Open thread/Running Diary/Brain Dump

Macro Man isn't mentally or physically capable of writing a considered thought piece this morning, because a) the market is too busy b) he is mentally drained and c) his only strong view is a desire to play golf rather than watch this crap.

8.26 am Suffice to say that the authorities are moving in the right direction- the Fed's CP purchase, the UK package- yet the obvious gesture to tip short-term sentiment is still lacking- e.g. rate cuts. And given that this is a sentiment-driven market, the authorities should realize that a little gesture can go a long way. Rate cuts need not be taken back, in the fullness of time, in a "measured" fashion over a "considerable period".

Macro Man's experience this morning has probably been echoed throughout the market- losing trades are decimated, while winners barely budge (the offer price reflects the market call, but the bid price doesn't budge)...so it's been a reaaaaaalllllll fun morning so far. It's tempting to just turn the screens off and play Urban Golf instead. For now, however, it's head down and manage things as best as possible. At this point, it's hard to know if today will be Armageddon, Ragnarok (particularly in Iceland), or even Nirvana should a coordinated response emerge.

Stay tuned, and feel free to chime in with views and war stories.

8.58 am It's the end of the world as we know it. Does anyone feel fine?

9.14 am South Africa's ANC party splits. The first campaign in the worldwide revolution?

9.34 am Something's rotten in Denmark. Lost in the world ending was last night's shocking news that Danmarksbank hiked rates, in a rather emerging-marketesque strategy of introducing a yield premium to defend the currency. This a currency, by the way, that is very closely pegged to the euro and had generated fringe interest from macro punters as a blow-up trade. By focusing attention on their concern over the currency , they may be inviting a more robust speculative attack. Certainly there are now rumours that the ERM peg will be abandoned. Could be a rather spectacular own goal....

Meanwhile, EUR/ISK is quoted 212/285 on the Reuters dealing platform....

10.02 am So now that things are settling down, do we start buying equities in expectation of the coordinated rate cut at 1.15 London time today? Dunno, but having paid up in futures to to hedge some of his equity puts, Macro Man is confident that things can now shank again. Certaibnly new lows in USD/JPY are sending that message.

10.26 am With winter around the corner, Macro Man is growing out his summer "#3 all over" haircut. This prompted Mrs. Macro to observe recently "Man, you're gray". Hardly a surprise, given this market! Fortunately, Sonny Rollins' Live at the Village Vanguard arrived from Amazon last night and went straight onto the iPod this morning. Macro Man can particularly recommend disc 2 of the re-mastered 2 CD set....

10.38 am Carry carnage continues. AUD/JPY is down 6% in the last 45 minutes.

Meanwhile, rumours swirl that the BOE has cut 100 bps and not bothered to tell anyone.

11.24 am No gym today as Macro Man doesn't feel like he can leave th desk. Still, his heart rate is getting a good workout. He bought USD/JPY twice today below current rates (99.40) and yet has lost money both times, such is his unwillingness to warehouse directional FX spot risk for any but the shortest of time frames.

There is a stiff drink somewhere out there that has his name on it this evening....

11.58 am So the Fed and the UK come up with great plans to shore up the banks.....and 3m $ LIBOR fixes 20 bps higher and 3m £ LIBOR fixes unched. Thanks for playing.....

12.02 pm BOOM! Coordinated cuts! Macro Man now has a long equity delta.

12.45 pm Well, 45 minutes into the brave new world, risk assets have firmed....but I have to say, it's a slightly disappointing reaction. Macro Man is up on the day, but has probably cost himself 15-20 bps of portfolio P/L with his misadventures in foreign exchange day-trading.

Still...he would have expected a somewhat better return on his equity book from trading his long gamma position; it probably would have helped if he hadn't have sold out some of his futures hedge at 11.57 this morning after the fixings hit the tape.

Still, it could be worse. Quote of the day from the chap next to me: "I've spent the last four days chained to my desk from 7 am to 10 pm because I'm short stocks....and the f***ing cut rates when I'm off the desk making a cup of coffee."

1.05 Someone forgot to tell the Brazilians that it's party time for risk assets. USD/BRL trades up to 2.44 (+5.75%) 5 minutes after the BMF opening. OUCH!

1.27 pm USD/MXN up 6.5% today to an all-time high of 13.15. Last week, Macro Man closed a small long at 11.00. This market ain't fixed by a long shot.

1.41 USD/MXN now 13.85. This isn't a black swan so much as a flock, or whatever a group on swans is called.

What's the f***ing point of Brazil, Mexico, Korea et al accruing all these reserves if they aren't there to stabilize things when it all goes tits up? This isn't about bailing out carry traders- they deserve what they get in this, and Macro Man hasn't got any horse in this race. But for the Latams in particular, why piss away a decade's worth of inflation-fighting credibility in the span of about a week by not at least trying to aggressively stem the market?

Equities are now careening back towards their lows of the day.

This is scary.

2.19 Do the Latam CBs read MM? Stories now circulating of onshore spot market intervention in Brazil, while Banxico also reported to be selling $/MXN. The latter is down roughly 1 peso from its highs.

2.45 13.00 offered USD/MXN. Holy shit.

15.00 Lunch at last. Here's everything you need to know about today: September 2009 eurodollar 100.00 calls traded at 1 tick today. For that trade to make money at expiry, LIBOR needs to go negative.

USD/MXN 12.65 offered. That's down 12% from the highs. In about ninety minutes. Three months ago, USD/MXN 1 month implied vol was 6%. Ay caramba!

15.21 I think we can officially retire the phrase "easy money", because nothing...I mean nothing...about this market is easy.

15.52 Is it beer o'clock yet?

16.10 And with 20 minutes to go til closing, Eurostoxx plummet down towards the lows of the day.

Nas-T.

16.57 Equities and bonds getting mullahed, the latter thanks to the Treasury re-opening some off-the-run issues and labeling the Street with auctions. Barbrous relic crowd, now is your time to shine.....

17.18 Let's end on a lighter note. Apparently the Nigerian govt has warned its citizens that if they get any e-mails from Irish banks, promising govt-backed deposit security and seeking bank account details, that its a scam...

18.52 Home, and about to crack open a nice bottle of red. Who knows where the last two hours of equity trading will hold; nothing between 970 and 1050 as a cash close on the SPX would surprise me, and nothing inside of 900 and 1100 would come as a total shock.

Nice to see Banxico announce a new dollar auction mechanism. You gotta say that they called the bottom in USD/MXN bang on...I think spot was 10.03 when they ceased their prior dollar auction mechanism.

So do Ben and co. do another 50 bp at the end of the month? If they follow TIPS breakevens religiously, it would be close to a dead cert....

21.17 With 10 minutes to go, I thought we might actually finish unched on the day. No such luck, however. USD/MXN traded on 4 different handles today: 11, 12,13, and 14. As of this writing, its nine centavos from yesterday's NY close. Forget Satan's finger or Satan's fist; that candlestick is called "Satan's Can Of Whup-Ass", or "Scowa" for short.

Unfortunately, there's been more than a few on the receiving end of that particular treatment today in any asset class or strategy you care to name. Methinks it's early to bed this evening; Macro Man wishes all readers a good night's sleep and good luck on the morrow.
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66 comments

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Linda P.
admin
October 8, 2008 at 8:56 AM ×

The "barbarous relic" is certainly getting busy this morning....

Good luck MM, sounds like another driving session on the track is coming!

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Manc Trader
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October 8, 2008 at 9:07 AM ×

:"Does anyone feel fine"

Nope, despite being massively long JPY I'm in the worst drawdown of my career (30% from peak) and really have no clue as to what is coming next.

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Anonymous
admin
October 8, 2008 at 9:09 AM ×

As the FT says - "The British government has thrown everything at the banking sector" - but still carnage.
Good luck to all
CT

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Anonymous
admin
October 8, 2008 at 9:25 AM ×

agreed on the desire to want to go flat and turn of the screens--the headline risk and liquidity risk make any positions hard to justify--while i like being short stocks and jpy (and have the jpy trade on) ive allready been stopped out of in once today on the move from 99.60 to 101.50 and had to wtch spx rally 2% and then dump--and thats without the wished for rate cuts --have to be prepared for that costs an immedite 5% on both positions--so what to do--well pa account that can invest with 5-15 year time horizion is buying stocks (25% of total cash) at these levels, BUT hedge fund i managed just having trouble with risk-reward be structured properly---and man feels like end of world comming--what happens if all currencies cease to have value as central banks and govt promise to back all assets--who is going to back the governments--yuck

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prophets
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October 8, 2008 at 9:30 AM ×

i'm actually pretty bullish for the first time since 9/11, but i also spend 70% of my time short selling, which was frustrating as hell in 2005-2006.

i'm actually slightly net long now for the first time in years.

stocks are just cheap.

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Macro Man
admin
October 8, 2008 at 9:33 AM ×

Prophets, I am prepared to go net long if/when we get the global rate cut. Until we do, well....let's just say that "this sucker could go down" a lot further, regardless of valuation.

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Damcanu
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October 8, 2008 at 9:33 AM ×

It's getting a bit silly now. If the FTSE keeps dropping 300-400 pts a day, in ten days or so the mkt will be worth zero.

Mr King needs to quickly throw in at least a 1/2 pt cut in UK int. rates to at least give the mkt something to feel good about.

MM,

Things at WH don't look very good but at least you may be able to draw some comfort that one of your arch rivals owners, Mr Roman A. has most probably lost half his paper fortune in the recent Russian mkt sell-off.

P.S. I'm a big Zola fan (even before he played for Chelsea) and I hope things work out at WH for his sake.

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Anonymous
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October 8, 2008 at 10:09 AM ×

Morning from Asia. It is carnage here. We're pretty certain there will be rate cut soon, but as Rogers keeps saying, what happens when the Fed runs out of bullets? And we're only in the 2nd or 3rd inning of this game. What happens when corporates start defaulting en masse next year? What happens when the *rest* of the stuff on the banks' books get hit?

I'm having a hard time not panicking.

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Anonymous
admin
October 8, 2008 at 10:09 AM ×

I don't agree that stocks are cheap. I think that 2009 earnings on the S&P 500 will come in below fifty dollars, giving a P/E (at the current price) of about twenty - well above the long term average and median.

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Manc Trader
admin
October 8, 2008 at 10:22 AM ×

I admire your discipline on waiting MM. I tried bottom fishing in the Nikkei and Japanese regional banks yesterday and the result was not pretty.
That said i am bullish as I don't believe in another great depression.

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Anonymous
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October 8, 2008 at 10:38 AM ×

On a lighter note -

http://www.thedailymash.co.uk/news/celebrity/robert-peston-transformed-into-pure-energy-200810081310/

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Boat52
admin
October 8, 2008 at 11:05 AM ×

Hello from NY and welcome to the long awaited Minsky moment brought to us by the accomplished production company of Hank & Paul and reviewed by the libor vigilantes.

Equities are adjusting to the new world order and why are folks upset? When they adjusted irrationally on the upside, everyone thought that was just fine. The answer is that the new world order might be as different as Europe became after Napolean's final defeat. One might argue that set the stage for the Franco Prussian War, a warm up to WWI, and then the big show stopper, WWI.

A small rate cut will do nothing if the repricing is factoring in a new world order. We must recognize there will be many unintended consequences of the mad rush by governments to stabilize a situation that will stabilize by itself, but at levels heretofore unthinkable.

This environment separates the real traders from those who pretended to be one. Don't panic, use your brains and take a deep breath.

Good luck Macro Man and I am confident you will do well.

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Boat52
admin
October 8, 2008 at 11:07 AM ×

Opps, typo, "the show stopper was WWII and the emergence of the USD as the world's primary reserve currency".

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Sean Maher
admin
October 8, 2008 at 11:20 AM ×

To paraphrase George W., this sucker's going up...having shorted equities and copper/oil since August, I'm reversing and going long FTSE, Nikkei and DJIA...ECB and BOE are likely to announce very big 'temporary' rate cuts today or tomorrow...every risk aversion measure I look at is screaming oversold.

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Anonymous
admin
October 8, 2008 at 11:44 AM ×

Equity markets will continue to slide and crash until the incentives return for private-sector capital to put money to work. The problem is that as public-sector capital is providing more and more of the funding and bids, those incentives may not return until we see prices that are shockingly low. I mean truly shockingly low.

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Anonymous
admin
October 8, 2008 at 11:52 AM ×

I blame Tangelo Mozilo

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Anonymous
admin
October 8, 2008 at 11:59 AM ×

Today i made mi first bullish equity trade in 18 months. think that coordinated cut is imminent. ECb just can't stand this mess and has to try to do something. Of course, these is chanche that mkt doesn't cares.
Extreme levels coult bring a bounce even in absence of a move, if FED and BOE misures get traction a bit.
Needless to say, itis pretty tactic trade. Will take profit asap and reverse if stoxx goes >3000 (wishful thinking?) and have a tight stop.

sick trader

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gsm_73
admin
October 8, 2008 at 12:07 PM ×

Dear MM
read Fed cut rate 1/2 percentage point.

ganesh

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Sean Maher
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October 8, 2008 at 12:07 PM ×

Well talk about timing, what a nice trade that's been...we're off! If this doesn't break the back of the bear near term not sure what will, regardless of grim 2009fundamentals...

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Richard
admin
October 8, 2008 at 12:07 PM ×

"Does anyone feel fine"

Yep , I closed all JPY longs , EUR Shorts on Monday for decent profit and now practically flat I am in Sit-on-hands mode as panic is moving into strange proportions.
I am trying to use every rally in Gold and Oil to add into shorts.

Btw. Just finished one round on local golf course near Prague. Great weather. Sunny, almost 17 degree Celsius.

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Anonymous
admin
October 8, 2008 at 12:43 PM ×

Q to MM:

After throwing everything they have at hand (govts/central banks) including the latest 50bp cut I really do wonder...

Will it be enough to stem the tide of the continuous and disorderly deleveraging of global markets??

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Anonymous
admin
October 8, 2008 at 12:47 PM ×

Question to the distinguished audience:

What is the likelihood of intervention on behalf of central banks in Eastern Europe in order to stop the decline of RON, HUF, PLN?

many thanks!

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MW
admin
October 8, 2008 at 12:48 PM ×

I gather Urban Golf is now is Smithfields, too --- Soho for the funds, Smithfields for the banks. Perfect!

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Anonymous
admin
October 8, 2008 at 1:04 PM ×

Was this the capitulation of Mrs. Watanabe the last two days?

On Monday, AUDUSD traded at .7738. Today, it fell as low as .6451. I managed to buy some at .6500 (and I also bought some of your favorite - NZD - at about the same time). I don't like AUD that much, but how can it not bounce from here. Yes, they have many of the same problems as other countries, but they run a budget surplus, and have a reasonably sound banking system (four of the ten "AA" rated banks in the world).

I got luckier buying USDJPY than you MM (+160 pips as I write this).

I am not sure I would have done all of this without the "coordinated rate cut" rumors I have heard for the last two day (I figured the rate cuts might bail me out if the trades went south). :)

I wonder how long an equity rally will last. There are a lot of people like you (and me) ready to bail out of the trade at a moment's notice.

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Macro Man
admin
October 8, 2008 at 1:04 PM ×

Anon @ 12.43,

Further capital injections are a possibility. I think this cut is throwing down the gauntlet, saying "enough is enough".

Anon @ 12.47, I think fairly low. FX is a sideshow here.

MW, yes it's literally around the corner from my office.

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DWK
admin
October 8, 2008 at 1:14 PM ×

i have a one touch in usd zar that missed by 5 pts this morning. then im in the loo when they cut rates. stiff drinks more like it.

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Anonymous
admin
October 8, 2008 at 1:44 PM ×

That didn't last long (to steal the title from yesterday's post). All U.S. equity futures are now red.

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dblwyo
admin
October 8, 2008 at 1:48 PM ×

MM - thanks for the inspiration. Pulled up Sonny on disk, quite soothing. You might want to check ou the Musical Heritage Society and particularly it's Jazz Heritage as they have great classics on high-quality recordings at very good prices. Being fond but not knowledgeable about Jazz was nonetheless able to build an instant library of greats in fell sales swoop a couple of years ago.

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Manc Trader
admin
October 8, 2008 at 1:51 PM ×

I guess why would anyone have confidence in the markets when the authorities clearly have no confidence in the markets.
Minyanville's prediction of a karachi style floor on the us markets may come to fruition if things don't improve.
Thanks mm for your blog it helps when you trade on your own away from a big financial centre.

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Macro Man
admin
October 8, 2008 at 1:57 PM ×

db, I highly recommend the Penguin Guide to Jazz on CD. Close to a thousand pages of reviews and ratings. Superb.

Manc, that precedent goes back further than that....FDR forcibly closed the stock market and the banks during the Depression....half of the latter never reopened.

And hey, more recently observe the NYSE after 9/11.

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Anonymous
admin
October 8, 2008 at 2:01 PM ×

Mr. Macro,

thanks for your answer. if possible, could you please tell me what would you do if you were the head of a Central Bank in Eastern Europe?

you've got:
1. a rapidly declining currency (I am talking about RON)
2. current account deficit
3. frozen interbank lending market
4. banks with huge leveraged investments in real estate that is starting to lose value
5. your currency has been pumped by the carry traders.
6. elections are looming and and you're asked for any short term measure that would stop the fall of the local currency and avoid economic meltdown

what would you do:
a) tell the PM to $$ck himself and do nothing
b) do nothing
c) increase rates
d) decrease rate
e) make an intervention in the currency market
f) other option _______________

my external gratitude shall be extended to you if you provide a humble student of the markets with your words of wisdom....

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Anonymous
admin
October 8, 2008 at 2:02 PM ×

ouch... the post above should read:

*eternal gratitude*

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Macro Man
admin
October 8, 2008 at 2:05 PM ×

Humble student, unfortunately the only advice I could credibly give is to suggest that he find the geezer who was head of the Bank of Thailand in 1997 and ask him how he's spent the last 11 years.

Slightly less flippantly, maxi-deval, slap on capital controls, nationalize the banks, which was basically the Asian route to prosperity from 1998 onwards.

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October 8, 2008 at 2:23 PM ×

This report, if accurate (note that the source is the FT), is extremely significant.

Exact numbers are not known, but thousands of metric tons may well be outstanding in this market. If it freezes solid and stays frozen, it could easily generate short-term demand comparable to annual production. Barbarous indeed!

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Anon 12.43
admin
October 8, 2008 at 2:29 PM ×

Scary indeed, the markets disparaging reaction to their definition of 'enough is enough' isn't comforting in the slightest but more an affirmation that it's beyond their control.

Free fall mode set to continue when the US opens up

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Anonymous
admin
October 8, 2008 at 2:35 PM ×

No question about it, MM. Markets will be shut down if relief does not show up quickly.

CB

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Anonymous
admin
October 8, 2008 at 2:46 PM ×

Why would EM CBs want to waste their bullets now? I mean that they know at the moment it is useless. Let the panic pass and reverse afterwards. It seems that it is a much better option.

The true recession has not reached EM markets yet. Better save your bullets for the foreseeable future. One example, Fed must regret now that it wasted the rate cut opportunity in Jan.

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Anonymous
admin
October 8, 2008 at 2:56 PM ×

Thanks MM! your wisdom is highly appreciated! sadly, there is no ear for such wisdom in here...

Thank you too, anon@2:46

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DS
admin
October 8, 2008 at 2:59 PM ×

MM, your DKK comments sparked my interest. Any thoughts on Iceland - Denmark links and how that could increase the probability in a change in the peg stance? What are you looking/waiting for to put on that trade? Risk reward seems compelling... Thanks for the wisdom.

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Anonymous
admin
October 8, 2008 at 3:03 PM ×

give time to the mkt... there is a lot to digest. Do not follow any swing or you'll get fooled. Early to dismiss the relief rally theory

sick trader

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Macro Man
admin
October 8, 2008 at 3:11 PM ×

DS, one of the reasons that Danish banks are in trouble is because of those links that you mentioned.

In this environment, I am trying to concentrate on stuff that I know and understand like the back of my hand...and Denmark fails to qualify on that count.

It's what helps me (kinda) sleep at night, and is what has, I think, been the philosophy that provided a support for my efforts to take money out of this Venus Flytrap of a market.

Oh, and since The Cut at noon, EUR/DKK is now back towards the bottom of its range of the last six months.

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Anonymous
admin
October 8, 2008 at 3:38 PM ×

Well feck me. If any day could demonstrate a whipsawing this is it.

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Anonymous
admin
October 8, 2008 at 3:39 PM ×

"September 2009 eurodollar 100.00 calls traded at 1 tick today."

I remember when Euroyen traded like that a few years back. I still wonder why any sane person would buy that.

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SD
admin
October 8, 2008 at 3:44 PM ×

Thanks MM.

Still long the Schatz?

BCB came in for a third USDBRL sale... clearly not quenching the market's thirst. No markets for young men, clearly...

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Anonymous
admin
October 8, 2008 at 3:53 PM ×

No market for young men? Well I'm in my 30's and I'm just not enjoying today at all and I don't mind admitting it. Its horrible and tbh intelligence trading can as easily kill you as reward. I'm out and going to make a nice cup of tea and have a smoke. Does that make me a pussy? For some reason I've got the "know when to hold 'em, know when to fold 'em..." tune in my head and I've folded, left the table, cashed my chips and headed to the lobby and the bar beyond..

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Anonymous
admin
October 8, 2008 at 4:13 PM ×

Haha, "the back of my hand". Feel like a fly sucked into the venus fly trap, can only stand and stare. Most of my risk is off, apart from the occasional scalp attempt. Watchout for the 09 Sterling rally, lots of banks finally jump changing their forecasts (UBS 2.5% fall 09!). Don't think mr mkt liked that there will be no rate meetings tom. Europe eq tanking for the close, may rally post given US rel resilience... Just my schizophrenic stream of consciousness. In the words of Father Jack: "FECK, where's ma driink". Great running commentary MM et al (DKK seems to have skipped my radar). Cheers, JL

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Anonymous
admin
October 8, 2008 at 4:31 PM ×

gaggle of swans

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Anonymous
admin
October 8, 2008 at 4:37 PM ×

Hearing fairly downbeat coments from real money accounts regarding european equities; such as " ... this is too late (rate cuts) we have decided for days now that we wanted to reduce our equity risk ... and we are just selling ...".

Note as well in fixed income space that 10s/30s continues to go more inverted/flatter in Eur ( despite 50 bps cut !!!). That tells me that pension money continues to go out of equities into bonds no matter what ...

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bernard
admin
October 8, 2008 at 4:37 PM ×

So, the central banks have tried the coordinated rate cut. Though I am not in the markets these days, I have a hunch that it did not achieve all that much, which was my main argument against trying that a few days ago. However, I could be wrong: can someone indicate if this is unlocking wholesale credit markets please ?

People ought to pay very special attention to what the BoJ said today, namely that they feel pretty sympathetic to this move even though they can't match it. See, there comes a point where it is pretty silly to cut rates at the wrong time, because you eventually get yourselves in a situation where you can't maneuver anymore. If, on top of that, you now have a balance sheet that is, shall we say, less than sterling, your future life as a central banker may become rather agitated.

Let's get serious. The core of all of this is what I'd call a disclosure crisis. A lot of people have been very bad boys and are reluctant to disclose it fully. Thus the credit market seizure which reinforces the difficulty in disclosure: a market is a price disclosure mechanism, no market, no price disclosure.

What central banks and governments must work upon is disclosure. Throwing a lot of money into the credit market isn't really bad as it might help restart them a little bit and might help some businesses survive their short term obligations, nationalizing banks -to sort out the bad (bank) and the good (bank)- is better, forcing all institutions to disclose fully will be the solution in my view. I don't really know how you achieve that, but I'm pretty convinced that it is necessary if some financial institutions worldwide are to survive.

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Anonymous
admin
October 8, 2008 at 5:04 PM ×

Margins on interest rate futures at the CBOT being increased by as mucg as 50% may be helping the bond sell-off too..

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Anonymous
admin
October 8, 2008 at 5:17 PM ×

The way you recommend music makes you sound just like Patrick Bateman. Please reassure us that you don't own a chainsaw and nail gun.

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Anonymous
admin
October 8, 2008 at 5:22 PM ×

Ha ha ha ha - liked the nigerian mail joke!!!

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Anonymous
admin
October 8, 2008 at 5:39 PM ×

similar joke:

http://bigpicture.typepad.com/comments/2008/09/request-for-urg.html

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Anonymous
admin
October 8, 2008 at 5:41 PM ×

similar joke



DEAR AMERICAN:

I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.

I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.

I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.

THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.

PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.

YOURS FAITHFULLY MINISTER OF TREASURY PAULSON

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Anonymous
admin
October 8, 2008 at 5:46 PM ×

Thanks for the Nigerian joke! Despair had set in until that laugh! One US analyst now saying the Dow is headed to 7,000 over the next six months or so. Yikes.

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gramps
admin
October 8, 2008 at 7:10 PM ×

Well MM, you got your coordinated rate cut... lets see if this fixes everything, or if it proves as effective as the previous 325bp of FF cuts, and USD1 trillion in "emergency" lending programs!!!

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mikarsky
admin
October 8, 2008 at 7:27 PM ×

Great, superhawk finally gave in to political pressure. We all know that not ONE SINGLE market player is finding "confidence restored" as Mrs Merkel was keen to stress. Indeed all the top-level hyperactivity is only reinforcing the doomsday sentiment that so far spared most of Europe.

Just the thought of Merkel or Sarkozy chatting with Trichet is frightening. There is an entire discourse driven by people who are either clueless or still attached to their old economic toolbox. What they fail to see is that underlying conditions of their models are not met. The liquidity issue is only one of the more obvious.

If the conditions are not met, the anticipated effects won't realize - it only attests to the quality of the model if they don't. While there's no new toolbox yet it's very obvious that the old won't work. For some reasons, people on the street know that. I hope Switzerland extends its direct democracy to include rate cut decisions!!

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Anonymous
admin
October 8, 2008 at 8:42 PM ×

I really wouldn't read too much into the 100 strike Eurodollar calls. A common real money investment guideline is that short futures must be covered by long calls. Given how much it costs to buy vol, and how difficult it is to do anything in option land in these markets, I suspect these were the cheapest and easiest way to satisfy compliance guidelines on a Eurodollar bearish position. Just a thought.

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Bitr
admin
October 8, 2008 at 8:55 PM ×

re 100 calls on the eurodollars ... for conspiracy theorists: heard that last time somebody bought that was just before 9/11!

also heard that somebody bot 11pct equivalent puts on March EDs!

still hard time understanding why EDs got sold off after the cuts...

gud luck MM!

cheers,

bitr

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gramps
admin
October 8, 2008 at 9:37 PM ×

Re: 2009 Sept 100 strike calls

These still have a year (roughly) to expiry. At expiry, they have no value (unless rates go negative) ... but between now and then, these options have a huge amount of gamma -- well, that's the theory predicted by Black Scholes model. They are just a lottery ticket on lower rates

Since the intrinsic value at expiry is zero -- to profit on the trade you have to sell to a schmuck, sorry "investor", who blindly follows the Black Scholes model price and doesn't think about underlying values.

Based on this mortgage mess, there are a LOT of schmucks -- sorry "investors"-- who blindly follow pricing models

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gramps
admin
October 8, 2008 at 10:20 PM ×

Wow... the rally from the global coordinated rate cut lasted almost TWO HOURS. We have another 150bp to go in the States -- that ought to prop things up for SIX hours.

Can't wait to hear the Wall Street "analysts" start calling for that.

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Anonymous
admin
October 8, 2008 at 11:02 PM ×

I hope the trading firms have nailed the windows shut and locked the room access. Otherwise we'll have to pay into the shoe shine boys mental fund too.

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Anonymous
admin
October 8, 2008 at 11:15 PM ×

One more big down and we're there. Won't even need to last a full day.

I was short from Thursday to Monday, went long Tuesday only to see my 35%(total portfolio gain from a 20% portfolio investment) gain go up in smoke in 2 hours and I did what I never do and doubled down, not once but twice on GS calls and eventually got bailed out by Mistress Market just for breaking my own rules.

Giving up only 1% of my 30% profit....options prices are are now around 50% of where I sold(read bailed with gusto).....

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Anton
admin
October 9, 2008 at 2:05 AM ×

Look @ these currency swings! The next thing coming is a run at the Baltic currencies? I mean Denmark?
Swedish banks will get destroyed in such action

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Anonymous
admin
October 9, 2008 at 2:55 AM ×

wow, a 5,5 sigma move in MXN

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November 28, 2009 at 3:52 AM ×

This one is scary because it is post massive stimulus but still caused such a large move. Thin volume compounded it, but the story is still all over the press. I bet average investors get the jitters and pull out. I think there will be a 10 to 20% sell off. Do I think the news really matters....no, but the story has legs. Dubai has always stoked the public's interest. Phase 2 minor.

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