onsdag den 29. april 2009

It is disappointing to be short & long this market....

Click on chart to enlarge
Dear Investor,
Nothing much to add we are now into 6th or 7th week w. extremely tight range trading going on.....the GDP today was a disaster - but in the land of the Happy.. its no problem, but do spend 5 min. reading through this: http://www.ritholtz.com/blog/2009/04/gdp-down-61/
I am still recalibrating my model - but right now the mechanic part of my model is long, while the discretionaty part SCREAMS - selllllllllllllllllllllllllll......making me close to neutralising the positions.....
Bigger, broader macro piece tomorrow post the FED meeting...
Short EURUSD, Long EURSEK, Long Gold, Short S&P and DOW Futures........
Safe trading,

fredag den 24. april 2009

The war between unemployment and green shoots

Dear Investors,

I have to agree - it does not "feel" like the recession is getting worse anymore - and I have for some time talked about the "crisis fatique" being one key component of this rise in the stock market, but then again.... I'm just back from Dublin and even here it did not feel as bad as it did in October when I was there last, but.....on my way to the restaurant with my friend Tim I passed what I can only discribe as the biggest job queue line I have ever seen - so big in fact it made it to The Independent http://tinyurl.com/cvchz9 , so in the medium term what is more important - the lack of jobs or a "feeling" of feeling better?

Being the manic depressive person I am I will vouch for the job loss' being the key driver, but I have been wrong so many times before.

In the portfolio allocation I had great start to the week with the sell of the highs on Friday last, but this bull market looks strong and gaining strength - by Monday I may have to recalibrate my short-term view of this market.......failure to stay below 875.00 on the close will be disappointment for me....

The same goes for EURUSD from 1.2900 to 1.33 ish.. is big news - all based - again- and improving PMI around Europe.....no one seems to care that ECB is soooo behind the curve they soon will "lapsed" by the rest of the world - the financial implosion of Europe is getting closer - unemployment will rise DRAMATICALLY in Q3 and Q4 ... so ultimately maybe my partner Jesper Christiansen is right.... this market may have more "days" in it, than I am willing to admit... but the game plan remains the same...

Only change in portfolio is small long XAU/USD (gold) from 898.00....so.. short EURUSD, long EURSEK, short S&P, DOW Futures....cash: 85%...

Safe trading and nice week-end,


mandag den 20. april 2009

Buy land- they are not making it anymore - Mark Twain

Dear Investors,

Yes, I got quite a few reaction on the "solar thing" - including this in Financial Times Alphaville: 

Where Izabella does much better job than me to explain some of the mechanics of this.

I remain sceptical but have observed how more and more serious players at least incorporate this into their cyclical models. Whether this turn into a Heisenberg moment or not is to be seen, but in fund management, as long as it works no cares cares  - really...;-)

I am net short maximum position in stocks, I closed the short gold yesterday at 880ish as my 910 put ran out.....still short EURUSD, and long EURSEK and USDSEK (my favourite long since last week)

Sweden is an interesting example of a country which has chosen to announce that fighthing or keeping unemployment down is more important than anything else (Hasse Borg last week) - this makes for dangerous cocktail as they have entered DEFLATION, have weak currency - the policy choice of jobs means public sector will expand (its already massive), making economy less productive and crowding public capital for private capital almost 100 pc securing Sweden will have sub-par growth for a decade - hence the bearish SEK view. The tool box is simply empty.. .had Sweden been a company it would have been comtemplating Chapter 11 - which I guess is showned by Volvo and Saab fighthing for their lives.

Which bring me to a country who is in Chapter 11 considering bankruptcy: SPAIN - unemployment at 15% and could see 20% before long - Spain is in a viscious negative cycle and it will spill-over to rest of Europe - Am I the only noticing the ever increasing number of countries in DEFLATION land ?  Switzerland(confirmed), Spain(confirmed), Sweden close and Ireland must be close as well -  the implications on corporate earnings and future growth is NOT priced in this market.

Europe is the MOST mispriced asset market for: Earnings, equity values, growth, monetary policy and CDS for banks. Europe is "toast" - the Social-Capitalistic model is falling apart left-right and center..... making me underweight ALL european assets except fixed income ......(which is really same way) ... I remain with my 1.1000 in EURUSD...and I expect growing risk in EEC currencies.

With this cheerfull closing... I bet you safe trading,

Steen Jakobsen

fredag den 17. april 2009

This could be the BIGGEST selling point this year....

There are several indicators which makes the next 48 hrs the crucial infliction point for the stock market - many observers put tomorrow and Monday down as REVERSAL date.. due to different reasons...

1. End of tax year....
2. Solar activity.. yes you read correctly: http://carolan.org/2009/04/16/nicked/

3. ..and most important though... EVERYTHING the US government have done has had ZERO IMPACT on the US consumer, but it has made the same corrupt bankers who made the mess regain some of their money.. this is one big transfer of capital from tax payers to banks.... directly.......It will end in tears...

Otherwise my EURUSD finally working, and Gold likewise... I have been short small equity market and I will sell to maximum of mandate into the close today with a stop above 900 on a two days close... its time to take of the gloves and put my money where mouth is.... (SPX now 870.00)

Safe trading,


torsdag den 16. april 2009

Market getting ready for sell off?

Dear Investors,

Maintaining the same outlook for the market - we are in final path of this bear-market rally, and I am already short, awaiting confirmation top is in place. Concern would be if we broke 860.00 on two continues days.....but 850/55 should cap the S&P for now.

Earnings system has been bad for the market...and all my trading indicators is screaming SELL, SELL, SELL, and with Goldman done manipulating both their numbers and the market in order to get the right issue in place, it may be time to look down again.

This is from my CNBC guest hosting from Tuesday morning .....:


Safe trading,


torsdag den 9. april 2009

When people learn no tools of judgment and merely follow their hopes, the seeds of political manipulation are sown. Stephen Jay Gold

Dear Investor,

New research shows bond market predits better than anything else -that's bad news... but then again why let facts get in the way of hope? WSJ: A warning from the bond market. http://tinyurl.com/croo2x

Yesterday it was leaked that the stress test' of the major banks would be delayed and that the administation would batch them up and release them at the same time - now this leak from the New York Times: http://tinyurl.com/dc3h75

What I find amazing is that the administration really thinks it can play these types of games with us again and again.....reminds me of the qoute: You can fool most of the people most of the time.... It is clearly an adminstration running out of time whom is behind such moves... I am sitting with the cash book almost full and awaiting the "true nature" of this market - although today good news is everywhere is it not?

The one news item which does matter is the big improvement in US Trade deficit which at least justifies my very bullish view on the US dollar http://tinyurl.com/dyzlt7

The main reason all year for my bullishness has been the fact that the falling current account deficit (and for the non-economists, the C/A includes trade & another important item: invisibles (the overseas earnings, royalties - a favorite "tax item" which Obama will hit soon)) - a smaller US current account equals much better balance in the world "monetary flow" - as the size of positive and negative current accounts sums up to...... (drum rolls.... ZERO)....

This is the REAL REASON why China, Singapore, Vietnam, Eastern Europe, Europe, UK et al is having major issues - the US consumer (who was the current account deficit) is bankrupt - the next move will be IMPROVEMENT in current account for the US - and much, much small surpluses in the above countries, but mainly EMG risk, so.... the "strong number" today hides further unwinding of imbalances AND it substract from global growth/credit...and finally should make the US Dollar much much more expensive... but as always I am merely simple Danish farmer writing from a sunfilled seaside in Denmark..

Finally, today is FULL MOON, my learned friends all think this is significant indicator of peak or trough in the market, for this simple guy, though it merely tells me too many people have no conviction.......

Positions all the same - losing on the short equity, gaining on long USD...and short EUR,SEK......making ok money still on short gold...... cash reserves remains high....and the powder will not be used next few days.... I am contemplating - and being as slows as I am....it could be a while before I re-engineer my outlook....themes remains the same as yday's post..and targets.....with no predicitve powers are:

  • EURUSD in 1.1000
  • Gold in 700 (Gold is the crude of 2009)
  • Europe to have deflation before end of Q3
  • EPS will be maximum 35 USD this year...
  • Housing prices still 25-35% too high in most of Europe...
  • Steen Jakobsen will become positive once this year..

Safe trading,


onsdag den 8. april 2009

Wednesday Macro

Dear Investors,

Easter is coming - no change in positions....did small interview with Bloomberg this morning, although headline is slightly more "outragous" than my argument....and the interview stinks...but safes me from writing piece today.... http://tinyurl.com/dfqrow

Macro themes for me are now:

  1. Deflation is coming to Europe - not only Switzerland (check link: Ireland imposes emergency cuts http://tinyurl.com/dan4z5

  2. Unemployment and what it means for monetary policy, policy decisions, people quality of life, social unrest in not priced correctly.

  3. Obama - is the most overrated President in history - its all smokes and mirrors ...... (please check link: A rookie President (http://tinyurl.com/dczxyz)

  4. Banks in G-10 are insolvent - the more they claim not to be - the more they are...

  5. Time is up....for Eastern Europe - only matter of time.....

Safe trading,


tirsdag den 7. april 2009

There is no such thing as an underestimate of average intelligence. Henry Adams

This morning you will find yours truely deeply concerned - there is too much optimisme in the stock market now - let me give you a few pointers:

80% of all stocks in DOW trades above their 50 Moving Average... this has indicated crust in the past.

(Click on chart to enlarge)

and the Bull/Bear in same risk.....

The past week action must have been disappointing for the bulls:
  • The G-20 was MAJOR SUCCESS --- right ?
  • FASB - will help the banks--- right?
  • Breaking 825.00 was key -- right ?
  • Banks are back - right ?

On the other hand I note, as yesterday, that Switzerland going into DEFLATION is the worst news at all in this cycle - the mere idea that Europe/G-20 will face the Japanese disease is simply scary.

People forget DEFLATION will make credit even less available - as in an environment of DEFLATION the "real price" of lending goes up as deflation increases your debt burden- hence the low leverage of Japanese corporates.

Deflation is a tax on borrowing money, and the present model of VALUATION needs to be ditched as "free cash flow" analysis no longer works - this will make companies with debt even less worth and it will "contain" an expansion of successfull business' as their REAL COST of funding expansion is rising.

Even Greenspan & Trichet, the two people most in denial in this major crisis, realise if the end game becomes DEFLATION its over - and we will see 400 in S&P.... So... monitor Switzerland fight against deflation - if their policy tool becomes competitive devaluation it will merely export the problem......

All in all it the above indicators have made me slightly negative again, and I have initiated short S&P and DOW Futures.....as midday yesterday..... also still short EURUSD & Gold... while I took minor loss on the EURCHF..... I also reentered long EURSEK.....

Safe trading,


mandag den 6. april 2009

Meetings are indispensable when you don't want to do anything. Gailbraith

Back! Had one week on the sidelines from the economic epic centre of Marbella, Spain - and being an observer of the markets and Summits last week was probably the right way to play the markets.

Clearly there is a "crisis fatique" which somehow means anything and everything which comes out from central banks & policy makers makes the market goes higher. No problem with me - although I am "intellectually hurt" by the rise, it does however make for excellent time to construct and contemplate the next move in this market.

The noise factor hit maximum with the G-20 meeting last week - we have now had weeks upon weeks with hearings, plan, revised plans, and summits since low in early March.... basically one week equals 1 trl. US Dollar spend of your tax payer money, but do not worry, it will all work out fine........

I have very few positions (85% cash), the only one working being my short gold, which this morning is touching 875.00 - I must be the only bear on GOLD in the world, but this printing of money, and a total believe in FIAT economies will make government sell their stock of gold, likewise will international institutions be forced to do the same, but most importantly, my leading indicator on the gold, the Indian local market, is now NET EXPORTING gold for the first time in history...

I remain short EURUSD, I was even profitable for one day last week ;-), I simply do not buy that delaying the process of goin to QE or the like should be good for Europe. The Europe I know is falling apart as final demand is nowhere to be seen......in 2009 and in 2010....

Taking about falling apart, Switzerland!

Not only pressure due to the G-20 communique on tax havens, but also now sliding into DEFLATION, the very thing Trichet can not imagine (hence it will happen).... http://tinyurl.com/c77rk8 -

I bought some EURCHF this am, if for nothing else as hedge versus my negative outlook in everything else.. (long 1.5270 with stop 1.5150 (fwd points - 8))

The Swiss economic data simply terrifying making it a good old game of competitive devaluation ? Looking at this chart there is plenty of weakening possible: (Click on chart to enlarge)

Finally running through my daily charts I note, again, Credits improving, Sentiments bull/bear at very high (contrarian high even), 75% of all stocks above their 50 MA....but..... Why is freight rates continuing to drop? Mystery....... but enough from this old, grey, simple trader...cash is king.......still.... Safe trading,