Geithners solution to Toxic/bad bank assets; will it do the trick? Market certainly seems to think so.

*Banks need to be sorted out before circumstances improve

Will be interesting later in the week when US Treasury Secretary Tim Geithner comes up with his proposal. For the taxpayers and US economy`s sake, I hope he chooses to lift out the good bank assets of the existing banks and leave the bad ones in the current banks, restarting the "new" bad asset free ones with private capital. The most costefficient way of doing it, to me anyway.

Buying toxic/badassets from the banks will most likely lead to taxpayers overpaying, which means an inefficient use of capital. Market is certainly hopeful of Mr Geithner getting it right though. Ive been long a basket of US bank stocks since last week and its up 60% already.


*Europe is a different ballgame and this should be recognised by the market, but is is not - yet anyway

Europe is lagging the US when it comes to dealing with banks toxic/bad assets. So far a plan to deal with this has not been seen. Especially not a coordinated one. I am holding off buying European bank stocks.


*Bullish marketsentiment rules - I am trying to go with it, but will flip pre G20
Riskaversion has sunk and market really wants this "to be it". Mr Geithner will have to throw the market a nice bone for this sentiment to continue though. Dont think all crowded trades have been squeezed as of yet. Gold still havent moved to the low 800;s. Seems Gold is in for a decent move either way before long. I am looking for the downside.


*FED meeting this week; Quantitative easing or not?
Think the FED will hold off before they start buying longend US bonds. If they do, this should mean higher US longend Yields and a weaker USD. I have gone long Eur/Usd via options, looking for a further push from 1.30 to 1.33 ish short term. I am also long Eur/Jpy via options. Long Gbp/Chf, long gamma in Eur/Chf.

*CEE - still squeezing, but as we approach the 2nd April G20 risks are increasing for a flip in sentiment and price action.
I am probably a little bit early, but dipping my toes shorting CEE here. I am also dipping my toes in short SEK vs Euro. Watching Equities closely.


As usual -good luck



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