Is the QE2 the new Titanic? Macro note

Macro
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Strongest view:

US growth heading to zero or below

Reaction

QE in both UK and US in Q4

UK will most likely lead due to severe fiscal tightning...

US trigger will be shift to my view in growth OR stock market
falling....(Sub 1050/30 s and p)

ECB will not follow - Weber won the QE debate and more importantly I
see the new euro SPV being used to capitalize banks AND taking "bad"
sovereign debt of ECB balancesheet -- creating bigger monetary and
policy flexibility for ECB

Medium term forecasts;
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The mutual fund, pension, and SWF asset management model is under
threath from several angles:

1 demographics now headwind on growth +0,5-1,0 pct-points (reducing
expected return by same)

2 the equity premium has disappeared(studies estimate it to be 4-6
pct) and this means the YALE model is underperforming(getting overpaid
to hold illiquid assets) - the 2008 crisis showed us that in time of
crisis are all illiquid instruments trading as leverage equity w
discontinued price function- fat tail distribution)

3 the 60/40 model dies under #2 as it is really 80 long equity and 20
fixed income weighted - problem being bonds has been outperforming(due
to low inflation and policy response cycle) ---so now the 'new black'
in allocation should be --- 80 fixed income and 20 equity like
investments whichs risk weighted wud be 60/40 !!!!

4 who wants to pay 2/20 for zero return ??? Same goes for private
equity leverage plays ( vs unleveraged)

Implications?

Big reallocation away from equity into fixed income, and more
commodity, and true diversification...(ironic that best and cheapest
put on stocks market has been......fixed income( and high yield good
credit)

Secondary medium term:

Velocity at historic lows - considering that growth equals monetary
base x velocity - there is need is need to either further increase
monetary base(political trouble) or work to increase volatiity(loan
demand and loan supply)

The risk being Weimar like explosion in velocity (during two weeks the
german lost all faith in reichmark and velocity(and inflation)
exploded as major disbelieve in purchasing power(US dollar long term?)
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Positioning

Long equity since last week - looking for month-end rally based on
Jackson Hole hope for better outlook to economy(combination of hope
for QE and stimulus going into midterm election)...and slight
short-term oversoldness... Looking for retest of August high - but see
market having put in major high for the year)

Net selling by September 1st and we will begin long slide down(target
sub 666) over next 18 month.

I expect sell of in sep/oct then big reaction on forcefull QE.2 then
slow grinding down on growth headwind, higher unemployement,..

Long s and p
Long stoxx50
Short eursek
Long gold futures and etf
Short REIT etf
Long usd index
Long jpy index
Long crude futures and etf
Long freight companies....
Long non-listed private equity investments unleveraged and
turnaround/credit stories ( headhunting, fund management, newsletter
publicist, and freight)

But major bet will be when August runs out--

Will be long 30yr year US vs 10yr US (Fed will need to lower rates at
that tenor)

Long Gold ( real-rates falling)
Short USD dollar, Long EUR basket
Long Fixed income
Long high yield corp debt
Long utilities

...And the answer to the headline quesion: No, but it's not a lifeboat either..