Major Schadenfreude_IHB
New member
Well, apparently, I didn't get the MEMO! <strong>Thanks a lot!</strong>
NEW -> Contingent Buyer Assistance Program
Trooper_IHB
New member
Major....um, err....I sent it Thursday .... P.O. Box 911 Schadenfreude, CA 90210 .... right ?
bltserv_IHB
New member
<p>Looks ugly again. Kind of like last week when the Fed bailed it out. If the Yen goes up and the Nikkei tanks. Look out below. Nikkei futures only off 50 right now. There is some funny business with some huge short positions. Looks like some Hedges know they are toast and are betting on the market to take a a huge like 30% hit. Guess someone has a Billion Dollar short on a SPX index that is insane. So called Bin Laden Trade. </p>
<p>There are 65,000 contracts @ $750.00 for the SPX 700 calls for open interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not a single trade. But quite a bit of $$ on a contract that is 700 points away from current value. No one would buy that deep "in the money" calls. No reason to. So if they were sold looks like someone betting on massive dislocation. Lots of very strange option activity that I haven't seen before.
</p>
<p>There are 65,000 contracts @ $750.00 for the SPX 700 calls for open interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not a single trade. But quite a bit of $$ on a contract that is 700 points away from current value. No one would buy that deep "in the money" calls. No reason to. So if they were sold looks like someone betting on massive dislocation. Lots of very strange option activity that I haven't seen before.
</p>
Major Schadenfreude_IHB
New member
<p>Trooper,</p>
<p>Memo was in the mailbox TODAY - just got it.</p>
<p>Please overnight future ones.</p>
<p>Thanks...</p>
<p>Memo was in the mailbox TODAY - just got it.</p>
<p>Please overnight future ones.</p>
<p>Thanks...</p>
graphrix_IHB
New member
Go look at the option volume on the Sept. SPY contracts. Heavy and I mean heavy volume on the out of the money calls. The $150 had over 108k traded today. That is almost as much as the entire volume of the out of the money puts. Very interesting.
EvaLSeraphim_IHB
New member
When is the next FOMC meeting? Are the options you're looking at expiring before or after the meeting? Given how pissy the market was today on the Fed's statement (along with housing), there might be people figuring that when the rate cut doesn't come, the markets will get even more pissy.
Trooper_IHB
New member
<p>Officially, it's September 18th. </p>
<p>I keep hearing on CNBC the phrase "They've all ready figured in the rate cut"..... I wouldn't want to be anywhere near Wall Street if he doesn't cut it at least .25 in September...oy. Some say he might meet early to cut if the market continues like this.... You really think he won't cut ? </p>
<p>I keep hearing on CNBC the phrase "They've all ready figured in the rate cut"..... I wouldn't want to be anywhere near Wall Street if he doesn't cut it at least .25 in September...oy. Some say he might meet early to cut if the market continues like this.... You really think he won't cut ? </p>
J
Janet_IHB
Guest
<p>A question:</p>
<p>Bernanke is guilty of underestimating the problems in housing, and more so, in lending.</p>
<p>Considering he is so revered as an economist, how can the underestimation be explained?</p>
<p>Is he too into books and papers, at the expense of getting out in the world?</p>
<p>I'm serious, I don't get how the ball was dropped so badly.</p>
<p>Bernanke is guilty of underestimating the problems in housing, and more so, in lending.</p>
<p>Considering he is so revered as an economist, how can the underestimation be explained?</p>
<p>Is he too into books and papers, at the expense of getting out in the world?</p>
<p>I'm serious, I don't get how the ball was dropped so badly.</p>
EvaLSeraphim_IHB
New member
That was the sense that some people took from today's missive. I saw it as potentially promising that they would, but this isn't my baliwick.
J
Janet_IHB
Guest
<p>(Context)</p>
<p>How can we have faith any future actions of the Fed will be the right ones, given the slip-ups?</p>
<p> </p>
<p>How can we have faith any future actions of the Fed will be the right ones, given the slip-ups?</p>
<p> </p>
Trooper_IHB
New member
<p>IMHO Ben doesn't care about the people who got in over their heads. Yes, housing is having, and will continue to have, a severe ripple effect throughout the economy.....but from what I understand, he's trying to control massive inflation. A rate cut won't help that.</p>
<p>Stolen from USAToday:</p>
<p class="inside-copy"><em>"The Fed has given no sign that it plans to change interest rate policy in the near term due to stock and bond market gyrations. Fed Governor Randall Kroszner told the Senate Banking Committee on Thursday that economic fundamentals hadn't changed since mid-July, when the Fed released its outlook and called inflation its predominant concern".</em></p>
<p>Stolen from USAToday:</p>
<p class="inside-copy"><em>"The Fed has given no sign that it plans to change interest rate policy in the near term due to stock and bond market gyrations. Fed Governor Randall Kroszner told the Senate Banking Committee on Thursday that economic fundamentals hadn't changed since mid-July, when the Fed released its outlook and called inflation its predominant concern".</em></p>
Major Schadenfreude_IHB
New member
<p>Some may argue there hasn't been any slip-ups by the Fed yet. From the <em>Economist (August 25th -31st):</em></p>
<p>"A rate cut does not just increase the supply of cash; it directly influences people's calculations about risk. Cheaper money makes other assets look more attractive - an undesirable consequence at a moment when risk is being re-priced after many years of lax lending..." and "...Mr. Bernake should be driven by his remit to support economic stability, not by the whiplash from financial markets."</p>
<p>The article concludes that "...plenty of the normal mechanisms markets have for correcting themselves have yet to swing into action: there is plenty of cash still hoping to pour into financial markets when they become cheap enough..." (like us renters who are waiting on the sidelines!) and ..."to cut rates too soon would imply that the financial system cannot work without bail-outs. That would be the worst legacy of all."</p>
<p>I agree.</p>
<p>"A rate cut does not just increase the supply of cash; it directly influences people's calculations about risk. Cheaper money makes other assets look more attractive - an undesirable consequence at a moment when risk is being re-priced after many years of lax lending..." and "...Mr. Bernake should be driven by his remit to support economic stability, not by the whiplash from financial markets."</p>
<p>The article concludes that "...plenty of the normal mechanisms markets have for correcting themselves have yet to swing into action: there is plenty of cash still hoping to pour into financial markets when they become cheap enough..." (like us renters who are waiting on the sidelines!) and ..."to cut rates too soon would imply that the financial system cannot work without bail-outs. That would be the worst legacy of all."</p>
<p>I agree.</p>
EvaLSeraphim_IHB
New member
>>How can we have faith any future actions of the Fed will be the right ones, given the slip-ups?
Bad news: we can't. In fact, if you ook up Ben's profile on Wikipedia, he lays blame for the Great Depression at the door of the FRB.
Bad news: we can't. In fact, if you ook up Ben's profile on Wikipedia, he lays blame for the Great Depression at the door of the FRB.
Nude_IHB
New member
<p>Janet,</p>
<p>I'm not an economist, nor am I currently in the markets. But I'm going to answer your questions as I see them.</p>
<p><em>Bernanke is guilty of underestimating the problems in housing, and more so, in lending. </em>Your premise assumes facts not in evidence. Some of the talking heads make this accusation because they want a rate cut right now to solve thier own problems. Bernake was Johnny-on-the-spot as soon as a bank got into trouble, indicating he knew exactly what was going on in the markets.</p>
<p><em>Considering he is so revered as an economist, how can the underestimation be explained?</em> In concert with my point above, I think he is content to let the markets correct as the bubble dictates, only stepping in the prevent a collapse of the system, rather than just a collapse of the profits. His job isn't to prevent people from suffering losses in a speculative market, it is to ensure the safety and integrity of the banking system as a whole. When the depositors of CFC made a run on the bank portion of the company, he quickly stepped in to prevent a domino-style collapse, working both in public and private to assist an otherwise healthy bank. In contrast, if CFC's mortgage arm was to close up shop tomorrow, I don't think he'd bat an eye.</p>
<p><em>Is he too into books and papers, at the expense of getting out in the world?</em> By all reports, he's a student of the Great Depression. He has gone to great lengths to study it's causes and the actions of the government both before and after the 1929 stock crash. He's written extensively about it and he seems determined not to repeat the same mistakes. That said, there is no guarantee he won't make new ones.</p>
<p><em>I'm serious, I don't get how the ball was dropped so badly.</em> Consider the source you are getting your information from. I can name the bulls on most networks and more than a few of the columnists that consider Bernake an idiot for not cutting rates immediately. And yet, these folks have also been the ones saying that there is no recession, housing won't go down, and have little orgasms every time the DOW closes up .001% in a day. I've seen less biased reporting on the Daily Kos, Fox News, and moveon.org *combined* than I've seen on the financial channels. The ball was only dropped if your concern is the profits gained during the bubble. If you are more concerned with your bank staying solvent, then Bernake just may prove to be the next Emmit Smith.</p>
<p>Again, just my take.</p>
<p>I'm not an economist, nor am I currently in the markets. But I'm going to answer your questions as I see them.</p>
<p><em>Bernanke is guilty of underestimating the problems in housing, and more so, in lending. </em>Your premise assumes facts not in evidence. Some of the talking heads make this accusation because they want a rate cut right now to solve thier own problems. Bernake was Johnny-on-the-spot as soon as a bank got into trouble, indicating he knew exactly what was going on in the markets.</p>
<p><em>Considering he is so revered as an economist, how can the underestimation be explained?</em> In concert with my point above, I think he is content to let the markets correct as the bubble dictates, only stepping in the prevent a collapse of the system, rather than just a collapse of the profits. His job isn't to prevent people from suffering losses in a speculative market, it is to ensure the safety and integrity of the banking system as a whole. When the depositors of CFC made a run on the bank portion of the company, he quickly stepped in to prevent a domino-style collapse, working both in public and private to assist an otherwise healthy bank. In contrast, if CFC's mortgage arm was to close up shop tomorrow, I don't think he'd bat an eye.</p>
<p><em>Is he too into books and papers, at the expense of getting out in the world?</em> By all reports, he's a student of the Great Depression. He has gone to great lengths to study it's causes and the actions of the government both before and after the 1929 stock crash. He's written extensively about it and he seems determined not to repeat the same mistakes. That said, there is no guarantee he won't make new ones.</p>
<p><em>I'm serious, I don't get how the ball was dropped so badly.</em> Consider the source you are getting your information from. I can name the bulls on most networks and more than a few of the columnists that consider Bernake an idiot for not cutting rates immediately. And yet, these folks have also been the ones saying that there is no recession, housing won't go down, and have little orgasms every time the DOW closes up .001% in a day. I've seen less biased reporting on the Daily Kos, Fox News, and moveon.org *combined* than I've seen on the financial channels. The ball was only dropped if your concern is the profits gained during the bubble. If you are more concerned with your bank staying solvent, then Bernake just may prove to be the next Emmit Smith.</p>
<p>Again, just my take.</p>
Trooper_IHB
New member
<p>Well said Nude.</p>
graphrix_IHB
New member
<p>I have much more to say but I am too tired to make any sense of it into sentence let alone a paragraph. So instead I give you the link to BenCopter's printing press speech. <a href="http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm">http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm</a></p>
<p>What I will say is that if you research Ben's general thoughts of economic growth he has to be concerned about the lack of real wage growth. That and they didn't say squat in the minutes. And if you don't think that The Container Paulson calls him everyday to mention a strong dollar you are nuts. </p>
<p>What I will say is that if you research Ben's general thoughts of economic growth he has to be concerned about the lack of real wage growth. That and they didn't say squat in the minutes. And if you don't think that The Container Paulson calls him everyday to mention a strong dollar you are nuts. </p>
awgee_IHB
New member
<p>First let's agree that I don't understand much, so let's see if we can get me straightened out on something.</p>
<p>Why does anybody think that Ben or the Fed can do anything to help present or future mortgage holders? It is my feeble understanding that present mortgages are based on the LIBOR, not the Fed Funds or the ten year treasury. And it doesn't seem like the secondary market is borrowing internationally and doesn't care to base anything in the future on the Fed funds or treasury. </p>
<p>Why does anybody think that Ben or the Fed can do anything to help present or future mortgage holders? It is my feeble understanding that present mortgages are based on the LIBOR, not the Fed Funds or the ten year treasury. And it doesn't seem like the secondary market is borrowing internationally and doesn't care to base anything in the future on the Fed funds or treasury. </p>
IrvineRenter_IHB
New member
Personally, I think much of the obsession on the FED is the last stage of market denial. The only hope bulls have of preventing a complete market meltdown is some kind of FED action. I don't think any FED action will make a difference, but in the minds of bulls, this is the only hope they have left.
Someone took out a huge option position recently to short the S&P. The collapse has to occur before options expiration on the third Friday in September for the trade to work out. They are betting on the market moving from denial into capitulation. Everyone is praying for the FED to lower interest rates when they meet in early September. When the FED does not act, the panic selling with be breathtaking. The market's last bastion of psychological defense -- its last rampart of denial -- is going to be overrun by market reality. The FED will not ride in like the calvary to save the day. The housing market is dead, and the stock market is going to experience a painful correction.
Someone took out a huge option position recently to short the S&P. The collapse has to occur before options expiration on the third Friday in September for the trade to work out. They are betting on the market moving from denial into capitulation. Everyone is praying for the FED to lower interest rates when they meet in early September. When the FED does not act, the panic selling with be breathtaking. The market's last bastion of psychological defense -- its last rampart of denial -- is going to be overrun by market reality. The FED will not ride in like the calvary to save the day. The housing market is dead, and the stock market is going to experience a painful correction.