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The Credit Crisis Financial Stocks Short Journal
- Thread starter Daal
- Start date
I went long pretty heavily in the Fed futures today, doubled my position. On a double .25 hike scenario I`m going to lose about about 20% of my networth. If I`m correct I make 14%(This uses a conservative estimate of how much QE2 will drive down the effective fed funds rate, could be more, they also could cut IOR to 0% or negative)
Lets just hope I`m right. If the Fed holds extended period up to May next year I believe I will be pretty close to 100% safe
Lets just hope I`m right. If the Fed holds extended period up to May next year I believe I will be pretty close to 100% safe
I can understand inflation expectations getting out of line and that forcing the Fed`s hand but in my mind they would respond by 1st prolonging the period which they are buying assets and 2nd decreasing the amount not by raising rates(Maybe both at the same time if markets are really crazy). Most inflation forecasts call for low core inflation next year, employment will be stronger but there is the shadow inventory of workers that dropped out and might come back, had they not left the UR would have already breached 11%(which was my old forecast), this will suppress wage costs and inflation
Thing is it looks like housing is turning down again, if it does say goodbye to lending recovery and healthy money supply growth
Thing is it looks like housing is turning down again, if it does say goodbye to lending recovery and healthy money supply growth
Its interesting that by and large banks are still not on net lending credit to the economy
http://federalreserve.gov/releases/h8/current/
The pop on M2 seems to have come from their purchases of Securities(line 2), mostly treasuries and agencies during September and October. Now that the lets front run the Fed party ended M2 growth might turn back down to weak levels, given that Loans and leases in bank credit(Line 9) is still negative
So even if housing doesn`t turn down it doesn`t look like the M2 growth of late is sustainable
http://federalreserve.gov/releases/h8/current/
The pop on M2 seems to have come from their purchases of Securities(line 2), mostly treasuries and agencies during September and October. Now that the lets front run the Fed party ended M2 growth might turn back down to weak levels, given that Loans and leases in bank credit(Line 9) is still negative
So even if housing doesn`t turn down it doesn`t look like the M2 growth of late is sustainable
Effective fed funds reaches 0.16%
http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
And the QE program still has a long way to go. 10bps seem possible
http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
And the QE program still has a long way to go. 10bps seem possible
"The Federal Reserve Board announced on Friday that a live webcast of its December 16 open meeting will be available on the Board's website. At the meeting, which is scheduled to begin at 2:30 p.m. EST, the Board will discuss proposed rules governing debit card interchange fees and routing. This will be the first time the Board has webcast one of its meetings. The Board has previously webcast other public events such as Chairman Bernanke's town hall meeting with educators and a conference on addressing issues facing small businesses."
Next, FOMC press conference?
Next, FOMC press conference?
Good luck w/the FF bet. Looks like rates stay on hold for 2011. Doesn't mean that there might not be a rate hike scare a la 2008. Hold on tight!
Stocks are up 17% since labor day, 10 year yields are up 75 basis points, and the same guys who were predicting rate hikes and the 10 year hitting 5% in 2010 are now back predicting rate hikes and the 10 year at 5% in 2011. Can a Greenlaw piece predicting FF of 3% at the end of 2011 be far behind?
I also feel the need to recognize the Dec 10 99.00 call to go off the board at around 70. - a 5-6 bagger since first appearing on this thread. Naturally, I sold out of my Dec10, Mar11, Sep11, and Dec11 calls way too early - still tripled my money on the trade.
Stocks are up 17% since labor day, 10 year yields are up 75 basis points, and the same guys who were predicting rate hikes and the 10 year hitting 5% in 2010 are now back predicting rate hikes and the 10 year at 5% in 2011. Can a Greenlaw piece predicting FF of 3% at the end of 2011 be far behind?
I also feel the need to recognize the Dec 10 99.00 call to go off the board at around 70. - a 5-6 bagger since first appearing on this thread. Naturally, I sold out of my Dec10, Mar11, Sep11, and Dec11 calls way too early - still tripled my money on the trade.
I'll also put a shout out for the deep out-of-the-money puts on the Mar 30 Year Bond (all struck between 107 and 110). Right now, these are 10 baggers in the few weeks I've owned them. I think they have the potential to be 60 baggers (or complete losses)!
Of course, I don't have huge trade size on these, but they could turn out that way. In any case, its the only trade other than a few core stock holdings I've got going on right now.
Of course, I don't have huge trade size on these, but they could turn out that way. In any case, its the only trade other than a few core stock holdings I've got going on right now.
Quote from ralph00:
Good luck w/the FF bet. Looks like rates stay on hold for 2011. Doesn't mean that there might not be a rate hike scare a la 2008. Hold on tight!
Stocks are up 17% since labor day, 10 year yields are up 75 basis points, and the same guys who were predicting rate hikes and the 10 year hitting 5% in 2010 are now back predicting rate hikes and the 10 year at 5% in 2011. Can a Greenlaw piece predicting FF of 3% at the end of 2011 be far behind?
I also feel the need to recognize the Dec 10 99.00 call to go off the board at around 70. - a 5-6 bagger since first appearing on this thread. Naturally, I sold out of my Dec10, Mar11, Sep11, and Dec11 calls way too early - still tripled my money on the trade.
The calls are the best, if there was Fed futures options with the liquidity of eurodollars I would have probably risked retarded amounts of money and made more than I did. I`m just not comfortable going back to them after the EU thing started to unravel