• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Markets
  3. / Rates and Bonds

Trump Victory Means Investors Should Short the Euro

His victory is sure to embolden many anti-Europe, anti-establishment, anti-immigration politicians.
By MIKE NORMAN Nov 09, 2016 | 03:00 PM EST
Stocks quotes in this article: EUO, DRR, EUFX

President Trump. Wow.

What a surprising and shocking upset it was. Literally no one had this happening. The pundits were all saying it would be an early night. The polls and the prediction and "betting" markets all had Hillary winning handily. However, as the night wore on it became clearer and clearer that Trump's victory path was transforming from a "Hail Mary miracle" to a stunning reality.

Investors went into hysteria on this news, at one point dumping Dow futures in a frenzied panic and driving the index down by 800 points. It was a ridiculous display of childish hysteria. Call it a flash crash. And this morning? The Dow's up as of this writing. Yawn.

Like I always say, investors are mostly their own worst enemies because they allow themselves to be swayed by fear and emotion, almost always.

While Trump's victory was nothing short of a political revolution, it also represents a seismic shift for the markets and the economy. While it still may be a little too early to tell for sure, I am starting to believe that this could be the beginning of a paradigm shift. A paradigm shift over the very structure and composition of our economy and what the markets have deemed valuable and thus rewarded, and what the markets have eschewed, for the past 30 years if not longer.

Just consider some of Trump's economic proposals. He wants to cut taxes, spend $1 trillion on infrastructure repair and rebuilding. He's talked about renegotiating our trade deals and/or, imposing tariffs on China and Mexico. He's for taxing companies that are looking to close domestic factories and seeking to export jobs. He wants to repeal and replace Obamacare and drill more for domestic energy needs.

We don't know the specifics of these things yet or in what form they will be passed. However, these proposals are nothing short of radical and ambitious, to say the least. Furthermore, he can likely get them passed, because he will have a Republican controlled Congress to work with.

The spending and investment stuff is long overdue and if he can get some of that passed I can tell you that the economy is likely to scream. We'll see growth like we saw in the Reagan years, with GDP expanding at 5% or 7% annually. The stock market will be in a powerful bull market.

One thing that does concern me about Trump are his views on the debt. He sees the debt as most people do, which is to say, incorrectly. He has bought into the fallacy of the debt as some "ticking time bomb" that has to be brought down otherwise we'll bankrupt our children and grandchildren, etc. This is a false narrative as I have explained in the past and a dangerous one as well. If Trump decides to reduce or eliminate the debt, then all his great economic plans will be rendered ineffective. It will surely throw us into recession.

Luckily, however, this is not a worry for now, but maybe sometime near the end of the first quarter of 2017, when the debt ceiling has to be raised. That will be Trump's first true test of his handling of the economy.

As an aside, I can tell you one thing right now that I do think we can bet on in light of this political upheaval: we will see similar upheavals all throughout Europe in the coming year. There are many elections that are going to take place in the EU in at the end of this year or in 2017. There are Hungarian elections, Romanian elections, France's presidential election, Dutch parliamentary elections, U.K. local elections, German parliamentary elections, just to name a few.

Trump's victory is sure to embolden many anti-Europe, anti-establishment, anti-immigration, anti-globalist politicians and political candidates. What this likely means is that the euro will be facing a particularly rough year. The very future of Europe may be called into question, just as the powerful forces of the establishment here were nullified by Trump's victory.

The euro could be a great sale right now before these forces really get going. It's a position that is worth considering. Three ETFs you might want to consider looking into are the UltraShort Euro ETF (EUO) , the Double Short Euro Index ETF  (DRR) and the Short Euro ETF  (EUFX) . The first two are leveraged, so you get more bang for the buck. I would only buy them on days when they are down.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Mike Norman was short EURGBP but positions can change at any time.

TAGS: Currencies | Markets | Rates and Bonds | ETFs | Funds | Investing | Fixed income | Economy | Politics | FOREX | How-to | Risk Management | Stocks

More from Rates and Bonds

Overcoming Microsoft, S&P Levels Off, Bank of Canada Wisdom, Mucho Data on Tap

Stephen Guilfoyle
Jan 26, 2023 7:28 AM EST

Plus, a look at Wednesday's wishy-washy market action, the Treasury yield curve, Chevron's coming earnings and Lael Brainard's possible exit from the Fed.

EXCLUSIVE: Billionaire Investor Leon Cooperman

Real Money
Jan 19, 2023 5:15 PM EST

Watch this hour-long private event with the legendary investor as he shares his views and outlook on the market, the Fed, stocks, crypto and much more!

Market Hot Streak, Breakout or Rejection? Davos Risk, China, Earnings Parade

Stephen Guilfoyle
Jan 17, 2023 7:00 AM EST

CEO speak will be as important as anything the Fed Heads say this week or anything that spills out of the clown car in Davos.

The Battle Between What the Fed Wants to Do and What It Will Be Able to Do

Peter Tchir
Jan 10, 2023 9:26 AM EST

Bulls face a big hurdle, but there a few things helping their case.

Fed Rally Slayer, Powell's Speech, Charting the S&P, Trading Halliburton, SLB

Stephen Guilfoyle
Jan 10, 2023 7:05 AM EST

If Raphael Bostic's intent was to put the rally back in the box, then mission accomplished. If this is how the broader FOMC thinks, then uh-oh.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 03:06 PM EST BOB LANG

    LEAPS Webinar

    This week, I offered a free webinar session talkin...
  • 02:53 PM EST REAL MONEY

    LIVE EVENT: Chris Versace and "Sarge" Guilfoyle Share Their Stock Market Insights

    This Monday, Jan. 30, at 12 p.m., our very own exp...
  • 04:58 PM EST REAL MONEY

    The Latest AAP Podcast!

    Listen in as AAP Tackles Earnings, the Fed, Recess...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login