You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
The Credit Crisis Financial Stocks Short Journal
- Thread starter Daal
- Start date
EFF might drop even more if UST unwinds the SFP and floods banks with $200b more excess reserves
"Possible Market Disruptions Lie Ahead
Adoption of the tax bill will likely lead to a slightly earlier-than-anticipated need to hike the debt ceiling. This appears to be setting up as a real political donnybrook that could trigger significant market disruptions. Any disruptions to auctions and associated cuts in Treasury supply could promote temporary declines in Treasury yields. At present, the Treasury is about $500 billion below the current $14.3 trillion debt ceiling and, assuming the pending tax deal is enacted, we estimate that the limit will be hit in March. However, at that point the Treasury can unwind the Supplementary Financing Program (SFP) and use other accounting mechanisms that have been employed in the past in order to continue to operate normally until May or June. At that point, the Treasury will likely run out of options, and the threat of cancelled auctions, a federal government shutdown, and missed coupon payments will begin to loom large. In fact, a replay of the 1995-96 stand-off on the debt ceiling now seems like a high probability." - MS Greenlaw
"Possible Market Disruptions Lie Ahead
Adoption of the tax bill will likely lead to a slightly earlier-than-anticipated need to hike the debt ceiling. This appears to be setting up as a real political donnybrook that could trigger significant market disruptions. Any disruptions to auctions and associated cuts in Treasury supply could promote temporary declines in Treasury yields. At present, the Treasury is about $500 billion below the current $14.3 trillion debt ceiling and, assuming the pending tax deal is enacted, we estimate that the limit will be hit in March. However, at that point the Treasury can unwind the Supplementary Financing Program (SFP) and use other accounting mechanisms that have been employed in the past in order to continue to operate normally until May or June. At that point, the Treasury will likely run out of options, and the threat of cancelled auctions, a federal government shutdown, and missed coupon payments will begin to loom large. In fact, a replay of the 1995-96 stand-off on the debt ceiling now seems like a high probability." - MS Greenlaw
Yeah, there's some peeps predicting FF eff at arnd 15bps in Q1 next year.
I dont understand Dennis Gartman when he says he likes 'to buy gold in euro terms not dollar terms'. He is long GLD and shorts FXE by the same amount. I dont agree that there is even such thing as owning 'gold in euro terms', if you buy a gold bar with dollars, yen or euro, its irrelevant which currency you used, you get the same final product, in fact before you buy you could have switched the dollars for euros and made the same purchase, you get the same product for a similar price(cuz gold is an storable globally arbitraged commodity) making it irrelevant which currency you used
What he is doing is going long gold and adding a short to the EUR at the same time
What he is doing is going long gold and adding a short to the EUR at the same time
Quote from Daal:
Does anyone know why the ES futures curve has changed?
http://www.zerohedge.com/article/es-futures-curve-hits-whopping-10- point-6-month-backwardation
http://fridayinvegas.blogspot.com/2010/12/so-you-want-to-understand-s-futures.html
M2 growth slows some more. If I'm correct the bump over the last few weeks was a head fake and growth will go back to being weak
http://barrons.econoday.com/byshoweventfull.asp?fid=442298&cust=barrons&year=2010#top
As deleverage continues this would force the Fed to finish QE2 and possible need to buy more
http://barrons.econoday.com/byshoweventfull.asp?fid=442298&cust=barrons&year=2010#top
As deleverage continues this would force the Fed to finish QE2 and possible need to buy more
Its funny, facebook revenue seems to have come around $2-3B this year, meanwhile the valuation estimates is running around $30-60B. And Twitter is in a similar situation, if you think about it it seems completely rational for tech stocks to trade at 'unreasonable' multiples, given that they are lottery tickets with large payoffs when the companies workout
Sometimes they don't work out and the investors who bet on those unreasonable multiples look like fools(JDSU) but when it does, they look like geniuses(GOOG). In hindsight the tech bubble was far more rational than it looked
This is not to say that facebook and twitter aren't overvalued they might very well be but there is a difference between a bubble and overvalued assets
Sometimes they don't work out and the investors who bet on those unreasonable multiples look like fools(JDSU) but when it does, they look like geniuses(GOOG). In hindsight the tech bubble was far more rational than it looked
This is not to say that facebook and twitter aren't overvalued they might very well be but there is a difference between a bubble and overvalued assets
Hatzius has an interesting article on Barrons
http://online.barrons.com/article/SB50001424052970203319504576019693041431216.html?mod=BOL_twm_fs
"Annual drops of 1% in unemployment are rare events in the U.S. economy and are unlikely to occur in the immediate future, given current economic drags like fiscal policy restraint, a still-healing financial sector and the housing overhang."
I just disagree with this constant focus on the UR, I dont believe the Fed is looking at that a lot, they say they are but what they do is quite different. I started to suspect the Fed was focusing on M2 after the Q4 of 2008 when by some kind of magic the Fed exploded its balance sheet by just about the time velocity plunged(I say magic jokingly it can't be a coincidence), they pumped M2 to offset that, they kinda failed because NGDP went negative but they did prevent an even larger collapse.
This tells me there is a monetarist thinking going on there and they will not allow a collapse in the money supply. Same thing with QE1, the Fed lending programs started to be less used and this declined the monetary base(inducing M2 to decline) but then the Fed magically comes out with additional purchases that somehow keeps the balance sheet around the same level even after all the lending programs are gone
Somehow their decisions always endup being the ones that prevent a collapse in M2 and iexpectations(which could happen if the balance sheet contracted) but done in a conservative way(because they are scared of the balance sheet size), coincidence?I don't think so
If they really cared about the UR we would be at QE5 by now
http://online.barrons.com/article/SB50001424052970203319504576019693041431216.html?mod=BOL_twm_fs
"Annual drops of 1% in unemployment are rare events in the U.S. economy and are unlikely to occur in the immediate future, given current economic drags like fiscal policy restraint, a still-healing financial sector and the housing overhang."
I just disagree with this constant focus on the UR, I dont believe the Fed is looking at that a lot, they say they are but what they do is quite different. I started to suspect the Fed was focusing on M2 after the Q4 of 2008 when by some kind of magic the Fed exploded its balance sheet by just about the time velocity plunged(I say magic jokingly it can't be a coincidence), they pumped M2 to offset that, they kinda failed because NGDP went negative but they did prevent an even larger collapse.
This tells me there is a monetarist thinking going on there and they will not allow a collapse in the money supply. Same thing with QE1, the Fed lending programs started to be less used and this declined the monetary base(inducing M2 to decline) but then the Fed magically comes out with additional purchases that somehow keeps the balance sheet around the same level even after all the lending programs are gone
Somehow their decisions always endup being the ones that prevent a collapse in M2 and iexpectations(which could happen if the balance sheet contracted) but done in a conservative way(because they are scared of the balance sheet size), coincidence?I don't think so
If they really cared about the UR we would be at QE5 by now