The Credit Crisis Financial Stocks Short Journal

Maybe the possible sovereign defaults that are looming are not a big deal, IIRC the IMF was recapitalized, no one important will be allowed to fail. In the case of Greece maybe they will be bailed out before they get to the IMF by the EU
 
Its getting difficult to believe the economy stays weak. Business in my little corner of the world is just humming along. All of the big box places - HD, Lowes, Costco, ... - in our area are hiring right now. I know guys who are running HD stores and they believe they are way understaffed for the coming spring season and are hiring aggressively.

Its been clear for awhile that we're going to get a big print for 4th qtr GDP growth - north of 5%, I assume. The question is what would the 1st Qtr of 2010 look like. Doesn't look too shabby from here.
 
Quote from ralph00:

Its getting difficult to believe the economy stays weak. Business in my little corner of the world is just humming along. All of the big box places - HD, Lowes, Costco, ... - in our area are hiring right now. I know guys who are running HD stores and they believe they are way understaffed for the coming spring season and are hiring aggressively.

Its been clear for awhile that we're going to get a big print for 4th qtr GDP growth - north of 5%, I assume. The question is what would the 1st Qtr of 2010 look like. Doesn't look too shabby from here.
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I want to stay open minded but I just cant see economic outperformance to a level that the fed hikes. Looking at rents and the econbrowser phillips curve model looks like inflation and core inflation is set to keep going lower, how many months of upticks in inflation will the fed need to consider a hike? Probably many(last cycle it was something like 5-6 months)
So perhaps the strong economy argument might help out those bullish in stocks, which is one reason I have been staying out of for a while. The whole thing has become a self-fulfilling prophecy, the higher it goes the more it boosts the economy
 
Quote from ralph00:

Nice piece from Felix Salmon. Its not about interest rate speculation. Its more of a summary of a piece Malcolm Gladwell wrout about Nassim Taleb, as well as a critique of the stature of John Paulson. I think it captures some of the true difficulties of being a successful Global Macro trader ...

http://blogs.reuters.com/felix-salmon/2010/01/14/john-paulsons-high-risk-hubris/
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This totally mischaraterises how Paulson bet (setting up a separate fund with multi-year lockup specifically for this trade; the incredibly skewed risk/reward in CDSs; choosing the lowest tranches so even if house prices kept on rising, he'd still probably make money).

Also if Paulson's trade was risky, how risky was being long stocks over the same period? At least 5 times riskier (58% realised S&P drawdown in 18 months, vs 12% max possible loss for the Paulson trade on the same period). So being long stocks (conventional view) risked 58%+ for an upside of maybe 10-20%, and Salmon is criticizing Paulson for risking 12% to make 500%?

Salmon needs to go read up on risk/reward. When you have a potential 50-bagger once in a lifetime trade, you don't wager 1% of capital on it.
 
I recall reading that if Bernanke doesnt get reappointed by congress he will STILL be the chairman after his term expires, in some kind of a temporary basis, but dont quote me on that. In case that is wrong, Bill Dudley or Kohn might step in, those guys are quite dovish right now
 
After the Brown's election, I figured the BO response would be to change the subject away from HC by getting tough on WS. In this, I thought that Geithner would be shown the door. However, now that you mention it, Ben could go instead. It'll be curious to see how this plays out. I believe TG testifies on the AIG thing next week. If you see a bunch of congressmen on the dem side calling for his resignation, you'll know who the BO administration has chosen.\

I don't think there is any question that if Ben goes, the new Fed chairman will be expected to play it dovishly until after the election.

I suppose its a possibility that both might not make it.
 
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