Labor day - the cheerleaders been busy...

Back in Copenhagen and over the week-end the G-10 financeminster met and the cheerleaders immediately concluded: This is good - RISK ON.....

However the only worthwhile comment I probably read over the week-end and this morning was from my old collegues in Saxo Bank Research David Karsbøl and Christian Blaabjerg who when asked why they saw market down 20-30% while other saw it up by the same amount replied: Because we are "Austrians" and they are Keynesian.

They could have added - and the investment banks are whatever it takes to paint the world bright and appealing.

The conclusion is correct.....but the mere exercise of trying to predict this market is utterly futile. Even the best "futurists" - only get 10% correct....so why keep trying ....

I do not prescribe to any school, partly due to my lack of intellect, partly because it really does not matter...... as a speculator.... the main ingredients is the amount of stomach pain you can take - and right now there is plenty of acid for the same......

The move off the high in S&P was classic divergence + high sentiment indicators, but even record high unemployment on Friday did not stop the plunge team from getting in line and buying into the close..... then this morning quarterbacking by the investment banks has taken the market yet higher..the incoming data keeps the momentum going on the bull side - and there is some light as seen in this "record of industrial production":
http://www.voxeu.org/index.php?q=node/3421

So... here we are: The Austrians vs the Keysian, the Investment bank vs. the Hedge Funds, the naive vs realistic ? :-)

Well I'm not taking side yet... our base scenario remains one off:

Down in September/October (Probably more likely in October than September due to the overfocus on how "baaaaaadddddd" September seasonal does - so expect range in September down in October.....

The Q4 overall should be positive: Looks like the exit from the stimulus has been postponed after the US forced other G-10 members to rein in the "urge" to normalise....and the Prez O needs to regain the political focus at home - what he does not need is a second leg of this crisis....

He has plenty on the plate with: Health care (note he is speaking this Wednesday to Congres, Aghanistan and Iran... http://tinyurl.com/nfckbm

So... the best "deal" right now is wait for further confirmation and accept the market is in "positive" spin if for nothing else due to lack of new information......

Strategy:

We remain short GBP into the Bank of England meeting this week...http://tinyurl.com/mlag6s

We are short USDJPY from today @ 93.01 - stop 93.55

Long Bunds on strong performance.....

Small short S&P and DAX - low conviction...... (Research shows day after Labor weak in 9 out 10 days with two positive closings preceding it...)

Short Crude.. still....

Short Gold... mean reversion..

Safe trading,

Steen