justcurious

Hard to believe at first glance, but Ford (F) CEO Alan Mulally would like to see a gas tax that guarantees a price floor of $4/gallon - which he figures will prod small-car sales. Welcome to government-run energy policy.

People don't always make the most socially conscious decision. They are driven by their own self interest, which is not necessarily in the interest of the common good. Hence it is the responsibility of the governments to induce the relevant behavior. It is enlightening to see the CEO of an American company come in support of gas price floor. The article misses the whole point that Alan Mulally was trying to make. Yes, the whole world pays a much higher price for gasoline, so why can't americans too?

Gross: 'Stop the Asset Price Decline'

This is the same guy who said buy whatever the treasury buys, but just before they do that. Seems like he's bought a lot of CMBS, and Corporate bonds this time around. Please!!! Give me a break. It should be obvious to even a 7 year old kid what an ass Gross is. Grosso just grosses me out.

Did Merrill's Trading Desk Blow Up in Q4?

JP Morgan tracks the Basis on a daily basis. The basis in the past has been almost flat to sightly negative. There is a lot of research on the mean reversion of the basis. September through November saw the basis widen by 300bps (reaching almost -410bps in December for BBB rated bonds). The main thing about this trade is that this used to require very little capital as you are pretty much hedged on all fronts, and you are only taking counter party risk. The illiquidity of the bonds and the market conditions made the haircut required in the repo markets to jump from 7-8% to more than 25%. Which meant not many players in this market. The only way anyone could make money in this trade is by the positive carry , and the mean reversion of the trade and hence you have to lever up. In this market leverage means kiss of death. If you are a forced seller, you take additional 1-2% loss on an unlevered basis. There are lots of relative value FI hedge funds in similar situation.

50% Returns, No Risk?

Derivatives are not necessarily a problem. Even a plain vanilla currency forward or stock future is considered a derivative. These could just be used for reasons related to liquidity, or just to hedge the FX risk.


On Jan 09 09:04 PM bigmoney wrote:

> the no-thinking approach might be 1/2 cash, 1/2 investments, where
> the latter is stocks & bonds. That fence-sits both inflation
> and deflation.
>
> I work for a mega corp, and our 401k choices leave alot to be desired.
> They are proprietary black-boxes, with high fees. There is one
> S&P500 index, and a global bond index (whatever that is) with
> low fees, and everything else is 1%+. And if you crack open the
> Statement of Offerings, the funds typically have the disclaimer "may
> use derivatives". Even Conservative Fixed Income says something
> about derivatives.

Citigroup's Derivatives Reduce Bailout to a Non-Event

Any specific reason to believe the writedown to turn around? Spreads could stay at the high level for a long time. Defaults could meet or exceed the level implied... What then? Another down draft? More bailouts?


On Jan 04 07:09 PM Gtarras wrote:

> Has anybody thought about billions in write-UPs for the big money
> center banks which are coming when spreads start to tighten? The
> tightening is already underway..
>
> "the rescue plan fails to address the potentially disastrous impact
> of a crumbling derivatives portfolio in the face of a rapidly deteriorating
> global economic environment"
> +
> "Citigroup’s exposure to credit derivatives stood at $3.2 trillion
> (notional value)"
>
> I do not have a position in Citi (or any other bank), but looked
> at Citi's CDO exposure earlier last year. The biggest chunk of it,
> as far as I remember, were super senior tranches (both ABS and corporate).
> These exposures tend to give you the wild swing in earnings (because
> of their sheer size), due to FASB 157 rule. Well, when spreads widen,
> Citi's earnings get a horrid MTM hit because of the exposures.<br/>
>
> Watch out when the spreads reverse the course. All this false write-downs
> will be becoming write ups..
>
> I am thinking to go long UYG.
>
>
>
>
>

Options Trader: Tuesday Outlook

I'm not sure if you even understand what you writ.e.. India is in chaos over bribery??? Huh. The issue there is about the confidence vote. If the government wins, better scope for change, better reforms, and the nuclear deal goes through. Please do some research before you talk...
Also it seems like you also are in or close to foreclosure. 55K in three years for someone who made a bad bet, or decided to flip a condo in Florida... #$*&(*&