Macro digest: ECB meeting a week of correction before lower?

Long DAX for correction into ECB QE?

There is growing evidence that the ECB is close to moving into yet another "crisis emergency" - this time is driven by deflation, EM crisis and lack of growth in Europe.

Wall Street Journal is surprisingly airing a view through ECB sources that Bundesbank would like to stop sterilizing the bond buying Bundesbank would favor end of ECB sterilization.  

This would lead to more liquidity in the interbank market and is DE FACTO a QE through the back-door. I'm as always skeptical of these "rumors" but from political point of view this solution will be least evil and the easiest to "cheat" the politicians/media with.

The point however is that if this story gain tracktion into the ECB meeting this week, it could be worthwhile buying some DAX calls.

I have bought a 9.600 Call 9.600 Expiry 21-FEB-2014 @ 41.90

Furthermore my daily model is looking to go neutral to long on DAX. I need to stress this trade is only for this wéek and the ECB meeting - my weekly model have only just begun selling and the weekly model is my main generator of macro ideas.

 AND... the bigger trade remain selling EUR/USD where I on daily and weekly is looking for increase in volatility but also the biggest risk reward in the last three years

EU Lurches towards deflation - biggest EUR sell signal so far

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

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