.jpg)
I`m so naive about finances. Once when my mother mentioned an amount and I realized I didn`t understand, she had to explain: `That`s like three Mercedes.` Then I understood. (1981) Brooke Shields
Dear Friends,
A short update on the macro picture:
I have basically not traded for a full month but only kept the same old positions in place:
The P&L has been volatile around a big fat zero for most of the time, but last weeks rally in Silver, Fixed Income & Crude gave some nice gains.
I took off Silver, Crude and Fixed Income on Friday close due to the sneaky but still firmer talks of tighter monetary policy coming from not only China but now also U.K and ECB - we have even had some Federal Reserve Governors talks about an early exit from asset purchases in the US, but seriously let's not kid ourselves: We will see QE3 and QE4 before Obama leaves office.
His reflation trade is not working and hence he and his loyal partner Geithner and Bernanke will continue to pump money into the system while pretending to make step towards curtailing spending.
I find it laughable that Obama talks about 10 bln. in cuts and Congress about 60 bln, while the MONTHLY DEFICIT in February was 200 bln. USD! Yes 200 bln. USD in February alone. It's a lot of Mercedes to keep it in Brook Shields terms!
Federal Payroll Tax Deposits - An early estimation of growth and employment
Source: Shadowstats.com
The evidence provided in the tax receipts above indicate we will have classic seasonal outcome on growth in the US. Q1 will be revised down - the Ivory Tower banks will maintain Q2 and Q3 only to revise everything down in Q4.
It's classic in an economy which is "managed" in terms of analysis and input, but in real terms growth will continue to fail as the tailwind of public sector spending goes away leaving the high unemployment, the growing cost of financing the debt and a slowing world economy as the residuals to create growth. Again we have put ourselves into a corner of too much optimism based on nothing but belief. The normalcy bias is alive and kicking.
Meanwhile the stock market sectors seems to be trailing the overall index performance. Are we seeing signs of fatique here? I do not know - I am still convinced the market "Plan Economy Management", PEM, will continue to do everything in their power to take S&P higher still - the technical target will be something like 1385.00 before everything becomes too excessive even for Bernanke, who only have one hit going for him, the stock market which he keeps claiming does not create Asset Inflation!
Europe P.I.G yields to new highs
In Europe this morning we saw new highs in nominal yields for Portugal and the spread of Italy vs Germany exceed the magic threshold of 5.00%. We, Limus Capital, has been long this spread for a while and used the spike to take some profit, but both of us feels this could go further, but we are entering the "Promise Timezone" - as the European politicians fly to Brussels Friday for early talks about EU, we will see yet another desperate attempt by everyone involved to buy some more time.
We had a long and serious talk about potential outcomes from the EU Summit end of March. The bottom line being; They can only buy more time by using loose terms like: Commitments, principle agreement, new committee formed to deal with... etc. etc. The language for: We disagree too much to move this forward, but we have a strong political will to keep this game going as the alternative is too serious for us to deal with.
Germany and Merkel will not bring anything to the table, at a maximum they could agree to slightly cheaper funding for Greece and Portugal(they will apply shortly for emergency help), but not without consessions they are not about to get from the weaker Southern countries. Am I the only noticing that the countries in trouble all have Socialdemocratic or Socialist governments? In Germany SPD saw biggest gain in decades in Hamburg a traditional Liberal area - yes 2011 will see major shift of political leadership from Blue to Red, which will only reinforce the buying more time concept as dirigism remains the weapon of choice when dealing with this crisis.
Hair-cut and restructuring will not happen before the ECB have sold off their 75 bln. EUR of trash P.I.G bonds on their balancesheet to the EFSF, as this would be major loss of face and money for them.
Do not forget taking a loss also will impact the massive REPO ECB does with collateral being the same junk, but as my partner Jesper said: Well, really it's simple, you just convert your loans from being with collateral to being unsecured - right indeed - effectively we are all giving everybody unsecured loans presently as the FIAT money system is being dissolved slowly but nicely.
End of the day the most likely path from here becomes one where the US engage QE3 by August/September(despite present hawkish talk), EU find a way to extend the pain for everyone is Europe yet another year or two, while the amount of "Mercedes" we need to finance becomes ever bigger. It's clear to me that it is not only Brooke Shields who fail to understand an amount, the numbers are now so big that eveyone seems to think it's really just a game, a live-version of Monopoly.
Copenhagen, March 9th, 2011
Dear Friends,
A short update on the macro picture:
I have basically not traded for a full month but only kept the same old positions in place:
- long silver
- long Crude
- Short S&P
- long Fixed income
- Short EUR/USD
The P&L has been volatile around a big fat zero for most of the time, but last weeks rally in Silver, Fixed Income & Crude gave some nice gains.
I took off Silver, Crude and Fixed Income on Friday close due to the sneaky but still firmer talks of tighter monetary policy coming from not only China but now also U.K and ECB - we have even had some Federal Reserve Governors talks about an early exit from asset purchases in the US, but seriously let's not kid ourselves: We will see QE3 and QE4 before Obama leaves office.
His reflation trade is not working and hence he and his loyal partner Geithner and Bernanke will continue to pump money into the system while pretending to make step towards curtailing spending.
I find it laughable that Obama talks about 10 bln. in cuts and Congress about 60 bln, while the MONTHLY DEFICIT in February was 200 bln. USD! Yes 200 bln. USD in February alone. It's a lot of Mercedes to keep it in Brook Shields terms!
Federal Payroll Tax Deposits - An early estimation of growth and employment
Source: Shadowstats.com
The evidence provided in the tax receipts above indicate we will have classic seasonal outcome on growth in the US. Q1 will be revised down - the Ivory Tower banks will maintain Q2 and Q3 only to revise everything down in Q4.
It's classic in an economy which is "managed" in terms of analysis and input, but in real terms growth will continue to fail as the tailwind of public sector spending goes away leaving the high unemployment, the growing cost of financing the debt and a slowing world economy as the residuals to create growth. Again we have put ourselves into a corner of too much optimism based on nothing but belief. The normalcy bias is alive and kicking.
Meanwhile the stock market sectors seems to be trailing the overall index performance. Are we seeing signs of fatique here? I do not know - I am still convinced the market "Plan Economy Management", PEM, will continue to do everything in their power to take S&P higher still - the technical target will be something like 1385.00 before everything becomes too excessive even for Bernanke, who only have one hit going for him, the stock market which he keeps claiming does not create Asset Inflation!
Europe P.I.G yields to new highs
In Europe this morning we saw new highs in nominal yields for Portugal and the spread of Italy vs Germany exceed the magic threshold of 5.00%. We, Limus Capital, has been long this spread for a while and used the spike to take some profit, but both of us feels this could go further, but we are entering the "Promise Timezone" - as the European politicians fly to Brussels Friday for early talks about EU, we will see yet another desperate attempt by everyone involved to buy some more time.
We had a long and serious talk about potential outcomes from the EU Summit end of March. The bottom line being; They can only buy more time by using loose terms like: Commitments, principle agreement, new committee formed to deal with... etc. etc. The language for: We disagree too much to move this forward, but we have a strong political will to keep this game going as the alternative is too serious for us to deal with.
Germany and Merkel will not bring anything to the table, at a maximum they could agree to slightly cheaper funding for Greece and Portugal(they will apply shortly for emergency help), but not without consessions they are not about to get from the weaker Southern countries. Am I the only noticing that the countries in trouble all have Socialdemocratic or Socialist governments? In Germany SPD saw biggest gain in decades in Hamburg a traditional Liberal area - yes 2011 will see major shift of political leadership from Blue to Red, which will only reinforce the buying more time concept as dirigism remains the weapon of choice when dealing with this crisis.
Hair-cut and restructuring will not happen before the ECB have sold off their 75 bln. EUR of trash P.I.G bonds on their balancesheet to the EFSF, as this would be major loss of face and money for them.
Do not forget taking a loss also will impact the massive REPO ECB does with collateral being the same junk, but as my partner Jesper said: Well, really it's simple, you just convert your loans from being with collateral to being unsecured - right indeed - effectively we are all giving everybody unsecured loans presently as the FIAT money system is being dissolved slowly but nicely.
End of the day the most likely path from here becomes one where the US engage QE3 by August/September(despite present hawkish talk), EU find a way to extend the pain for everyone is Europe yet another year or two, while the amount of "Mercedes" we need to finance becomes ever bigger. It's clear to me that it is not only Brooke Shields who fail to understand an amount, the numbers are now so big that eveyone seems to think it's really just a game, a live-version of Monopoly.
Copenhagen, March 9th, 2011
Posts
No comments:
Post a Comment