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EURo In Past Bear Markets

1darkmatter1 Publicado 24 Mar  en #USD #EU #Euro #Macro #Us #Eurozone #Economics #Fed #Fxe #Uup
Summary
1) The past two major bear markets for the euro were significantly larger than the current one.
2) Currencies are prone to large overshoots.
3) The peak in monetary divergence is not known and even if it was, the incentive structure of interest rates favors a continued decline in the euro.
The first bear market is associated with the policy overshoot with Reagan's stimulative fiscal policy and Volcker's tight monetary policy.The euro's equivalent lost about 58% of its value.
The secon…
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4 Comentarios
driven avatar
driven 24 Mar

Thanks for the great info Alok. I have a few questions:
1) You seem to be quoting from somewhere, what are your sources?
2) I take it that the key message is that you/they expect the Euro to drop to $0.80 - any timeline for this?
3) This seems almost entirely about the US side to this, surely economic activity and policies in Europe are at least as important?

Thanks again.

1darkmatter1 avatar
1darkmatter1 25 Mar

Hey Uri, thanks for going through the article!
1) I work for the largest stock pitching journal(yes US based), so me and my team compile a few macro articles along with stock recos. Here I only see technical analysis blogs and therefore I post our team's 1-2 macro articles/day for those interested.

2) you can see it as early as next week. I think we will see that drop before the next quarter.
3) Yes, at the moment..its general consensus that Eurozone is weak and the economic activity and policies are nothing that we dont know and are being discussed and debated for a long time (cont)

1darkmatter1 avatar
1darkmatter1 25 Mar

(cont.) and its feasibility has long factored in the currency.

Would like to hear your views on this. Thanks

driven avatar
driven 25 Mar

1) Ok, that makes sense.
2) Wow $0.80 by next quarter (or even next week!) seems scary - as you say you think fundamentals are already priced in, you think this drop will be entirely due to market sentiment?
3) I get what you're saying, it just seems to me that if we see the Euro drop as precipitously as you suggest it will have to involve more than just the Fed's actions but rather something serious happening in Europe, either politically or economically.

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British EU Exit Could Hit GDP By 2.2%

1darkmatter1 Publicado 23 Mar  en #EU #Europe #Britian #Gdp #Macro
Britain leaving the European Union could result in a permanent loss of 2.2 percent of the country's gross domestic product by 2030, and the costs would not be offset solely by striking a free trade deal with its former partners.
The prospect of Brexit - Britain breaking away from Brussels - has moved up the political agenda in tandem with a surge in support for anti-EU party UK Independence Party (UKIP) in recent years.
The Conservative Party, which has long contained a wing sceptical about the …
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EURope opens lower with eyes on Greece

1darkmatter1 Publicado 23 Mar  en #EU #Euro #Europe #Eurozone #Greece #Germany
European equities opened lower on Monday as investors watch a meeting between the leaders of Greece and Germany, beginning a week that may prove decisive for Greece's future in the euro zone.
At last week's EU Summit, Greek PM Alexis Tsipras agreed to speed up his economic reform plans in order to unlock the long-withheld aid payments needed to keep his country afloat.
If a deal is not reached, Greece is likely to run out of cash by early next month.
The euro is -0.4% at $1.0776.
European stocks…
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