lørdag den 31. januar 2009

Back to basics....

Finally back from a busy travelling schedule ....... lots of ideas and thoughts... but for now I will once again do the easy thing and give you my interview done w. Bloomberg this week......

More here tomorrow/Monday.....


Safe trading,


torsdag den 22. januar 2009

Denial is the new black....

I'm in Paris, Zurich and Geneva and there is one common theme: Denial.... financial crisis does not happen here, its somebody elses problem.... shopping is good, no pain.......

Meanwhile in Washington Geithner is also in denial.... I am so sorry I "forgot" to pay tax for 5 years........

The outgoing President Bush also claims..... He did a few mistakes but he left the US a better and safer place...

I must be from the moon...... I have travelled pretty much the whole world in the last three month and the only two places where denial is prevalent is Paris & Geneva/Zurich....

Another theme I found again and again was the morale hazard many company CEOs have created for themselves..... annoucing 2008 was a great year, no incoming crisis in sight...and now they are forced to not only cut marketing spending, expansion plan but most importantly making serious lay-offs..... the world is in the "winter phase", globalisation works, and it's time to face reality and move away from everything being based on hope....... (ands the non-change Obama stands for)

Position wise.. I still keep 75% in cash/bonds.... 25% applied negatively.....net short dax, s&p and eurusd mainly.... 650-690 the goal......both from technical perspective but also from bottom up analysis.... ( 50 US Dollar expected earnings in the S&P ...13 P/E (recession lows) equals.....650....)

I look forward to the market moving to more realisme as it would indicate conditions should be improving.. for now my key indicator remains unemployment as long as the velocity of lay-offs are accelerating.. I wil remain short.......

Safe trading,


mandag den 19. januar 2009

It feels, smell & look like the week of the Lehman break down...

Short note as I am in Management meetings all day - the week-end packages have ZERO impact except crystalizing how insolvent the banks are and how they "underestimated" - another word for lying? the pressure of their credit facilitation.
In short: In smells, feel, and looks like the week that ended with Lehman bankruptcy....

Three banks involved in the bank bail-outs.. looks at their performance today!


(Click on chart for bigger version)


Danske Bank, Copenhagen

RBS - down 65% !!!!

Still same positions:

  • 75% long cash & short-term fixed income
  • 25% deployed negatively: S&P + Dax.......

Short EURUSD......

Safe trading


fredag den 16. januar 2009

If in doubt tell the truth - Mark Twain

BoA now more owned by Government than private shareholders - what is wrong in the State of Boa? http://tinyurl.com/9mvknv

Doesn't the American tax payer have the right to know where the money goes? Apperently not according to Fed! This is scary....scary... please spend six minutes on this: http://tinyurl.com/ytn8ru

C - as in Citigroup begins to look, smell and feel like LEH did - an arrogant management, a business model which has never worked, a board full of incompetence - and now they release their numbers today - look at the chart---- http://tinyurl.com/693pla

(Click on chart for larger version)

My friend Jesper Christiansen (http://mrtitrading.blogspot.com/) and I spend some time this morning over coffee trying for once to be constructive - at least on the crisis ;-)...

Let us put the overall economy and investment cycle into a perspective:

(Click on chart for larger version)

We are in the "Winter" mode of the Kondradratiev cycle(http://tinyurl.com/2xxsj2)

You know I am no believer in any specific model, but this model shows a few key things:

1. Where we are in the business cycle
2. How we will find bottom in economy
3. The impact on policies

We are moving into: plant closings, unemployment, debt defaults, beggar thy neighbor, competitive devaluations - in other words:

The "fundamental" problem for the world is that the consumer is INSOLVENT (there is no pend up demand with negative saving rates and a massive debt mountain to service) - to remedy this issue we need to see serious write-down of debt........making the debt mountain smaller.

How do we achieve this?

Firstly, the investors owning the debt needs to take a loss - there is a reason why they have been paid a high interest (yes, this includes the "articially safe havens" of mortgage bond as well) and hereby taking away the uncertainty which end of the day is probably the worst negative factor on every single decision big and small.

Secondly, the total debt burden needs to reduced - someone has to pay - and it should not be the future generations as every single "recovery plan" dictates right now

Thirdly, we need to stop Government & Policy makers from spending money on unproductive projects like keeping Detroit a live, paving roads, subsidising this and that - remember one US Dollar spend in public regime goes from one being spend in private.

Fourthly, the resolution to Detroit and similar problems is to make it go into Chap. 7 or 11 - then buy out the best most productive component reapply them somewhere else - guarantee mimimum social standards and then critically give 3-5 year tax reduction to start-ups, make funding capital available for new business, short-term subsidise redeployment of laid-off works... this way you support the actual tax payers directly through security, potential job growth...and not through roads, and keeping jobs which ultimately will disappear.

Evolutions dictates that "destruction of capital" will happen for us to see a new better world, rest assure I am VERY positive on long-term growth, employment and market returns, but first the world needs to own up to the fact we are in the "Winter phase" ... then we need to apply our IC, interlectual capital, to solve this crisis.

The beauty being the very reason we survive is our always positive outlook, and I am 100 pct certain if "people" & investors where told the REAL TRUTH, i.e. how bad things are - they would adjust accordingly and we would be out of this crisis very quickly, but unfortunately we need to take serious detour due to policy makers and politicians which must rank the most incompetent in history....


We have restarted our negative equity market outlook by bying some out-the-money DAX puts on S&P equivalent rate of 850.00. I feel too nakes with no downside on, but this is small position and I stand by my overall view that into Obama Inaugaration market will be volatile both ways....

We are still short EURUSD - we saw 1.3020 low post ECB meeting - Trichet talks rubbish - as per usual, EUR rates is going to zero.. he knows, I know, and you should certainly know....

I am slightly concerned about fixed income (Europe) - Bunds - the high yesterday had both divergence and "spinning top" making for excellent risk reward selling here @ 125.90 with stop above high yesterday plus margin of error. (High: 126.53 - suggest stop 126.70)

Otherwise we are sticking to low exposure due to upcoming event risk...............

Safe trading,

Nice weekend


torsdag den 15. januar 2009

Hope is gone and fear is in....

Seems "fear" theme is back in fashion - Deutsche Bank(http://tinyurl.com/6vojqu) got the bulls nervous yesterday - and this morning I keep getting rumours of Boa and C getting "nationalised" this week-end (Listen: they are already de facto exactly that).... nice lead-up to Obama's Inaugaration next week.

ECB's Trichet - I have to laugh - he sits and it seems honestly says: Inflation will be rising again this year? Mr. Trichet - which planet are you from?

  1. Greece, Spain and Portugal in such dire straits its getting their currency debt downgraded
  2. Italy is mere days away from same....
  3. Eastern European Pre-ins countries collapsing day-by-day (Take a look at banks with exposure to Baltic region ---- ouch!)
  4. Export growth ...which was Asia only in the last three years - has collapsed --- China calls on growth all of the sudden in line with our Outragous predictions ttp://tinyurl.com/84mv7x
  5. PMI leading indicators tells us unemployment will reach 10% minimum this year..

Keep it coming Trichet --- it will only make EURUSD go quicker to 0.9500.....!!!

I maintain very defensive stance - feels naked with no equity short exposure (S&P @ 820.00) - but promised myself that 910-00 could happen........only short EUR/USD from here......

I am doing a few speeches next few weeks.. if anyone want to have a look at it feel to download from here: http://drop.io/z8p0m5v# (password: tosser)

Watch this week-end - it feels like the week ahead of Lehman.....

Safe trading,


PS: A few people been asking to our Macro Performance so here goes:

2008: +700 bps

2009 YTD: + 250 bps

onsdag den 14. januar 2009

Tactical note: Now from short back to Neutral

We have enjoyed a nice run from 935-00 to 835-00 (short the S&P) and hence we have taking almost all our positions of today except short EURUSD……we took off: Short gold, short eurchf, long bunds, short S&P and Stoxx50.. .

It is as much “money management” as a believe in that the market could bounce from here – but clearly the market is now closer aligned to us on the present themes:

  1. China growth an issue – export/import numbers have now confirmed our view…•

  2. Europe in trouble on credit (Portugal, Greece and Spain --- downgrades and potential downgrades)

  3. Obama premium should not exist --- (our new catch line on this being: The Obama plan is like jump starting a car UP a hill!)……

  4. January effect is a concept, and nothing more than a concept..

Upcoming events which we need to gauge before recomminting…

  1. TARP – 2nd installment – by asking President Bush to ask for the money, Obama initiated a 15 days period inside which Congress needs to approve. Right now it looks there is Sunday vote(coming Sunday) but he is already facing rebellion from leading Democrats! (Click on Rebellion for link) http://tinyurl.com/a6ntaq

  2. ECB announcement – despite ECB should go 50-75 bps tomorrow and at next meeting – they will go 25-50 bps, Pause, cut, Pause, cut, Pause… Trichet loves to hear himself talk, but the game is changing and fast.

  3. Redemptions – January 15th widely rumoured to be “magic date” •

  4. My friend and S&P guru Drew Baptiste of Morgan Stanley tells me 810/820 and 835 ish…. First tactical target(From Drew’s email) S&P Micro to Near Term (871.79 CASH 862.50 SPH9) Off the 942.00 rebound high (January 6th = current 2009 high), SPH9 is declining in an “impulsive fashion” to date (a still unfolding five-wave sequence). Yesterday and again today in the Globex session, SPH9 traded up to proposed micro term resistance at 875+-2 before turning down. The next level to further expose the downside is 855+-2 (5 week low), a break of which exposes a minor cluster at 838.50 / 836.00, ahead of what T.A.G. views as a near term ACTION / REACTION area at 820 / 810. T.A.G. will reassess the current Near Term Bear Mode above 877 / 880.

Having a nice profit in January drives this move, but post-analysis as seen above seems to support taking one or two days for thoughts.


Cash @ 95% - short EURUSD

Safe trading,

mandag den 12. januar 2009

Monday morning quarterbacking...

We saw horrible 7.2% unemployment, and market thought it was better than expected! Tell that to the 525.000 who yet again lost their jobs last month, please!

Fact is and remains, every single month for a long, long time there will be net loss of jobs and the impact on our mood, consumption, sex life and other important stuff has not even started to be realised by the always happy Wall Street crowd.

Each morning I download on my Ipod with:NBC Nightly news http://tinyurl.com/4skdwu, PBS Nightreport http://tinyurl.com/76qgop, ABC, Bloomberg, CNBC etc business podcasts and listen to them in my car......and every single morning I get the same message: Stimulus will work, they(the idiots in Congress, Fed and White House) are doing the right thing, this is all or nothing, corporate balancesheets are solid, market will not go down, January effect etc etc. --- all of it based on H.O.P.E none of it based on sound fundamementals analysis, opportunity costs or even funding costs.

From the perspective of being a simple hedge fund manager I always have to look at opportunity cost - could I be placed differently, what are my competition making......and hence last week decreased our cash (to 75%) in order to go short the market - something we did hesitantly as we felt market strongly believes in Obama and his merry men.

Being the cynic I am: Tell me, if all this Obama Circus was going to be good why is the market then down YTD ? Why did we never ever have a Election rally? Obama is a salesman, and where I come from we do not like salespeople - they talk too much and they crowd-you-out in the B.S they think they need to sell you on......(often not even understanding what they are selling in the process.....)

Furthermore lets talk about his plan ! He wants to spend 700-1.000 bln. US Dollar (this is US tax payers money) on infrastructure, alternative energy- but where is the solution for Medicare and Social Security? Actuarians on Medicare (http://tinyurl.com/7d3lzz) said last week that they would run out of money inside seven years - and this was before all the "depressions" the good people of the US labor market will get over the next six month.

I hate to be negative, but in a world so full of hope, and little realisme I want to warn of the clear and present danger of misinterpreting government money with good money. This will NOT work - the state can not allocate efficiently, neither can they increase productivity or intellectual capital (a contradiction in terms for public sector)........

Tactically we, as you know, we went short last week - we maintain this - we did however today take profit in Gold @ 824.80 from short @ 854.00 - we took profit on our 125.00 calls ( 77 ticks) vs 25 paid - and we took off short EURCHF & EURJPY ---- we maintain very large exposure to both short stock market and long JPY and USD... vs. EUR..... in options (striked 89.00 and 1.2800)......

Going into ECB I think IMF's stern warning this morning (http://tinyurl.com/983aoz) plus S&P talk of Spain downgrade on currency debt talks for (http://tinyurl.com/8wjgxt) will mean:

  1. Italy will be downgraded next
  2. ECB to realise this is NO game and what is needed is serious moves on monetary policy ....... now is the time for Europe to forget they do not have common Treasury and come up with serious MONETARY EASING in the face of collapsing demand.....here, there and everywhere....

    Safe trading - I hope for sake of most people I am wrong...


fredag den 9. januar 2009

Tactical ALERT on Friday Non-farm

I am adjusting down my call for non-farm today - it will be worse than even the whisper numbers as a friend of mine been saying for most of the week, and finally it dawned on me: Obama been talking as if he knew todays numbers for a while - and its likely he has seen them otherwise why say:

  • "It appeared those critics were the focus of Obama’s speech, as he said, “If nothing is done this recession could linger for years. The unemployment rate could reach double digits.” (source:http://www.freep.com/article/20090108/NEWS15/90108054)
  • Some cyclical work we do shows MAJOR infliction point for todays Friday...

Hence we suggest extreme caution into this market today - and we will not be surprised that the worst is confirmed - if wrong.....then it egg on my face..

We are:

Short EURUSD, short S&P, short Stoxx50, long bunds, long USD p jpy c.......short Gold.


tirsdag den 6. januar 2009

Once I make up my mind, I'm full of indecision. Oscar Lavant

Sorry dear readers been trying to start on this blog like 50 times this week alone, but I am "sucked" out of anything intelligent to say it in this January madness, but a few things:

  • Tactical change in S&P 500. We came into this year as everyone else pretty bullish buying the Obama effect - being scared of all the money the US will spend et al, but our technical model indicated strong risk and hence we change the risk to NET SHORT S&P via 870 put in Feb @ 27 $ & net long 850 March @ 33 with spot reference 935-00.

Click on chart to get bigger version

  • Tactical change in EUR/USD. Similar argument purely short-term on tech. picture with 1.3800 now top formation and stop loss level....and with massive improvement in terms of trade and EURO soon going into negative spin....I feel short EUR worth it while from here (@ 1.3710) .... short cash and long some 3week options EUR p)

My dominant "theme" is sceptisme to all the bullish interpretations being delivered to me from all sources - if Obama and his plan was this good why is S&P then unchanged on the first 5 days of trading ? Do we not pride ourselves of being ahead of the curve? Or rather ahead of the positive thinking?

Unemployment will play big this year - not as in tomorrrow numbers but it will main theme for: People losing their jobs, politicians, police (social unrest?), central bankers (who shouldt keep their jobs) and media. Market is still too complacent on where we go from here, but more on this tomorrow.......

A sick - yes this time for real Jakobsen signs off...


fredag den 2. januar 2009

An optimist stays up to see the New Year in. A pessimist waits to make sure the old one leaves.

Dear Investors,

Finally back into the rhytme of work again - must say holidays can be too long these days! Stunning weather, the market is happy and it looks like everyone got the same scenario for 2009 in place - tough first half-half then "flying through" 2nd half...I am not committed yet, having been one of the biggest bears for years, I must remain focused on seeing/understanding the catalysts for 2009, first up being the incoming President and next weeks Unemployment rate.

We have de facto ZIP (Zero Interest Policy) with all the risk of deflation ........the numbers looks bleak. It's almost certain 2009 will be best worst economic year since the 1930s, this does not, however, secure 2009 as a bad equity year per se... the balance will be between looking into the future and finding earnings, tracktions for credit and the extremely low interest rates on US debt or looking into the abyss...

A few things stands out as being in "riot" mode:

  • Private Equity is "toast" - no hidding there. I really enjoy this piece by Michael Wolff from Vanity Fair:http://www.vanityfair.com/politics/features/2009/02/wolff200902
  • US yield @ ZERO percent - while the CDS on US Debt risis and credit rating overall falls ...? Makes no sense, there will be price to be paid..I am sincerely concerned about continued talks of Overseas Foreign Banks selling of both agencies and treasuries overall ( http://seekingalpha.com/article/110873-who-s-piloting-u-s-treasury-bonds-flight-to-safety)
  • EURO strength... with major Euro sceptic Vaclav Klaus taking the presidency from the ever self-promoting Sakozy there could major change in the "economic tunes" of Europe....so far there seems to be this crazy ideas Europe is in a better place... not so.. EURUSD down to 1.000 will be one of the major moves this year.. http://www.timesonline.co.uk/tol/news/world/europe/article5430362.ece
  • Volatility will continue to be high.... I expect major ranges to remain in place for this year..I am still in process of looking at technical levels, but my friend Jesper gave me headstart by point to these amazing charts, which tells a story most counters DO NOT want to engage in: http://dshort.com/ (please do yourself the honor of clicking on ALL the charts to get enlarged version..its simply....terrifying who little REAL RETURN stocks have given!)
  • Believe in Obama and a planned economy....I still do not understand why a capitlist society just rolls over and accepts general government intervention at large. Major banks in the US, UK, Denmark and elsewhere preaches Capitalisme and reacts with Socialisme. The talk of this working must stop and now... 2009 clearly will show how infrastructure projects DOES NOT solve the worlds issue, that we need serious Destruction of Capital for this game to continue..........

I will ignore what everyone else thinks.. and start on the basis of our economic models which show pain is coming fast and furious in the incoming data sets - this will lead to further policy responses of infrastructure and spending future generations money they dont have.

There will be EURO fatigque and it will come early on, as market finally sees how changing Sarkozy for Klaus is not constructive for EUR values - the data for Europe will show how dogmatic the ECB and its merry chairman Trichet has been and unemployment will hit 10% in Q2 2009.......Europe finally paying the full-price for the FULL STOP on consumption......

No one I know feels good about the future..... not even my always miserable friends, thats not a good sign for markets and even less so for the consumption and risk taking which needs to be reestablished.

End of the day when you take TRILLIONS aways in private credit and substitute it with public credit, then the smart guys/girls will recognize it for what it is..... crowding out of private capital.........so unless you vote Socialist 2009 can become Annus Horribilies for us all.

Safe trading,