tirsdag den 25. november 2008

When given a free option you either.....

Sell it or use it! This was one of the most fundamental lessons ever given to me by my former boss in Swiss Bank Corp, Mr. BJ..........(Mind you I have failed to exercise quit a few times in my life despite this insight!)

The US govenrment have now given the ABS market a free option : http://tinyurl.com/62gg2h

Buy these issues - if it fails(lose you money) just give it back to the US Government, or rather Fed - it also... the lessons goes.... implies quantitative easing!

Wow, easing in near depression environment? - What a surprise!!!!!! I must say I am tired, extremely tired of this game of mouse and cat.

You know, I know, this is one big Ponzi scheme - and the game right now is to figure out who can stay solvent the longest. The US government got some cards on their hands being able as always to "print themselves" out of the trouble.

The risk being this time, it's a global crisis, it's not only global it's also the biggest uphill struggle in history with debt remaining at all time high 340 pct of GDP... so now.. if moving ABS debt from one pocket to the other is big "feel good" factor then my bank advisor should just move my overdraft from one account to the other - at least one of them will improve!

Feel free to buy this rally, even feeel free to cheer on the new O-regime with their Dirigisme.

I for one is tired of being the "warning signal" for this market but please free me from talk of this market being cheap, having seen the low, and please stop producing "counting" documentation for why this market is now going up 1000 pct!

I do not want it! - I am 75% in cash,yes...... seventy-five percent C A S H ! - and if anything I am likely to increase this cash ratio as I see nothing but utter disrespect for the forces of the market and a total lack of willingness to understand all these "help programs"... and the junk yard they all lead to.

My good friend Drew Baptiste have given me his new outlook on stocks which sort of mimicks my amateur levels: (Below is his and mine combined - sorry Drew!)

S&P could move into broad 650.00 - 1050.00 range - for now 905.00/900.00 is upside to break (S&P now @ 848.00) - downside still got some attraction before downside established for now....720/680/650 our new medium targets and long-term now 2009 we will see S&P 500 in 500.

For the mighty EUR/USD I still, alone it seems, feel Europe not priced correctly - The US Dollar has horrible outlook but at least they have done something - and with new Prez O from January there will massive fiscal stimulus - meanwhile in Lalaland- sorry Euroland - Trichet is about to publicly acknowledge things have slowed!

All core Europe rates will go to ZERO, ZILST, NOTHING in 2009 - the sooner the better - implying massive yield steepning........ but the EURUSD will neeed to pay the price and for me 0.9500 EURUSD is more than likely - just not this week ;-)

Talking about something I do like from long side, I remain positive on selective corporate credit - in the refinancing period between now and middle of next year there will be so much dislocation that VALUE DEALS will materialise......it is time to start new VULTURE FUND in Corporate Credit space.

I also maintain overweight Japan - versus short Europe - The Japanese have been in "recesison" the last 20 years - they know what to do AND they got the saving surplus to deal with it.

It is also time to look at inflation linked products - whether selective REIT or direct in TIPS - this explosive creation of money will have inflationary impact but delayed as the REAL ECONOMY for now will be bigger drag, but rest assure where there is ACTION there will be REACTION (= inflation) down the line.....

We are:

Short EURUSD (still), short EURGBP @ .851932, long bunds @ 120.50, short S&P(still)m small long JPY.... and just taking opportunistic view on everything.

Safe trading,


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