Friday, 6 February 2009

L: 111%
S: 48%
G: 160%
N: 63%

Interesting to see the JPY/$ move yesterday, we're now above 90 - The Raven still doesn't have any real colour as to what has driven this movement, perhaps the markets just 'sold out'? It rapidly got priced into US financials; GS broke its recent resistance easily, Raven picked up some JPM that was down 2% for the day, it closed up ~4% where he halved the position.

The Raven increased his position in LAD, its still very cheap and he remains convinced that its profit should hold up well in the recession, he also thinks that long term the brand grow well over the internet and into the rest of Europe if it opens up and frankly at this price its worth being involved, its divy yield alone is pretty sweet. The Raven reads the recent strength in the market has been a signal to increase the position, its a small stock so perhaps its actually got some new friends, after all it does often a good IRR for a PE firm if they had courage, and its been a sector they have been comfortable buying into before. The risk is its debt level, although the Raven thinks that the cash flow is stable enough to support it it remains his biggest worry.

The Raven closed out all his EUR/GBP positions in January and frankly just doesn't have a good feel on where fair value is or sentiment, he's steering well clear, after all there are old pilots and there a bold pilots....

Jobs numbers in the USA today, Obama indicated they were going to be awful, he's sure they will be (although the Raven doesn't quite get why people care so much when the revisions are often larger than the range of expectations and it gets revised twice!!) its a good test of the trading sentiment in the market, his hunch is that the bad news is priced in and that we dribble into the numbers and rally out of them - it'll be good to see either way.

The economic numbers and charts on Brad Setsers blog have given the Raven pause for thought, they show that industrial production is a lot lower than where we should be given when the recession started, we should be at a point of inflexion, the chart clearly has a very negative gradient still, argh - is that priced into equities? This doesn't fit with his other feeling this morning that the credit assets on the US banks books are probably marked too low - what would the market reaction be to an income statement with write ups??

He's still working on his Deutsche Boerse research - but he likes what he's seen so far and has been buying a little more this morning.

The Raven is still scratching his head in terms of shorts, he'd like to short gold - but that isn't going to be a hedge and he's been a bit more cautious after he heard Einhorn had bought some miner stocks and some physical. Perhaps the utilities that are trading like bonds might be a good place to look? He's also been looking for good academic alphas on the short side, his particular favourite is the CEO house purchase indicator...

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