Carry, LTRO, Data, And VIX
Once again we seem to have a discrepancy between what “credit” people think and what “equity” and “FX” people think. The broad market rallied strongly today, at least in part because of the LTRO. On one thing, everyone agrees, the take up rate will be high. There will be strong demand for the LTRO. What […]
(BN) Einhorn Trades Swaps for Shorts When Betting on Sovereign Debt
The ECB has had a focus on stopping the CDS market from working. They have looked at Naked CDS bans. They have floated rumors about selling CDS. They worked hard to avoid triggering CDS on Greece. The EU has always been against short selling. They like to ban short selling on stocks. For whatever reason, […]
JEF vs MS
I’m not sure there is much left in this trade. If Europe deteriorates, we could see JEF trade through MS, especially since MS is likely to have a large loss this quarter (some DVA give back, settlement with MBIA, and typical problems of all investment banks), but if Europe does indeed convince everyone it has some solution, MS will benefit […]
What The TF Is Up With LTRO?
So the market has completely latched on to the idea that LTRO is back-door QE. Does this make any sense and can it even work? So banks can borrow money for up to 3 years from the ECB. They can buy sovereign bonds with that money. Those bonds would be posted as collateral at the […]
You Want The Truth? You CAN Handle The Truth!
I’m not sure exactly when it happened, but Europe has finally starting dealing in the truth. Draghi can’t point out the limits of sovereign debt purchases often enough. The EU, usually happy to let completely false rumor after false rumor to drive the markets, took the time to quash the idea of EFSF and ESM […]
JEF
Decent earnings, but more importantly, they took leverage down from 12.9x to 9.9x. The combination of decent (not great) profitability coupled with significant balance sheet reduction should take some pressure off the shares. We had hoped they might have done the release earlier in the month, but this is very much in line with what […]
The Corzine Trade vs French Downgrade
Today it seemed that the market latched on to the idea of the Corzine trade as being the new bazooka. Banks would borrow lots of money from the ECB to buy sovereigns. It certainly seemed to be the case this morning when 3-year and in PIIGS bonds rallied hard. There are several flaws with this […]
MF Global Is Coming To Town
The Santa Claus rally may finally be here. In an ironic twist, as Corzine’s firm is in bankruptcy and he is at personal risk of prosecution, we are rallying because for all intents and purposes, the ECB has allegedly told banks to load up on the MF Global trade. Banks are supposedly using ECB money […]
Maybe We Have Switched To The Julian Calendar?
It is looking like yet another failed attempt to spark a Santa Claus rally. Maybe we should be looking at the Russian Orthodox calendar where Christmas isn’t celebrated until January 7th? Maybe, with all the anticipation of Chinese money we should focus on their seasonality? Maybe the seasonality of the countries where the money is, […]
(BN) Germany’s Hidden Risk: Bloomberg Businessweek Opening Remarks
This is a very interesting article. Not sure I fully understand it yet, but does help explain why all these national central banks still exist, and how circular everything really is in Europe. +——————————————————————————+ Germany’s Hidden Risk: Bloomberg Businessweek Opening Remarks 2011-12-15 05:00:00.1 GMT By Peter Coy Dec. 15 (Bloomberg) — Involuntary lending […]
