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Presenting The Twelve Things That Keep Niels Jensen Up At Night

Tyler Durden's picture




 

In his December letter to investors, Niels Jensen from Absolute Return Partners has issued his twelve key risk factors for the global economy for 2012. "In the following I list a number of risk factors which I believe investors should give serious consideration, but I do not for one second pretend for that list to be exhaustive. Neither should you read anything into the order of which those risk factors are listed. If you want my assessment of how to rank the various factors, you need to take a look at the risk scatter chart at the end of the letter." As always, an entertaining read, and as Jensen is a rather indicative example of the smart money, readers can determine for themselves what it is that keeps the hedge fund community up at night (aside from worries that the Feds will bust their door in any minute).

In summary, the dozen risks are the following:

  1. High yield priced for perfection?
  2. The risk of double dipping
  3. The sinking ship of Japan
  4. Beggar thy neighbour mentality
  5. Capital flows too hot to handle
  6. Chinese inflation out of control?
  7. Food inflation induced civil unrest
  8. Is India an accident waiting to happen?
  9. European contagion and solvency risk
  10. Massive refinancing programme
  11. Premature withdrawal of monetary support
  12. Israel launching a pre-emptive strike on Iran’s nuclear facilities;

The matrix below shows the proability and impact of these 12 possible developments:

Full letter (pdf)

 

 

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Tue, 12/14/2010 - 17:12 | 805989 Jason T
Jason T's picture

OT: where was piece about the riots in Italy today?

"The protesters smashed bank windows, destroyed several cash machines and threw chairs and tables at police vehicles."

http://uk.news.yahoo.com/22/20101214/tpl-uk-italy-protests-d1a0d5d.html

Tue, 12/14/2010 - 17:15 | 806000 Cleanclog
Cleanclog's picture

And that was just in Rome.  In Palermo they blocked the airport and in Milan the occupied the stock market building.  

Coming to a theater near you soon.  Oakland, California.  Philly, Hoboken, Coral Gables, and Laredo.

Tue, 12/14/2010 - 17:17 | 806009 Jason T
Tue, 12/14/2010 - 18:07 | 806156 iota
iota's picture

Cheers.

Wed, 12/15/2010 - 06:58 | 807483 shortus cynicus
shortus cynicus's picture

Its only a beginning. Soon it will be new normal in Europe.

 

Tue, 12/14/2010 - 17:13 | 805990 Cleanclog
Cleanclog's picture

I think you meant 2011.

Let's add state and local inability to roll debt as rates climb after today.

Tue, 12/14/2010 - 17:24 | 806032 traderjoe
traderjoe's picture

Yes, state and muni finances. WA state had to cut $900 million this year through June. Another $2 billion or so for next 2-year budget. 

Oh, and I'd add something about mortgage notes - Where's the Note?

Tue, 12/14/2010 - 18:06 | 806150 Ferrari
Ferrari's picture

Yeah. Really. Why no mention of mortgage fraud?

Tue, 12/14/2010 - 19:52 | 806491 prophet
prophet's picture

#10

Tue, 12/14/2010 - 17:13 | 805995 Spalding_Smailes
Spalding_Smailes's picture

Bond market outflows = flood of hot money into the stock market = Booooyaaa.

Tue, 12/14/2010 - 17:57 | 806112 scatterbrains
scatterbrains's picture

no but for real do you think those sagging long rates might trigger a fast wash out in PM's ?  I want to short them but more then that,  I want to get long should it occur.

Tue, 12/14/2010 - 17:14 | 805998 TruthInSunshine
TruthInSunshine's picture

Ben 'Caught Stealing' Bernanke won't let Niels down.

Any crisis can be dealt with in "15 minutes" or less.

Bernanke has "100% confidence" in his use of a new, mutant and so far, highly destructive and distortionary monetary policy that he is subjecting all the world's citizens to.

Tue, 12/14/2010 - 17:42 | 806071 ranrun
ranrun's picture

Ben 'Caught Stealing' Bernanke

ha

Tue, 12/14/2010 - 17:28 | 806006 the rookie cynic
the rookie cynic's picture

I'll tell you what keeps me up at night:

Providing for my family as bankers and politicians hollow out the American middle class.

http://therookiecynic.wordpress.com/

Tue, 12/14/2010 - 18:14 | 806015 plocequ1
plocequ1's picture

This looks like John Nash's Equilibrium theory written out his college dorm window.  This is the only equation you need to know. POMO+Fed + Taxpayer = Dow 80,000.

Tue, 12/14/2010 - 17:20 | 806019 RobotTrader
RobotTrader's picture

Yep, as usual, money never leaves the NYSE casino.

As soon as investors caught wind of the bond debacle, they immediately sold gold and oil stocks.  Big cap oils like DO are still waffling around at 52-week lows.

But consumers are unfazed.

They are still grabbing their blue "20% off" Bed, Bath postcards in the mail and stampeding to the mall in order to buy more gimcracks for their bathrooms, fancy comforters for their beds, and platinum-plated toilet paper holders.

No wonder the institutions keep piling into these "houseware" plays.

 

Tue, 12/14/2010 - 17:38 | 806062 traderjoe
traderjoe's picture

You talk about retail on a day BBY drops 15%?

Tue, 12/14/2010 - 18:20 | 806207 DoctoRx
DoctoRx's picture

That's the Robo-post of old!  Welcome back . . .

Meanwhile re Jensen, those 12 worries are BS.  It's all about the insolvency of the USG.

Tue, 12/14/2010 - 21:29 | 806742 something fishy
something fishy's picture

I had to laugh when I read this comment....just talked to my mom today and that's 

 exactly where she was off to, Bed Bath and Beyond to buy more crap! lol! 

Tue, 12/14/2010 - 17:33 | 806042 Rogerwilco
Rogerwilco's picture

European insolvency is "low" risk, who knew? I'm sure glad we have experts like our friend Neils keeping a watchful eye on the markets. My other friend, Mr. 10-year T, is on the line, gotta go...

Wed, 12/15/2010 - 11:02 | 807873 ATM
ATM's picture

Think you got it backward. High probablility and high risk.

Tue, 12/14/2010 - 17:35 | 806052 drink or die
drink or die's picture

Civil unrest due to high food prices is only medium impact?  Interesting...

Tue, 12/14/2010 - 18:02 | 806129 Sudden Debt
Sudden Debt's picture

Corn and grain prices are set to double in the next 12 months due to bad harvests.

We will have no problem paying a bit more for our food.

But in countries like Afrika, India, Pakistan.... where people use about 75% of their income on food. It is a problem.

Social unrest because of food prices is a hughe problem there.

If it all doubles again... we will have to expect reactions against us "Western Devils" who will be their cause that they grow hungry.

Tue, 12/14/2010 - 18:13 | 806178 NotApplicable
NotApplicable's picture

Don't forget the impact of federally subsidized ethanol (a.k.a., burning the last six inches of topsoil).

Tue, 12/14/2010 - 17:58 | 806120 Sudden Debt
Sudden Debt's picture

Why do so many debate here if Europe is worse of then America or not?

WE ARE BOTH GOING DOWN THE SHITTER!!

EUROPEAN ECONOMICS : SUCK

AMERICAN ECONOMICS : SUCK

It's not because one has a better or more psychedelic week then the other the all the shit on the walls is gone!

 

Tue, 12/14/2010 - 20:28 | 806561 Leo Kolivakis
Leo Kolivakis's picture

Love reading Niels Jensen and commented on this last week, but he still doesn't get that the cost of funding in Japan is a quarter of what he thinks it is! Hedgies shorting JGBs will get their heads handed to them!

Tue, 12/14/2010 - 22:00 | 806843 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

I think they are some permabears who don't like robotrader.  He always has two junks every time I see his posts!  I use cnbc and zero hedge.  I need both view points to help me.

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