A fanatic is one who can't change his mind and won't change the subject. Sir Winston Churchill (1874 - 1965)

Dear Investors,

I know a few of you got a "scare" seeing me go long EUR.USD and S&P yesterday ;-) but I will remind you I am doing this as a trader who needs to make money, not as medium term fund manager (That's why we got Puma Beta and Puma L-T).... The alpha model is flexible and recalibrates daily....)

There is a few themes growing on me:

1. Asia leads this rally - sign of new times in financial market ? I.e: Increased need to allocate relative to GDP rather than the MSCI? Impact is massive - as EMG Asia will outperform through this process, also by product the Chinese "anchoring" of currencies- Good or bad?
2. Financial system feels under pain again - the easy money of Q1 is gone - Obama and the central banks are turning the volume down on the "free lunch" money for the bank - and banks now trail in performance relative to overall market? What's next for banks to safe the day? Disclosures still behind the curve and the "true value" of commercial lending, mortgages, and speculative lending is far, far from real value.
3. Yields are high, too high for comfort for the FED - risk is they will try to engineer a flattening of the yield curve, and that the consumer will be left behind still unable to fund himself and his business. Unemployment going to remain high for a long, long time
4. Eastern Europe noise will continue. Business model no good - looks too much like the one taken in Dubai for my liking.

I will try to fine tune this macro theme list as my reading/research goes back to norm.....



Equity market

Today is Super Tuesday, the market presently have rhythm of down Monday', up Tuesday' a pattern I will follow taking my profit, if any, at the close of business tonights.... looking over the chart yesterday there is a few concerning issues for the Obama and Happy-go-lucky camp, which believes whatever happens is good.

The Above chart points out the obvious "divergence pattern" between the RSI and Price, this could be sign of summer top in place, but in classic scenario we would like to see another test on high, only to fail, and then turn down.




Data & macro news

News overnight is tempered but ZEW was strong - in the words of my friend Stephan Collet from CS, Zurich:

German ZEW expectations further recovered to a three-year high of 44.8 in June from 31.1 in May, firmer than the consensus forecast of 35.0.

The recovery in the ZEW expectation is strong and persistent, with the series rising and exceeding consensus forecasts for eight consecutive months.

Our work suggests that the path and magnitude of ZEW changesserve as a guide to the coming PMI and Ifo data, albeit an imperfect one. Today's strong ZEW reading supports our bullish EURUSD forecast of 1.43 in three months, with the better global environment continuing to trump more local concerns in Germany.

This is exactly was ECB do not want, but in life you do not always get what you want, and increasingly the game seems to be one of:

Taking things to the boundries plus VAT and then reverse - always respecting the mean-reversion with or without drift. Facts is neither the US or Europe wants a strong currency - there is no inflation to contain, only the game of competitive devaluations - and no one, but Zimbabwe, does this better than Obama and his new administation.

Foreign exchange...& Commodities...

Still long EURUSD......Commodities looks ugly again.....  RJI (Rogers Int. Com. Index- Total return) have made clear toppish pattern: http://stockcharts.com/charts/gallery.html?RJI

Puma macra MTD:  + 13 BPS (start June 14th, 2009)

Safe trading,

Steen Jakobsen