Strong European indicators likely to continue short term, but creditgrowth is struggling and likely to slow from here.

*Despite strong European indicators coming in - credit growth to slip lower

For anyone in the "recovery bullmode", credit growth and multiplying effects should be the objects of focus. Without them - no recovery. Well, historically there has never been a recovery without them, anyway. Unfortunately, we are not seeing much, if any, of it.

Weak corporate balance sheets and corporate restructuring will make it difficult to generate profits in line with the equity markets expectations going forward, especially as continued bad assets on continental European banks books will make credit tight to the corporate sector. Blocking any creditmultiplying effects.

Issuing corporate debt is an alternative, but questions remains as to how much liquidity would be available there, especially as creditrisk still remains a very high priority in the financial markets.


*Institutional investors cash levels has dropped to 3.5% from 4.7% over the last four weeks. this is the lowest level since July 2008.

Equity markets volcurves have flattened and buyers of downside protection has dropped significantly. With credit dropping and US banks continuing to go bust (another four during this weekend, bringing the total to 81 this year), while European banks havent even started their clean up process, I cant help but sense a mispricing in the market.

I will mainly use options to ride this rally as well as position myself for assymetric drops.




* New positions and position changes
- Sold most of my Citigroup calls but still long 1/3.





As usual, 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.