This blog has moved....

Dear Readers,

Cleaning up my old blogs and just wanted to post my new URL link:

www.steenjakobsen.blogspot.com

Hope you will join me at the new website....

Steen

Frustration....in the hammock.....Macro note

Dear Investor,

Short macro note update ... from rainy Denmark...

www.steenjakobsen.blogspot.com


Safe trading

Steen

Hope is tomorrow's veneer over today's disappointment.

Dear Investor,

New blog now over at: www.steenjakobsen.blogspot.com

Calling for S&P to 550 minimum.... and UNEMPLOYMENT coming to focus.

Steen

Suffering is one very long moment. We cannot divide it by seasons. Oscar Wilde (1854 - 1900),

Dear Investor,

I have always appreciated straight talk and I do not think it comes more straight than from Mr. Charles Nenner, who I was introduced to through my friend Sam.
Make sure you check his interview with CNBC and the common sense he talks....

Also the ECB and the FED are busy preparing all their tricks - and I note how Club Med is busy talking about not taking away the fiscal stimulus, while the financeminister
overall this week proclaimed "Green shoots" everywhere.... Seems not only the American politicians getting afraid of the feeding frenzy given to banks, who will probably
have their best earnings in many years for Q1+Q2, but who will still fail to make money in 2009 overall....

Read on: http://steenjakobsen.blogspot.com/


Safe trading,

Steen

Let the games begin! There are NO RESET buttons on an economy!

Dear Investors,

This rally is now entering an extremely dangerous phase - the cyclial turning point July 5/7th is near, plus the believe in a magic reset button for the economy is failing....in other words: I am going net short and looking to built maximum short exposure between now and end of first week of July.

www.steenjakobsen.blogspot.com

Nice week-end,

Steen Jakobsen

Fake the "fade" before the Fed ........Macro

Dear Investors,

Why you should not trust the Fed - how it is likely Fed will hike rates but keep QE in place -our top three of most overrated things right now:

Read on: www.steenjakobsen.blogspot.com

Safe trading,

Steen Jakobsen

The undermining of the US Dollar is under way....

Dear Investors,

Todays macro blog is on how the the Think Local- Buy Local strategy of Asia(China) and Russia could have material impact on natural unemployment rate - i.e: higher - in Europe and the US.

Also Fed is leaking their intent on not hiking rates ... read on:

www.steenjakobsen.blogspot.com

safe trading,

Steen Jakobsen

Portfolio changes.....

Changed the position around based on today modus operandi.....

Net short EURUSD  1.5 x original @ 1.3865.....

Net short S&P @ 926.00

Safe trading,

Steen Jakobsen

Mean... Mean Reversion is my name......

Dear All,

New blog is posted on my new link/URL:

http://steenjakobsen.blogspot.com/


Tags: China led rally? Weaker US Dollar, Intervention competition, Fed meet et al

Safe trading,

Steen Jakobsen

S&P should be at 750-00! What is it doing here?

Dear Investors,

Sometimes you read something which makes you think again - my friend Yoshi often does this to me, so I have asked Yoshi for permission to print this e-mail he sent me today. Yoshi is an independent trader in Singapore and one of the true warriors of trading. Enjoy - Steen -

Link: http://steenjakobsen.blogspot.com/

Safe trading,

Steen

PS: I fixed the final problem with the RSS feed - which is now working on the new blog-site.

RSS feed is now fixed..

Dear ALL,

Sorry, sorry, sorry - I am no IT Geek, but RSS feed should be fixed now - ....

Normal blog later today..

http://steenjakobsen.blogspot.com/

Steen

The function of socialism is to raise suffering to a higher level.John Mailer

Dear All,

New posted blog on the new site, please come along:

http://steenjakobsen.blogspot.com/

Safe trading,

Steen

Steen new blog

Dear Friends,

Please use: http://www.steenjakobsen.blogspot.com/

New markets? New blog?

Dear Investors,

Sorry for small delay in my updates, but shortly - I hope from Friday I will be fully back into the game of commenting and analyzing the market with the promised "models" but also with the usual angle of macro thoughts.

I am constructing a new blog as the old one was started and kept from my former Saxo Bank life. I am desperately trying to mitigate the issue of not bothering my subscribers with having to register yet again - but being the primitive type I am - I may have to do so anyway... the new blog URL is:
http://steenjakobsen.blogspot.com/

Give me a few days to complete it but rest assure starting next week things are back to normal.

On the market I'm 100 pct non-committed in every single market - I find the price action close to random, and despite the "200day moving average" breaks in commodity and stock markets.. I find all thoughts, valuations inflated and without merit - actually I would love you all to read Peter Thiel piece on long-term lack of productivity as it to me is one of the missing links in the present analysis of the market.

When I grew up (Yes, just after the war I know....) I remember how the bright future would be "paperless" - everything would be easier and productivity would rise forever - hmmm... we use more paper than ever and despite the fascination with internet and its ability to make us all "smarter" - one has to ask "are we really smarter"? Better ? Than we were 2o years ago? Alot of the smartness is really convenience - people are not less busy now - en-contraire - there is so little time to be reflective and thoughtfull today than ever before .....with the consquent loss of new frontiers, imagnition running wild - every thing is "priced control" - Resource allocation... we have mini-maxed everything into atoms - atoms which have not independent life or drift....

Remember the long term yield of stock market will have to be: Growth of the economy plus productivity gains and inflation ... Thiel argues there has not been any REAL PRODUCTIVITY gains since the late 1960s.. if so.. we have equation where long-term stock market gain = 0 (zero)inflation + o (zero) productivity + low growth... hmm... not my favourite cocktail, but then again I am simple, agnostic and uneducated independent trader :-)

http://www.scribd.com/doc/14468282/Clarium-Investment-Commentary-The-Wonderful-Wizard-of-Oz

Finally one of my favourite people of 2008 - David Einhorn were back this past week at the Ira W. Sohn Research Investment Conference, the annual hedge-fund conference where just last year he held forth with his now-famous takedown of Lehman Brothers, and Einhorn had a new target: The most over-rated politician in history: The O'- administration.... read on my friends: http://nymag.com/daily/intel/2009/05/david_einhorn_strikes_again.html

See you in the new format Friday or over the weekend.

Safe trading,

Steen Jakobsen

jakobsst@gmail.com

“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". (http://tinyurl.com/oa75sq)

Maybe the White House is about to learn about the key principle of physics: (Newtons third law:( http://tinyurl.com/f4yu3) : 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,

Steen

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.




Source: http://www.barrons.com/



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:

http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html?_i_referralObject=1107357154&fromSearch=n

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

REVIEW ON MACRO EVENT FROM LAST WEEK

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.

TECH. PATTERNS

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. (http://stockcharts.com/h-sc/ui?s=$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

DEFLATION/DISINFLATION vs. INFLATION

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:


FIXED INCOME

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:

http://tinyurl.com/re447o
Click on chart for larger version:




ALLOCATIONS

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.

CONCLUSION

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

It is disappointing to be short & long this market....

Click on chart to enlarge

Dear Investor,

Nothing much to add we are now into 6th or 7th week w. extremely tight range trading going on.....the GDP today was a disaster - but in the land of the Happy.. its no problem, but do spend 5 min. reading through this: http://www.ritholtz.com/blog/2009/04/gdp-down-61/

I am still recalibrating my model - but right now the mechanic part of my model is long, while the discretionaty part SCREAMS - selllllllllllllllllllllllllll......making me close to neutralising the positions.....

Bigger, broader macro piece tomorrow post the FED meeting...

Positions:

Short EURUSD, Long EURSEK, Long Gold, Short S&P and DOW Futures........

Safe trading,

Steen

The war between unemployment and green shoots

Dear Investors,

I have to agree - it does not "feel" like the recession is getting worse anymore - and I have for some time talked about the "crisis fatique" being one key component of this rise in the stock market, but then again.... I'm just back from Dublin and even here it did not feel as bad as it did in October when I was there last, but.....on my way to the restaurant with my friend Tim I passed what I can only discribe as the biggest job queue line I have ever seen - so big in fact it made it to The Independent http://tinyurl.com/cvchz9 , so in the medium term what is more important - the lack of jobs or a "feeling" of feeling better?

Being the manic depressive person I am I will vouch for the job loss' being the key driver, but I have been wrong so many times before.

In the portfolio allocation I had great start to the week with the sell of the highs on Friday last, but this bull market looks strong and gaining strength - by Monday I may have to recalibrate my short-term view of this market.......failure to stay below 875.00 on the close will be disappointment for me....

The same goes for EURUSD from 1.2900 to 1.33 ish.. is big news - all based - again- and improving PMI around Europe.....no one seems to care that ECB is soooo behind the curve they soon will "lapsed" by the rest of the world - the financial implosion of Europe is getting closer - unemployment will rise DRAMATICALLY in Q3 and Q4 ... so ultimately maybe my partner Jesper Christiansen is right.... this market may have more "days" in it, than I am willing to admit... but the game plan remains the same...

Only change in portfolio is small long XAU/USD (gold) from 898.00....so.. short EURUSD, long EURSEK, short S&P, DOW Futures....cash: 85%...

Safe trading and nice week-end,

Steen

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: 

http://ftalphaville.ft.com/blog/2009/04/20/54873/markets-and-sunspot-cycles/   

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