Goldman's Stolper Sets 'New' Four-Year FX Plan

Tyler Durden's picture


This morning, Goldman announced their 10 Themes for the year. The succinct summation of them (which we will discuss later in more depth) is that: there'll be some volatility on the way but in the end it will all be unicorns and faeries (our translation). In line with these global forecasts, everyone's favorite contrarian FX strategist updated his short- and long-term FX projections. So presented with little comment are Tom Stolper's guide to stop-hunting and fading the crowd. High conviction ideas such as AUD weakness, JPY stability, and a 1.40 EURUSD stood out to us.



Via Goldman Sachs:

Long-term forecasts to 2016. The most significant change in the way we present our forecasts is that we have dropped our 5-year forecasts and instead have a full annual path out to 2016. For the multi-year projections we typically started with our GSDEER 'fair value' model, and in many crosses clear signs of convergence to fair value are visible. For example, in the EUR and the JPY we expect relative weakness in 2015 and 2016. Even the trade-weighted Dollar is expected to re-appreciate towards the end of the forecasting horizon. This kind of projection has been a feature of our previous 5-year forecasts, too. However, the more detailed path gives additional information about the timing and speed of the expected mean-reversion towards fair value. It is also clear that we expect a number of currencies to remain substantially misaligned, typically on the basis of country-specific factors.


Short-term forecasts for 2013. Our new 12-month forecasts coincide with the end-of-year projection for 2013. In between, we provide the usual 3- and 6-month forecasts. These have generally not changed much compared with the previously published path, although there are some differences.


Changed View on the JPY. The most significant forecast change is a more moderate view on the JPY. Instead of gradual further JPY appreciation, we are now expecting broad stability at $/JPY 80 over the foreseeable future. We now think that policy makers will prevent the JPY from becoming much stronger. That said, we also fail to see a catalyst for a much weaker Yen and hence believe that $/JPY has moved too far in the latest move higher above 82.


Strong views. In terms of forecasts that stand out relative to current spot, we would highlight the AUD and the TRY, where we see further substantial FX weakness, including against the USD. Otherwise, our continued USD bearish stance also stands out, in particular relative to consensus. Much of this Dollar weakness is linked to the expectation of further Asian currency strength. On the EUR we continue to expect a move back up to EUR/$1.40. Many investors remain substantially under-exposed to the EUR and following the ECB’s OMT announcement we think a gradual reassessment of tail risk scenarios will support the Euro over time and correct some of the underperformance in recent years. The Euro move would likely contribute to broad USD weakness, with many other European currencies typically following EUR/$.


Near-term risks. The macro outlook for the immediate future remains quite unclear, as extensively discussed in other publications released today, mainly linked to the risk of a 'fiscal cliff' in the US. We see scope for notable asset price volatility and this could temporarily weaken some of the more cyclically exposed currencies vis-à-vis the Dollar. Our 3-month forecasts do reflect this to some extent.

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 11/28/2012 - 19:59 | 3018939 unwashedmass
unwashedmass's picture


How does this guy have a job? I mean, really, how do they provide him with a desk, a lamp, a computer......and no clown shoes? 

Wed, 11/28/2012 - 20:07 | 3018958 Dr. Engali
Dr. Engali's picture

Because he is very good at his job.... Fleecing the muppets.

Wed, 11/28/2012 - 20:10 | 3018965 DeadFred
DeadFred's picture

It's just an audition for the Comedy Channel, no need to get upset.

Wed, 11/28/2012 - 20:40 | 3019025 Stoploss
Stoploss's picture

But, but, why dolla keep going down??













Wed, 11/28/2012 - 22:28 | 3019232 FuzzyDunlop21
FuzzyDunlop21's picture

Make sure you hedge these trades by going long petroleum jelly for the inevitable moment when you get fucked

Wed, 11/28/2012 - 20:03 | 3018943 Squid Vicious
Squid Vicious's picture

why wait for the dip to 1.25, just load up on Euros now... and enjoy the ride!!!

Wed, 11/28/2012 - 20:02 | 3018945 PEanal_yst
PEanal_yst's picture

BuyJPY Puts, Short the EUR and Long AUD

got it

Wed, 11/28/2012 - 20:07 | 3018957 Dr. Engali
Dr. Engali's picture

My four year fx plan..... Buy gold.

Wed, 11/28/2012 - 20:13 | 3018966 Yen Cross
Yen Cross's picture

 I looked at Tom Stolpers (usd/jpy) call... He is batting 1002, and Z/H knows it.

   Personally, I think the guy is scamming the crosses, to ingratiate himself! Nuf Said/

Wed, 11/28/2012 - 20:20 | 3018980 ebworthen
ebworthen's picture

EURUSD at 1.40 when it should be at parity?

Funny, but very possibly where it will end up.

Wed, 11/28/2012 - 20:27 | 3018996 Yen Cross
Yen Cross's picture

 1.269- 123458/ eur/usd Next quarter. Ponzi Euro

  The Euro will lose more (XAG) value. Purchasing power. Short term interest rates will rise next year.

Wed, 11/28/2012 - 20:22 | 3018983 nevket240
nevket240's picture

faeries or feces??

both I suppose.


Wed, 11/28/2012 - 20:23 | 3018985 magpie
magpie's picture

I always suspected they had massive positions above 1.30

Wed, 11/28/2012 - 20:29 | 3019003 Yen Cross
Yen Cross's picture

 There isn't any "they" Magpie.  I gave you the range. I'll be adding to my position.

Wed, 11/28/2012 - 20:39 | 3019021 magpie
magpie's picture

Oh this time i only meant GS; as an underwater short i will cut my losses.

Wed, 11/28/2012 - 20:51 | 3019049 Yen Cross
Yen Cross's picture

 Magpie is getting really smart!  

Wed, 11/28/2012 - 20:57 | 3019060 magpie
magpie's picture

There is no getting, only hard work and a waste of time.

Wed, 11/28/2012 - 21:12 | 3019093 Yen Cross
Yen Cross's picture

Luved ya from day one! Remember when you questioned me about money flows?

Middle eastern euro flows back into the North American markets?

Wed, 11/28/2012 - 20:28 | 3018999 Martdin
Martdin's picture

Whaaaaaaat... EUR at 1.40 while AUD weakens!? Pffft, I'll believe that when I see it.

Wed, 11/28/2012 - 22:31 | 3019241 Orly
Orly's picture

The Aussies are going to lower interest rates next week, possibly by more than expected, which will send the AUD crosses tumbling, especially against the Loonie.

The semblance of stability may bring funds back into the Euro and push it that high but I don't see it.  The ruse pulled by the IMF and ECB the other night was a shameless sham and people know it.  I am also (frustradedly...) short the Euro to about 1.27-ish but it is sure taking a while to get there.  That tells me that when the move comes, it will come like air out of a balloon.


Wed, 11/28/2012 - 20:29 | 3019002 Piranhanoia
Piranhanoia's picture

less ambitions than Stalin's 5 year plan, but just as destructive.

Wed, 11/28/2012 - 20:39 | 3019019 The Master
The Master's picture

Christmas comes early! Thanks Tom!

Wed, 11/28/2012 - 20:46 | 3019036 Seasmoke
Seasmoke's picture

i am sure he will be correct , on ONE of those forecasts

Wed, 11/28/2012 - 20:49 | 3019047 Mark Wilson
Mark Wilson's picture

S&P needs to drop around 12% to reach Goldman's EOY target of 1250. That's .5% EVERY trading day until then.

Wed, 11/28/2012 - 21:04 | 3019073 Squid Vicious
Squid Vicious's picture

no that was to get more muppets short, for days like today

Wed, 11/28/2012 - 21:25 | 3019117 Mark Wilson
Mark Wilson's picture

Yeah really. S&P only came close to their target once all fucking year back in June. 

Wed, 11/28/2012 - 21:01 | 3019068 pasmurf
pasmurf's picture

back up the truck for UUP options or RGR, the only stock to do better than gold last year, if I recall correctly.

Wed, 11/28/2012 - 21:03 | 3019071 Yen Cross
Yen Cross's picture

 It is fairly safe to assume I'm short of Tom Stolper.  I would be selling his buy "orders".

Wed, 11/28/2012 - 21:06 | 3019077 Yen Cross
Yen Cross's picture

Closing out for the year.   That [desert trash] needs to burn. No fuel, no trade!

Wed, 11/28/2012 - 21:06 | 3019078 Darkness
Darkness's picture

Did you just get bullish on the Euro? HIGH CONVICTION IDEA? WTF

Wed, 11/28/2012 - 21:08 | 3019084 Yen Cross
Yen Cross's picture

 No Dis -Respect. I don't trade the "ponzi euro"...

Wed, 11/28/2012 - 21:07 | 3019081 Yen Cross
Yen Cross's picture

 I'll play fun game trades, with Smart People!

Wed, 11/28/2012 - 21:15 | 3019097 snowlywhite
snowlywhite's picture

shit; I'm short aud.


how can a guy have an oppinion about the rate in... 5 years? I mean, it's fuckin' amazing...

Thu, 11/29/2012 - 00:31 | 3019394 jez
jez's picture

"how can a guy have an oppinion about the rate in... 5 years?"


Well, anyone can have an opinion about anything. Whether that opinion is worth a moment of your time is another matter.


I'm surprised that "Stolper" still hasn't become a verb. Lends itself quite well to it. As in, "You know you've been stolpered when . . ."

Wed, 11/28/2012 - 21:18 | 3019106 saulysw
saulysw's picture

Anyone know why THEY think the AUD$/$ will weaken?

Wed, 11/28/2012 - 21:59 | 3019186 european child
european child's picture

Anyone know why THEY think the AUD$/$ will weaken?

Well, I don't know if AUD will weaken or not, but I've been living in Aussie land for a while and I can tell you this: Australia will have hard time adjusting to their so-called "new economy" model. What happened is that with the gov't blessing, AUD was allowed to rise too much (supported by mining lobby), which effectively devastated economy, and especially small businesses. If you go through some suburbs in Sydney (where I live) you will just encounter signs "Closing", "Closed","For lease/rent", "Closing sale" etc. There's workers lay-off on a mass scale with skilled job relocation to Asia and India. Just Quantas recently layed off almost 3000 workers. As one Aussie put it nicely: "We'll all end in serving coffee/baristas" (they're the only ones usually hiring local labor). There are literary hundreds of cases I've heard of where people were forced to train their (cheaper) substitues from Asia/India. The only sector profiting from AUD boost: mining. However, there's problem here besides China slowing: HUGE ineffectivness and appaling lost money on (overpayed) projects with usually huge and costly adminstration. Loses are kept secret and hidden using accounting gimmicks. Apart from mining everything else virtually is slowing/stopping. Government here is totally bust, there's no money. Even with last 10yr China boom, believe it or not, Australian gov't is still in deficit. Huge administration and lots of expenses (every member of Aussie parliament who served 5yr or more is entitled to lifelong 12 airplane tickets to any destination in the world per year for him and his family. Also they can ask for 3 months payed expenses every year to go and study any industry which will benefit Australia). All in all, very bad economic judgement. 

Thu, 11/29/2012 - 00:52 | 3019271 Orly
Orly's picture

Doubtless you are correct.  Housing prices in Australia have also gotten way out-of-whack with normalcy and this will come back to haunt the Australia banks as defaults pile up from all those laid-off workers living in a $300,00 house.  Sound familiar?

Stevens at the RBA is going to be working overtime to bring interest rates in-line as the real estate decline gets out of hand.  It would not be shocking to see the RBA adopt a near-ZIRP within the next decade.  Next week, the RBA will announce interest rate cuts that may be 50 basis points instead of the expected 25 basis points.  These are the reasons the AUDUSD cross will weaken considerably over the next five years.

In regards to commodities, the billionaire miner herself said that workers are clearly over-paid, so why shouldn't she hire Indians and Chinese to do the dirty work for far less money?  I understand that she inherited the family money from iron ore and she should now be asking herself how that worked out for her.

Also, the mining companies have given leases and millions of bucks to any Tom, Dick and Harry with a geography degree to go out into the Outback to find the mother lode of rare-earth metals and anything else they can refine and put on a boat.  The problem there is, there are not nearly as many boats as there used to be.  Misallocation of resources is the biggest danger when the world is awash in easy money.

This does not end well for the Australians, I am afraid.


Thu, 11/29/2012 - 02:13 | 3019530 prains
prains's picture

the rugby is going to go in the shit for sure now.....wait a minute

Thu, 11/29/2012 - 04:10 | 3019652 saulysw
saulysw's picture

As an Australian living in Sydney, I fear you are right. Except the bit about $300K. Pretty hard to find a house that

Thu, 11/29/2012 - 06:00 | 3019739 awakening
awakening's picture

Not so bad atm as you venture further inland, so long as the locality chosen is not a major city (but even then some areas are starting to climb to those figures in my experience).

Wed, 11/28/2012 - 23:17 | 3019321 luckylogger
luckylogger's picture

Tyler-- Can you post the entire pdf or is that no longer possible?


Do NOT follow this link or you will be banned from the site!