The Credit Crisis Financial Stocks Short Journal

Quote from ralph00:
I'm hostile because you seem to dismiss something just because there is negative carry. You say you think for yourself, but you behave just like 95% of the hedge funds out there which seem to be little more than vehicles set up to borrow at low yields and invest at high ones. That can also be a way to the poorhouse.

Just because I find stories like Burry or Eisman or Cornwall inspirational doesn't mean I don't think for myself. As far as I know, these guys have made no recent public pronouncements about the fate of interest rates. Should I instead take my inspiration from John Devaney?

http://money.cnn.com/2007/07/30/news/newsmakers/yacht_sale/index.htm
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I am not dismissing it. I am a big fan of trades with option-like payoffs, which are often negative carry. I just think that you have to be aware of the true costs of having these trades on. Moreover, you're not correct to generalize and assume I am one of these carry monkeys you read so much about. I like all sorts of trades, incl ones that carry negatively. It's just that I know from bitter experience how often it happens that carry completely kills the trade that you think you have made money on.

I don't know who the people you cite are, honestly. I am sure they're very smart people, but I am generally very cautious about stories of heroic exploits, since I know journalists and writers love to exaggerate and romanticize. Moreover, survivorship bias is a massive issue.

At any rate, it's fine, there's plenty of people that agree with you (e.g. one of the recent Macro Man posts). My personal opinion is simply that I don't like these trades. The optionality of the payoff is not big enough to make me want to pay the carry. Let me stress that this is an opinion, no more, no less. I have no problem whatsoever if you disagree with it.
 
These stress test results are awesome. The authorities really seem to have a handle on the situation. I've covered any and all bets that rely on deflationary conditions persisting and gone all-in long on stocks. :p :D :):p
 
The stress tests are obviously a complete jawk... Take Dexia that had to be bailed out and is known to hold all sorts of toxic crap. Here's the headlines:
*DEXIA HAS EU3.679 BLN IN GREECE BANKING BOOK
*DEXIA HAS EU2.8 BLN IN PORTUGAL BANKING BOOK
*DEXIA HAS EU1.788 BLN IN SPANISH BANKING BOOK

*DEXIA HAS EU34 MLN IN SPANISH TRADING BOOK

Now, guess what, sovereign bond haircuts are applied to trading books only, so, of course, heroic Dexia passes with flying colors. What a total load of bollox!
 
It remains to be seen if the EU joke tests will create the same result as in the US, where lies kept the self-fulfilling confidence rally going
 
Interesting piece in the latest Grant's. After a very bullish article on all things Canada about one month ago, Grant has turned bearish on that country due to growing evidence that they are on the downslope of an American-style housing bubble.

I would note that even though the Bank of Canada has jacked interest rates 50 bp over the past couple of months and even though recent economic statistics out of Canada have shown a great deal of strength, BAX futures have rallied strongly. As usual, the guys in the pits have it figured out way ahead of the news.

This certainly ties in nicely with my thesis about Australia. As usual, the key is China. The meme floating around now is that the Chinese bureaucrats, sensing that the Chinese RE bubble is cracking, are again going to be putting their foot the peddle to try and reflate before anything ever deflates. I say its a load of baloney. The Chinese do not have perfect foresight. They cannot perfectly calibrate a $10 trillion economy w/1 billion people over a massive land mass. When the myth of Chinese government omnipotence cracks, its going to be a doozy.
 
Quote from Martinghoul:

The stress tests are obviously a complete jawk... Take Dexia that had to be bailed out and is known to hold all sorts of toxic crap. Here's the headlines:
*DEXIA HAS EU3.679 BLN IN GREECE BANKING BOOK
*DEXIA HAS EU2.8 BLN IN PORTUGAL BANKING BOOK
*DEXIA HAS EU1.788 BLN IN SPANISH BANKING BOOK

*DEXIA HAS EU34 MLN IN SPANISH TRADING BOOK

Now, guess what, sovereign bond haircuts are applied to trading books only, so, of course, heroic Dexia passes with flying colors. What a total load of bollox!
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Dexia up 9% today, up 30% this month.

Should have bought some...:D
 
http://www.zerohedge.com/article/70...ncy-day-trader-extraordinaire-barton-biggs-fl

Barton Biggs at it again :p

You can't make this stuff up. He was wildly bullish on June 30. By July 2, he had turned bearish again - right at the bottom and right before equities would rally nearly 10% in the ensuing 15-18 sessions. Now he's bullish again. As I said on July 2, this clown's only value is as a contrary indicator. I'm convinced he is no more than a talking head. I find it hard to believe that anybody actually lets him get anywhere near the actual investing or trading side of the business.
 
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