Friday, February 10, 2006

More thoughts on the short DAX trade...

OK so as i mentioned a couple of days ago, the DAX trade was rubbish...a
short-term punt I had no real belief in (although I do think risky
assets in general are overvalued and set for a fall, but we probably
need the government bond market meltdown first). Looking at FTSE versus
DAX today, I now want to be long the DAX against short the FTSE...on the
view that I think growth is going to be picking up in Europe and Germany
in particular, as it looks like the government there IS implementing the
necessary reforms for growth, whilst the UK seems to be going the
opposite way with higher taxes etc etc (you will hear a whole lot more
on my thoughts on UK economics/politics plenty more times this year!).
So the obvious trade is long DAX/short FTSE (i especially like the fact
they almost trade at the same price...hey, it makes it easy to follow

BUT...i am short DAX. And I think we may get a correction, and I think
in a sell-off the DAX underperforms, so we'll hold the short DAX on its
own for now, and when markets are weaker I'll put the DAX/FTSE on.


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17 May, 2006 12:48  
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17 May, 2006 12:58  

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