First up, some background. You know that the problem is beyond repair when the best solution being discussed lacks logic. The latest discussion about CDO-izing the EFSF funding to save Eurozone is apparently being taken seriously. The logic of supporters is that this will allow Eurozone to lever up, and satisfy funding requirements without expanding the balance sheet … Continue reading
The market rallied today (9/13) because China and Italy are discussing a bond purchase program. Promptly traders and their algo cousins pushed up the S&P, which was dwindling at near-flat or negative. Great news. China will buy Italian bonds, and this will help avoid the big bad Eurozone crisis. Where have I heard this news … Continue reading
Technically, we can’t have a double dip since the last recession ended almost an year back. But, humor me, will you? The meat is all the same; it’s just the label that’s in dispute. Equities rallied by ~3.6% over the first 3 days of this week on basis of 3 pieces of backward looking data, … Continue reading
First of all, this post is simply another (simplified, I hope) version of http://www.zerohedge.com/article/forget-vix-skew-tells-true-story-about-market-risk. I claim no credit for any original thought in this post. This is still fairly wonkish, and you would need a understanding of options to understand this post (and/or call me out on a mistake). Second, CSFB here doesn’t stand for … Continue reading
I believe that the S&P 500 is overpriced and due for at least 8-10% correction in the coming 9 months. I would take advantage of this mispricing using a long put option on S&P 500 Mini options (XSP). Very simply put, the S&P will rise if the component firms’ sales increase, margins improve, or if … Continue reading
I have previously argued that Spain is the game-changer for Eurozone debt crisis. If Spain fails, it will be the Lehman of debt crises, because rules of engagement will be unknown, and panic will spread across the globe riding on a giant uno-correlation machine. This is why EU, ECB, and likley G-20 will do all … Continue reading
It’s here; a new era has begun. Wisconsin public-sector workers have lost their collective bargaining rights. The narrative of how unions are hollowing out America’s fiscal stability has won. Except, that the new era, if it lasts for long, is an unfortunate one. First, this is not a negotiation; the Wisconsin public-sector employees have simply … Continue reading
Today, we had the privilege of listening to William Dudley, president of the New York Fed. Almost everyone had QE-2 on their mind, and asked him questions on it, to which, he gave understandably evasive answers. I think it would have been a lot more fun had he, say, countered the points that Hussman makes … Continue reading
Treasury Yields fell from 2.74% to 2.67% yesterday, primarily due to comments from Jan Hatzius, chief economist of Goldman Sachs. Hatzius expects that the Fed will buy $1 trillion of Treasuries to stimulate the economy. The comment had the opposite effect of key data released yesterday–slightly improvements in retail sales (0.4% monthly increase*, and 3.6% … Continue reading
With the Fed running out of ammunition, second round of downward revision of quarterly GDP, continuation of toxic political climate, and stubborn unemployment numbers, the press is waking up to the idea that maybe it’ll take very very long, if at all, to climb out of this recession. New York Times argues that the for … Continue reading
