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.

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:

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

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 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,


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