The Gold Standard | The cover ‘curse’

‘Economist’ is at it again. In its latest issue dated November 26, 2011 it has displayed the Euro like a shooting star (or a meteor) that is crashing fast towards the earth. Is it time to close the Euro shorts?

I quickly browsed through a PowePoint file that I had put together in December 2007 for my class at the SP Jain Centre for Management in Singapore in December 2007. I managed to locate it.

Here are the interesting results. These were sourced from www.macro-man.blogspot.com. I think the blog still exists but it is not the same ‘macroman’ that is blogging.

(1) Dec. 2, 2006: Economist cover: ‘The falling dollar’

Next five weeks: EURUSD down 3.8%

(2) December 2004 (date not clearly visible) Economist Cover: ‘The disappearing dollar’

Next two months: EURUSD down by 5%

(3) Feb. 2004 (again, date not clearly visible) Economist Cover:  ‘Let the dollar drop’

Next three months: EURUSD drops by 6.5%

To be fair to them, the long-term trend was correct. The dollar slipped a long way by 2007. It is just that, in the short-term, the magazine cover simply confirms that all news must be in the price.

So, should one go long EURUSD now?


DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.