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Smart Money? Rothschild Betting Against the Euro

Another straw in the wind? The Telegraph has looked at the books of RIT Capital Partners, the investment trust chaired by Lord Rothschild, and noticed that it is shorting the euro to the tune of £128 million—up sharply from its position earlier this year.

Sources close to RIT suggested that the position was not a dogmatic negative view on the euro as a currency, but rather a realistic approach on a currency that remains relatively weak.

It’s hard to say exactly just how telling this is. As a percentage of the fund’s total holdings, the position amounts to around 7%—not insignificant, but not an overwhelmingly large number either. But it’s certainly another vote of no confidence, much like EU leaders openly discussing contingency planning for the Euro’s demise.

Time is running out for European leaders to do something decisive before these kinds of views start becoming the consensus opinion.

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  • Alex Scipio

    It’s not ALREADY the consensus…?

  • Jay Teigh

    Oh, no! Now all of the conspiracy kooks are going to come out of the woodwork screeching incoherencies about “the Rothschilds,” Agenda 21, Bilderbergers, chemtrails, fluoride in water, vaccinations, etc. It’s be a communal caterwauling of ear-splitting dimensions.

  • Damir Marusic

    Alex Scipio, if it was already the consensus, you’d have a run on the currency, no?

  • Mick The Reactionary

    @Alex Scipio:

    “It’s not ALREADY the consensus…?”

    If it is, it must be among bloggers who invest their pennies in bank’s CD.

    Look at Google tool over 5 years.

    EUR declined 10% vs USD, 15% vs CAD, 26% vs CHF (Swiss).

    While CHF is rock solid, -10% vs USD in 5 years is not a big deal.

    One can say that USD is a weakling too — big shockah — it declined 20% vs CHF and 30% (!!!) vs JPY (Japan).

    I don’t know about RIT, but betting 7% of assets against EUR means very little.
    It may mean that they expect EUR to decline in the next 3 days and then will close position.

    Without this information this post is truly meaningless.

  • Eurydice

    The article says that RIT is short the euro. not “is shorting” the euro. It probably sounds like nitpicking, but what the smart money is thinking depends on the timing. Sometime between January and July, RIT decided to more than double its short euro position. It might have happened back in March when the Greek debt was restructured, or in May when the Greeks called for new elections and when Spain started bailing out its banks. If so, continuing to hold a short position does sound like a “realistic approach on a currency that remains relatively weak”. But if they decided to double down on July 31st, when the currency was trading at its lows, then that means something much more pessimistic.

  • Jacksonian Libertarian

    I have been saying all along that the Euro and EU are going to disintegrate just like the Soviet Union and Warsaw Pact. Just like the Soviet Union and Warsaw Pact were forced together by the Political Elite, so too has the Euro and EU be forced together. Neither of the groups ever obtained the support of the People, and so disintegration is inevitable. The same hopelessness that filled the communist world in the 80’s, now fills the welfare states of the EU. They have no Children, they have no future, they have no hope.

  • Mick The Reactionary

    @Jacksonian Libertarian:

    “The same hopelessness that filled the communist world in the 80’s, now fills the welfare states of the EU. ”

    Oh, it is just silly.

    While the message of your post about coming EU / EUR disintegration is perfectly arguable, the assertion is off the wall.

    Having spent extended periods in both place at respective times, the only common feature is in both cases lots of people are unhappy with existing setup.

    You may try European (West, Central and East) travel sometimes. It is fun and you may learn something.

  • Mark

    Ironically, there can be quite a big difference between being short the euro and being negative on the prospects of the EU. No doubt some who are short the euro believe that the EU will break apart. I would bet that a far higher percentage of the longer-term, larger money accounts who are short the euro believe that the EU’s best prospects come through a lower euro, which would relieve some pressure on the weak Club Med countries (and Ireland). It is no doubt what Draghi believes, too. It’s the most pain-free (in the sense that the pain is harder to discern than bail-out or default as the population in euro countries likely won’t notice their diminished purchasing power) way to provide stimulus.

  • Corlyss

    That clever “memo” to Merkel in Economist was just about as persuasive a contingency as I’ve ever heard of. Hot air has a short half-life when used to prop up a tottering mess like the euro crisis has become. The pols, the bankers, and the elites have been engaging in magical thinking of the sort depicted in Sidney Harris’ famous Miracle cartoon.

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