Starting A Chinese New Year Part 3 – Snake Trades

Not a firm believer in anything much in these times, I am not sure if this CLSA chart is anything to go by and I will remove it if they accuse me of copyright infringement.

Nonetheless, it looks like a nice starting point.

Nice call for a first half rally and for us to rush back to work tomorrow and buy every single stock in sight, 2800 HK especially, because this is a HSI centric report.

I did these tables last Friday morning just for a reality check.

Table 1. Equity Indices Change (local ccy)  YoY cut off Friday 8 Feb am.

Table 2. Commodities Table Change YoY (in USD). cut off 8 Feb am.

Table 3. Fx Changes YoY vs USD (note that +ve numbers means strengthen only for EUR, AUD, GBP, XAU and XAG; for the rest, -ve numbers means the ccy has strengthened)

Guess what it basically says.

* if you were an investor in the Nikkei a year ago, you would have only made 3% vs the USD.
* if you were a Japanese investor in the DAX, you would have made >35% returns.
* if you were a Japanese investor in Bean Meal and Orange Juice, WOW ! >50% !

There is a reason why markets would rally more from here.

2013 Earnings Are Now Forecast To Be Less Then 2009 Earnings Were Projected To Be In 2007

Maybe it is just all about the JPY.

The Yen Is Everything

I am going to play it snake style, sly and contrarian.

Looking at all the down commodities – Nat Gas (LNGA LN -46% and BOIL US -43%), Sugar (LSUG LN -45%),  Coffee (LCFE LN -69%) etc. Target 5% gain 3 mths.

Looking at shorting EM Equities – EEV US -14.7%. Target 5% gain 3 mths.

Looking at buying VIX – VXX US -76%, UVXY US -97%. Target 5% gain under 3 mths.

Looking at shorting EUR/JPY, target 120. Cut 127.

The Pope just announced he would be resigning on 28 Feb. My initial reaction was that he would be running the Italian elections ! God bless him.