Steen’s Chronicle: Three things can’t be hidden long: The sun, the moon and the truth (Buddha)
This week saw US GDP rebound an impressive 4.0% taking the run rate for GDP in 2014 to 2.3% still shy of the ambitious 3.0% the consensus firmly believe in. Wall Street is busy selling strategies on how to hedge the coming hike in policy rates from Fed and we are, again, told how rates will explode. This narrative will implode and shortly if I look at Saxo Bank's JABA models:
Main Macro and Market calls:
Fixed income will outperform all assets class’ in 2014
– View established in Q4-2013. Long 1.5% Danish Government bond, Long Bunds futures, Long 10 Y USA.
US Dollar will sell off in H2 of 2014 – NEW VIEW
. Long EURUSD and adding short USDJPY. Targets: 1.40+ and 96.00 USDJPY. Yield in US will accelerate to downside in Aug-Nov.
Germany will reach negative growth by Q1-2015
& France will be in recession. Euro growth reach zero again. 2014 another lost year in economics and non-reforms
Inflation expectations will bottom in Q4 –
major buy signal for gold, silver and more importantly mining.
Short Dax since 10.
000 - and still believe in 25-30% correction in H2-2014 as projected all year.
Geopolitical risk will see keep energy prices elevated – leaving the consumer with less disposable income and companies with thinner profit margins. ========================================================================
ALPHA Positions: (all of which is more than three month old except EURUSD and Crude) Fixed income:
Long Bunds since November 2013 / Long 10 Y since April – adding IEF on this “Fed scare”
: Short DAX only
Long Sep. WTI Crude (since two weeks ago)
Long EUR/USD from yesterday just below 1.3500 in Sep. Futures, Short AUDUSD Sep Futures (one month old), short ZAR calls – and looking to sell USDJPY ========================================================================
Long 80% fixed income since Q4-2013 – mainly Danish government bonds, Bunds and IEF. Long 15% long equity: AA, INVN, VALE – looking to buy mines, insurance companies and utility in Germany. Major short position not confirmed yet. Cash 5%