torsdag den 11. december 2008

Tactical change - EURUSD in 1.5000? The Silly Detroit business plan....and finally...The idiots on CNBC US ....

Dear Investor,

This is my note from this morning for internal use:

It is simply frightening the logics behind this Detroit plan – please read this transcript from Nightly Business News – under PBS in the US…….there is no way Detroit can have
5-6 pct growth in sales, cut cost by 50% and then maintain solvency….. but…. Politicians more than willing to use 13-15 bln on this --- I remember when 10 bln. US Dollars was a lot of money.. no more…..

We are in process of changing our EURUSD call to 1.5000 by Q1 next year… is why:

1. Fed to issue debt? No governance.. must be junior-debt to Treasury? So why? Plus as friend point out: if they issue debt surely there will be CDS on it – meaning direct “credibility measurement of Fed”.. not something I think Bernanke would want.....

2. Treasury Czar (where do this idiotic term come from ?)… listen market: We will issue 1-2 trln. US dollar….. WHAT!!!!!!!

3. Credibility – as much as I think EUROPE going to break-down – I must say I think the US is close to being TOTALLY INSOLVENT……..

4. Yields – interest differentials very negative for US Dollar..

5. GMAC will face Chap. 11 it seems….

6. Money market funds yielding close to zero..and not taking in new money (as it dilutes present holders…)

7. Sentiment – I cannot shake of the feeling the US is only in 2nd inning of double header (Thanks E..)……..

8. Positioning – my prop. Indicators indicates building momentum on upside in EURUSD …most people “fading this move”….

Please, please listen to this clowns...... please please do..and realise that listening to CNBC is absolutely guaranteed to lose you money:(Thkx Matt for link)

Finally... this is from PBS... very interesting conclusion:
NBR's Darren Gersh Gives GM's Financial Plan A Test Drive

PAUL KANGAS: If GM gets the money, what happens then? And just what is this company worth now, anyway? Good questions. So we decided it was time to get some better answers about what's behind the numbers GM sent to Congress. While Washington debates a bailout, we sent Darren Gersh to get some expert input from outside the beltway.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: To test drive GM's financial plan, I went to Dartmouth's Tuck School of Business and asked finance Professor Anant Sundaram to scrub the numbers the auto makers gave Congress. All right professor, so here is GM's term paper. Let's start with what grade would you give it.

ANANT SUNDARAM, FINANCE PROFESSOR, TUCK SCHOOL OF BUSINESS: If this was a term paper in my class, I would have to give it unfortunately, a "C" plus.

GERSH: Ouch.

SUNDARAM: The reason is there is lack of clarity. There is lack of consistency and the data, the methods, the approaches, are just not transparent.

GERSH: So this is kind of an all nighter?

SUNDARAM: Absolutely. Never happens at the Tuck School of Business though, but I have to say it has the feel of an all-nighter that was pulled with a drop dead deadline.

GERSH: In that all-nighter GM apparently left out a cash flow analysis, the gold standard of finance. So Sundaram did some detective work to estimate GM's revenues based on a chart on page 21. You can see all those details on our website, but here's the result.

SUNDARAM: Making certain very favorable assumptions, assumptions favorable to GM, if I were to back out a revenue forecast, essentially tells me that GM is expected to have about $136 billion in revenues in 2009, but they expect these revenues to increase to something in the $160 to $165 billion range by the end of year 2012.

GERSH: OK, so you've got the revenues up there. Now how aggressive is that assumption? How fast do they have revenues growing and have they done that before?

SUNDARAM: This revenue growth implicitly assumes something like 6 to 7 percent in compounded annual growth rate in revenues, which is a little bit on the optimistic side. Actually, if you look at how their revenues have grown in the last five years, it's been less than 1/2 percent per year, in fact closer to a 1/3 of a percent, so we are talking about growth rates being about 15 to 20 times what they have been in the recent past.

GERSH: Sundaram points out GM plans to do that while cutting brands, employees and dealers, but if we assume the company hits that goal, we can put a value on GM. Sundaram cautions it's a rough estimate which compares GM to companies like Toyota and Honda. Bottom line: GM could be worth $50 billion to $80 billion after it has successfully restructured the company in 2012. And using some fancy math that we will spare you, Sundaram adjusts that figure back to get a value for GM today.

SUNDARAM: And essentially under some reasonable judgments one can make about discount rates and so forth for GM, suffice it to say that in today's value, this $50 to $80 billion by the year 2012 will probably be - we're talking about it being somewhere in between $32 billion to $50 billion range.

GERSH: But wait, GM owes banks and investors and its union $66 billion.

SUNDARAM: So if $66 billion were the claims against this company, then what we are saying is the value that is left over for equity holders is negative.

GERSH: Which is why GM is promising Congress it plans to negotiate a deal to cut its debt almost in half. So if you were the bank of Congress, the first amalgamated bank of Uncle Sam and this company comes to you and says, we want $12 to 18 billion? Would you give it to them?

SUNDARAM: I would hesitate to say yes, unless I'm convinced that they can get all the reductions, perhaps a little more than they're hoping for. If I were the car czar that they are thinking of putting in place, the issue that I'd be focused on night and day, 24/7, is the speed at which I can get the liability down to $34 billion or below, i.e. the negotiations with the lenders and labor.

GERSH: Consider those debt restructuring negotiations GM's real final exam, one it must ace to stay in business.

Darren Gersh, NIGHTLY BUSINESS REPORT, Hanover, New Hampshire.


We went long EURUSD @ 1.3098 (stop @ 1.3055 offered), Long Gold @ 816... (stop 793)...and we are short S&P cash @ 899.98... and VERY LONG puts in Stoxx50 and S&P.. into year-end....

I simply do not get this --- still @ 90% cash - with the 10% deployed negatively...

Safe trading,


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