Largest Forex hedge fund manager: sell German shares

A

ASusilovic

John Taylor, founder of FX Concepts LLC, the world’s biggest foreign-exchange hedge fund, forecast the euro region will enter a recession next year and the euro will weaken as the debt crisis worsens.

“The risk that Spain and Italy will get into trouble is going to cause the euro to get quite weak,” Taylor said today at the Hedge Funds New York conference hosted by Bloomberg Link. Investors should sell German stocks because efforts by governments to cut back spending will hurt the region’s economy next year, he said.

Selling Euros

Macro hedge funds have been selling the euro, commodities, emerging markets, and Standard & Poor’s 500 Index futures while buying the dollar and U.S. 10-year notes, Bank of America Corp. analyst Mary Ann Bartels said in a Nov. 29 report.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=acc36xSxaGg0&pos=6
 
that guy is quite possibly one of the best forecasters of currencies i have ever read. aptly named "the cycle guru", he does an excellent job of detailing cyclical changes in markets and is an avid historian to boot.

when he speaks, you really should listen, even if you don't agree.
 
I followed Taylor's week by week with each of his Market reports and he was bearish on Europe at 1.32 back in August and had to adjust his forecast, but was kind of reluctant to do so. He's not perfect. Hes also lagged on the completion of the move at 1.42 (and delayed any suggestion to be aggresively short) to where we are now.

The Euro trade for longer term shorts has been a painful short thus far for those short from 1.33 in August.

There is a major USD rally in progress that will cause a major episode of risk aversion and hes been subdued on that as well.
 
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