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

“Nobody believes the official spokesman... but everybody trusts an unidentified source.” Unknown

Dear Investors and friends,

Reporting live from the tall building on the right: The RSA building in down-town Mobile, AL.

I have received so many nice e-mails all of them voicing concerns for me and the decision to resign from Capinordic, but let me put you all to rest:'

1. I resigned as the match was not right - most of the job needed to be done out of Stockholm, something I initiated myself and believe in.
2. We did NOT lose money at all - actually 12/15 of our funds are beating benchmarks as we leave - and do remember this is LONG ONLY pretty much, so it would have been hard to lose as I joined March 1st ! Yes, maybe me being back in hedge fund world is as much a sign as it was me joining long only fund in March 2009 ;-)
3. Remember on my "hedge fund" allocation has been 80% cash - and with 20% unleveraged down-side plays (read: options) you lose money but not a lot!
4. I will upgrade this blog to not only being more frequent, but I will also make public all of the trading models we use - and keep the score - making the models more useable by you.
5. I am very happy to be restarting my hedge fund later this year - I look forward to running the business and I feel better than in a long, long, long time, so again thank you for all your thoughts - it has been nice to hear from you all.

Now on to the market: I briefly touched on the risk that a US Dollar crisis was the one thing we considered a macro risk: From my Blog May 13th, 2009:

"There is a growing concern among us, that a US Dollar crisis could be the one catalyst which get these markets moving again – we have had remarkable low volatilities considering Swine Flue, Geithner plans 1- through- 50, Non-Farm et al – A break-out in volatility is very likely – and we note that USD vs. JPY is again on the move – almost 102 JPY per USD in early April now @ 96.60 – and if 93.80-ish goes we could have a 5th wave being in action indicating below 87.00 JPY per USD."

Now it seems this risk is getting closer. I read research and news stories daily now on how the foreign "lenders" - read China, Japan, Russia and Middle East is getting frustrated with the policy of "printing money". (http://tinyurl.com/oa75sq)

Maybe the White House is about to learn about the key principle of physics: (Newtons third law:( http://tinyurl.com/f4yu3) : For every action, there is an equal and opposite reaction

The real risk for the US being that "speculators" gets the wind of the US Dollar weakness and we could have an attack similar to Soros attack on GBP.DEM in 1992 (by the way reading SOROS: The world most influential investor, by Robert Slater - READ IT!)

For most of 2009 I have been in the camp of long US Dollar based on the cyclical nature of this crisis; where the US clearly is out ahead - while Europe is only about to feel the real pain ......and combined with the fast improving current account I have - wrongly- been assuming the US dollar would see some strength as Europe slowed, but.... this potential US Dollar crisis is REALLY a major tell sign something could happen and I wil reass this risk over the next few days.

On the ground in the US - I am humbled by the amount of FOR SALE signs out - clearly there is desperate final move to getting "some money" out of a loss making situation - I also note the local newspaper main category under classified is: FORECLOSURES - and this even before the moratorium on foreclosures (moving from 90 days to 180 by Obama decreed) runs out! The mood is more "realistic" but the pain is there to see ......

Strategy wise I remain with my "breakout" strategy in S&P - below 880 close I will, again, go short, and I note how the market continues to fail above 920-00, this week could be critical.

Safe trading,

Steen

But all endings are also beginnings. We just don't know it at the time.

Dear Investors,

I do not want to make to much fuzz about it all, but it has now be announced where I will start March 1st, I am so sorry for the "secrecy" but due to stock market regulations it was needed (I was told).. but here we go: http://tinyurl.com/dfunyq

For the full press release go to: http://drop.io/j4kkrol# password: steen

This blog will recommence shortly - and I will continue to write this if for no one else then myself.....

It is strange to be off the market, not having my funds anymore, but being a trader I have some personal stakes in the market and right now true to form I am:

Short the EURUSD (from 1.2800 again)

Short EURJPY from around here...

Short S&P

Long Gold.

It is a pitty that while I am on garden leave finally Europe caves in and tanks.... -

Obama meanwhile is making mistake after mistake .... let me say again: Obama is all about hope, not substance...watching the Geithner "show" last week reminded me why I have a sincere and deep distrust in bureaucrats - they have never had a "REAL JOB", the have never lost money, and they all seem to cheat either on their wifes or on taxes..... Want me to name the "cheats" in International top jobs ?

No, it is time for Volcker to get into action if Obama needs saving - Geithner lost Fed support, East Europe and indirectly Scandinavian banks going into tail spin - It is winter Ladies and the few gents - in season and in the economic cycle... it is time to bring out the warm cloth and get ready for the Icewinter.

On that happy note - safe trading and be...careful out there..

Steen