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John Taylor: "The Euro Is In A Death Struggle"
FX Concepts' John Taylor has not had a good year. A month ago, talking to Bloomberg he admitted that "What’s really frustrating is that we’re supposed to do well in a lousy world market,” said John Taylor, the founder of New York-based FX Concepts LLC, the world’s largest currency hedge fund. Taylor said in an Oct. 19 interview in London that he has lost 12 percent this year and assets under management fell to $5 billion from as much as $8 billion. "We’re doing very badly." Naturally that is to be expected: after his banner year last year, and doing what is logical in 2011, it is not surprising that he did not anticipate the level of central bank involvement, and the resulting surge of the EURUSD in the past month. Either way, he very bearish stance on the EUR will soon be vindicated. In a brand news interview with Bloomberg he says that the the Euro has entered a "death struggle" and that it is "really worse than I could have dreamed it being." Logically, to every seller there is a buyer. To wit: "What’s stupid is that the ECB is holding it up. Why are they holding up the euro? One of the problems, besides the ECB, is the banks are shrinking, and the banks are selling all of their offshore assets and bringing them back to Europe. That means in fact there is a persistent buyer of euros and it’s their own financial institutions." All this, and more in the full interview below with transcript.
Transcript:
Taylor on the outlook for the euro:
“It is absolutely incredible. It’s a death struggle for this currency. It is really worse than I could have dreamed it being. And unfortunately it has a bleak outlook ahead.”
On whether there will be a breakup of the euro:
“Probably. Some parts of the euro will have to be out. There is no way Greece or Portugal can stand it.”
On why the euro is not back down to $1.20 given its bleak outlook:
“What’s stupid is that the ECB is holding it up. Why are they holding up the euro? One of the problems, besides the ECB, is the banks are shrinking, and the banks are selling all of their offshore assets and bringing them back to Europe. That means in fact there is a persistent buyer of euros and it’s their own financial institutions.”
On why the euro spiked in October and went back down in November:
“It is really hard. For me the outlook is bleak, but there is always the hope that the bleaker it gets the more the governments are going to wake up and do something. It gets to be this bipolar situation. The worse it is, then by God something will happen. That is what happened yesterday. We had articles coming out over the weekend saying that Europe had 10 days to live. The next thing you know, boom, the euro is way up. If it is that bad, [Angela] Merkel has to wake up and do something.”
On the yen:
“The market does not know what the hell to do with Japan. Things are very quiet in Japan. The economy is not growing very much. We have gotten over the earthquake thing. Toyota made the comment yesterday they will have to move business offshore. It looks to me like the dollar yen is going to rally slightly. On the other hand, if Europe collapses, then money will move back into the yen because it is safer than Europe. Then people are scared of the United States because God knows what Bernanke is going to do. Of the four currencies, you’ve got Europe and England is very close. The U.S. has Bernanke to worry about. Japan is just sitting there. It’s like a rock. It is not growing or shrinking, it is just there. It is safe in a way.”
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And so is the dollar, the yen,... etc.
It's only paper ... Let's Print More.
Seriously this guy needs to wake up.
In an environment where currencies and fx rates are set by central banks, if you aren't on the Board then you don't know; you exist to be fleeced.
It's really not that difficult is it?
Buy gold, it just doesn't matter...
Tyler - Sounds like John Taylor has been reading your column and really making use of the good stuff.
FWIW - The problems with the dollar can all be fixed. The problems with the euro can not be fixed. The dollar will remain the world's reserve currency for a long time to come.
Yeah the problems with dollar can be fixed, 15 trillion USD is nothing to worry about. Dream on.
Uh oh. That 'Citizen of the World' guy will be here any minute to explain to us simpletons why the Dollar, is in fact, an economic perpetual motion machine...
Japan is quiet because it is Fukued.
http://ex-skf.blogspot.com/2011/11/radiation-in-japan-450000-bqkg-cesium...
Bbbbut...they can just fund their own debt with euros they lend themselves
All one has to understand, that is US'ian ones, is that whereas in all types of interventional affairs US acts dramatically, pre-emptively and with enormous overkill, Europe acts quietly, last minute and with minimum necessary intervention.
US is the control freak of the world. Europe is the Laissez Faire'ist of the world. It is logical, if you think about it for a second: old power versus young power psychology and culture.
European central banks buying back their own currencies is in so many ways similar to any corporation buying back its stocks and the US Fed buying US Treasuries, so there really isn't any cause for exceptional melodrama reactions to European behavior versus US behavior.
Even the simplest common man knows the truth - that productivity lies at the root of all well being and financial stability - and so condesending references to "the sheeple", as well as exagerated obsession with European financial games, should now, in the US and all US media including this alternative forum, give way to respectful co-operation to bring manufacturing and R&D and capital investments (rather than speculative paper) back in focus as remedies to regain some control of one's own immediate territory and thus destiny.
Boycott Chinese goods. Mail, phone and email US corporations and let them know that you will not buy their products and services until they repatriate jobs and profits and pay their taxes without any accounting scams. Boycott all big banks. Create local, sustainable and independent businesses and networks.
The US can be what its potential & promise was: free, independent in all affairs, and, a place of happiness and equality with no bailouts and entitlements for the uber rich. A man is only worth the hours he puts to good use for his family and community - so stop fawning over the "celeb" uber rich who without exception monopolized and leveraged their way to uber wealth (because that is the only way anyone gets uber wealth).
If US citizens recapture the idea and takes it to heart that no man is worth more than another and that a nation is built and sustained only be men who honor it and serve it - then, maybe the obsession with Europe can subside and the US can again rise - not as a leader of the world, but of itself.
Wordz to contemplate re: cooperation: $1.28 Towelz
The Euro and the Dollar both need to just roll over and die!!!
-John
http://johnu78.blogspot.com/2011/11/how-to-get-started-in-amateur-radio.html
I follow these guys http://twitter.com/SpadaCapital with some of my trader friends in Boston and they've generated 34% YTD return in 2011 trading futures options also on FX. They publish their trades real time and as I've back tested their performance in 2011, more than 90% of the trades are profitable. Weird that John Taylor can't make money, while these guys can.
Why don't you just pay for an ad, and save us all the pain...
Why do thes guys always look like dweebs?
You expect rock stars?
Black stockings and boots...très chic.
How do you expect a man to stay focused looking down that barrel ?
I was thinking the same thing. They must not want straight men to actually hear what she's saying - we'll be too busy thinking nasty thoughts...
Re the interviewer babe in the skirt and boots ... John Taylor often has better FX explanations, but sitting next to her, Taylor seemed a bit more 'gosh, I don't know' than usual ...
Personally I can see Kyle Bass on horseback puffing on a Marlboro Red and toting large caliber weaponry on his private ranch whilst guarding his 20 million nickels.
His nickle collection is in a Brinks vault in Dallas if I am not mistaken.
Regards,
Cooter
Which is kind of unnecessary when you think about it. Might as well keep it on the ranch in one giant locked container. The $1 million face-value nickels alone would weigh over 110 tons, and while there are cranes and large mining trucks that could technically life/carry that much, they cost much more than the $1 million.
i wonder if the fed's alchemist could petrify them ?
The alligator chomped...chart --- http://hedge.ly/vLbpZU
Taylor on the outlook for the euro:
“It is absolutely incredible. It’s a death struggle for this currency. It is really worse than I could have dreamed it being. And unfortunately it has a bleak outlook ahead.”
Say it ain't so Taylor, say it ain't so.
Awesome- the more they prop it up, the harder it will fall in the end- silly rabbits......
Fall against what? USDs, nah. Gold, YES!
Will ZH have a award ceremony this year and pass out gold plated statues for the most dramatic performance by a hedge fund owner?
This is my curious look.
His stylist did him dirty.
What about best comedic performance by a "world leader"? Tough call there.
1st prize: Hugh Hendry
2nd prize: Kyle Bass
3rd prize: John Taylor
No prize: Tepper, Tilson, Einhorn, Paulson, Ackman, et. al.
Why didn´t the EUR go to 1.20 again? Because the FED launched qe2 after the 2010 low...
It´s a fucking currency war.
If you want to know the value of any fiat, mesure it in gold.
Comparing the EUR to the USD is like comparing trash to garbage.
"is like comparing trash to garbage"
In the future, that will be a valuable skill around meal times. Only one of them implies bits of left over food.
Here are a few truths: 1. sovereigns are not corporations and should not be considered to benefit the same way 2. economies of scales only work until it doesn't i.e. no one else wants to be taken advantage of 3. more fiscal/monetary union in an era of deleveraging and imbalances only create bigger problems for sovereigns and states.
This market is making smart people look stupid and stupid people look smart.
long deutschmarks, bitchez...
The Euro is a currency and as a currencys it is doing exactly what a currencys is supposed to do and it is doing this very well.
There is no euro crisis. There is a debt crisis in some nations and reverting back to national currencys will not change the debt by a penny nor solve any crisis besides the impending USD loss of hegemony. So all this euro doom by Zerohedge, Bloomberg and Co is nothing but a constant stream of hot air , by now so powerfull you could serve the entire planets electricity needs for a decade with it.
"No Euro crisis"
You appear to have the wrong handle, mate. Or is "Baghdad Bob" already taken on ZH?
maybe they will get it sooner or later
By the way
Some NYSE trivia:
We have had a total of 61 consecutive trading days with a panic -1000 TICK or worse since Aug. 25
Within that streak, we have had 13 days with -1400 and 2 days with -1600
Look for yourself:
http://stockcharts.com/h-sc/ui?s=$TICK&p=D&yr=0&mn=6&dy=0&id=p37322057532
To top that off, the SPY is not even in bear market territory, yet the put/call keeps climbing:
http://stockcharts.com/c-sc/sc?s=$CPC&p=D&yr=2&mn=3&dy=0&i=p34830204053&a=217031142&r=4693
Last time this happened was in 1994 before the SPY launched on one if its biggest rallies ever.
And that rally started with the 10-yr. yield at near 6%...
So far, we have seen 2% - 3% 10-yr. yield for 3 freaking years in a row!
The pent up demand for fever speculation in stocks is primed like never before.
Now you're just being ridiculous.
He lives in the attic.
Just him and his computer.
We shove his food under the door...
No, he lives in the BASEMENT, in his pajamas, like every good troll!
"Robot, dear, would you like to come upstairs for dinner?"
"Not right now ma, I'm masturbating ... again!"
(Pan to a large flickering TV tuned to CNBC, with Steve LIESman once again kneejerkedly defending Bernanke and the Fed):
"Oh yeah, that's the stuff ... give it to me Steve ... fuck, that Ben is HOT! ... shit yeah, Larry, keep pumping that fuckin' stock market .... yeah, do it man! ... OH FUCK YEAH, QUANTITATIVE EASE THAT FUCKER! ... AHHHHH!!!! ...."
This is a bit too graphic to have been made up.
"Japan is just sitting there. It’s like a rock. It is not growing or shrinking, it is just there. It is safe in a way.”
Yeah, just sitting there glowing. Just like my new Toyota, glowing in the dark.
"Japan is just sitting there. It’s like a rock. It is not growing or shrinking, it is just there. It is safe in a way.”
Like one of those dormant volcano thingy-ma-jigs. Totally safe in a way.
Japan is perceived as "safe"? NOT for long:
http://video.cnbc.com/gallery/?video=1568273859
As I've said many times before, it's a race to the bottom and the US dollar will be the "winner" because it will be that last fiat currency seen as "safe." Of course, that's bad in a way in that it eliminates the perceived need of US politicians to stop the deficit spending when they can get effectively free money on credit.
Gives you more time to stock up on the essentials. Be thankful.
Kind of funny he left out gold as an option for a safe currency....it has been one for thousands of years...and still is.....but he likes paper I see....
Exactly....if you trade currencies this is the big one and I don't see how you make real money without trading gold (short or long).
There's old FX traders and bold FX traders but there will be no old, bold FX traders. AG/AU bitchez.
Why would anyone have an opinion about the currency market? Exchange rates are set by central banks. They are not reactions to anything.
"We have gotten over the earthquake thing".
HHHmmmmmmmm............
Precisely. What about that radiation thing?
And why wasn't there any significant earthquake damage (8.9+ !!) as the tsunami rolled through towns?
It's time to retire and start looking for some exotic beach, John. You're not doing God's work, that's the reason you have been the only one standing when shit has hit the fan this year. You need to learn how to flip and dip, you know.
Bull shit. Central banks have limited impact on fx rates. This guy lost money cause he's a fucking fundamentalist. Fuck fundamentalists. Long live hfts.
I like his glasses.
Is she hot or what? I'll give her a very favorable FX rate - who's the guy with glasses?
That's actually the very same thing i was thinking.
It's been a tough year for Hedge Funds and investors - I'm down 12% this year myself (my worst year ever)! I'm not worried though, as I know that in the long-run my Trend Following systems will get back on track. If the Euro does go to hell in the short to intermediate term we are going to have a heckuva a lot of good trading opportunities on the SHORT side. While shorting has its difficulties, it is the fastest way to make a buck!
But you've gotta be careful. To paraphrase Keynes: Central Bankers can manipulate markets longer than you can stay solvent!!
What must really be frustrating for Taylor's clients is that despite a string of losses that continue to be racked up, his people stick by their models and continue to bleed. You think at some point of market chaos they would realise the models don't hold and that it is time to roll up the sleeves and start doing some good old-fashioned trading.
"It's really hard ...." What a douche. He would rather talk his book than actually admit the models don't fit reality.
this just in, the japanese and the yen are being
irradiated. is that good for the currency markets
or bad? off shoring in the cards.
This reminds me of a recent CNBS article entitled "Bove: Why I was Wrong on Bank Stocks"
http://www.cnbc.com/id/45463910