Do the opposite of what the sovereign wealth funds do!

We have all heard the story about the colleague (or student, in my case) who is brilliant at picking stocks that will perform badly and that everyone use as a living sell-signal. I wonder if the sovereign wealth funds (SWF) might be the Wall street version of this guy?
I mean, after half a year or so of analysis they suddenly decide that it is the right time to buy troubled banks such as Citigroup and Merrill Lynch. Is it just a coincidence that it is these megabanks that have attracted their attention? What about all the much smaller and less well known banks that have suffered in the markets lately? Wouldn’t it be more wise to scoop up a bunch of these guys instead and get diversification as icing on the cake? I suspect that these purchases are by organizations with too much money and too little experience and competence. ==> Short the stocks that the SWFs buy!
Also, I agree with all those commentators that like to stress the likely suboptimality of these players as owners of profit-maximizing firms. These governments are not exactly known as stellar-performers in running things. Basically, that these funds have a hidden agenda is a given. At least to me! ==> Short the stocks that the SWFs buy!
Finally, by providing ample rescue funds to badly run franchises the SWFs slow down badly needed reforms (it seems) in the target companies. This shouldn’t be good news to the rest of the owners. ==> Short the stocks that the SWFs buy!

En lekman i Baltikum!

Under ytan har det en längre tid förts en diskussion om huruvida svenska bankers exponering mot de baltiska ekonomierna är ett hot mot stabiliteten här hemma eller ej. Jag är inte direkt insatt i denna fråga men måste säga att om jag måste välja ett läger så väljer jag (som vanligt…) pessimisternas. Förutom allmän skepticism till den sista tidens höga risktaganden överallt, och medföljande hot mot stabiliteten, så tycker jag det räcker att ta en tur till Tallinn och öppna ögonen. Ta en titt i real-estate bilagorna i tidningarna eller se dig omkring. Ska fastigheter i lilla Estland (med Ryssland runt knuten) kosta som i Sverige? Är det hälsosamt att tallinn-borna har en extremt mycket mer exklusiv bilpark än vad t.ex. Malmö, Göteborg eller t.o.m Stockholm har? Som bilintresserad är det rena eldoratot att vandra runt i Tallinn: SUVar, Bentleys, Carrera-S så långt ögat når! OK, jag vet att det är ngt typiskt ryskt över att spendera sina sista slantar på lyx/pälsar/bilar och att 40% av tallinn är rysktalande men ändå! Jag säger bara, bubble, bubble, bubble….

AMBAC downgrade might actually be a strong factor behind the global selling pressure!

Fitch downgraded AMBAC from AAA to AA this friday. And the next trading day (yesterday) we saw huge price falls on stock markets all over the world. I think that this is more than just coincidence! The link might not be clear but there is one, trust me!

Detta är också skrämmande - del IV

Jag varnade tidigt (i december) för en stark säljsignal vid en eventuell nedgraderinga av en av de sk bondinsurers. Nu blev AMBAC nedgraderat från AAA till AA av Fitch i fredags. Och säljsignal som heter duga fick vi!

Fed lowered the interest rate!

10 minutes ago i saw that fed cut the interest rate with a whopping 75 points!! The swedish stock market jumped a couple of % and I am flabbergast! How can anyone interpret this as a positive piece of news??? Not even in the ultrashort run am I able to see this as a convincing positive development in the crisis-saga.

When in Rome!

I am off to Rome for a couple of days presenting a paper about credit risk management in China. I will also stack up with Italian books since my Italian is too good to be wasted but not good enough for Dante and the other books in our Romanic-language book store here in Lund! I am also looking forward to catch up with the latest gossip in the Italian celebrity world (Novella 2000 etc) and eat some wonderful Rusticas (pizza), Arrabiatas (pasta), Cacciatoris (salami) and Baci (chocolate)… Perche non sono nato Italiano??

Will the hurricane calm down before it reaches the CDS market?

To follow up on the last entry I should just add that I am equally afraid of what a sudden widening of corporate credit spreads could do to the credit default swap (CDS) market. The CDS market is untested (it has seen almost no defaults) and, to make things much worse, quite large! One of the few I listen to, Bill Gross (Pimco), has written some on this lately and I think his message deserves to be spread! Go read his reports! If you don't listen to me, maybe he can convince you?