Tuesday, 12 May 2009

EU stress tests?

L: 58% S:0% G: 58% N: 58% ~ $D 0% $P 0%

The IMF is looking to the EU to stress test the whole of the banking system, rather than individuals. This sounds like a VERY stupid idea to the Raven, its the opposite of the US idea and would only have a negative result. The US at least structured this as an idea not to pass or fail banks, but to work out how much each bank needed in capital to top it up and already had a back stop plan as to the fact that the government would do it if it wasn't done with private capital. Who would play this back stop role in the EU, politcally that just doesn't fly in Germany and the French don't look like they're going to play that role either, the UK can't, etc.

The Raven has put on the JAVA m&a spread at this level, it looks pretty decent at 24% pa, although it might soften up some more, he's still got powder dry to triple the position if it gets more juicy.

He's taken off a little risk in DB1 after it outperformed on numbers.

Interesting that Ford is selling stock today, it'll be interesting to see how that trades going forward, they're still in a good relative position, its also good to see the UAW not getting a chunk of stock as well.

TGT is on the Raven's focus list and he's been picking over Bill Ackman's comments.

Macro wise he's bearish the EUR, but is waiting for price action before he puts the trade on. Interesting to see the SPX correl as well.

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