FX Concepts' John Taylor Predicts A Euro Breakup, And Another Recession In The US

john taylor

Currency guru John Taylor is being interviewed at the Reuters 2011 Investment Outlook Summit.

Some key points:

  • Another recession is coming to the US.
  • The euro will break up, and Germany could leave the way by leaving the common currency.
  • Commodity currencies are still very appealing, including the Brazilian real, despite Brazil’s efforts to cool inflows.

What are his top trades for 2011?

  • The European situation is going to be very difficult this year, as we get to the Spanish issue as the year goes on. Spain will come up next year. “I’m on record as predicting the euro is going to 1 against the dollar.”
  • And what about poor Switzerland? Selling the euro and buying the Swiss Franc is also a good trade.
  • Commodity prices are going to come off, and that’s going to hurt Australia. That might be a significant hurt depending on their housing situation.

What’s Taylor most worried about?

  • How much is Bernanke going to do when things get negative? Will we have German-style hyperinflation in the US? It’s extremely remote, but it has to do with things that we don’t understand very well. There have been hyperinflations before, but never like a country in the US.

As for hard assets?

  • I bought an apartment in Manhattan, which seems insane. I’d love to own more gold.

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