Jack Crooks is the founder and president of Black Swan Capital, a foreign exchange and currency market advisory firm. A seasoned financial advisor with nearly 20 years of investment experience, he uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. Mr. Crooks is the co-editor of the Black Swan Capital Currency Strategist and the free daily e-letter, Currency Currents. He also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, Mr. Crooks was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, he served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for...
Short-term negative sentiment could melt into a big resurgence in the greenback over a longer period, says Jack Crooks, who shares his preferred way to play it.
Well US dollar traders are going to be interested in hearing from this gentleman, Jack Crooks, of Black Swan Capital who has been following that and is going to tell us what he thinks is happening there over the next few months. So, Jack, talk about the US dollar. Where are we at now and through the end of 2012, where do you see it going?
Well, we’re at now at a critical point and a lot of people think with what’s going on with the central banks in the world and juicing liquidity in these markets and we have that risk-on trade back again that the dollar is in big trouble. I think the dollar here is going to stabilize here and surprise a lot of people going forward. We’ve seen this before. We’ve seen these QE events and we’ve seen these financing events out of Europe that have been very bad for the dollar, but what we see going on the global macro environments suggests to us that the dollar could get some money flow again into the end of the year once we get through this sentiment period that’s a perfect storm against the dollar near term.
Alright, so is that just an idea of once again the dollar is the worst or the best of the worst in terms of reserve these days?
You know that’s part of it, but I think ultimately once we get past the election. If we get a change in the election and a change in tax and regulatory policy you could see some major money flow moving into the US based on what I think are really cheap assets in the US. When you look at the real assets in the US; the property and some of the businesses in the US, that are involved in the new technology, nanotechnology, and this 3D printing and exciting things like this. If we get the right set of policies in here I think you could see a lot of money flow in FDI foreign direct investment wise and that’s always very good for a currency long-term.
Alright, and I know here at the expos you talk about macro global events. What do you think is the most important thing dollar traders need to be watching through the end of this year in terms of pricing there?
I think it’s China. I think we’ve got most of the news out of Europe and here. I don’t expect any surprises. I expect it generally weak and going forward, but China I think could be the big surprise. I think they could have a real negative growth surprise. Most people understand that China is weakening, but I don’t think people understand how weak it is and some of the political turmoil going on in China could be a real surprise for everybody and that would hit commodities, obviously, and hit this risk-on trade in a very big way.
Alright. If the US economy improves, though, will our increase in exporting or importing from China, will that help them get through that period?
That’s exactly right and that’s a big part of it. There’s this giant interconnectedness with the US, China, and Europe. If the US improves they still are the big dog. That’s definitely going to take some pressure off China in their export model.
Alright and how do you like to trade the US dollar? Is it against the euro? Against the Yen? What do you like to do there?
Primarily against the euro because that’s a liquid trade and it really is a reflection. You know the mirror image of the dollar. The euro seems to be driving everything in here and it’s almost like one big pack trade. Everybody is keying off what’s going on in Europe, so I think the euro is the way to play it.
Alright. Any price levels specifically that you like to look at right here?
Yeah. I mean we’ve hit that big 130 figure in the euro against the US dollar in here on this sentiment and I think it’s overdone. We came up from 120, so we’ve had about a $0.10 or $0.11 move almost in here. We saw a $0.10 move exactly the last time the European Central Bank came in with what’s called their long-term refinance operation, so again it’s almost like a deja vu here so we’re looking to get short the euro in here.