by ilene - September 1st, 2009 10:17 pm
Courtesy of Jesse’s Café Américain
The observations herein regarding the nature of this stock market rally are quite in parallel with our own.
Buying the dollar to play the debt deflation trade may also be a good one in the short run, especially if leveraged foreign punters have to quickly raise cash to cover bad bets made in the US markets.
However we would have to add that this scenario assumes no black swans with regards to the heavy overhang of US dollars being held by overseas central banks.
If we were in such a position, we would be selling the rallies, given the huge amount dollars on the books.
Goldman Sachs Wrong on Economic Recovery, Macro Hedge Funds Say
By Cristina Alesci
Sept. 1 (Bloomberg) — Paul Tudor Jones, the billionaire hedge-fund manager who outperformed peers last year, is wagering that Goldman Sachs Group Inc. and Morgan Stanley got it wrong in declaring the start of an economic recovery.
Jones’s Tudor Investment Corp., Clarium Capital Management LLC and Horseman Capital Management Ltd. are taking a bearish stand as U.S. stock and bond prices rise, saying that record government spending may be forestalling another slowdown and market selloff. The firms oversee a combined $15 billion in so- called macro funds, which seek to profit from economic trends by trading stocks, bonds, currencies and commodities.
“If we have a recovery at all, it isn’t sustainable,” Kevin Harrington, managing director at Clarium, said in an interview at the firm’s New York offices. “This is more likely a ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.”
Equity and credit markets have rallied on hopes that government intervention is pulling the U.S. out of the deepest economic slump since the Great Depression. The Standard & Poor’s 500 Index jumped 51 percent from its 12-year low in March through yesterday.
The economy will expand at an annualized rate of 2 percent or more in four straight quarters through June 2010, the first such streak in more than four years, according to the median estimate of at least 53 forecasters in a Bloomberg survey.