Chinese tightening fears and the Greek´s fiscal problems

* Chinese tighteningfears and Greek budget issues are currently weighing on equities

The Chinese tighteningfears may be well placed, but the Chinese numbers seem to indicate that inflation is no big issue as of yet. Question is if one can trust the numbers.

Same goes for the Greek fiscal numbers. There is an obvious market risk with the Greek CDS rate climbing higher. Countries with similar or worse problems might get under the market´s spotlight, increasing market volatility. A few CEE countries are still suffering from overleveraging in hard currencies. The Baltics are still in dire straits, with Latvia still a case in point. It seems there is a discrepancy between the market pricing of assetrisk vs the current macro realities.



* If 2009 was the year for Centralbank conformity, will 2010 become the year of Centralbank differentiation?

Although the Western world is still in a world of deflation, Asia is not. Liquidity is abundant. Capital is not. Asia will likely increasingly focus on domestic demand and less on exports. Hiking interestrates in the process, sucking in hot money. To prevent hot money inflows, regualory measures will have to be taken in order to disincentivise these flows.

A net effect will still be stronger Asian currencies, increasing the speed of global rebalancing.
This will increase the pressure for a stronger CNY, and thus a ditto USD.

Macrowise this should weigh on equities, especially if China starts exporting inflation, increasing the impetus for higher global rates.

On a positive note, this should also mean increased margins for Western exportcompanies with solid finances and an Asian distribution.



* New positions and position changes
- Took profit on my Long Eur/Usd position.
- Short Eur/Usd
- Long R/R on various banks with exposure to the Baltics and the CEE.





As usual, good luck





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