FUND Q&A: FX Concepts' Taylor sees further U.S. stocks fall

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - U.S. stocks, which plunged to a 12-year low on Monday, have yet to hit a bottom, with the S&P 500 index possibly declining to a level between 500 and 550 points this year as a global recession worsens, said John Taylor, chairman and chief investment officer at FX Concepts.

FX Concepts is the world's largest currency hedge fund with assets under management of about $14 billion.

Taylor told Reuters in December he expects the S&P 500 .SPX to fall to around 500 points by July. He has partly raised his forecast since then.

But despite deep problems in the U.S. financial sector, Taylor has not lost faith in the banking system and said he would buy bank stocks again because the rate spreads have become profitable.

Taylor spoke to Reuters on Tuesday about the state of the financial markets and what he's buying and selling:

Reuters: Are U.S. stocks at a bottom?

Taylor: "We are definitely not at the bottom. Stocks may be at their two- to three-week bottom, but they're definitely going lower. I am sticking to my 500-550 forecast for the S&P 500.

"The problem is that valuations are still going down. The earnings are going down and the dividends are being cut. So it looks like stocks are going to look like they're not worth that much."