On the day for market that can only be described as a blow off top, two things that one would normally anticipate with the Dow above 21,000 and S&P at all time highs, are taking place: first, the departure of the Co-CEO of the world's largest hedge fund, Ray Dalio, as reported moments ago. Now, in a less high profile if just as unexpected departure, Goldman's chief FX strategist, Robin Brooks, the replacement to the infamous Thomas Stolper, has also announced he is leaving the company.
This is the email he just sent to clients:
Since I joined in May 2010, Goldman taught be to boil an issue down to its essence, write it up simply and … make a pretty picture that tells the story. That’s basically what I have done these last few years and I have loved every minute of it.
With my time here counting down to the last few days, I leave you with my favorite charts:
(i) what the last few years have taught us is that the trade-weighted Dollar (LHS chart, black line) follows the 2-year interest differential (LHS chart, blue line);
(ii) there is still plenty of upside for the 2-year differential, even if you have a more dovish view than our Fed f/c (middle chart); and
(iii) coming Dollar appreciation will arguably take the Dollar into overvalued territory, but given the outperformance of the US vis-à-vis others (RHS chart), US policy makers will have to accept this as part of a necessary tightening in financial conditions.
I am grateful for everything I have learned and hope to stay in touch.
Considering that this is the bank which over the past 17 years cut the human headcount on its cash equity trading desk from 600 to 2, one woners if Brooks will be replaced by a human or a machine? Stay tuned for the answer.