Sounds like a familiar scenario? Latvias government set themselves up for mission impossible when they agreed to the Swedish government´s (read Banks) terms for financial support. Perhaps they wouldnt have received it otherwise, what do I know?
Anyway, pressure is building in the kryptonite deflation pressure cooker called Latvia and risks have increased that the current government will be ousted via reelections.
How would a new government handle this new situation? I do not know who would be in government or what their official stance would be, but it wouldnt make sense to continue down the current unsuccesful path.
I would err towards them wanting to ease the pressure on the population, while having a window of opportunity to also prepare them for immense pain.
Net net, I believe the probability of a let go of the "peg" has increased further.
Being short Swedish/Scandinavian Banks (again) is the way to be. Prefferably via options. Huge creditlosses and recapitalisation needs are around the corner. The Swedish taxpayers will most likely bail it all out.
Equity holders trying to tough it out, focusing mainly/only on the positive cashflow and not so mark to market of asset values, plus "old" world valuations (see piece from 9 Jan), might be in for a very nasty and rude awakening. The Carnegie ghost might reappear for shareholders, whooooh,,,,,,
I will use any pre ECB correlated setback to add to NOK/SEK longs.
As always, Good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment