Einhorn bets on major currency collapse

AGA7d

Oct. 19, 2009, 12:17 p.m. EDT By Greg Morcroft

NEW YORK (MarketWatch) -- Greenlight Capital manager David Einhorn said Monday that his hedge fund firm is betting on the possibility of a major currency collapse and a surge in interest rates, citing ballooning government deficits in some of the world's most developed countries. Einhorn said Greenlight has been buying long-dated options on much higher interest rates in Japan and other developed regions, giving the firm the chance to make big profits from a jump in rates. The options, bought from major banks, are tied to interest rates four to five years out, Einhorn noted. In the case of Japan, rates have been very stable in that country for many years, so the options were relatively cheap. Einhorn said the "asymmetry" of that trade was interesting. If rates jump suddenly in Japan, Greenlight stands to make "multiples" on its positions, he added.
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I'd place the same bet - the low rates is not sustainable given the deficit forecast. Another big question is: how long will it take for the Fed start to unwind its balance sheet?

Diffusion

is this Einhorn the one predicted the collapse of Lehman?

AGA7d

Yes - he profited handsomely from the financial meltdown.

Diffusion

Hmmm, just read that Japan is the only developed country that sees its CDS inched higher.

nctree

Is Einhorn a democrat or republican?

superxy

Hmmm, just read that Japan is the only developed country that sees its CDS inched higher.
Diffusion 发表于 2009-10-19 13:25

What to buy in US?