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The Credit Crisis Financial Stocks Short Journal
- Thread starter Daal
- Start date
Quote from Daal:
I shorted a bit of HAL 17.5 2011 puts. My max loss is just 2% of my netwoth if the stock is worthless by then, I can't refuse cheap money
Shorting a put also has an opportunity cost - if HAL falls to <17.5 in a panic over the oil spill and lawsuits/regulation, then your ability to buy at bargain prices will be reduced by the amount of puts you are short. E.g. what if the price collapses to 10, but you already have on a maximum short put position - you can't buy any HAL down there. Whereas if you didn't write the put, you could risk the same 2% of your net worth by going long the stock, with far greater upside than the put position.
Here's one reason why Hoenig is wrong
http://www.bloomberg.com/apps/news?pid=20601110&sid=aBKqsQ__Lkkk
The market is already hiking rates, as the EU situation unfolds negatively the tightening should increase. Libor already hiked 25bps, lower quality corporate bonds are already yielding more, meanwhile the recovery has been jobless and weak on a GDP growth basis net of inventories
http://www.bloomberg.com/apps/news?pid=20601110&sid=aBKqsQ__Lkkk
The market is already hiking rates, as the EU situation unfolds negatively the tightening should increase. Libor already hiked 25bps, lower quality corporate bonds are already yielding more, meanwhile the recovery has been jobless and weak on a GDP growth basis net of inventories
Quote from ralph00:
CNBC Europe interview w/someone named Philippa Malmgreen. She refuses to follow the CNBC cheerleading routine and it leaves the interviewers nearly speechless. Then they hit her w/the "Well Dick Bove just called Citi a buy" and she has to control herself from just coming out and saying "Dick Bove is a clueless tool who is bought and paid for by the banks he 'covers'." Good stuff.
http://pragcap.com/sovereign-defaults-are-coming
That was brilliant.
I agree with Malmgreen - there a limit to which Germany (and the USA via IMF) are willing to bailout the PIIGS.
As she said, the market is calling the bluff regarding the approx. 1 trillion USD bailout, and in the last hour or so the EURUSD has broken below the 1.2110 level to a new multi-month low.
Quote from Ghost of Cutten:
Shorting a put also has an opportunity cost - if HAL falls to <17.5 in a panic over the oil spill and lawsuits/regulation, then your ability to buy at bargain prices will be reduced by the amount of puts you are short. E.g. what if the price collapses to 10, but you already have on a maximum short put position - you can't buy any HAL down there. Whereas if you didn't write the put, you could risk the same 2% of your net worth by going long the stock, with far greater upside than the put position.
If the stock hits $10 and I consider that a big bargain, I could allocate more capital to it. There is nothing preventing me from having to keep my risk constant as prices change
Furthermore, the probabilities of the stock falling is already embedded in the option premium, so if you dont believe the premium compensation is big enough, you should be long the puts
Interesting that the FF futures contracts from Dec on out are selling off this morning despite the lower futures. Its pretty clear that foiks are expecting a blowout number from NFP. I will sit tight and hope for a big number and then pick up a few contracts if they drop some more.
This speaks to another point to be dealt with over the coming months, and that is the Nov election in the US. Even a blind man can see there's a bad moon rising in this country. Those currently in power have to be scared and are going to do everything possible to keep this thing together for another 5 months w/baling wire if necessary.
Much of the stimulus money has yet to be spent and you can be sure it will be going out in big chunks to states and municipalities to try and stem the massive layoffs coming from those entities. Additionally, there will be a move by Congress and the President to extend a temporary Medicare pay-sharing program in which the Feds are picking up part of the states' medicare tabs. This is saving billions, and is probably the difference in whether several states are in default of not.
Governor Rendell (of PA) was interviewed on Bloomberg yesterday and he sounded completely confident that PA was in the clear because help from DC is on the way. Given his close ties to the BO administration, I wouldn't doubt him.
As for employment, there have been numerous reports of the Census Bureau gaming the numbers by firing staff and the rehiring, sometimes multiple times. Whether true or not, one must be cognizant of the ability of politicians to influence these numbers over the short term. Anybody long the FF futures contracts should not expect an assist from the important gov't reports. Of course, the beauty of our markets is their ability to eventually see through these schemes and occassionally properly discount what is actually happening.
This speaks to another point to be dealt with over the coming months, and that is the Nov election in the US. Even a blind man can see there's a bad moon rising in this country. Those currently in power have to be scared and are going to do everything possible to keep this thing together for another 5 months w/baling wire if necessary.
Much of the stimulus money has yet to be spent and you can be sure it will be going out in big chunks to states and municipalities to try and stem the massive layoffs coming from those entities. Additionally, there will be a move by Congress and the President to extend a temporary Medicare pay-sharing program in which the Feds are picking up part of the states' medicare tabs. This is saving billions, and is probably the difference in whether several states are in default of not.
Governor Rendell (of PA) was interviewed on Bloomberg yesterday and he sounded completely confident that PA was in the clear because help from DC is on the way. Given his close ties to the BO administration, I wouldn't doubt him.
As for employment, there have been numerous reports of the Census Bureau gaming the numbers by firing staff and the rehiring, sometimes multiple times. Whether true or not, one must be cognizant of the ability of politicians to influence these numbers over the short term. Anybody long the FF futures contracts should not expect an assist from the important gov't reports. Of course, the beauty of our markets is their ability to eventually see through these schemes and occassionally properly discount what is actually happening.
I would suggest keeping your children away from the TV this morning. Bob Barberra is on and I fully expect to just whip it out and start whacking away at about 8:31 this morning.
Speaking of Barberra, why doesn't CNBC just make him, Jim Paulson, and Bob Dahl permanent members of their staff?
Speaking of Barberra, why doesn't CNBC just make him, Jim Paulson, and Bob Dahl permanent members of their staff?
"1239 GMT [Dow Jones] The broadest measure of unemployment, the so-called U-6 rate, that captures total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force fell to 16.6% in May, from 17.1% in April. The decline is welcome, but rate still onerously high."
People are migrating from U6 to the official UR. I dont believe the Fed has the guts to hike with 8.5%+ UR. So the first half of 2011 could be good for the front end too
People are migrating from U6 to the official UR. I dont believe the Fed has the guts to hike with 8.5%+ UR. So the first half of 2011 could be good for the front end too