FX Concepts' John Taylor Will Always Be A EUR Bear

Tyler Durden's picture

John Taylor, founder and CEO of the world's largest FX hedge fund, spoke with Bloomberg TV this morning and was his typically clarifying - if not sanguine - self when it comes to prospects in Europe and the US. Stating that he'll "probably always be a bear on the Euro", Taylor added that it is "hard to look at the European situation and see a cloudy sky become clear," and while there has been noisy swings in the movements of currencies of late, "the reason the euro is up is because the dollar is down - two guys have done this: Draghi and Bernanke." Ranging from FX to volatility, Taylor opines on the time-varying correlation of the weak euro with a strong US equity market and notes, however, that "the equity market is not showing any legs."



Taylor on the euro:

“I will probably always be a bear on the euro. It is hard to look at the European situation and see a cloudy sky become clear. Much more likely that cloudy sky will start to rain on you.”


“The fact of the matter is although we’ve been short the euro that whole time, we kind of were long on everything around the euro to make it even.  Owning Sweden, Norway, Turkey, the Czech Republic, all kinds of things. Everything around Europe except for Switzerland, which has locked itself to the euro. So, the reason the euro is up is because the dollar is down. Two guys have done this: Draghi and Bernanke. Draghi made the speech on July 24 and followed up with actions in September. Bernanke made the speech on August 30 and followed with actions in September. Both of those things were aimless to strengthen the euro and weaken the dollar and they worked.”

On whether the Swedish Krona has more room to gain:

“Yes. It depends a little bit. It depends on the equity market here, it depends on electronics. The Swedish situation looks very good. Obviously it is doing something, but I would argue that it still has some to go.  I still own it.”

On FX volatility being the lowest it has been since 2007 and whether that makes it more difficult for currency traders:

“It absolutely does make it harder to make money. I can see it from both sides. It’s harder to make money. On the other hand, would I want to go out and make a big bet? No, I am afraid of the central banks jumping down my back. The fact of the matter is if you look at our leverage is as low as it has been in a generation. We are trying to say gee whiz, how can you make any money with such a low leverage? We can say, oh, we’re having a decent year compared to our peers, up 2, up 3. What good is that? You will not sell anyone anything if you are saying you are going to make 2 or 3%. It’s not enough.”

On whether he agrees with those why say that Bernanke signaled last month that Fed actions are tied to equity markets and what that means for those buying and selling currencies:

“Normally equities correlate very highly with risk on and risk on correlates very highly with dollar weakness. So wanting to strengthen the equity market means you want to weaken the dollar, so therefore for those kinds of things go along with each other. Each time a QE or an Operation Twist comes along, it has less power than before. One of the interesting things right now is that we do believe the dollar will be weak and we have a target date of October 27 for the beginning of a reversal where the dollar might start to show strength. But I have to say the last week has shaken my conviction in that point of view. The equity market is not showing any legs. Being below 1440 which is where we started and everyone out on the street has signaled this as a big level and a big deal, and we’re trading 1432 right now, I do not know where we will wind up. Maybe the people will come out of the wall and as you say, it’s cheap now, they should be in and buying, they have their chance. Where are they? I am waiting. Show up. We’ll see.”

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SemperFord's picture

starts at 1:15 on the first clip, notice how the cop gets up sort of casually after just getting pushed down, seems he realizes they "can" fight back. The people have the numbers, they just need organization and learn to use molotov cocktails like the Greeks.

EvlTheCat's picture

What I found more interesting are the "cops" dressed as protesters in 1:41 helping to drag a guy behind the lines to the awaiting van.

Stackers's picture

Euro - Bear

Yen - Grizzly

Dollar - Sasquatch

LeisureSmith's picture

The "Black Block" is always on scene to infiltrate, instigate and light the match so the stormtroopers can start cracking sculls. Assclowns.

zorba THE GREEK's picture

I hope that when I'm old and start babbling and ranting as he was

doing in this interview, someone will have the decency to put me in

a home.

giovanni_f's picture

Spot on. He just recommended to the underwater short-the-euro gambler crowd what it wanted to hear: To quadruple down.

Number 156's picture

Maybe the people will come out of the wall and as you say, it’s cheap now, they should be in and buying, they have their chance. Where are they? I am waiting. Show up. We’ll see.

Yes. Buying with what? Inflation will give them wheelbarrows full of money, and a bad global economy along with it. Theres simply no value.

mick68's picture

Umm, this genius is long the dollar and is surprised it's falling after Ben announced QEternity.

Not too bright I'd say.

Rainman's picture

Gosh, ya think maybe the missing long buyers figure unlimited QE3 indicates significant structural pricing vulnerability in the markets...?? The shorts are terrified of central bankers too. These markets are value distorted, manipulated and all fukked up. I'll wait for a stronger hand.

Euro Monster's picture

"Hard to look at the European situation and see a cloudy sky become clear"?!?!?

A FUCKING storm is coming!

blindman's picture

Max Keiser and The artist taxi driver
Posted on September 26, 2012 by maxkeiser

Tsunami Wave's picture

The other, other Taylor Rule.... until the Euro is gone.

The Alarmist's picture

He might be fundamentally correct about the Euro, but in relative terms he is all wet.  But he does have a distinct talent for separating clients from money ... performance fees start at LIBOR ...  and that's all that matters.

falak pema's picture

Libertarianism-lite has become the last refuge for the ideological conservative.

Read more at http://www.nakedcapitalism.com/#yK2pC74feiieQxCz.99

Iconoclast's picture

This is the same John Taylor who has taken a bet (with other peoples's money) that the euro would reach parity with the USD in 2009, 2010, 2011, 2012...

Yeah good luck with that John..

disabledvet's picture

"the enemy is allowed a say as well." beggar thy neighbor is still just "beggar thy neighbor." Why trade currencies when I can trade oil instead? Or better lend to PRODUCE an infinite amount of it? Iran keeps attacking our banks...allegedly...launching one hack attack after another. Is it time to bomb Iran Mr. President? Or do we simply have no clear idea where these attacks are coming from in the first place? An "Inside Job" as it were. (God help us if that's the case.) Or does it just not matter to begin with...http://www.youtube.com/watch?v=BnYsnJLl_sk

Mentaliusanything's picture

And here was me thinking all Euro bears had been printed out of existance.

Guess you can fight Nature.

"When you go down to the woods today, your in for a big surprise..."

Mr Lennon Hendrix's picture

Yet does being a euro bear mean being a dollar bull is logical?

What if one is a fiat bear?

Considering the problems with the euro are the same with any fiat currency, I believe Taylor should re-examine his stance on currency.

Itch's picture

I don’t think we will ever see that kind of volatility again for a very long time. In ten years time chartists will be drooling over 2008-2011 and saying to themselves "wow, imagine the cash i could have made then"...if only it were that straight forward. The moment i had gotten used to it disappeared, now i fantasize about it instead of watching porn. ooooooh volatility, you're sooo naughty.

unionbroker's picture

He looked a bit confused by what is going on so if he is WTF do we do?

fredquimby's picture

He really does sound confused.....

The SNB doesn't sound confused however; and they have been furiosly buying this Euro-Dip this last year, and will no doubt soon be popping the Boll' as the dollar dives to 73 and below and they ditch the peg to the Euro as the Euro soars vs. USD (which will also make the CHF cheap for it's Euro neighbours.)

And to answer your question @unionbroker. Buy gold of course!! :)





shitting_alpha's picture

wow.  this guy is a complete lemming.  it is absolutely amazing that this guy ever ended up with serious AUM.


no alpha in that brain.  not a fucking drop.