Some macro views

Today, SFOT would like to venture into the macro world and share some of his views(some of which he does have a position in).

Stocks: Bearish
From a very simple standpoint, if earnings outlook is negative, dividends are getting cut and hence yield is less attractive, global trade slowing, GDP globally being slashed down and the end of recession not in sight( economists are even pushing their forecast further out), SFOT cannot bring himself to believe in any sort of sustained rally.

Gold: Bullish
One of the most technical and flow driven asset class to trade. SFOT still believes in the store of value use of Gold, and its traditional use as a form of inflation hedge. The opportunity cost of holding Gold is next to nothing with rates at zero and other asset classes not providing any better returns( unless you have managed to capture that 50% bounce from financials every other month)

AUD: Bearish.
SFOT does not look at currencies on a daily basis but he does keep track of a few he likes to watch. AUD happens to be one and readers will know he has venture into the currency pair AUDCHF and opened a long position not too long ago. However, he admits that has not managed his position well and made a mess out of this. Now that AUD has gone ultra bid against almost any currencies, and in particular the CHF, SFOT is revisiting this pair again. The main reason is that the Baltic dry index, while looking very strong in the irst 2 months, has now lost its shine and gone back to levels seen in mid Jan. I.e, global trade in goods is slowing down again the past month. However, there is a hell lot of noise in there and SFOT will attempt to be short of AUD when the seemingly strong bidding hand has gone away... whenever that might be.

Baltic dry index

Bonds: neutral

SFOT had a great run in being long of bobls late last year and took it off before year end. Since then, it has seemed less clear to SFOT to be long or short govies here. However, he is watching swap spreads, credit

spreads closely as the recovery will not take place before credit spreads tighten, and it has to tighten a lot.

Oil: Bearish
Spread bearish, own puts, more in the short end, and will sell spreads into strength for reasons discussed in the past few weeks from inventories, demand, and financial flows. The baltic dirty tanker index below shows
freight rates for crude has collapsed to multiyear lows. That said, tankers are very cheap to hire for storage space and it seems that the floating storage is beginning to build again in crude oil. Refined products are the ugliest in terms of inventories on water and the low freight rates will probably help give some 'fake' demand when physical guys take advantage of the contango to buy materials for storage.

Baltic dirty tanker index

Arsenal: Bullish
Today we play Villareal away. They are a tough team, holding Man Utd to 2 draws and we do have a soft spot for them as Robert Pires is having a great time over there. However, i expect the fit again Fabregas and Adebayor to take us through to face, hopefully Porto but probably Man Utd. Bring them on!.