mandag den 25. maj 2009

“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". (

Maybe the White House is about to learn about the key principle of physics: (Newtons third law:( : 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,


tirsdag den 19. maj 2009

All change.. .again...

Dear Investors and friends,

Just to kill any rumors on the spot: I have today resigned from Capinordic as Chief Investment Officer, this as undramatic as can be, we agreed the business needs to have more of a Swedish focus meaning my role effectively should be out of Stockholm, and as much I love Sweden its still too far from the high taxes in Denmark ;-)

I have no plans as of now, and I am looking forward to running my own little Family Office over the summer and then see how thinks progress.

If any of you have any questions or comments feel free to write me on:

I will continue to do my blog as per usual....

Normal blog resumes tomorrow....

Safe trading,


================ Official press release ============================

Capinordic A/S Company Announcement Structural adjustment
2009-05-19 12:12:10.177 GMT

           Capinordic A/S Company Announcement Structural adjustment

This text has been prepared in Danish and in English. In case of discrepancies,
the Danish text will prevail.

Company Announcement No. 8/2009

19 May 2009

Structural adjustment

Capinordic A/S has decided to increase its focus on utilizing the Swedish
business potential and at the same time to reduce the resource allocation in

The change in resource allocation will affect the Danish management team, and by
mutual agreement the below employees have chosen to resign their posts in
Capinordic A/S:

• Steen Jacobsen, CIO, Capinordic A/S
• Eric Frydenlund Michelsen, COO, Capinordic A/S
• Jesper Christiansen, CEO, Capinordic Capital A/S

Yours sincerely
Lasse Lindblad
Group CEO

mandag den 18. maj 2009

Negosiating difficult water....

Dear Investors,

Seems the "temptation" was too big at the critical 882-00 level, and the normal "sell-of" Monday cycle has been replaced by a buying Monday, if tomorrow do not follow the normal pattern of being an "upday" its either sign of some behavioural changes in investors, or sign this top is in place - There are several schools and logic to seeing a "melt up" in S&P as my good friend Drew Baptiste, MS, says in his notes today, but there is also a terrible "consensus" move change almost daily presently, a sign things are about to heat up.

Clearly a close below 880 - is one sign - and on the top side 930 becomes a key issue for further gains into the 950/1050 expected top for the year...

(click on chart for bigger size)

I am again pretty much sidelined as I can not make head-or-tail in this market - my inclination is for top being in place, but on the other hand the lack of follow through concerns me - hence the almost tiny interet in getting involved for real untill this range gets "unstuck".....

The dynamics of the market is thorne between "nervousness" of missing the train - again- on the upside and risk of being caught too long on the topside.......

I know im rambling, but bottom line... wait for market to evolve - I notice or rather my friend Jesper noticed the "usual" front page from Barrons in May.


I have always loved reading Barrons, but its timing and being front page has not always worked out - Clearly we "all" think there is one final bubble, i.e the low yields in the world, but as I have stated again and again it really depends on your starting premise: I.e: Which is greater the falling velocity of money or the inflationary "printing" of new money? You will know I am in the camp of "disinflation/deflation", but as Barrons clearly makes the case for ......the risk being this could be the biggest bubble left to play... I will look into how the ultimate "reflation"-basket has been doing recently: Long Gold, short T-bond, long crude, short US dollars.....

Anyhow, safe wind and safe trading.
Steen Jakobsen

PS: Spend some educational time listening to Prof. Thaler if u got the time:

onsdag den 13. maj 2009

Few things are harder to put up with than the annoyance of a good example. Mark Twain.


The take is that for Q1-2009 data, news, and central banks action is “better than expected” – this is partly explained by the under-shooting/under-projections done after the miserable Q4, so for the first time in memory both the analyst’ and the economist' downgraded expected incoming data too low.

Despite this the “Green shoots” – the most popular word being used in the market now:

Source: Google Trend

The other “concern” we have on Q1 data is that the improvement in data is mainly in SURVEYS – which mathematically could not go further down due to their construction – but never the less it has to be said loud and clear that Q1 data has been than the expected, and it has given rise to increased hope of this being a real improvement in the economy. Basically the “bar was too low for Q1 – and looks to be too high for Q2”.

ECB did as little as they could without being “called” on their bluff – the 60 BLN. EUR buying is less than 0,5% of GDP (compared to 5% of GDP in the US & 8% in the UK equivalent QE easing) – so this was more a “statement” than a practical implications.

ECB/Europe remains solid behind on the Quantative Easing path, which could be major issue down the line, as competitive devaluations begins in earnest.


There is serious divergence in NASDAQ stocks (Vs. the SPX index overall) – technology has been a leader through this crisis – now underperforming…… Short with stop 1% above old high should be stand alone trade for most medium term traders. ($NDX&p=D&b=5&g=0&id=p38716996235)

Click on chart for larger version:

The bullish sentiment has reached 90% …

Carry- trading in foreign exchange as a metric for RISK APPETITE has made a sharp correction over the last 48 hours – if confirmed this could be early signal.

880/895 remain key level SUPPORT for S&P – a two day close below could vindicate our present NEUTRAL/NEGATIVE bias stand on the allocation


This weeks PPI & CPI will reignite focus on the waning inflation as PPI is expected to fall 3.7% % YoY top-line, while Core-CPI is down to minus 0.6% YoY - the market believes the "bottom line story in the Obama plan" is one of reflation and hence inside the next 12 month(as seen by FED funds 1 yr pricing in 50 bps hikes – in Swaps), but this seems way too early days for us.
Click on chart for larger version:

We have the position that the velocity of money is still falling faster than the “new” printing …”The hole is still big” and needs to be filled first before inflation takes off. We see at least 12-24 months of disinflation and then the REAL EXERCISE becomes for the Fed and the world’ central banks to take ALL of the monetary easing back.

The analogy becomes: “To put the tooth paste back into the tube!"– An exercise which is even more difficult than the analogy!!!!!! – we remain extremely skeptical to whether an accommodative Fed and White House is REALISTIC enough to see when the punch bowl needs to be taken away.

The lack of final demand in the world – note how shipping rates remains flat – is a concern and most of the EXPORT numbers still coming in from Japan, China, Vietnam etc clearly shows the IMPORT demand from Europe and the US is not there, yet……
Click on chart for larger version:


We had long discussion on the “seasonal impact” of summer rallies, but somewhat agreed this year could be different – there is right now a clearly move towards much steeper yield curves, we are now almost at last year high in 2 y vs. 10 y US rates (now @ 235 vs 260 high last year), but on the other hand should equities start falling as predicted in our models, then there could be some safe haven – but in a world with ZERO front-end rates, allocation into fixed income must be seen almost exclusively as move to PROTECT/PRESERVE CAPITAL rather than value proposition.

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.

We need to monitor trade weighted US index for sign of stress, and we acknowledge that FX could be trigger point for both sides of the risk trade – and this morning the Financial Times carries an interesting article on US rating:
Click on chart for larger version:


The focus was to stay with the conservative allocation – our internal numbers clearly shows that since low in March, our “stand” has been expensive relatively vs. our benchmark, but it is important for us all to remember investing is a Marathon not a sprint, despite the increasing pressure from retail & broker level to enforce further allocation – there is also BIG JOB at hand to align our portfolio more correctly – and this will have major priority through the next two to three weeks.


We remain with the 40/60 split – we acknowledge and respect the improvement in data, but we also “understand” the bar was set up low –In terms of relative rotation – we were hurt by underweight Sweden, something which does not make STRATEGIC sense as our clients have home bias.

We see approximately 20% risk of further upside – and here 950/1050 broad range should cap for balance of 2009 – while break below 895/880 could be first warning signal for the long to exit.

Steen Jakobsen

mandag den 11. maj 2009

The top is near.... ?

Dear Investors,

Yet another short blog, but I am working on bigger macro piece to put things into perspective..but more and more signals in my contrarian model is indicating RED HOT ALERT - this could be excellent opportunity finally to fade this move - as the weak shorts and now truely committed long. but first a few chart which is important to me:
NAS-100 Index - The technology sector has been leading the charge higher w. financials - all of the sudden the divergence is there - and now potentially also a break back below the much watched 200 MA - watch this index for more clues next few days: (Click on chart for larger version)

The same NAS-100 - merely to underline there has been reveral and plain tech. analysis indicate lower for now..

Then onto Friday unemployment report - if you buy this "improvement" then you need your head examined - the below two charts clearly shows the improvement comes only - and what a surprise in the public sector - with serious hiring for the Consensus 2010 going on.... Does the White House really think we are that stupid. One socalled analyst after the other is calling for Green shoots - and true recovery et al - I note that the US economy improved in 1933 - also a true recovery, but the full recovery did not materialise before 1947/48.

As said I am writing bigger piece on the macro side to establish my position here, but I have to add my partner Jesper Christiansen and I are the most bearish we have been in a long, long time. I should also be noted that Jesper has been far more patient with this rally then me, but we have now positioned ourselves with the funds in Capinordic to underweight equity, Sweden, and overweight inside equity relatively of the US vs Europe.
We firmly believe the slowest mover in QE- takes the biggest loss - or in other words MR. Trichets ridicolous 0.5% of GDP (60 bln. EUR) is nothing compated to the US' 4% and the UK 8% of GDP - this game is now on competitive devaluations, and soon the EURO will roll over in the last effort to create inflation, competitiveness vis-a-vis a world outside the Towers of Frankfurt where everyone and his mother is enganged in weakning their currency - the most aggessive, to no avail, being Switzerland.
This has been "expensive" relative in the short-term, but many people tends to forget investment is a true Marathon not a sprint, but more on this later tonight or tomorrow.
Full alert from here.

onsdag den 6. maj 2009

To be positive: To be mistaken at the top of one's voice. Ambrose Bierce

Dear Investor,

Nothing much have changed since last report: The S&P is 30 points higher, euphoria is 50 pc higher - the world is in a good place and we will live happy forever after - that's the verdict of the market - We as an organisation is getting increased pressure from retail-level to increase the exposure, now that we are 30 pc up from the low - there is also growing believe that 2009 could be about de-coupling - I guess there are two types of de-couplings:

1. The people inside the circle of wagons: Banks, too big to fail industries, vs the rest

2. BRIC + VAT(the other periphals) relative to the rest of the world.

I am not smart enough to deal with all this analysis, so I am spending considerable time to construct- even reconstruct an "Explanation model" on the present market - ... a model which caters for SERIOUS INFRINGEMENT on Capitalism - a model where the exogenous risk factor in your model is no longer simple math - i.e discontinued price action - but discontinued political initiatives... which is totally random and often with negative long-term cost (i.e: lower growth through higher taxes, protectionisme or regulation changes).

Market is so positive its almost negative....but I will make full report on business, models et al later today... sorry I have been quiet but more than plenty to do in this new job...but no excuses...... later..steen