Tuesday, April 21, 2009

Buy land- they are not making it anymore - Mark Twain

Dear Investors,

Yes, I got quite a few reaction on the "solar thing" - including this in Financial Times Alphaville: 

Where Izabella does much better job than me to explain some of the mechanics of this.

I remain sceptical but have observed how more and more serious players at least incorporate this into their cyclical models. Whether this turn into a Heisenberg moment or not is to be seen, but in fund management, as long as it works no cares cares  - really...;-)

I am net short maximum position in stocks, I closed the short gold yesterday at 880ish as my 910 put ran out.....still short EURUSD, and long EURSEK and USDSEK (my favourite long since last week)

Sweden is an interesting example of a country which has chosen to announce that fighthing or keeping unemployment down is more important than anything else (Hasse Borg last week) - this makes for dangerous cocktail as they have entered DEFLATION, have weak currency - the policy choice of jobs means public sector will expand (its already massive), making economy less productive and crowding public capital for private capital almost 100 pc securing Sweden will have sub-par growth for a decade - hence the bearish SEK view. The tool box is simply empty.. .had Sweden been a company it would have been comtemplating Chapter 11 - which I guess is showned by Volvo and Saab fighthing for their lives.

Which bring me to a country who is in Chapter 11 considering bankruptcy: SPAIN - unemployment at 15% and could see 20% before long - Spain is in a viscious negative cycle and it will spill-over to rest of Europe - Am I the only noticing the ever increasing number of countries in DEFLATION land ?  Switzerland(confirmed), Spain(confirmed), Sweden close and Ireland must be close as well -  the implications on corporate earnings and future growth is NOT priced in this market.

Europe is the MOST mispriced asset market for: Earnings, equity values, growth, monetary policy and CDS for banks. Europe is "toast" - the Social-Capitalistic model is falling apart left-right and center..... making me underweight ALL european assets except fixed income ......(which is really same way) ... I remain with my 1.1000 in EURUSD...and I expect growing risk in EEC currencies.

With this cheerfull closing... I bet you safe trading,

Steen Jakobsen


Anonymous said...

what's your recommendation for just protecting capital-networth on a macro level. Or, how are you protecting your clients accounts from currency erosion, are you parking funds in USD, Euro's, and etc?


Buying combination of long-term bond ETF's, combined with small defensive stocks....health care, mining, utilities... then....add some puts on the market through either negative etfø's or outright put buying....

AND.. hedge everything in currency....I am long US dollar, jpy and SGD...

you can always write me direct: jakobsst@gmail.com ...


MW said...

While I see the rationale for your SEK trade, I think the problem with the idea is the current dichotomy between structural and cyclical concerns. IMO, the structural outlook for the UK is not good, but the market has been very happy to buy Sterling because GBP is cheap on valuation models (as is SEK) and the easing in financial conditions in the UK is positive for GBP (same story in Sweden).

As you know, the market can ignore the structural story for a long time, as was the case with the USD in the last recession, when equity inflows trumped deficit concerns for quite some time.

As ever, good trading, and thank you for sharing your thoughts. Best, MW