Thank you for subscribing to my posts. If you\u2019re not yet a paying subscriber, please consider becoming one. That\u2019ll allow you to DM me with questions and comments. I plan to move my posts behind a paywall in coming months. Subscribing now locks you in at a low rate. Thank you so much for your support and feedback!<\/p>\n
As a former currency strategist, I have more than my fair share of spectacularly wrong forecasts. One of these was a Goldman Sachs top trade for 2015. I recommended going long the Swedish Krona and to fund this long position by going short the Swiss Franc. My rationale was that the Swiss central bank had a cap on how much the Swiss Franc could strengthen, while the Swedish Krona was very undervalued. This sounded good on paper, but then reality intervened. On Jan. 15, 2015, I was presenting Goldman\u2019s FX outlook to local investors at the Hilton in Frankfurt. My presentation was supposed to go from 8:30 am to 9:15 am, but five minutes into my spiel there was huge commotion and the conference room emptied in the space of seconds. What was left over looked like a disaster movie. Overturned chairs, spilled cups of coffee and breakfast Danishes with bite marks on them. Switzerland\u2019s central bank had given up on its commitment to cap Swiss Franc strength and my top trade – within seconds – was down 80 percent. I got back to my hotel room to find a message from Lloyd Blankfein\u2019s office that he\u2019d like to talk to me. I spent the rest of the week zigzagging across Europe, convinced I was about to be fired. When I finally did talk to Lloyd, he wanted to be briefed on the Euro, which was falling sharply in anticipation of ECB quantitative easing (which is what had driven Switzerland\u2019s central bank to abandon its cap on the Franc). I didn\u2019t get fired and the next few months were some of the most exciting of my life.<\/p>\n
Forecasting currencies is tough, but forecasting GDP growth is just as treacherous. In today\u2019s post, I\u2019m going to kick the tires on the growth consensus for Europe. The IMF a few weeks ago projected<\/a> annual average growth of 0.8 percent this year for Germany, 0.9 percent for France, 0.5 percent for Italy and 0.8 percent for the UK. None of these numbers look that bad, but – when you look at the quarterly path for GDP they imply – growth is basically flatlining in all of them. This means it doesn\u2019t take much to tip them into recession and there\u2019s a high risk this shock does exactly that. <\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/04\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/a550b737-9587-4cdd-a0da-eea1f43bda8a_1200.jpeg\")
<\/a><\/p>\n