Initial Macro Comment, Jan. 5, 2011

Dear All,

Running late this morning, but...... a couple of key things playing out:

1. US Dollar did trade through 1.3424 yday but failed to close above which gives us excellent 'mean-reversion' short with known stop loss (@ 1.3450). Euro auction started this a.m with Germany selling less than 4 bln. EUR with bid-to-coverage of 1.6 (up from 1.2 and 1.4) France tomorrow probably worse. Jesper tells me PMI Southern Europe was DISASTER territory underlining need for something "else" to solve this EUR crisis ==> For now short EUR from 1.33708 with stop @ 1.3450.
2. DAX initiated short today @ 6.920 (as per yesterdays signal) - IMPORTANT note being: It needs to close below tonight to validate! Note also STOXX50 @ 2.784 in reach, but yet not reached (spot @ 2805.00)
3. IEF - my long-term leading indicator of Fixed Income overall has done turn-around indicating some upside potential in bonds from here (More on this in later post today)
4. Commodities - as noted in "model run" yday, the charts indicated massive "Inverse Hammer" in most market, which turned out to be major signal for short. Crude continues down this morning, while Gold/Silver holds the levels of late last night ...for now...
5. Also please read Yves Merch editorial in WSJ today:  Cut the deficit now - Yves Mersch

More later