onsdag den 9. januar 2008

Recession - stagflation... it's here now..

I always get a little disappointed when the market "joins" me in my market analysis, as it means I will have to find something new - the recession/stagflation is now main stream, meaning need for new paradigm; I will spend rest of week fine tuning this, my gut feeling ---> High inflation, better than expected growth but need to figure the model out.


House keeping:

Selling my Long DBA today - chart is showing Crude and other commodities reaching saturation point, and with recession around the corner there is bound to be repricing of GROWTH/Inflation assets like agri, gold and crude.

Sold Feb., Crude @ 96.95 with stop above 101.00 today...

Other positions:

Foreign Exchange:

Long AUD/CAD - AUD economy keeps steaming ahead - long resources, Asian investment inflow - Loonie look overprice - the Canadians wants it weaker... positive carry...

Long EUR/SEK - Long - market like it the other way, I think too much priced in on inflation and growth, I agree more with Riksbank, than with with market on future path ....

Put on decent size 1.4400 EUR put 2 month yesterday - - With French government calling for growth over inflation, and making weak US dollar G-7 issue.... is one thing, but the "cheap" J-curve of US goods should move EURUSD down again, add to this that its time for Europe to join re-coupling on weaker growth. The German Retails Sales this morning was SHOCKER - Germany is more than 15 pct of European consumption - Spain in freefall - Italy, being Italy, you add up the numbers!!!!!!

Fixed Income:

Strongest view: Long 116 Put in March - Have mean-reversion model indicating triple bottom in place in 10 y- notes. The weaker numbers, Ex. Treasury Sec. Summers calling for FISCAL STIMULUS, and central banks more than willing to create even more money make it a certainly along death and tax that they will INFLATE the economy with wrong central- and government actions. (Remember how Paulson behind the scene got BoA to buy into Countrywide - nice trade @ 18 now 5 offered - Government intervention at its best)


Short Crude - Feb

Best research qoute of the day: J. K Gailbraith: '.....that finance does not lend itself to innovation, full stop! What masquerades as innovation, he says, boils down nothing more than credit secured on some asset. You can repackage it, slice it horizontally or vertically, repackage, call it a different name, but end of the day, somebody owes money to somebody" - Well said and so right...

Good Luck,


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