Where is the Euro going? by Jean Jacques Chenier

October 07, 2012

Over the last week the Euro rose to a two week high after the ECB kept interest rates on hold at 0.75% and U.S. jobless rate fell to under 8%.

It may be counter intuitive that the US Dollar drops on  better US  data.  However a better than anticipated US jobs report supported risk on sentiment and thus the Euro  on Friday as the country’s unemployment rate dropped to a near four-year low.

However it would need a string of much better employment reports to change a view that the Fed will be expanding its balance sheet by close to $1tn over the next year.

With investors still on risk-on/risk-off mode news of a Spain bail out will be a positive for the Euro although it amounts to the ECB printing money.

The next target for the Euro is 1.33 said Jean Jacques Chenier, AA Management founder.

Jean Jacques Chenier
AA Management Ltd.

Jean Jacques Chenier uncertain about uncertainty

July 29th, 2012: Fund Managers are blaming uncertainty for their poor results. The uncertainty consensus is flattering: it implies our age is uniquely on edge. There are few evidence of that with a VIX back to pre-2008 levels.And anyway the markets always climb a wall of worry. When the market players are convinced that the future is rosy, they price the market at such a level that it can not push ahead much and is due for a fall. Uncertainty is the foundation of financial markets, the source of risk sure, but also the mother of all opportunity.

Jean Jacques Chenier

Waiting for Greek elections

June 15th, 2012
Yesterday stock markets and the Euro rose on the rumors that secret  opinion polls where showing that a government favorable to the bailout package was likely to emerge after the June 17 election and that central banks were ready to intervene. In short, optimism prevailed.
However the situation is not so rosy: the Syriza party is not advocating Greexit which the Greek are opposed to but to renegotiate the bailout package which is not so frightening to voters.
On the other hand if the pro-bailout party wins you can expect some social turmoil.
In short whatever the result Monday should offer a good opportunity to short the Euro.

Jean Jacques Chenier
AA Management Ltd.
www.aambvi.com

Week end at the beach?    by Jean Jacques Chenier 

June 8, 2012

A bailout of Spanish banks is expected by some hedge fund managers to happen over the week end. In preparation they cover their short positions. Also expected are week numbers form China. Maybe weaker than expected.

If nothing happen in Spain, and with bad Chinese numbers expect a sharply down Monday for equities , and commodities with bonds higher.

If Spanish banks are rescued the "risk on" trade will be back but the rally should be seen as an opportunity to short. Indeed the fundamentals will not be changed and growth in Europe will remain sluggish.

Waiting for Bernanke by Jean Jacques Chenier

June 7 2012: Yesterday June 6 the stock markets all over the world, rose sharply despite the ECB holding rates. Investors are waiting for Bernanke Senate testimony for further easing clues. In fact yesterdays rally was more due to Hedge Funds covering shorts ahead of that appearance. If Bernanke does not send some signals of QE3, the trend should resume which means lower stock markets, higher US dollar, lower commodities and Higher US T-Bonds. Jean Jacques Chenier

Euro a sell anyway by Jean Jacques Chenier

Euro a sell anyway by Jean Jacques Chenier December 2nd, 2010.

Whatever the ECB decides the Euro is due for a fall. If it keeps tights the sovereign credit crisis will not abate.

However if the ECB decided to engage in some kind of QE like policy that will hurt the Euro too as it has hurt the dollar.

Either way the Euro is due for a fall.

Jean Jacques Chenier

Stock Market krach? by Jean Jacques Chenier

Is today's drop just the beginning of a more serious correction?
We think so. Over September the stock market rose on the assumption that bad was good. The worse the news were, the more hope that the Fed would launch QE2 and flood the world with money freshly printed and because nobody thinks that the money will percolate in the real economy much more than with QE1, all markets went up.
This kind of perverse logic can not go on forever and this new mini bubble will implode as bubble do.

Jean Jacques Chenier October 19, 2010