The Euro Is a Short
By Dennis Rhee, Managing Partner of Treesdale Partners and Portfolio Manager of the AdvisorShares Gartman Gold/Euro ETF (NYSE Arca: GEUR) and AdvisorShares Gartman Gold/Yen ETF (NYSE Arca: GYEN)
The ECB will meet on Thursday and it is broadly predicted that they will increase their stimulus by cutting the ECB deposit rate by 20 basis points and/or make changes by increasing the size and lengthening the duration of the existing asset purchase program. The current deposit rate is already negative 0.20%. They want to make it more negative in hope that banks, corporations and individuals will borrow money and do something economically productive with it. This act of desperation is unprecedented in recent memory. Even Japan’s overnight deposit rate never went negative during their decades of recession.
The Paris terrorist attacks are certainly not helping. Do you know anyone excited about planning a trip to France or Belgium these days? Chinese tourists are not. Chinese in fact have cut down consumption domestically and abroad in a significant way. Travel fears will pass but the timing is not good for a continent which relies so heavily on the tourism industry.
Goldman Sachs has recently published its top trade for 2016 which is to short the Euro.1
1Melin, Mark. “Top Trades For 2016 According To Goldman Sachs – ValueWalk.” ValueWalk. ValueWalk, 28 Nov. 2015. Web. 01 Dec. 2015.