John Taylor Says He Is Now Long The USD As Of A Week Ago

Tyler Durden's picture

John Taylor is again making the media rounds, following last week's CNBC appearance in which his punchline is that next year was going to be "truly miserable", today he was on Bloomberg continuing his thesis of how doom and gloom will be with the US for a long, long time, and that courtesy of no QE3, risk is about to go bidless (he differs with the Zero Hedge outlook only on whether there will be QE 3 or not). His response to what an environment of no fiscal or monetary stimulus (in case it was not clear): it is bullish for the JPY, bullish for the USD, bearish for commodities and bearish for stocks. More importantly, in terms of timing, Taylor says that after being short the dollar, he went long a "week and a half ago" and expects a big upside USD catalyst in the next "3 or 4 days." which he follows up with the cryptic: "Our analysis of the markets has shown that they are very, very dangerous." Another trade that JT has on is a long JPY, short EUR - the reason for the EUR bearishness is that Taylor is very "confused" by the second European bailout. As for his long USd conviction, it is based on his belief that the market appears to believe that QE 3 is coming, and that once it is made clear that there will be no further monetary easing (good luck with that), the dollar will surge, following a slowdown in the economy, and a shortage of dollars.

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Racer's picture

EU's Rehn says Europe has contained sovereign debt crisis"

Hmm, that's got an eerie ring to it.. now where have I  heard something like that before?

vxpatel's picture

doesn't that statement guarantee a Ireland, Iceland, Lehman, etc etc etc


jus_lite_reading's picture

This falls into the Bill Clinton "I did not have sexual relations with that woman" lie...

On to bigger things... TYLER DURDEN why are you not reporting anything about TEPCO STOCK XPLODING TODAY?? THATS BIG NEWS!!!

LeBalance's picture

We will see about QE3.  Whether a socialism of the risk of the elite onto the backs of the masses is called expressly QE3 or not, I believe strongly that it will happen.  Since the political will is generated by the elite, theirs is the voice that will be heard.

camaro68ss's picture

Whos going to buy US Goverment bonds? QE3 is a must!

Boston's picture

Everyone who'll be selling risk, that's who.  

When the USD gets bought, where do you think those dollars will get parked?

Any severe downdraft in equities, etc. will be VERY bullish for US T-notes.

camaro68ss's picture

There is nothen bulish about T bills with a threat of downgrade

Ura Bonehead's picture

Just the opposite.  The ending of QE will insure money flow into US Gov debt.  Commodities and equities get punished, the 'risk off' means that the dollar makes a big run as money flows back into dollars and bonds.  1 + 1 = 2.

trav7777's picture

what dollars?

The leverage will be repaid...there will be a collapse in credit.  The dollars outstanding will vaporize.  That is deflation.

There won't be enough dollars to bid USTs up and the auctions cannot self-fund.

Those who expect an increase in the value of the currency of a bankrupt sovereign are going to be in for a rude awakening.

Boston's picture

Credit collapsed in late '08.  

What did the 10-year do?  What did the USD do?

They both took off like a rocket.

chartcruzer's picture

the COT for the dollar closed the week indicating there will be a bounce soon.  However, ,,,,

by any reasonable measure the USD is still in a down trend long term[s218820698]&disp=P

even short term the dollar is still selling off[s218820698]&disp=P

Ill wait for clear signs of a bounce or an international fiscal explosion before going long


Urban Redneck's picture

The US public debt (both budgetary and debt refunding) was a lot lower in 2008.

trav7777's picture

credit only failed to grow.

The sucking sound that persistent $1.5T deficits will make is a lot bigger than any of that.

The 08 collapse was a global run on money markets...anyone who thinks this won't extend to sovereign paper is foolish.

oddjob's picture

Exactly, in the end all there will be is debt, and debt is not an asset class for anybody outside New York.

Sean7k's picture

The end of QE would be a default on the debt- who buys bonds or the dollar in that scenario? People still need commodities- the shortages still exist. Equities would get trashed, but they have been due for 20% re-tracement for awhile. 

This is a timing play by the Elites. Dress up tragedy to get QE3 and put her on parade. 

Temporalist's picture

I believe Jim Rickards adroitly addressed this in his recent interview on King World News:


Basically the bailed out banks have no choice but to continue buying treasuries because that was the condition of the bailouts.  It is easy for the treasury to "persuade" primary buyers to buy since they would not be solvent today were it not for the government backing. 

Oh regional Indian's picture

Detroitly distressed indeed.


LudwigVon's picture

READ ZH TD !!! FODD-RANK BILL creates market for debt needed to fund the leviatian state. TD just told you that the PD's will need Billions of Treasuries to pos as good collateral when a couple Trillion of OTCs are onboarded to central exchanges. Jeethner is working on longer maturity bonds as well was the rumor for a bit. anyone else? This is a nice hold-over, a nice hard kick of the can. But it only works once. 

Ruffcut's picture

I'm short (fully naked) on dollars, and long on debt.

camaro68ss's picture

Party on Bitchez, the games not over yet

MrTrader's picture

John Taylor´s funds are all down this year:





Global Currency Program


Funds 1










   Funded 2



   Funded-EUR 2



   Funded-GBP 2



   Funded−HI Alpha 2






Funds 1










   Funded 2



   Funded-GBP 2



           HI Alpha




Global Financial Markets


Funds 1










   Funded 2




Volatility Program



   Funded 2




Global Rates Alpha Program



   Funded 2





1. All fund returns include interest and are net of fees.

2. Represents net returns of all fully-funded discretionary accounts.

Past performance not indicative of future returns.


topcallingtroll's picture

Yep. He shuda held treasurys and cash instead.

Ten year at 2.1 in two years or less?

topcallingtroll's picture


Way ahead of you John!

I got long the dollar about a month or so ago.

Gold still looks strong, however.

ATM's picture

I think he is right in the short term. Dollar strenghten v. other paper currencies as QE2 fades and no QE3 immediately appears.

Then - next crisis - and QE3, 4, 5 ,6.......

Politically QE3 won't happen right away. How soon it will be when it does, I am not sure but in the mean time I can see a higher dollar, much lower rates then the next round of printing and debasement.

I personally dumped almost all my meager investments in stocks etc and bought treasuries and cash about a month ago (on top of physical gold and silver).

I think the ten yr can drop to 2.5% or even closer to 2% before the next big print. Then it will probably be print to infinity time.

Boston's picture


I just hope that the commodity correction is strong enough to drive down the PM's far enough to provide a great buying range.  If the drop off in industrial demand doesn't temporarily crush silver, I'll be kicking myself for not buying more at today's prices.

So I'm long T-notes, gold/silver/platinum, and looking to unload the Treasuries during max pain in the risk assets markets and buy more PM's (and probably equities and high yield) at firesale prices.


gmrpeabody's picture


Sounds like a plan.

ATM's picture

Just be patient. Treasuries will continue to rally, dollar stonger, commodities down as everyone fears the great deflation.

But how can we possibly have real long term persistent deflation when no one works and the central banks will all be running the presses 24hrs a day?

It's going to be a head fake that gives us a buying opportunity if we're patient and awake.

In the meantime I'm still adding some PMs along the way because I am not arrogant enough to think I cannot be wrong, but I don't think I am. Sitting on a bunch of cash and biding my time..... 

Trillax's picture

While I agree with his main points, I disagree about the strong dollar.  I still strongly believe there will be a time here shortly in which the dollar will lose it's Reserve status and people will flee like roaches when the light is turned on.  Before this happens however, the long awaited 'paradigm' shift will happen (i.e. Mega-Robo Black Swan event) -- whatever that might be.

Temporalist's picture

There are too many CBs colluding for that to happen that quickly; they are all in dollars too.  I believe it is a matter of time but it just won't be as sudden as some would like.  I've been telling people about the end of dollar hegemony for years now but as you can see it's just not going to be an "event" it will be a series of long slow happenings.

BorisTheBlade's picture

When 'strong dollar' is mentioned, it is usually defined as being strong vis-a-vis other currencies, mainly euro, in which case he maybe right. However, ultimately dollar being strong vs euro is highly irrelevant since euro is fundamentally flawed itself. Dollar will weaken in terms of purchasing power (so as other currencies, only slower), even if with a short break for another run-from-the-risk cycle. There is no way to sustain dollar reserve status in the long run, the only thing that keeps it as a reserve currency is the allmighty force projection, which also has its limits.

NotApplicable's picture

Tell Mr. Taylor that the dollar's strength is transitory, being indicitive of a move down through Exeter's Pyramid. Of course, this flow of monetizing financial paper will serve only to undermine any remaining capacity for the dollar to act as a long-term wealth storage system, and wealth will move through it into a superior meduim, gold.

But I bet he already knows that.

SunBlaster's picture

shortage of dollars- impossible

skip90291's picture

Really SunBlaster? Impossible? Sounds like you don't need all your piles of worthless dollars you're keeping in your mattress, so why not give me some?

I sometimes feel that being overly confident over a single prediction within an infinitely complex system is the epitome of hubris.

Mark Twain said it best: "It's difficult to make predictions, especially about the future."

BlackholeDivestment's picture

...ah come on QE3? They did not come all this way to Zero Out and die on 2112. Oh no no. It's time to call 911 and go global into the green fuzz.

Franken_Stein's picture


So he places his bets on a "feeling" ?

He doesn't know what it is, but he bets some millions on the dollar for some reason becoming stronger within 3-4 days ?

Huh ?


Has he stumbled across a chart pattern that we still don't know of ?

Or is it a combination of technical indicators like the ominous Hindenburg omen that makes him think so ?


Or the recent barrage of hits concerning NFP, ADP, SNAP, ISM and so on ?

I mean feel-based trading is not very lucrative, to say the least.


bugs_'s picture

or he got a message on his cell from deep shah

truont's picture

Taylor is signaling that he has some (insider?) information that he can’t get specific about.
The timing (3-4 days) shows that he believes he has credible, actionable information.
My guess is Taylor thinks he has been tipped off to a Eurozone problem in 3-4 days.

But why does he think that QE will end, I don’t know.
How can it end now? We should not have ever even started it, then, if we are just going to end it now.

GeneMarchbanks's picture

How about this: He's awaiting the news of the Greek situation which should come out sometime this week, they can't play kick-the-can forever. The DXY should react to this and maybe pop above 74 where I think that it could be a buy. Awaiting confirmation that is all. I see about a 15% drop in the DXY if he's wrong. He needs to be wrong at some point. Made some great calls though. But during the whole interview he was all " I think" "maybe" let's not forget this dude is a Goldmanite.

wandstrasse's picture

An Euronaut On Inflation

After failing to repair the Hubble Space Telescope, my favourite German scientist cast a hand full of Euro-coins into space. He muses: 'When on earth there is inflation, these coins are missing.' Completely new point of view, I felt urged to share it here.

magpie's picture

haha those are awesome, especially with Berling and Schneider.

Quinvarius's picture

He said this same stuff last week based on the foolish assumption that no QE is good for the Dollar.  No QE will collapse the Treasury market and take the dollar with it.  QE is bad for the dollar.  No QE is worse for the dollar.

mayhem_korner's picture

No QE will collapse the Treasury market and take the dollar with it.  QE is bad for the dollar.  No QE is worse for the dollar.

Over what time horizon?

Quinvarius's picture

I am pretty sure the Fed will keep buying Treasuries from whomever wants to sell them at inflated prices no matter what they call it.  The only bet I am actually willing to make is continued debasement of the currency, whether it is reflected in Treasury prices or not.  I guess my point is the Fed and Treasury have probably figured out they cant stop feeding money into the ponzi scheme too.

narnia's picture

John: the Chinese, the Japanese & oil producing nations are more than happy to sell you as many $ as you wish to purchase.  Maybe it's time to reconsider the long term risks to you and your clients of the fiat currency fund business.

Sean7k's picture

I agree. I think the Chinese would jump on it with both hands. Anyone thinking there aren't enough dollars is an idjut. They want to get out of their treasuries now. 

GoinFawr's picture

Right right right. Any transitory strength in the USD is triggering divestment while the divesting is still good. Hindsight doesn't lie.

One ezception narnia: CANADA just elected the "I can't believe we're not Americans yet" party to a majority, so Mark Carney has an open license to do whatever his fellow GS alumnis instruct him to do, while Japan is being forced to tap out.

Missiondweller's picture

Though I can see a Euro crisis boosting the USD short term I just cannot imagine a longer term situation that is strong dollar. He seems to indicate the euro crisis is about to cause people to flee to the dollar. longer term though, I just don't see it.

If Ben has shown us anything is that he'll find new forms of QE.

JW n FL's picture

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