Back from Paris.. sorry for lack of updates...

Maybe I shud add that these updates are as live as when I m in my office in London or Copenhagen, unfortunately the next quarter takes me around the world once, but....

Leading into G-7 I got some feeling in Paris, or rather a confidence that the french feels they can get some sort of 'action' which could stop the weakning US dollar. The french do talk extensively, but this time there seem to be odd confidence I have not seen in a while. I know the media is busy saying this is non-event, but since then has the media been AHEAD of time?

I got strong feeling, which could be proven wrongly shortly, that we are inside 1-3 EURO from top of the EURUSD cross. I remember moving back to Europe in 2000 from the US and how EVERYONE was betting their house the EURO would go to zero even dissolving.......people forget quickly.

I will follow up with more detailed analysis this pm....

Otherwise straight to the positions..

FI: We are and haven been long 10y notes since the last blog...and this time size through Dec 110 calls...

FX: We are VERY long US call vs EURO and NOK - and obviously losing some money.....
We are also long JPY calls.....in less size but with nice 116.00 strike...

Equity: Initiated one unit short (of maximum 3).. yesterday in STOX50 (4.464)...
We are also short AMZN and will add some more single stocks 2day - basically I am going to short the idiot Cramers index of high risers.... !!!

Commodities: No present positions


Bank of America reporting was interesting in several ways;

1. The steep decline in investment banking..
2. The amount of loss provisions...
...but ...
3. Most interestingly, BoA is the cleanest RETAIL bet in the US. BoA is by far the biggest bank and with the biggest exposure to the US at large. I find that as KEY INDICATOR in that consumers are more hurt than present numbers indicate......

Add to this that SIV's and off-balance sheet vehicles seems to be coming back to the surface of the trouble water indicating ROUND 2 is about to start.

After having been EXTREMELY confident in August that this evolve into crisis, I am far more prudent this time. I think the odds are 60 vs 40 for a full blown crisis, but we need to break 1520-1525 in S&P ....

On the FX market, make no mistakes; the fact we brokes 115.80 yesterday made excellent medium term forecaster like Andrew Baptiste calls for bare mimumum of 111.61 low tested with real chance of 105.00.

My comment: Why not ? Despite some renewed disappointed in Japanese economic numbers, they JPY should based on their growth and future yield path have been much lower. I think 100.00 is fair value. JPY is quasi Yuan so follow G-7 for related follow through. In terms of positioning JPY carry is back in force although not in same size as in late July.

Performance MTD etc... up later - report running late today......

Steen

JPY is the turn upon us?

Consumer confidence coming back, Government upgraded consumption 1st time in 20 month, only...aber dabei being the exepcted lowering of CPI forecast from 0.5 to 0.1%... Seems agreement consumer key for future path...

5 yr Japanese Rates...



This is growing risk for JPY bears - add to this we have big shift in bias from SHORT JPY to neutral... I am beginning to believe in the JPY from here.. but I am merely farmers son from Denmark...

There is already major change in rate differentials. Below I plotted JPY 1yr fwd vs USD 1yr fwd....It also indicates top could be in place.. last few hours there has even been, wrongly, rumors that BOJ may hike earlier based on better outlook.

Note the big drop in the white line, which, non-tested, seems to lead the USDJPY relationship.

Finally, there is must read for people concerned about Stagflation:

Caroline Baum, Bloomberg: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ak6GESHlmjp0

Good luck,

Steen Jakobsen

Carry Trading - scared yet?

This is commitment of traders report for: (Long): (AUD+GBP)-(JPY+CHF)