Subsidies=Protectionism=Competitive devaluations=Tradefriction=Tradewars= G7/20 had better coordinate and come up with a powerful solution - pronto!

*Out of synch with equities

When it comes to equities, I definitely feel out of synch as the position squeezing has resulted in a more lax approach to risk. Yes, Baltic dry is up, yes, creditspreads are tightening, yes, long bond yields are higher. However, this is not demand driven but rather supply driven, which makes a world of difference , to me anyway.

The Baltic dry index being up is rather a sign that creditspreads are narrowing than actual freight demand increasing. Anyway, the equity market has a positive sentiment attached to it right now and that is what matters. I will not stand in the way of that sentiment, quite the contrary. Although I dont necessarily have to believe in the story.



*G7/G20 meeting
Now, we have a G7/G20 meeting ahead of us and it is only natural with market expectations of some good, coordinated news coming out of it. I hope so too. What would I like to see come out that would make me shortterm bullish?

- A coordinated plan to prevent national subsidies and tariffs in order to prevent competitive devaluations and tradewars.
- A coordinated plan as how to deal with bad assets in banks to avoid sovereign defaults.
- A coordinated plan as how to fund the IMF going forward.
- A coordinated plan as how to deal with the CEE, Russia and the Baltics
- A stop to blindly spewing out liquidity, left right and centre, focusing on massive targeted liquidity injections instead, achieving a higher working effect
- Supporting fixed exchange rate regimes in floating their currencies
- Getting the Japanese and the Swiss authorities to weaken ther currencies to bring shortterm relief to deleveraging pressures globally, benefitting all assetclasses short term and providing breathing space. Both Japan and Switzerland have natural incentives for doing so anyway.

The risk to the G7/G20 meeting is that nothing of substance comes out of it, with vague, sweeping statements the only result as opposed to very specific, forceful and coordinated ones.


There are a lot of negative events lurking around the corner, each one with substantial negative effects to the financial markets and the world economy. However, with the equity market so "bullish"/(underpricing risk according to me), I will remain cautious as I probably have missed out on something. Keep an eye out for CEE developments as well as they should affect European financials and other equities going forward.

However, I havent missed out on Nok/Sek as it has steamrolled to 1.2450 so far.
It might very well consolidate here now, but post it Ill be looking for new all time highs with 1.30 the first target.



As always, good luck.








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