The Credit Crisis Financial Stocks Short Journal

Quote from ralph00:

I still found his interview to be outstanding (its pretty clear which guy he is) - not because he's pounding the table about deflation (which he doesn't), but just as a reminder to never lose focus about what the crowd is doing (gold bulls beware).
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A snipet out of Faber's latest newsletter:

I should like to categorically state that anyone who says that gold is over-owned and in the midst of a mania is completely clueless
about the nature of asset markets and about what happens in the late phases of an investment mania when speculation gets completely out of hand (as was the case for gold and silver in the late 1970, Japan in the late 1980s, and the NASDAQ in 2000).

:cool:
 
Looking at OECD data both Canada and Australia didnt had a bubble much different from the US, Spain, UK, Ireland, France as measured by price to income and prices to rent. Given that they are net exporters of commodities they should have a more benign outcome than these unless we have a new commodity crash
 
I added 2 charts to the OECD data, charts of housing valuation for major bubble countries, in the 'housing price ratios' tab. It was made on Open Office so there might be issues
 

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Apparently Canada doesnt have a fed funds futures equivalent, only a '3 MONTH CANADIAN BANKERS' ACCEPTANCE FUTURE', which is their Libor equivalent. And it seems that the australian 'bank bill future' is nothing more than a contract that moves with their own libor

This adds another factor to playing their bubble, having to be right about the bubble plus the direction of the libor spread

Hugh Hendry apparently bet on the RBA cutting rates massively, seems silly(at least using those contracts), if rates go 1% or 0%, then australia would probably be in a banking crisis and those futures would have some kind of floor
 
I'd say there is zero chance Hendry owns 90 day bill futures. #1, the liquidity and volume on these contracts are too small to support the kind of action necessary at a hedge fund of his size. #2, he has said he own options on lower rates - since these don't trade OTC, it would rule them out.

He has made an institutional bet, where the trading desk of a comm'l or IB has written him a contract on sharply lower rates in Oz. If he's smart, the focus rate is probably tied to the RBA policy rate, and not anything to do w/LIBOR. He has also said he is long the Oz 10 year note - again, I would assume he is not long futures, but actually owns (w/leverage) and is receiving interest on Aussie 10 year notes.

In Oz, there is a 30 day contract that trades which is the close equivalent of the FF futures contract. I doubt there is a lot of volume.

http://www.sfe.com.au/content/prices/rtp15SFIB.html

The reason buying 90 day bills in Oz is interesting is that there is so much room between the current policy rate and zero. Even if Aussie-Libor blows out, the 90 day bill rate can still fall along w/the policy rate. In fact, i would almost want the Aussie-Libor to blow out as this would mean a return of the GFC and money rates in Oz rapidly moving towards zero. You can't have it all - I can't expect rates in Oz to get cut while the world markets and economy hums along. I would note that on days in which panic set in and eurodollars actually got hammered because of the LIBOR blowout, 90 day bill futues were up through the roof.
 
Quote from Debaser82:

A snipet out of Faber's latest newsletter:

I should like to categorically state that anyone who says that gold is over-owned and in the midst of a mania is completely clueless
about the nature of asset markets and about what happens in the late phases of an investment mania when speculation gets completely out of hand (as was the case for gold and silver in the late 1970, Japan in the late 1980s, and the NASDAQ in 2000).

:cool:
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What do you want me to say? I just don't find gold interesting, and I don't like owning something just because there may be a chance that a speculative mania is about to take it through the roof. There are a million investment/speculative choices out there.
 
As far as Canada goes their front-end contract is showing some weird pricing
http://www.m-x.ca/nego_cotes_en.php?symbol=BAX

Jun 2010 trading at 99.13, even though the 3m bankers acceptance has averaged something like 65bps
http://www.bankofcanada.ca/en/rates/interest-look.html

The description of the contract says the pricing of the contract is affected 'by Eurodollar futures prices of the same maturity and the price of exchange contracts between CAD and USD'

Which tells me the EU blowup is affecting that contract. Which means I'm not touching this
 
Yep, the Canada overnight bankers acceptance has jumped from 25bps to 47bps(start of the year to right now). USD libor overnight jumped from 17bps to 30bps in the same period

Counter-party/liquidity worries. If China blows up and the australian housing market tumbles I dont want to be long counter-party/liquidity risk there(unless someone by law is required to protect my investment, like the NYFed is with Fed Futures)
 
Actually the overnight rate there did not move, I made a mistake looking at the data. the 1m rate moved, but the overnight rate is still 25bps, if there was a contract based on that I would play it but the contract is for the 3m only
 
Quote from ralph00:

What do you want me to say? I just don't find gold interesting, and I don't like owning something just because there may be a chance that a speculative mania is about to take it through the roof. There are a million investment/speculative choices out there.
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Fair enough, I just remembered the quote in yesterday's report and reading your quote on oncrowdedness of trades made me put it up.
 
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