Boy, when you think you’ve seen the worst in utterly shameless, self serving tripe, someone manages to outdo it. Admittedly, it’s awfully hard to beat Steve Schwarzmann’s recent one-two punch of utter canard wrapped in tasteless hyperbole, that of Obama proposals that private equity kingpins pay taxes on what is really the fruits of their labor like other working stiffs was a ” a “war… like when Hitler invaded Poland in 1939.”
But no, Pimco’s Bill Gross bests Schwarzmann in making it clear to the great unwashed his unabashed belief that what is good for him is good, period. Schwarzmann is a tad less horrid by at least limiting his grandiose claims to his own industry. Gross is marginally less offensive to good taste (although a discussion of his body odor in an investment piece is certainly a novel wrinkle), but makes it up by insulting his audience’s intelligence, namely, by presenting himself as a staunch ally of the little guy. READ MORE
The often ridiculed (for some incomprehensible reason) John Taylor of FX Concepts is once again proven spot on with his EUR top call, which came when the European currency was at 1.33, at about the time when Goldman reinforced its long EURUSD call. A few weeks and 6% lower, here is Goldman explaining what they really meant (again). In a nutshell - despite the transitory economic boost driven by a plunging EUR export-boom is over, Goldman is hopeful the lingering effects will remain forever. And Goldman continues to be very bearish on the dollar, for one simple reason: "Our expectations for sizeable [sic] additional QE by the Fed will only add to the Dollar negative mix towards the end of the year." We are waiting for the Jackson Hole announcement with bated breath: rumor is the Chairman has mastered the alchemy process of converting linen to gold, and will commence printing the shiny metal shortly.
From Goldman's Thomas Stolper
Recent EUR Negatives
Since early August three main developments have coincided with the renewed decline in EUR/$: politics, rate differentials and risk sentiment.
On politics, there has been a raft of small news items, which taken together suggest the Euro-zone crisis this spring has not yet been forgotten and market sensitivities remain. Among the headlines that have emerged in recent weeks were the announcement of a general strike in Spain for late September and the later-denied speculation about a new stimulus package, also in Spain, which could have undermined fiscal consolidation efforts. Rumours about potentially large job cuts in Greece on the back of the austerity program highlighted that many people are yet to experience the fully impact of the tightening. And finally some Irish banks were perceived to be under increased pressure once again. READ MORE
