Monday, January 12, 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...

    Steen

1 comment:

legacy daily said...

I also hope you're wrong but cannot disagree with your points.