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John Taylor: "The Nice Risk Rally Since The First Half Of 2009 Is Ending" And Will Be Replaced By A "Scary Descent"
In the last two years, one of the most accurate predictors of both long and short-term trends has been FX Concepts' John Taylor, whose April call for a EURUSD peak of 1.4925 was almost to the dot. Which is why he is either about to cheapen his predictive record by being wrong, or the days of the rally are ending. In a statement very comparable to that from Jeremy Grantham released a few days ago, Taylor tells Bloomberg that: "the rally in higher-yielding assets is coming to an end with Europe’s sovereign debt crisis resurfacing, growth sluggish and banking systems unsteady. “This is the end of the nice slow moving risk rally that has lulled us pleasantly to sleep since the first half of 2009,” Taylor, chairman of New York-based FX Concepts LLC, said in an interview. “This warning is worthy of a brass band and bright lights as the other side of this low volatility rally will most likely be a scary descent that will have a very negative impact on markets. Our statistical models say we are about at the end of the road for risk.” Taylor gives a deadline to his prediction: "Higher-risk assets, such as equities, the euro and emerging market currencies, have either peaked or will do so by end of July." If Taylor's previous predictive record is any indication, it may get volatile soon. On the other hand, his forte is FX not stocks, and many other forecasters have been burned (or should have been) at the stake of predicting capital markets in a time of central planning.
From Bloomberg:
Higher-risk assets, such as equities, the euro and emerging market currencies, have either peaked or will do so by end of July, according to Taylor, who manages about $8.5 billion and uses statistical models to help predict future movements in assets. Global investors have tempered their optimism about the U.S. and world economies and plan to put more of their money in cash and less in commodities over the next six months, a Bloomberg survey released today found.
FX Concepts, whose returns last year were the company’s best since 2006, reaped gains in the first half of 2010 betting on a slide in the euro against the dollar and then profited by its rise the rest of the year. At present, the fund is short the common currency, which means it will profit if it declines.
Taylor, who predicted several times since 2010 that the euro will eventually fall to parity versus the dollar, boosted returns by wagering on short term swings higher in the shared European currency. FX Concepts, in a Jan. 27 note, said the euro would move higher in a medium-term trend and in April predicted the currency was poised to reach a technical target of $1.4925.
Taylor had some choice words for Europe:
“There is absolutely statistically no way that Greece can survive,” said Taylor, who just returned from France. “There is a one in 10,000 chance; if the Germans give Greece their money to pay back their debt then they’ll be fine. But there is no way Germany will do that.”
Greek government bonds fell today, pushing the two-year note yield to a record high of 26.77 percent. The bonds have lost investors 11 percent this year.
“As the spread of Greek two-year debt goes absolutely crazy over German, it means that at some point we are going to have to have a crisis,” said Taylor, whose Global Currency fund gained 3.33 percent last month. “And I think it’s very soon.”
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Taylor Rule Bitchez
He is WAY TOO BEARISH!
hehe.
Now BTFD still RULES
Taylor, tinker, soldier, spy!
with the thesis of the article; Agree. I think the stock market has already done it's top formation.
The sooner the PIGS go the sooner we can move on to real fixes in Europe
PIGS are nothing compared to US debt, when does the US finally have to face facts?
When the world quits using the dollar... And the US proles revolt because the the gov't can no longer afford to give them beer and cable teevee.
Looks like its pretty near.
I also hope the reset is near so children can have a chance. It is not going to happen soon, the reserve currency will take years to fall. The suffering will be longer than most think possible. Then it will be engineered into a new paradigm, the American people as a whole are woefully ignorant and easy to herd.
By real fixes you mean the abolition of the socialist mentality that causes governments to spend irresponsibly? If so, I agree.
Why do you write PIGS instead of PIIGS? Do you consider Italy outside the group, or is it just sloppy or misinformed?
It should really be PFIIGS, if you want to get technical.
I agree with Taylor, but, he's been making this call for at least 4 quarters now, yes? These guys have to start owning up more to the trailing record.
Yes and why can they just do whatever they feel like Q after Q? Because the american people are pathetic.
GG, I agree. I like reading Taylor's perspective -- But if you invested in his FX projections read on ZH - you would have had your ass handed to you betting against the Euro
I wonder... Who wrote the insurance on that Greek debt?
People who live in the 'economic only' world are missing the big picture theres a world hot war about to go down.
No way, fuzzy mutt
No one wants a war, and it's not in anyone's interest.
We need the next deflationary crash to happen before the real war gets going.
Next up, QE2 ends and the market melts. Position accordingly.
we said that about QE1 and it was the time to get long.
if the market melts down again, the government will lose the support of the upper middle and lower upper "trade" classes, IOW, the people with the 401ks.
The market will not be allowed to crash; it's as simple as that.
QE3 is way too unpopular, it simply cannot be done. We have only two ways to re-engage the money printing.
Pick one.
I think you underestimate QE's popularity among Wall Street banks, and I am certain they have much more influence over this matter than you, me, Congress or anyone else. The Fed is rogue and answers to no one in our political realm.
I say after a "Decent Interval," QE3 is on, and QE2.0 Lite will also be busily maintaining the Fed's balance sheet at current levels in the meantime and that will represent a continual flow as well.
And then there's the issue of who will be buying the US treasury bonds we'll be issuing hand over fist? The "free market" has not been buying all this paper. We'll need a crisis, of course, to make these attractive again should the interest rates start to rise during The Decent Interval.
Mark it - this is the way this will go.
I think you underestimate QE's popularity among Wall Street banks, and I am certain they have much more influence over this matter than you, me, Congress or anyone else. The Fed is rogue and answers to no one in our political realm.
I say after a "Decent Interval," QE3 is on, and QE2.0 Lite will also be busily maintaining the Fed's balance sheet at current levels in the meantime and that will represent a continual flow as well.
And then there's the issue of who will be buying the US treasury bonds we'll be issuing hand over fist? The "free market" has not been buying all this paper. We'll need a crisis, of course, to make these attractive again should the interest rates start to rise during The Decent Interval.
Mark it - this is the way this will go.
I would add my pick of RRE valuations deteriorating quicker than currently expected (ohh, big shock there) and will maturate right along with your general thesis. Besides, few hooks work as well with congress. Heck, this hook worked for a cool few trillion last time.
QE2 was `way too unpopular` too. So what`s changed.
Here`s a third option: If Ben cuts down a quadrillion trees to print more fiatscos and nobody sees, does he have to make a sound?
And a fourth: Ben calls up his ol` cronies from GS now running foreign central banks the world over and instructs them to reign in the USD`s peers.
Or a combo of the same.
Game changer: For damn good reasons the USD is no longer the world`s favourite reserve currency, paint all the charts you like, it`s all short term gain for long term pain.
eg. Look at the USD/YEN action today... hasn`t the BOJ been printing like it has never printed before?
You can write any number you like on a scrap of paper, but against real assets its actual value will always be discovered in the long run, no matter how much debt you try to back it with.
Ask yourself: as a creditor would you rather be paid in a currency backed by nothing more than debt rife with counterparty risks, or a hard asset with absolutely none?
How is this printed money getting to the real economy when everyone's credit is maxed and the banks aren't lending? Where's the helicopter?
Oh the banks are lending all right, just not to the likes of you. As you`ve noticed they`ve already got you maxed out and are now in the process of capturing what is left of your nation, and/or filling their balance sheets with hard assets; where have you been?
Sorry, no helicopters for you.
Just helicopters with gun turrets?
Heh, you might see those, sure, but only for a moment just prior to being obliterated. The Jet Rangers brimming with conjured fiat are reserved for the TBTF, or the nations their alumnis at the central banks are working to capture for them.
Is anyone TBTF?
It always cracks me up when someone states that something is statistically impossible and then provides a statistic for how impossible it is.
Like for instance the formula for showing the US debt is mathematically impossible to ever repay.
That's because they mean statistically impossible to occur, not statiscally impossible to calculate.
An almost-zero probability means that the thing can happen, but that it won't. (Humorous explanation by Prof. Strang).
People tend to never say what they actually mean, nor take "definitions" of words seriously.
It is "more impossible" (har har) statistically for people to get hit by lightning and yet they still do....
I recall Taylor calling for the Euro to hit 1.31 before he changed it to 1.42, as it was rising against the USD.
Yep, hard to make those calls in an economic slavery world such as ours controlled by these central bankster criminals who just do whatever they feel like because the people are such sheep and will never do anything. I've often said why dont they just seize all americans bank accounts and pensions and jack DOW to 20,000, why not, no one would do anything about it anyway.
"This is a GREAT time to be buying US equities" - Fortune Magazine's Editor-in-Chief (on CNBS this morning).
May that MSM shill ass-pirate be hit by a magazine delivery truck
Who is buying 'US equities'...the Bernank. Besides hardly anything is 'US equities' anymore, the entire DOW is basically Chinese and the S&P is now owned by Germany/UK.
In todays world of instant messages..who would buy a magazine whos information is at best a week old and probably more....I do not know what to buy.....so I buy gold and silver....just to be safe..and that is the key word....its not to make a killing..its to reduce my losses in a colapse...
+++
This is surely bullish for silver!
Another great day to BTFDs!!!
Yep, looks like yet another 'bite the fukin dick' day for the american people. Just hold physical silver, its not for day trading.
You are funny because I know you are making fun of silver bugs. I bet there are some who believe you are serious.
Whether you believe in the silver religion or not you have to laugh every once in a while.
very distracting
Bought December Comex Silver at $34.25 today; we'll see how that works out.
Actually, right now silver is the only one of the four, AG, PT, PD that IS up.....
Is this anomaly a signal about something ..?
Wut woh, wooks wike Wowotwader might be bout ta hav sum pwobwems :(
Every continuous and differentiable linear or nonlinear function y = f(x) of a variable x can be expresed as its so-called "Taylor sum" or "Taylor series", which is an infinite sum of linear terms of a certain structure plus a residual in Cauchy- or Lagrange-form, to make it finite.
For example:
f(x) = e^x = 1 + x + x² / 2! + x^3 / 3! + ... + x^n / n! + L(n)
with
n! = 1*2*3*4*...*n, faculty function
That's how you calculate non-linear functions like sin(x), cos(x), ln(x), e^x and so on in a computer or calculator.
that's Taylorism for you...as Ford motor company patented in its production line..you can see CC playing the infinite series to infinitesimal perfection in 'modern times'.
Goin' all cash. No way to tell what is going to happen in the next two months with Europe sitting on a flag pole, supposed end of QE - like the coyote running off the cliff suspended in mid-air before looking down, debt ceiling histrionics, oil wars flaring, china feeling empowered, Japan getting more radioactive daily . . . I'm gonna sit on the sidleings and sip some cold beer for awhile this summer. Grow more vegetables than ever - figure out to save my own seeds. Get some chickens. Replace the batteries in the dosimeter . . .
People don't want to hear it, but unless you bought really low, your strategy is the correct on. PMs and other commodities would be in for a bloodbath if this scenario plays out.
Oh shit. I am not as alone as I thought.
@zing "PMs and other commodities would be in for a bloodbath if this scenario plays out."
_____________
You are yet another blasphemer and apostate of the precious.
The wrath that will be visited upon you will be mighty indeed!
To all the faithful, do not dishearten, the rightous holder of the precious will be spared!!
Give grace to the precious.
_______________________________________________
And now for your viewing pleasure.
The Mistress of the Macabre. The
Epitome of Evil. The most sinister
woman to dance on the face of the
earth. Lowly dogs, get on your
knees, bow your heads and worship
at the feet of SANTANICO
PANDEMONIUM!
__________
BTFDs
Salma Hayek was a knockout in that movie.
Get lost you fake transvestite.
under a normal scenario your concern may hold water. i.e. "a crash would crash all asset classes"
but we are not in a normal scenario. the idea that people would sell assets and hold cash is not a risk reducing trade. i think you will see them sell their assets and buy physical gold (hopefully silver too), but gold. gold has rightly replaced the dollar as the global currency. thus with this as your base, assets including fiat would be dumped and replaced with physical gold.
Ah I think I see your misapprehension:
Historically gold and silver ARE 'cash', the only cash in fact.
Don't take my word for it, just ask Mayer Amschel Rothschild's toady Niall Ferguson. Oh sure, they like the plebs/nations to be reliant on their paper, but that family has always known the definition of real money, the advantages of being their own central bank.
You have been conditioned well, my friend, but you're obviously figuring it out. Well done. Welcome to the real world.
Eh...
When the euro was appearing to collapse before our very eyes and a lot were calling for imminent parity, what was the euro POG doing?
Also, what was the cause of the euro's slide? It was the insolvency of member States. Deflation. Bond collapse due to unavailability of money, i.e., high yields.
There are two ways out of a debt trap. One is default, two is print. NEITHER is currency-positive. The bernank knows this and has his finger on the print button- ALL the central bankers do.
If we see serious deflation, we will find out how much leverage is in each asset class right quickly.
Enter RoboTrader:
This is the "Wall of Worry" so markets will Rock!
@Note to self
"Goin' all cash"
Blasphemer and apostate of the precious.
Surely yours will be a terrible punishment.
The rightous holder of the precious will be spared, but the mighty retribution for your affront will be a warning to all.
_______________________________________________
And now for your viewing pleasure.
The Mistress of the Macabre. The
Epitome of Evil. The most sinister
woman to dance on the face of the
earth. Lowly dogs, get on your
knees, bow your heads and worship
at the feet of SANTANICO
PANDEMONIUM!
__________
You may still have time BTFDs order silver today
Blasphemer and apostate"? Ehh . . I've been called worse. Now tell me more about this Mistress gal. Is she hot? Sounds like she's got sort of an Elvira thing goin' on. That might be ok.
“Sssss,” …. “Praps ye sits here and chats with it a bitsy, my preciousss. It like riddles, praps it does, does it?”
Hell no it do not. Yer scarin' me.
Gold isn't a commodity. It IS cash. Shake off the cobwebs, this isn't 1980, or even 2008.
"Grow more vegetables than ever - figure out to save my own seeds."
Memo to Me, feel free to share your seed saving, growing tips here --
http://www.zerohedge.com/forum/oer-hedgerow-garden
Hey cool - thanks. Gonna check it out.
Everyone in Europe will be giving the Greeks their money,not just the Germans,chucking it int the bottomless pit.George Osborne the British chancellor has no choice, his outgoing predecessor,Alistair Darling committed the UK to contributing to future bailouts until 2013.
More of Darling here,look out for Hugh Laurie:
http://www.youtube.com/watch?v=7tkVpj3xrMs&feature=related
I am very lonely again sitting here in dollars. Lonely and scared.
That is the only way I have found to make the big bucks.
I'm cash too, waiting for the herd to stampede in my direction.
Now, kindly get out of my trade and rejoin the herd!
Danger look at all the posts and the few number of junks. We are not alone. This may not work out. Maybe we shouldn't fight the fed this summer.
Are you confusing ZH with the street again?
Bad topcallingtroll, BAD!
True. The anti-dollar zeal in this thread isn't very strong. Did it all get spent on silver?
Gold for me.
Note to self. I have more company than I realized. I have to rethink this strategy.
Shit. Aside from my physical PMs, rentals, and land (being leased for soybean growth - which is good because I get a share of the market price and with the mid west floods wiping out my soybean competition, soybeans up) I am also in cash. What the hell? When did I join the herd? Damn.
I've been mulling the same thing as you. But each and every time it seems that we are at an "end to QE" or some such shit, we see it return with a vengeance.
Each and every "shorting opportunity" of the past 2 years has lasted all of a week at most. And these "we are at the top" calls have been legion during that period.
I'm not totally in cash. But I do have a big portion in cash waiting for the big crash that never seems to come. The rest is in PMs.
So sad and lonely!
http://www.youtube.com/watch?v=lN-4lX0QyZc
26% !? Was the DP in the wrong place.
This is insane.
The wealth of Greece is being sucked out of the country.
Well done IMF and the global elitists, Greece now does not belong to the Greek people.
What do you think the Asians, Indians and europeans will buy when their debt crisis gets worse and US stocks get pummeled? Sitting in cash may cause you to miss the move. What do think will happen when QE2 ends and treasuries can't find.a buyer - so rates expose? Bond money will go where exactly? If you believe there are plenty of buyers for treasuries and if you believe there will be decreases foreign demand for PMs, CAsh is the right move. Otherwise, PMs may get spanked for a bit but will come back with a vengeance and USD down to 72.
This is how we roll yo. We had the inflation, now it's time for more deflation.
per "eagle", FINALLY, someone with some sense about what the fuck is going on, and what the prognosis and outcome will be. thanks.
Wouldn't it be nice to have a real market, be "diversified" and focus on life instead of this ponzi? Crash this fucker and lets get on with it!
yes, it would.
But if you study Wall Street History of the last 150 years, you come to the conclusion it's deja vu all over again... and again and again and ....
Caramanlis and Papawappa are both oligarchs who should be lamp-posted...on a chord around their nether parts, not their scruffy necks.
He's shilling for QEn
Goldman knows better,
"Jim O’Neill, chairman of Goldman Sachs Asset Management, said investors should shed their pessimism and stop hoarding cash amid prospects for a global stock rally that could start in China.
The view that “the West is in trouble” is wrong when nations including Germany, Sweden, Australia and Canada are performing strongly, O’Neill said in an interview with Bloomberg Television in Hong Kong, recorded yesterday and broadcast today. Investors should “stop worrying so much,” said O’Neill, known for coining the BRIC acronym for Brazil, Russia, India and China.
- but, but, but... Jim O'Neil says there's going to be a new rally...
Wow! Looks like that "scary descent" is in full force today!
Not to worry, however. Wall Street is still having its Pollyannna Party!
Our cycles confirm this (subscribe and build your own cycles)
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=205_cycles-say-the-bears-are-about-to-roar-2011-05
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...
These guys really need to stop pushing the idea that a few billion in sovereign debt means anything to the Euro. I get it that the Euro needed to correct a little. But the debtors can't print Euros. Every time the Dollar gets a litte pop, the anti-Euro fanatics come out of the woodwork. The Euro retest of the breakout is in the process of completing. The Dollar is toast. If you go long Dollars, you will get your head handed to you.