fredag den 2. januar 2009

An optimist stays up to see the New Year in. A pessimist waits to make sure the old one leaves.

Dear Investors,

Finally back into the rhytme of work again - must say holidays can be too long these days! Stunning weather, the market is happy and it looks like everyone got the same scenario for 2009 in place - tough first half-half then "flying through" 2nd half...I am not committed yet, having been one of the biggest bears for years, I must remain focused on seeing/understanding the catalysts for 2009, first up being the incoming President and next weeks Unemployment rate.

We have de facto ZIP (Zero Interest Policy) with all the risk of deflation ........the numbers looks bleak. It's almost certain 2009 will be best worst economic year since the 1930s, this does not, however, secure 2009 as a bad equity year per se... the balance will be between looking into the future and finding earnings, tracktions for credit and the extremely low interest rates on US debt or looking into the abyss...

A few things stands out as being in "riot" mode:

  • Private Equity is "toast" - no hidding there. I really enjoy this piece by Michael Wolff from Vanity Fair:
  • US yield @ ZERO percent - while the CDS on US Debt risis and credit rating overall falls ...? Makes no sense, there will be price to be paid..I am sincerely concerned about continued talks of Overseas Foreign Banks selling of both agencies and treasuries overall (
  • EURO strength... with major Euro sceptic Vaclav Klaus taking the presidency from the ever self-promoting Sakozy there could major change in the "economic tunes" of far there seems to be this crazy ideas Europe is in a better place... not so.. EURUSD down to 1.000 will be one of the major moves this year..
  • Volatility will continue to be high.... I expect major ranges to remain in place for this year..I am still in process of looking at technical levels, but my friend Jesper gave me headstart by point to these amazing charts, which tells a story most counters DO NOT want to engage in: (please do yourself the honor of clicking on ALL the charts to get enlarged version..its simply....terrifying who little REAL RETURN stocks have given!)
  • Believe in Obama and a planned economy....I still do not understand why a capitlist society just rolls over and accepts general government intervention at large. Major banks in the US, UK, Denmark and elsewhere preaches Capitalisme and reacts with Socialisme. The talk of this working must stop and now... 2009 clearly will show how infrastructure projects DOES NOT solve the worlds issue, that we need serious Destruction of Capital for this game to continue..........

I will ignore what everyone else thinks.. and start on the basis of our economic models which show pain is coming fast and furious in the incoming data sets - this will lead to further policy responses of infrastructure and spending future generations money they dont have.

There will be EURO fatigque and it will come early on, as market finally sees how changing Sarkozy for Klaus is not constructive for EUR values - the data for Europe will show how dogmatic the ECB and its merry chairman Trichet has been and unemployment will hit 10% in Q2 2009.......Europe finally paying the full-price for the FULL STOP on consumption......

No one I know feels good about the future..... not even my always miserable friends, thats not a good sign for markets and even less so for the consumption and risk taking which needs to be reestablished.

End of the day when you take TRILLIONS aways in private credit and substitute it with public credit, then the smart guys/girls will recognize it for what it is..... crowding out of private unless you vote Socialist 2009 can become Annus Horribilies for us all.

Safe trading,


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