2008 Main Investment Themes
Here the 2008 main investment themes as I see them … as expected … EIGHT of them 
1. Housing Sector
The housing sector keeps plummeting and no relief yet to be expected. November figures showed that the seasonally adjusted annual rate of 647.000 new home sales (the number is expected to be revised even lower) showed a 12-year low, a year on year fall of 34.4% and compares with a high of 1.4 million in July 2005. Prices are STARTING to fall as official numbers are not including incentives. The backlog of new homes is approaching 10 months sales. So the best thing about it: Everybody is aware and already short or underweight!
2a. Financials
The financial sector is heavily oversold, the housing market bomb is dragging on, but every day helps the participants to sell off parts of their heavy exposure. The LBO market might be revived as conditions changed and economic outlook gets clearer. A lot of the backlog of unsold LBO-related loans was sold off by the big participants taking losses up to around 10%. So with the “floor” of arabian and asian real money BIDS for the major players and the still huge short interest in the sector, one could even expect a positive performance for the big ones, some bankrupties for some small companies.
2b. Bond Insurers
The fundamental situation is clear … all are helplessly under water: BUT as it is often cheaper for the big houses to help them keep crawling, it might be an endless story. For the new business in the sector, a needed sector, Warren Buffett started a NEW business and as he is bigger than all these bond insurers together, it might be a good sign for coming deals … UNDER DIFFERENT CONDITIONS 
3. Presidential Election in the U.S.
Should have no big upside impact this year as it seems to be a safe bet, that the new president comes from the now opposition. Best bet at the moment: Hillary Clinton.
I personally would love it … if she took REVENGE on some things her husband did 
4. China
Olympics, bubble bubbles on, Yuan starts strenghthening a bit faster … one of the big unknowns … the good thing … the Chinese have a lot of money and will do EVERYTHING to hold the train on track to show the world in August what powerful nation they are At least I’m sure, that they will dominate the MEDALS Table
5. Carrytrade/Currencies
Big question … will it unwind this year? Will the global need for liquidity start, sucking the liquidity out of highly speculative bets??? Will the Japanese help by finally raising their rates? Many expect the US Dollar to plummet on this scenario, but I could imagine the Dollar even to rise against the Euro in this scenario. I’d rather expect the Sterling to be the victim as the housing sector could be even play out worse than in the US and the economy looks weak there. Will and could that be a reason for the UK to enter the Euro???
6. Commodities
Inflation and asian growth say higher, but if economy weakens and risk of carry trade unwind … the only way could be DOWN!!! I always have to remember, that the Saudi Oil minister said, that he does not see the demand (the real one) for OIL and that they, the Saudis sell Oil with rebates of up to 11$ to sell their quota I would love to see the Carry trade monkeys get hurt BIG TIME on the commodities … and I love to refill my car CHEAPER! And this might dampen inflation very much … SO the QUESTION OF THE YEAR is: Who kills the CARRYTRADE?
7. Bonds
Bonds, despite recent FED action are HUGELY UNATTRACTIVE! Rising inflation, risk of Carrytrade related selling and very high DIVIDEND yields from stocks are the reasons.
In Japan for example, dividend yields are now higher than bond yields and in Europe, gap between dividend yields and bond yields is down to 2003(!!!) levels … OOOPS … another case for stocks, which are underweighted on economic fears?
8. Terror
Latest developments in Pakistan (nobody would care, if they didn’t have nuclear bombs) show, how quick we can made aware, that this planet’s fate depends sometimes on only few people’s weird ideas. Let’s pray, that Bin Laden does not repeat his “help” to the Republicans ahead of this year’s election 
As I will start trading Jan., 7th … I plan to update my charts and comment on them.
Take care and again: HAPPY NEW YEAR TO YOU!!!
Tags: 2008, bond insurers, Bonds, carry trade, China, Commodities, election, financials, housing, outlook, terror
