Monday, March 19, 2007

Buying some Ford, and getting even bigger on Euro rates

Buying £20,000 of Ford, stock trading at 776. Some funny rumours doing the rounds today of Chinese buyers for the company, and with a mere $14bn market cap, that seems more than possible. This is one I don't want to miss, plus I think Ford may just turn things around, and having pre-financed a lot of their needs, so stockpiling cash, their near-term survival looks fine. (Although I think a slowing US economy could hurt them, the market seems very pessimistic on their long-term future, so maybe you get paid to take the risk).
 
 
And selling OBL's (that's 5y German Government bond futures) at 108.74 in £100/cent (so £500/basis point).
 
5y bonds are trading around 3.90%, as i mentioned in my commentary before with my Bund short (i am short £30/tick of Bunds, and £75/bp of Mar '08 Euribor also), this seems such a no-brainer. ECB rates at 3.75%, you can guarantee they will be going up to 4% by June at the latest, and you can also guarantee that the ECB will NOT be sounding dovish after that! This trade seems just TOO obvious to me. Rates in Europe are too low, Spain and Ireland have economies and property booms out of control, money supply growth is ridiculously high, I think the high points in rates will be way above what ANY economist thinks right now.

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