Tuesday, March 24, 2009

“A man who pays his bills on time is soon forgotten” Oscar Wilde

Dear Investors and Readers,

There has been considerable "time lack" in my updates and blog - this WILL be corrected starting tonight..... but the new job has meant considerable NON-INVESTMENT time ...but no excuses..!!!!

Some questions has been raised on the portfolio going from 90 pc cash to 55-60 pc mentioned in last week Investment Meeting - it calls for an explanation:

From my Pura Alpha Macro perspective I am, and continues to be 90 pc allocated to cash..mainly..and as of today I will be buying some bonds to take money out of cash.....however in my new role, which the Investment Meetings was taken from, we are born with minimum exposures of 25-30% at ALL TIMES, meaning to get "translation" that you deduct this "embedded" exposure to get old... but from now on.. I will on this page commit to my pure alpha not to confuse anyone.......and this is how I allocate both Alpha Macro and more importantly my PA money - even outside my own funds.

OVERALL:

The Geithner + QE plan was another week with another couple of trillions spend.

My colleagues are ALL looking for momentum upside, I am FIRMLY remaining out of directional exposure till after the April 2nd meeting - Yes, I could have had 26% of the low with perfect timing, but its 26% of a very, very small number, having had an excellent 2008 I am not rushing into a market which to reminds me of Japan more and more... check this chart from dshort.com (click to enlarge chart)





To me the future looks like the Nikkei in 1980s/1990s - lots of false starts, a low not in yet, and lack of tracktion.

Obama is less popular than Bush at similar time in the Presidentials cycle, bankers working in New York will soon pay 102 pc tax!!! - the 90 pc "jealousy tax" plus 12.5% NY State tax.

The Local states are bankrupt and finally, so much for tranperency in the new plan:

Do you know ANY bank willing to trade some "toxic material" in the 30s when it is on the book as 70s on the Dollar? I do not - then in April the Stress test will be in play.....which will show... what? Based on which price matrix? And finally, selling this plan as private/public where the private sector gets cheap financing, no downside but share upside does not strike me as being politically what the good Senators and Congressmen(women) wants to hear - but the usual suspects are out in force: Blackrock, Pimco, Buffet....so if it goes like the other times....then

Finally if this market is "bullish" ...then:

  1. Why is Gold coming off? I thought this was the "reflation" dynamo? - I see gold in 850 next week...
  2. US Dollar - why is it stronger?--- the correlation broken? No! It caught up to rate differentials..indicating need for +1.35s... now its back to massively improving US Current Account and home bias - US has the biggest home bias of all, their mutual funds having primarily invested overseas plus Obama threathning to tax overseas earnings... (I am again long US dollar... target: Sub 1.2000
  3. TD is getting set-up on(for top): S&P, NASDAQ, DJIA, RUT, DAX, TRAN, SOX, XBD, BKX, CRY (http://www.tomdemark.com/)
  4. Earnings cycle... we are still way of low in cycle....
  5. Non performing private loans.. we have not even started, AMEX being the first to declare "nuclear waste" on private consumers even giving you money to close down your credit card.

No, it's still cautious for me, I am however pretty much left alone, maybe with the exception of the parma bears like Robini et al, but as Grouch Marx once supposely said: "I will belong to no club that wants me as a member"....

Safe trading,

Steen


2 comments:

Ludovic said...

Thanks Steen for the clarification. Much appreciated.

And also thank you for your great blog. Thumb up.

Ludo

MW said...

Counter argument on gold (which I don't subscribe to) is that the longs (now mostly via the ETFs) are sticky, being retail. Also think there are a lot of long-only types in gold via the ETF as they can't/don't trade futures or options. How sticky this money is will become apparent when gold has one of it's occasional violent sell-offs.

Behaviour of gold under deflation is an interesting topic --- there's a paper on this online, which may be worth reading. http://www.nowandfutures.com/d2/BehaviorOfGoldUnderDeflation.pdf