Bloomberg Hedge Fund 2010 Conference: Volatility In 2011

John Taylor of FX Concepts is speaking at the Bloomberg 2010 Hedge Fund conference and he thinks that Europe will go into a recession, which will cause weakness in the Euro, and especially cause weakness in the PIIGS.
Europe will go into an austerity period. Taylor is saying that his models are sensing that, that the dollar will have a break from, being hit and the Euro will look worse.

His trade for 2011 is to sell the DAX, which investors can profit from by shorting the German ETF (NYSE: EWG).

Dean Curnutt of Macro Risk Advisors is saying that he shares the views with John Taylor on Europe. Curnutt believes the problems are so substantial there, and that Europe is not kicking the can down the road at all. He is saying that the ECB doesn't trust markets, which is a core part of the problem. He is also saying that the countries have solvency issues that need to be reckoned with. Dealing with a single currency is a problem.

Curnutt also says that longer dated risk premiums are steep, and he forecasts more volatility in the future. Curnutt saw opportunity in sovereign CDS in Euro countries even as Euro was rallying. This is because of dollar weakness due to QE2.

Paul Britton said there is a contraction of risk capital and that the natural transition should go to hedge funds. The world will be starved for risk capital and huge gyrations in market places will continue until transition to hedge funds takes place. 2011 will be a very volatile year. His trade for 2011 is that the VIX offers great value, which investors can play with the VIX ETF (NYSE: VXX).

Neil Chriss of Hutichin Capital is saying that his trade for 2011 is to sell puts on the S&P to buy puts on the euro stocks.