BACK FROM THE DEAD...AND SO IS THE BEAR

Coinciding with my return to the markets after some well deserved RnR, the Bear decided to cut his winter sleep short. Scandi banks taking major hits and SWEDA SS trading well below rights issue price. SEBA SS is said to be needing capital infusion as well as Nordea. Down some 25% on the year. SHBA SS taking less of a beating, but still down abot 16%. Don´t really know where to start on banks, but baltics obviously a huge concern. SWEDA SS stating no predictions as to how big credit losses will be 09 and forward is possible due to lack of visibility. Well, I beg to differ. Visibility is clear as day. Things are getting worse and fast. SWEDA SS and SEBA SS have made commitments to the IMF, but refuse to give details on just how much capital they have pledged to their Baltic adventure. I speak to employees of said banks on a regular basis and they just can´t understand why the stocks are taking such a beating. Profitability is great they say, but they simply do not get it. I for one will not be at all surprised if the Swedish government end up taking a chunk of SWEDA SS in the inevitable second rights issue. SEBA SS may turn out to be able to take market share once Investor recapitalize it. Nordea is facing similar problems, but have a better ownership structure than that of SWEDA.

MADOFF FALLOUT KEEPING MARKETS DOWNBEAT

Market participants still trying to sort out who got hit by the Madoff fraud. A few disclosures around the globe but so far just BNP Paribas and Santander loosing big on this. We will see more disclosures as this unfolds. NDA SS was the sucker in Sweden with 43MEUR of possible exposure. SWEDA SS took their time, but finally announced they had no losses linked to Madoff. US markets trying to rally into black in the final 30 minutes, but traded off slightly in the end. Volumes anemic.

YAAAWN...!

Pretty Boring day tradingwise. PW from ELUXB SS, worse than expected sales numbers from HMB SS and ERICB SS trying to sneak a PW by us in the saturday edition of Dagens Industri. All expected if you are taking recent macro data into account. We are in a de facto recession. To expect growing LFL in HMB SS or to take ERICSSONs predictions of a flattish market seriously, you have to be mentally challenged. That said we acctually got a push upwards in the morning session, mainly driven by performance in Asia. As the day went on things deterioated, closing near session lows. ELUXB SS losing ground in the afternoon, ending almost 10% down. Volumes close to non-existent across the board. All in all an uneventful day. Let´s see how the US holds up.

BAILOUT...ONE WAY OR THE OTHER

No surprises there. Senate says no, Bush may tap into TARP funds. Fact of the matter is there is NO way this bailout is not going to happen. Is it the smart thing to do? Probably not, but that is really not the point. Obama more or less took office (well...not really) on promises of major economic stimulus. Wall Street first, then Main Street. Obviously GM, FORD and the likes are making cars no one outside (or inside...) the US wants to buy. Environment becoming such a factor these days it cannot be ignored. The plunge in Stock prices on the back of the Senate vote was a sure "buy on dips", since the outcome of this squabble is a given. Across the pond stock recovered with Bush statement as a trigger, but I am pretty sure stocks would have recovered anyway once people realized the vote is just republicans using the only real power they have left. The rescue bill will pass with or without TARP funds. In Sweden another telecom profit warning, this time ALU FP (Alcatel-Lucent), sent ERICSSON down. If anyone besides my wife reads this blog, this will come as no surprise. What is remarkable though, is ERICSSON IR stating they still see a flattish market 09. Granted, they look at different segments of the market and have limited exposure to fixed line, but still. The stock traded down to 57 lows before rallying a bit with the rest of the market. Two days ago it was at 66 and change. How about that for volatility? Timing the bets is really key in this environment. Banks still suffering with SHB SS NDA SS as main loosers. SWEDA SS still trading at or around the strike of 48 SEK. Folksam, AMF, AFA having major incentives of keeping it above the strike to limit their obligation in the stock issue. Baltics still a major factor and it seems everyone with the slightest interest is going out of their way to downplay what will acctually happen if and when currencies devalue. SEB going as far as to say it may be a good thing compared to alternative scenarios. I smell a rat. No real opinion on the market fropm here. Most likely it will rally into the new year, but no real conviction. I´ll get back on that one.

A BIT OF A BREATHER...BUT NO REAL PUSH.

So bulls finally took a day off. ERICB SS leading the way down with a slow, tick by tick descent. Worst kind if you ask me. If you´re short term (i.e. daytrading) it is hard not to take profit when things calm down, on hopes that you can reinitiate the short at a higher level. At least I got something right, since I been pleading the case for a short trade in ERICB SS. ML downgrade sealed the deal. Kept sliding in the US closing just shy above the 59 SEK level. Next week/end of year can still be quite interesting. HUGE open interest in EUROSTOX50 2600 level and this will surely work like a magnet the closer to expiration we get. Other storys to watch is a potential squeeze in SWEDA SS common stock. Really hard to borrow and inching its way above the 48 strike. What makes this interesting is pretty much the same way VOLKSWAGEN became interesting. Longs of SWEDA SS selling the stock, buying the rights to get preferred shares. Others simply shorting SWEDA SS to do pretty much the same. Well, they may find out the hard way SWEDA SS is not really the same as the preferred and get squeezed. Will be interesting to follow. SWEDA SS only bank to close in black today and financials taking quite the beating in the US probably on the back of DIMON´s comments on a possible 30% default rate on their mortgages portfolio. By the way, buyer of futures in the OMXS30 making sure the close was totaly BS in the future. Cash down 11,55 points, future down 2,75. Happy client? Think not, unless screwing up the close was his idea in the first place....

PPM MONEY PLUS U.S. BULLS EQUALS BYING SPREE

Late US turnaround Friday, despite disasterous Macro data, signals continued Bear-Market Rally. I´m calling it like I see it. Huge moves upwards in thin markets can be nothing else. PPM money coming into markets by close tomorrow and it is being fronted left, right and center. Index heavy stocks posting huge gains, with NDA SS, ERICB SS as main drivers, but also cyclicals (ATCOA SS, VOLVB SS, SSABA SS) the rest of the banks and Friday´s mega looser, HMB SS. This will no doubt reverse by tomorrows close. Be sure to look at short NDA SS vs long DNBNOR SS. Divergens a bit to excessive the past week or so, despite similar problems with shipping exposure. One trade that is looking better and better is to play a short in ERICB SS. If not outright, one should look to short some upside calls in January. I would be very surprised if they did not somehow revise their outlook for sales, market growth, and margins, given what is happening to CAPEX across the board.

SCANDI BEARS....LATE RALLY US

Scandis took quite a beating. Couple of Exceptions, AZN SS, SWMA and ERICB SS. Banks was hit hard. SEB was delt severe blows during the day and closed at day low after a late circuit breaker. GS pissing out stock at the close. Fear of baltic trimming of europegs main reason. Hard to believe they will make it through all this without some infusion of capital. Luckily owners INVESTOR have pretty deep pockets. AZN SS managed a rally despite some newflow that could turn out to be bad. Asthma drugs showed risks of hospitalization or even deaths, but for Symbicort (combo treatment with stereoids) the risk was not statistically significant. HOWEVER, one could argue it is hard to find brightspots in news that your drug may cause death... ERICB SS still trading strong vs market. My guess: PMs are underweight. The stock has been out of favor for some time and with SEB downgrading HMB SS, the only viable index heavy alternative. In my book ERICSSON will run into serious trouble 09, unless they prepare for a weaker market. Flat is just not going to cut it. Some storys around saying it´s the Brasilian real that is helping the stock right now, but that seems a bit far fetched. OBX closed at new lows and you don´t really have to think hard on this one. Oil at four year lows will do that to a market mainly driven by oilprices. A late rally in the US will set the tone for monday open. ERICB SS gaining even more momentum, closing at combined session highs of 60.80. NOK1V FH having some trouble picking up steam. AZN flying another 10-12 SEK. This Weekend may give some insight as to what Washington will decide regarding the Autos. Get back on that one.