The Credit Crisis Financial Stocks Short Journal

Apparently annalay is starting to do video commentaries. This is their first one and it made me want to throw up listening to their CEO pimp for the GSEs. I'm seriously considering selling all of my stock in their company. i don't mind them making money by leveraging agency debt, but don't piss on my head and tell me its raining.

http://www.youtube.com/user/AnnalyCapitalMgmt
 
This Greece bailout ain't all that bad. Apparently the money will be released in tranches and the fiscal reform will be monitored, so in theory it could be cut. They will probably look the other way for a while if Greece doesnt follow the plan but only for so long. At some point the money will be denied
 
Quote from Daal:

Martin, are you aware if the FX Swap lines from the Fed uses the section 13.3 of the Fed Act of 'unusual and exigent' situations?
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No, I don't know what the legal basis for these lines is. Given the questioning Benny B got from Alan Grayson, I think there's a danger the Fed might not be able to open these lines in the current environment.
 
Jun GE down almost 6bps, market pricing in almost 0.55% for that period in Libor. You better be right ralph that this is temporary, there wont be much profit if you are wrong
 
Quote from Daal:

Jun GE down almost 6bps, market pricing in almost 0.55% for that period in Libor. You better be right ralph that this is temporary, there wont be much profit if you are wrong
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I've been thinking about it, and I'll continue to be positive about this development. Does an increase in LIBOR/OIS take away part of the upside in this trade ... yes. But to the extent that this increase is because of stress in the system, it essentially takes a lot, if not all of the downside away from this trade - the goings on that have increased LIBOR make it far less likely that the Fed will jack the Fed funds rate. Should American stocks in general and financials specifically hit a significant road bump, you can kiss away any chance of the Fed hiking in the next year.

I would also note that the red months (is that the right terminology) are up nicely again today. The options continue to print positive.
 
You are correct. However, the ZQ would benefit even more from that scenario you mentioned. At the very least you could have shorted the EUR as a hedge
 
When I read the news about the Greece bailout om Sunday (and the acceptance by the ECB of doggie-doo as collateral), I immediately logged onto IB to find out what time currency trading opened to I could start shorting the EUR. 250 pips later and counting, I still haven't pulled the trigger.:mad:

I think about hedges ALL of the time and have even tried doing it on occasion. Its never worked out for me. I believe that a good chunk of the losses suffered by investors in 07-09 were because everybody spent so much time hedging that they thought they didn't have that much exposure.

I'm all set up to start buying OZ 90 day bank bill futures, but I've been thinking that if I'm correct in the trade, I could still lose money. Let's say I'm right and the Jun11 contract goes up a couple of hundred basis points or more. In that scenario, I could see the Aussie getting sawed in half vs the dollar. I don't think there is any question of doing this trade w/o being fully protected against a fall in the value of the Aussie. The trouble is that I double my exposure if I'm incorrect - i.e OZ bank bill futures fall which probably would mean that the Aussie goes up. So the hedge will have to be a lot more complicated than just shorting the Aussie to the tune of my bank bill futures exposure.
 
Quote from ralph00:

When I read the news about the Greece bailout om Sunday (and the acceptance by the ECB of doggie-doo as collateral), I immediately logged onto IB to find out what time currency trading opened to I could start shorting the EUR. 250 pips later and counting, I still haven't pulled the trigger.:mad:

I think about hedges ALL of the time and have even tried doing it on occasion. Its never worked out for me. I believe that a good chunk of the losses suffered by investors in 07-09 were because everybody spent so much time hedging that they thought they didn't have that much exposure.

I'm all set up to start buying OZ 90 day bank bill futures, but I've been thinking that if I'm correct in the trade, I could still lose money. Let's say I'm right and the Jun11 contract goes up a couple of hundred basis points or more. In that scenario, I could see the Aussie getting sawed in half vs the dollar. I don't think there is any question of doing this trade w/o being fully protected against a fall in the value of the Aussie. The trouble is that I double my exposure if I'm incorrect - i.e OZ bank bill futures fall which probably would mean that the Aussie goes up. So the hedge will have to be a lot more complicated than just shorting the Aussie to the tune of my bank bill futures exposure.
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Can't you just post the minimum margin possible(hedged by shorting the AUD) and convert the gains daily to USD while providing more AUD in case of mtm losses?
 
That's a good idea. I remember shorting JGBs several years ago, and they did not convert back to USD until after I closed the trade out. I'll see if they can do that for me.
 
One week ago, OZ bank bill futues were predicting 100 basis points of additional tightening over the coming 12 months. Now its less than 75. A nice rally, but not even a pimple on the ass of what could happen when the Aussie housing bubble pops and China continues to slow.
 
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