Correct me if I'm wrong but Bank Bill is something like libor in Australia. If that is the correct there is not arbitrage at all. Libor in the US typically trade quite a bit above UST yields. 1 year libor in USD is about 1% right now, well above US T-Bills(0.17%). The difference is credit risk and less liquidity
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Global Macro Trading Journal
- Thread starter Daal
- Start date
Correct me if I'm wrong but Bank Bill is something like libor in Australia. If that is the correct there is not arbitrage at all. Libor in the US typically trade quite a bit above UST yields. 1 year libor in USD is about 1% right now, well above US T-Bills(0.17%). The difference is credit risk and less liquidity
Quote from Daal:
I'm going to take a small position on JPM monday. Stock sell off seems to be mispricing the stock
The Gordon Growth Model adjusted for earnings shows that there is a big difference between one time hits to earnings and changes in the growth rate of earnings. The former should impact how much you pay for a stock by only a little bit, while the latter should have a big impact
I understand one might say 'but what about the Volcker impact and how it will affect the growth rate going forward' but thats not what the stock market is pricing in, XLF went down 1% only, so clearly people don't expect a Volcker impact.
I would argue this is one of those deeper level sea changes that takes a little time for the market to price in -- the initial shock may seem less for the same reason a traumatic injury produces no pain at first.
This is less about a JPM one-time hit to earnings than:
- the golden halo reputation of the best managed bank in the country getting shredded
- the dawning realization that ZIRP, which was supposed to be at least favorable to the banks while hugely disfavorable to savers, may actually be screwing up the banks too (forcing them into contorted trades like the one that just blew up)
- the fear that other bank blowups may be lurking (if Jamie Dimon doesn't know what the @#$# is going on, then what megabank CEO does?)
- a reminder that all the supposed wise men and shamans who are supposed to have a handle on things -- Dimon, Bernanke etc -- are actually winging it and making half-assed guesses in the dark as to how to handle this unprecedented macro environment
This thing could get much, much worse -- from a broad market selloff perspective -- and if portfolio contagion kicks in, gold might not be a haven either.
Then add in mounting odds of a Grexit, possibility of a weak Facebook IPO, poor finish to earnings season, California announcing a $16B budget deficit, commodity complex imploding (which hits inflation-positioned and BRIC-levered equity portfoios), China economic data imploding... something wicked this way comes.
Quote from darkhorse:
I would argue this is one of those deeper level sea changes that takes a little time for the market to price in -- the initial shock may seem less for the same reason a traumatic injury produces no pain at first.
This is less about a JPM one-time hit to earnings than:
- the golden halo reputation of the best managed bank in the country getting shredded
- the dawning realization that ZIRP, which was supposed to be at least favorable to the banks while hugely disfavorable to savers, may actually be screwing up the banks too (forcing them into contorted trades like the one that just blew up)
- the fear that other bank blowups may be lurking (if Jamie Dimon doesn't know what the @#$# is going on, then what megabank CEO does?)
- a reminder that all the supposed wise men and shamans who are supposed to have a handle on things -- Dimon, Bernanke etc -- are actually winging it and making half-assed guesses in the dark as to how to handle this unprecedented macro environment
This thing could get much, much worse -- from a broad market selloff perspective -- and if portfolio contagion kicks in, gold might not be a haven either.
Then add in mounting odds of a Grexit, possibility of a weak Facebook IPO, poor finish to earnings season, California announcing a $16B budget deficit, commodity complex imploding (which hits inflation-positioned and BRIC-levered equity portfoios), China economic data imploding... something wicked this way comes.
You should be short XLF then
Quote from darkhorse:
- the dawning realization that ZIRP, which was supposed to be at least favorable to the banks while hugely disfavorable to savers, may actually be screwing up the banks too (forcing them into contorted trades like the one that just blew up)
Re this: remember that the yield curve was very flat prior to '08: all those contorted trades were partly an attempt to get around that. The Fed's Operation Twist was not only not needed, it was a deliberate attempt to reproduce the curve that had a large part in causing the '08 crisis in the first place.
its all there in the chart,dot com bubble ,real estate bubble ,tarp bubble at resistance,running out of believers for the king has no clothesQuote from darkhorse:
I would argue this is one of those deeper level sea changes that takes a little time for the market to price in -- the initial shock may seem less for the same reason a traumatic injury produces no pain at first.
This is less about a JPM one-time hit to earnings than:
- the golden halo reputation of the best managed bank in the country getting shredded
- the dawning realization that ZIRP, which was supposed to be at least favorable to the banks while hugely disfavorable to savers, may actually be screwing up the banks too (forcing them into contorted trades like the one that just blew up)
- the fear that other bank blowups may be lurking (if Jamie Dimon doesn't know what the @#$# is going on, then what megabank CEO does?)
- a reminder that all the supposed wise men and shamans who are supposed to have a handle on things -- Dimon, Bernanke etc -- are actually winging it and making half-assed guesses in the dark as to how to handle this unprecedented macro environment
This thing could get much, much worse -- from a broad market selloff perspective -- and if portfolio contagion kicks in, gold might not be a haven either.
Then add in mounting odds of a Grexit, possibility of a weak Facebook IPO, poor finish to earnings season, California announcing a $16B budget deficit, commodity complex imploding (which hits inflation-positioned and BRIC-levered equity portfoios), China economic data imploding... something wicked this way comes.
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Just wondering, where were those loving JPM now in February of this year, just three months ago? That's the last time it traded around $37.
Apparently it didn't get much love back then. Then it rises 20%, quickly drops 15% and it becomes a value-investor's dream? I love the logic.
Apparently it didn't get much love back then. Then it rises 20%, quickly drops 15% and it becomes a value-investor's dream? I love the logic.
Quote from Butterball:
Just wondering, where were those loving JPM now in February of this year, just three months ago? That's the last time it traded around $37.
Apparently it didn't get much love back then. Then it rises 20%, quickly drops 15% and it becomes a value-investor's dream? I love the logic.
The stock could have been fairly valued in Feb at $37, but now undervalued at $37 and there would be no contradiction. Think about it
Quote from Debaser82:
I mentioned here before some time back my grandma sold her appartment.
All the cash has stayed in her deposit account for 2 months now as I was unclear about what to do with it.
Now I have grown to the idea of putting 8% of the money in a gold mining ETF (crashed these last months so rebound potential, + I remain a believer in the gold bull case) and 8% in a short S&P ETF.
They are both in USD so that is a hedge against the rest of the Euro's in the account, a broad market crash would send the miners lower but the short S&P higher.
I could lose with goldstocks further thanking and the S&P further rising.
I like this positioning, short S&P is always going to be a tricky one though. Markets tend to be left in an extremely unstable configuration after these money-from-helicopters rallies, declines are sudden and furious. You either need to be really good with the timing or prepared to have the index push against you to marginal new highs for a while.