mandag den 13. oktober 2008

Genuine beginnings begin within us, even when they are brought to our attention by external opportunities.

Genuine beginnings begin within us, even when they are brought to our attention by external opportunities.
William Bridges

This is one interesting morning for the financials markets - the main street and the politicians - I find it ironic that on the low-point of capitalisme we may have "deal" which will get us back to basic or at least back to non-crisis mode!

In my wording I believe and that's believe like going to Church this will bring policy-makers ahead of the curve rather than behind it - If they are smart enough to throw in more rate cuts we could have real nice Q4 on our hands.

Yes, you did read correctly! I am semi-bullish- the highest state in Steen Jakobsen's Nirvana training! I will however have to disappoint the ALL BULLISH crowd - the price for this Socialdemocratic Project is higher taxes, misallocation of capital, more regulation and a global recession, but twe saved the system.

The steps taken this week-end matches what I talked about all through last week: The all-in, no prisoners approach which says: LISTEN! We will do anything at any cost to get this going!

I was, as always, way too early in this call and even believing in it, but in the meantime the "best thing" to happen was that we moved the S&P500 into a cheap territory - or close to it - I like the fact that Jeremy Grantof GMO, a person who has been even more vocal than me was addressing the same issue in this week-end Barrons: Still Holding back

I found this nice link on Big Picture: 10 Bullish Chart, Indicators

I will comtemplate the true costs to this all-in plan from the week-end - but it is a time of great opportunities and risk, but for now our main views are:

  • Fixed Income: Curve steepning - Still more rate cuts are coming in Europe and the US. I personally think the last bubble to burst will be long-end US yields - lending US government at sub-7 is not a good long term deal. We are short 10y notes - and looking to put on steepners. We see Europe cutting 50-75 bps - USA 25-50 bps -considering High Yield funds - long -
  • Foreign Exchange: Long EURJPY - and we have strong fundamental case for reversal of EUR higher again - despite rate cuts - the US dollar bid came from liquidity raising in short-term market & US Investors dumping their EMG exposure - we are close to turning point for US dollar strength.
  • Commodities: Not involved- believe in 50% boom-bust cycle - close to initiating long positions
  • Cash: 80% down from cyclical high 85% - will deploy some more if US open holds what the futures promises. Target to get 25% exposure within this week playing strong Q4

Keep safe,


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