Biggs Says Europe Election Result No Reason to Add to Short Bets
Barton Biggs, founder of the Traxis Partners LP hedge fund, said he isn’t adding to bearish equity bets in Europe after elections in France and Greece this weekend signal voters are seeking leaders who support more stimulus.
Biggs said on Bloomberg Television’s “In the Loop” with Betty Liu today that he continues to short German and French benchmark equity indexes, while being 70 percent net long on U.S. stocks. The region’s shared currency is “50/50 on surviving,” Biggs said.
Voters are “signaling to their politicians that they want more stimulus and less austerity,” Biggs, founder of Traxis Partners LP, said today in a telephone interview. “If they don’t get it, they’re going to vote in new leaders. That’s a big deal, and I happen to think stimulus combined with reforms is the way to go.”
The euro dropped to a more than three-month low versus the U.S. dollar after French Socialist Francois Hollande was elected president and Greek voters backed anti-bailout parties. Hollande, the first Socialist in 17 years to control Europe’s second-biggest economy, pledged to push for less austerity. His platform calls for policies German Chancellor Angela Merkel opposes, including increased spending and a delayed deficit- reduction effort.
Biggs said last month he has taken short positions on German and French measures, betting they will decline, because the political rhetoric and economic data from Europe signal a change of course and a deeper slump. He said today that while he will not increase his short positions on the two nations’ gauges, he remains bearish on the region.
The Euro Stoxx 50 climbed 1.6 percent to 2,283.09 today, while markets in France, Spain and Italy rallied.
Biggs raised bets on equities before the Standard & Poor’s 500 Index rallied this year. He said last month the measure may fall as much as 7 percent because of economic weakness in Europe. On March 20, he said his net-long position in stocks, a gauge of bullish versus bearish investments, was about 90 percent, up from 65 percent in January.
The U.S. economy is still strong and will avoid a double- dip recession while seeing a “soft patch” for the next month or two, Biggs said today during the television interview.
“The U.S. economy is still cranking along at 2.5 percent real gross domestic product growth,” he said. “That’s a good healthy level.”
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