Why Marc Chandler Is Negative on the Euro

The video discusses the impact of political risks on European bond yields, particularly in the context of upcoming elections in the Netherlands, France, and Germany. It explores the dynamics between the euro and the US dollar, noting the euro's recent correction and the widening US-German spread. The undervaluation of the euro is examined using various market measures, including PPP and OECD metrics. The discussion concludes with the potential for currency wars and the importance of allowing the foreign exchange market to determine the dollar's value.

What is causing the peripheral yields in Europe to widen?

• Economic growth in Europe

• Political risks and uncertainty

• Decrease in US interest rates

• Strengthening of the US dollar

How can investors react to political risks in the eurozone without leaving the euro?

• By investing in the UK market

• By selling peripheral bonds and buying German bonds

• By selling US Treasuries

• By buying Italian bonds

According to the transcript, what is the current state of the euro's valuation?

• Overvalued by 10%

• Overvalued by 20-25%

• At fair value

• Undervalued by 20-25%

What is the best approach for the US regarding the dollar's value?

• Engage in a currency war

• Increase interest rates

• Let the foreign exchange market decide

• Set a fixed exchange rate

What could be a consequence of a currency war?

• A downward spiral of global capital flows

• Stable global capital flows

• Strengthening of the euro

• Increased global cooperation