fredag den 12. september 2008

The US - the model plan economy - Russia must be jealous

In times like this with changing themes day-by-day I wil try do one daily "quick-and-dirty" thought process - I think this and next month will determine a lot:

Overall news:

Market rallied strong ahead of rumor of Boa buying Lehman yesterday - confirms there are two or three layers of information. Someone knows ahead of time each and single time.

The BoA/Leh is doomed to fail - if done - like Countrywide. CEO Lewis of BoA no longer than a few month ago announced to the world he was never going to touch investment banking again - and now he buys one of the most aggressive investment banks around ? Even at the rumored 3 US Dollars BoA is useless fit, but....

It clearly shows the US economy is now: A: Driven by Fed not the government B: a plan economy which leaves Russia and Libya nothing behind. 600 bln. US dollar is now on the FED book soon the whole of the US banking industry will be "owned" by a bunch of bureaucrats in Washington. Chairman Franks is dangerous person - he is UTTERLY clueless!

Hence I have "officially" lowered my S&P target from the soft 1100 to 700. This will be volatile up-and-down as seen last couple of weeks but as long as water doesnt run up wall this is doomed project - The best analogy I can come up with is:

It's quantum physics - 20% of population claims they understand or can talk about it - but really less than 1% of understands it - Finance is the same. My CNBC indicator is running high at 8.5/10 people talking absolute BS about Fed, the bail-out and showing so little understanding of the issues that is scares me.

We need one final leg down with desperation - similar to the one we see in Denmark presently in the happy-go-lucky real estate sector - let me say one thing in closing this: Justice prevails over time and as such keep cash portion high - buy optionality - the only four certainties in life remains: death, tax, stupid politicians and high volatility.



S&P, DAX, Stoxx50: The CNBC crowd out in force all trying to find "break-up" in downtrends on banking, real estate and what do I know. I have one word: GRAVITY.
If anyone can spare me two minutes to explain how bailing out BS, LEH, and Freddie/Fannie (plus Washington Mutual this week-end) is good for the market - I will be all ears. It only
moves the risk from private sector to public sector - the risk and issues remains the same.

Again - call me when unsold homes is below 3 mio. - then we can start talking. Meanwhile my good friend Jesper sends me these two charts - makes you wonder does it not?
(Click on chart for bigger version)

Took of 40% of the downside plays yesterday around 1218 in S&P - reloading through selling cash @ 1252(Sep) now... tight stop.

Fixed Income

Waiting to set up long-term bearish trade - bottom line: US rates could go to 8% if not 10% when this market moves from fear to reality. Built-in is also major
change again to US dollar - We are setting up plays to see USD/CHF below 1.05 in 6 month time (one-touches).

Very long EDZ8 - Dec euro-dollar 9725... Fed is cutting soon - their balance sheet to getting to big for comfort......

(Click on chart for bigger version)

Still long JPY - increased long EURUSD exposure yesterday below 1.4000 - the close from tech-point of view relatively positive - at least we got known "if wrong" stop pegged.

50% almost done - plus on RSI there is small divergence - (lower price action but not lower RSI)... Long one week 1.4200


Also tech. close to bottom- OPEC move will have an impact...

Nice week-end


Med Venlig Hilsen Yours Sincerely Steen Jakobsen, Chief Investment Officer, Saxo Fund Management Saxo Bank A/S -London
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