The Credit Crisis Financial Stocks Short Journal

I'm surprised that the fed didn't cut.
I was thinkinh about 'going for it' today, the liquidity of the NOV Fed contract was just nasty, the bids were just dissapearing and the market would move 3-4 points with no trades. my discipline lead me to reduce to size of my bets by more than 50%. By the time the news hit my news service and it was reported that 'fed is doing this and doing that' I knew it was all over, they would have reported an FOMC change first. I quickly hit a market order and got out at a loss of 2.5 points per contract, that is partially offset by my gains on the back months

I'm amazed how slow the market was to figure out that no cut was coming after the TAF or other stuff hit the news. Had I waited and acted close minded('I cant be wrong') or hopeful I would have took a gigantic bet and lost more then 10 points! Yesterday I just kept thinking 'this will be the easiest money ever, get ready for your best day' but my trader side kept saying 'no liquidity no play, plus you can be wrong'

It just goes to show how risk management is crucial. I think this loss will help me with reinforce that because I came in pretty arrogant today
 
Quote from Daal:

I'm surprised that the fed didn't cut.
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Could be that -if a rate cut is in the cards- they will wait after the ban on shortselling is lifted, then cut and create further upside through a short squeeze.
 
Quote from rros:

Could be that -if a rate cut is in the cards- they will wait after the ban on shortselling is lifted, then cut and create further upside through a short squeeze.
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"The interest rate paid on excess balances will be set initially as the lowest targeted federal funds rate for each reserve maintenance period less 75 basis points."

I believe this is why fed futures recovered after the sell off. this is could be a ease hint by the fed
 
Out of my back month fed futures through shorts on slightly less back months. Vix is too damn high and the fed has shown a tedency to underdeliver ever since the BSC day(cutting 75 instead of 100). If the market rallies big from here fed funds should selloff like mad. I'm trying to build up a theory on what is fomc thinking by not cutting today without that speculation on more actions seems to dangerous. I can always get back in when the vix is lower
 
Regarding the FOMC non-action. It seems the reason they didnt cut its because since the effective FF is cut already around .75 and the credit markets are not responding, cutting the target rate would only produce a psycological effect but that same effect could be tried with other liquidity tools and other measures

Ever since BSC day the bernanke fed seem quite unconfortable that the FF is at such low levels, their inherit optimistic bias keeps them from going lower(bill poole, out of the fomc, was saying regarding cuts few days ago 'but when the credit market comes back the FF will be too low', fisher was saying inflation wasn't a big deal but he didn't want to cut anyway, evans,will became fomc voter in 09, was saying inflation outlook is still 'uncertain' and cuts are not likely to help markets)

Fed seems to be trying to have their cake and eat it too. They seem to think its appropriate to have 1.25 target rate RIGHT NOW(that will be the initial interest rate paid on bank reserves and the effective FF) but their optimistic bias lead them to believe that 'after everything becames fine and markets comeback the rate needs to be higher'

On the next FOMC meeting will they care about losing credibility for having the effective way down and the target higher than that?I dont know the answer but it doesn't seem that they mind telling the market FU after the rate got so low by their standards
 
Quote from Cdntrader:

check out ABH. Worlds largest newsprint producers. Looks like its on the ropes. Lots of debt to be rolled over with few takers.
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Analyst slashes AbitibiBowater price target
Wednesday October 8, 12:53 pm ET

Analyst slashes price target on AbitibiBowater, reflecting its 'distressed liquidation value'

NEW YORK (AP) -- Shares of AbitibiBowater Inc. fell Wednesday after a Wall Street analyst slashed her price target on the stock by 90 percent to reflect the "distressed liquidation value" of the world's largest newsprint maker.

Amid a broader market slump, AbitibiBowater shares fell 13 cents, or 6.7 percent, to $1.80 in afternoon trading. The stock earlier hit a new 52-week low of $1.68.

UBS analyst Gail S. Glazerman reduced her price target to $2.15 from $20, saying in a client note that "there is significant risk" the Montreal-based company could be forced to restructure because it has $600 million in debt that matures next year.

The "rapid deterioration of global credit markets is too much of an impediment" for the company, said the analyst, who also cut her rating on the stock to "Neutral" from "Buy."

"Our (former) view on AbitibiBowater relied heavily on AbitibiBowater's ability to execute asset sales to lighten the debt load, buying time for improving operations to accrue," Glazerman said. "Closed credit markets will make it hard for buyers to finance acquisitions. Equity value could fall to zero."
 
Soros and Roubini get an egg in their faces. The bailout plan is now planning to inject equity in banks which their biases to bash the government made them miss it on the bailout language(they were pushing for it), I have no idea if they will be sucessful
 
Quote from Daal:

The bailout plan is now planning to inject equity in banks , I have no idea if they will be sucessful
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the market is down on the news. Nuf said.
 
this is frightening, the market is not behaving like you would expect. I have a long in WB(merger play, was hoping WFC didnt got the deal) and that will go down some more. I look at all my losing positions this year and they were mostly the type 'long asset'
my gains where either long fixed income(fed futures) or short sales, right now the only 'short' that I got is the mbi puts and yen long. the asset meltdown doesn't stop, its unreal
 
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