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DrStool

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Golly, CWD, I'd like to say I'm sorry about IYR closing below 74.

 

But I'm not.

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I hope it doesn't move too fast as it cuts down my profit. :rolleyes:

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I'm happy we are down hard today on PTR and FXI.

But the problem is, i will probably stay up late on Sunday Night/Monday morning to watch trading in Asia.  :lol:  :lol:  :lol:

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How are the options working? :D

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i bought some stock at the close on some beat up crapola ... C, AIG,  to name a few.

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Good luck, what is your plan? :D

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US dollar relative to Canadian dollar is now right at 130 year support.  The spike low in the US dollar in 1865 was when General Lee was advancing on Washington.  If the US dollar breaks support here, it is headed for a low not seen since the US Civil War.  I think that says something!  :o

 

post-647-1192830430_thumb.jpg

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Awesome chart, Scully!

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US dollar relative to Canadian dollar is now right at 130 year support.  The spike low in the US dollar in 1865 was when General Lee was advancing on Washington.  If the US dollar breaks support here, it is headed for a low not seen since the US Civil War.  I think that says something!  :o

 

post-647-1192830430_thumb.jpg

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Thanks for the very LT chart. :)

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Check out this weekly candle on PTR.

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Makes me think of the Far Side cartoon where the dog has set up a trap for the cat, and as the cat gets near it, the dog's thought balloon says "Oh please..... oh please...."

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far-side-cat-fud.jpg

 

:P

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Thanks ! ! ! !

 

Also thanks to all for responses re David's sources for info.

 

I am not able to connect to Minyanville -- when someone posts a link, it takes me to that page but won't take me to the stories that have links posted on the page. Do you have to be a member?

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I think it is a paid site, although they have some free content. :P

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Funds and SIVs are blowing up left and right. CP Money due isn't showing up... this is ongoing for months, but it won't matter to equities until it does.

 

"Cheyne Finance Plc and IKB Deutsche Industriebank AG's Rhinebridge Plc, two structured investment vehicles that bought securities backed by home loans, defaulted on more than $7 billion of debt as the value of their holdings fell."

 

"Rhinebridge, set up and run by a unit of Dusseldorf-based IKB, missed payment on $65 million of commercial paper yesterday after revaluing collateralized debt obligations, Fitch Ratings and Standard & Poor's said."

 

http://www.bloomberg.com/apps/news?pid=206...H6Tg&refer=home

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Rumor on the Street is Goldman's Global Alpha is in deep doo-doo.... again

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Couldn't happen to nicer guys. :lol:

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Funds and SIVs are blowing up left and right. CP Money due isn't showing up... this is ongoing for months, but it won't matter to equities until it does.

 

"Cheyne Finance Plc and IKB Deutsche Industriebank AG's Rhinebridge Plc, two structured investment vehicles that bought securities backed by home loans, defaulted on more than $7 billion of debt as the value of their holdings fell."

 

"Rhinebridge, set up and run by a unit of Dusseldorf-based IKB, missed payment on $65 million of commercial paper yesterday after revaluing collateralized debt obligations, Fitch Ratings and Standard & Poor's said."

 

http://www.bloomberg.com/apps/news?pid=206...H6Tg&refer=home

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Congratulations to our own Dr. Stool on ferreting this debacle out and even calling for something to happen during the week of the 15th.

I would say something happened today. :D

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I always thought of LeeWhee as a bear for some reason.

 

Lets ring the bell for shorty. He is the preemo bear to watch.

 

Not sure if you heard it, but the bell was rang on IBM and XOM a number of days ago with a couple of longer term PnF charts. I think some hedge funds heard it.

 

For the bears, let's finally hope we get a trend change that impacts the monthly charts. The last few thousand Dow points went up for the wrong reasons. This ain't no goldilocks economy.

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Today's ABX charts. Why would anyone hold this junk?

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Uh, because they have no choice?

 

Could you explain what those charts are for and what they mean?

 

Tanks!

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There has been a good discussion of the ABX indexes at the Calculated Risk blog. Here is a comment by a reader from a few days ago which explains how they work:

 

In a nutshell, the ABX is the price of default protection against a subprime tranche not paying. Each tranche is made up of 20 structures with about 40% of the mortgages coming from CA or FL.

 

If you want protection, you short the ABX and pay the coupon. You are paid by the buyer of the ABX. In other words the ABX is structured just like a bond.

 

To your charts. the ABX 07-02 BBB-index has a coupon of 5.00%. It has a maturity of 5 years. It's price yesterday was 29.44 making it yield 51.31%. If you want to buy protection against the tranche defaulting, it's going to cost 51% A YEAR. In other words, the market thinks this tranche is toast, it has for months, the argument now is how long until it defaults. Current prices suggest about 14 more months.

 

The ABX 07-02 AA index has a coupon of 1.92% and closed yesterday at 77.78. This puts its cost of default insurance at 8.94% PER YEAR.

 

Incidently, the ABX 07-02 BBB tranche is trading with a yield of 45.71%, so the market thinks that is toast too, again only arguing how long until it defaults. The ABX 07-02 A tranche is trading at a yield of 26.61%, so this tranche is also perceived to be toast with the markt thinking it will take about 4 years to kill off the BBB- and BBB tranches before defaults pile of enough to kill off this tranche.

 

Is it significant these are trading lower. OF course. But bear in mind current levels suggest the market thinks the BBB-, BBB and A tranches are gone; it is only arguing about the time of death. The AA and AAA tranches look like they should survive.

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Exactly.

 

You gotta watch credit default swaps to understand what credit market participants are thinking about the quality of their credits. That's why I posted the snippet in IDS today from the Bloomberg article: it indicates that a variety of credit default swap spreads were widening the past 48 hours. This, to me, was like the panic into the 13-week: clear, different, and mutually confirming signs of smoke in the House of Credit. Here's the quote from Bloomberg article:

 

The iTraxx Europe index of 125 companies with investment-grade ratings increased as much as 8.75 basis points to 38.25 basis points including a 3.25 basis-point jump today, JPMorgan Chase & Co. prices show. The CDX North America Investment Grade Index has climbed 10 basis points this week, according to Deutsche Bank AG, the biggest weekly increase since July 27. It rose 1.75 basis point today to 56 basis points.

 

The cost to protect the bonds of 25 European banks and insurers included in the iTraxx Financial subordinated index soared 19.5 basis points to 52 basis points this week, according to JPMorgan, the biggest weekly jump since July 27.

 

Contracts on the iTraxx Crossover Series 8 Index of 50 European companies with mostly high-risk, high-yield credit ratings increased 21 basis points to 334 basis points today, according to JPMorgan.

 

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.

http://www.bloomberg.com/apps/news?pid=206...RYEw&refer=home

 

To take an example, IBM common stock trades as a standardized instrument at the IBM post on the floor of the NYSE. There is no comparable standardized "IBM Bond" that trades at an IBM post on a New York Bond Exchange.

 

Institutional investors in corporate credits, therefore, rely on credit default swaps to hedge their positions, rather than trades in the underlying. They are usually hedging a bond portfolio, and they can use credit default swaps to hedge that broad portfolio, in the same way that the holder of a broad equity portfolio can use S&P futures contracts to hedge (or increase) exposure, rather than executing trades in the underlying shares themselves.

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Schumer Sponsors Additional Bailout Legislation

 

Sen. Chuck Schumer (DumbaSS-NY) today introduced legislation to provide $400 Billion for Fannie Mae and Freddie Mac, $200 Billion each, to buy up any unwanted shares of stock at Thursday's closing prices.

 

"We are proud to provide these funds to help the millions of innocent stock market investors who were not told that prices could in fact decline. We call on all brokers to provide this information to their clients in the future."

 

The legislation bans all sales of stock at prices below Thursday's close for the next two years, waives the capital gains tax for anyone who sells their shares to Fannie Mae or Freddie Mac, and provides coupons good for one free twelve-pack of beer and one official NFL team jersey for all shareholders of record prior to Thursday. In addition, anyone who makes below the median annual income, or tests below the median IQ, or has a body fat percentage in excess of 49%, will be allowed to purchase up to $100,000 of shares at Friday's closing prices and sell them at Thursday's closing prices in a cashless transaction. All proceeds will be tax-free. Anyone earning over the median annual income will be assessed a special one-time tax of $20,000 and be forced to watch 40 hours of prime-time TV, or 20 hours of prime-time TV and two "big games" of their choice, provided that they voluntarily agree to tool around town in a leased monster SUV with dual NFL team flags honking their horns and gesturing foolishly at fellow motorists for a period of not less than three hours, two of which must be in a reckless drunken stupor.

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I remember after the close Friday October 16th, 1987 they interviewed some young traders who were all excited "boy oh boy on Monday we're gonna have the biggest rally in history!"

 

oopsie :P

 

:ph34r:

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