onsdag den 27. februar 2008

Bernanke: Futures in energy+ food indicates prices will come down? What are you talking about!!!!

Quick-and-dirty note on Bernanke...I found a lot of interesting stuff in this speech (and boy I am glad I read John Makin first this morning)..

Economic situation: Distinctly less favourable than last time... (note the wording)
Housing: ...will weigh on economic activity in coming quarters (Fed knows this takes several more quarter to turn around)
Consumer spending: ..slowed significantly in Q4 -rising import priced have caused eroding real income and wages (Major point!!!!)
Jobs:..slow job creation yet another potential (I.e not yet....being so..) drag on economy
Business: Display signs of being affected leading to less investment in IT and equipment (seen Google stock recently?)
Non-financials firms: strong and with good profit
Export grew 11% in H2 2007..
GDP forecast lower to 1.3-2.0 now.. and unemployment seen at 5.2/5.3... end of 2008
Risk remains to the downside on economy
PCE expected to moderate (WHAT!).. and here comes critical part:
..Energy and food will begin to flatten out as implied by futures (my Dear Ben !!! What are you talking about - now you are basin your forward looking inflation on futures where supply/demand and other VERY tech. things are impacting front vs. backend ? )
Finally... in closing.. Fed has responded AGGRESSIVELY.. his word to the events.

This is classic Ben talking about Japan in the 1990s - he is VERY concerned about deflation - rest assure that with this speech Ben is:

Going to give us at least 100 bps more of cuts - (he got the inflation under control via futures!)...
He will look for ways to mitigate impact on consumers and banks... by setting up PUBLIC FUND to take risk of banks books.. he is getting ready Ladies and the few Gents....

Nice how Fannie Mae + Freddie Mac ceilings lifted am I the only one remembering both Greenspan and Bernanke talking about the risk that those institutions balance sheet should become bigger than the Fed....?

Interesting how in trying times - market moves from libertarian view to what can only be called good old Social democratic crap.... Tax payers needs to bail out the banks, house owners who never should have had mortgage gets helped from state.....good thing I left the US a few years back my prediction is that soon the US tax payer will be paying more than the Danish one (65% presently) at least here they tell you they are Social democrats!!!!!


My friend Drew Baptiste calls it hit-and-run mode : I have been long EURUSD, with negative real rates and a overrated Professor running the show not good for US dollar.

The weak US dollar will force ECB to cut rates, but first we will see 1.52/1.5300..

Stock market at critical levels... 1388/90 then 1400/10 - looks tough to break for me - but I note EMG stock doing well (via EEM) so will give it time, long some beta exposure in stocks not happy about it.

Added short USDJPY today @ 106.35

Still in process of figuring out Fixed Income ......

Good luck out there..


Med Venlig Hilsen Yours Sincerely Steen Jakobsen, Chief Investment Officer, Saxo Fund Management Saxo Bank A/S -London
40 Bank Street, 26th Floor Canary WharfLondon E14 5DA

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