Jimi Posted July 3, 2008 Report Share Posted July 3, 2008 Note:? On June 26, 2008, the Federal Reserve Bank of New York (FRBNY) extended credit to Maiden Lane LLCunder the authority of section 13(3) of the Federal Reserve Act.? This limited liability company was formed to acquire certain assets of Bear Stearns and to manage those assets through time to maximize repayment of the credit extended and to minimize disruption to financial markets.? Payments by Maiden Lane LLC from the proceeds of the net portfolio holdings will be made in the following order: operating expenses of the LLC, principal due to the FRBNY, interest due to the FRBNY, principal due to JPMorgan Chase & Co., and interest due to JPMorgan Chase & Co.? Any remaining funds will be paid to the FRBNY. This is the part that puts JPM on the hook for the LLC's first $1b in losses: it doesn't get any payout from the LLC's assets until the FRBNY gets both its principal and interest due. If its ~$29b isn't recouped, the LLC never gets around to the part where JPM gets any of its principal or interest back. Link to comment Share on other sites More sharing options...
Drano Posted July 3, 2008 Report Share Posted July 3, 2008 Chop -30% Chop 671148[/snapback] The stuff dreams are made of... Link to comment Share on other sites More sharing options...
Drano Posted July 3, 2008 Report Share Posted July 3, 2008 The stuff dreams are made of, part 2. This is from yesterday, and it was down again today Link to comment Share on other sites More sharing options...
mdporter Posted July 3, 2008 Report Share Posted July 3, 2008 here's another coal, 50DMA has held so far Link to comment Share on other sites More sharing options...
mdporter Posted July 3, 2008 Report Share Posted July 3, 2008 Here's a longer term FDG chart. Every dip has been a buying opportunity Link to comment Share on other sites More sharing options...
DrStool Posted July 3, 2008 Author Report Share Posted July 3, 2008 This is something I have been expecting to happen for many months now. When Doc has been talking all this time about the draining of liquidity by the Fed, I thought ithis could have only one constructive purpose, and that would be to crash oil. So that individuals and companies could afford gas. But the Fed's draining certainly has been crashing the stock market instead so far. If they manage to crash oil, I think they will then start pumping like a man with his hair on fire, and they will also buy a ton of S& P futures, in order to show the speculators leaving oil where they want them to go next. The rally may may not be short-lived at all then. It could last a week or a month or more. 671143[/snapback] I really don't think a stock rally could last more than a day or a day and a half. The destruction of worldwide capital and credit flows that would result from an oil price collapse would overwhelm the Fed's and other central bank's ability to counteract it. The recycling of dollars that currently underpins the financial structure would instantly stop and reverse, collapsing all asset prices. Stock prices would collapse. Bond prices would collapse. Commodities would collapse. That's how I see it intuitively, but I am sure there are ways that this could play out that I haven't thought of. Maybe oil prices will never collapse, just consolidate for a long time. I highly doubt it, but you never know until it happens. Link to comment Share on other sites More sharing options...
K Wave Rider Posted July 3, 2008 Report Share Posted July 3, 2008 That's why I have puts on USO. Anybody remember the symbol of that new oil ETF? 671138[/snapback] New doubles for USO/SZO DTO - 2x down crude oil OLO - 2x up The others mentioned , DOY/UOYare the DCR/UCR type of arrangement with the new median point at $100. Here's a link that explains them. Link to comment Share on other sites More sharing options...
DrStool Posted July 3, 2008 Author Report Share Posted July 3, 2008 Heh Doc, this looks to me as simply the creation and funding of the entities through which JPMorgan and the Fed are orchestrating the latter's agreement to absorb $29billion in first losses from Bear Stearns' $30 billion in potentially problematic MBS. They need to set up this sort of shell to formalize the commitments.Memory Refresher That the values don't round neatly to $29b and $1b could be simply accounting stuff involving the way debt-held-to-maturity (as opposed to for trading purposes) is carried on corporate balance sheets. Is there something more particular that is raising your eyebrows? 671147[/snapback] After staring at the H41 line by line for about an hour and talking it over with my son-in-law, I think I have my arms around it, sort of. I am in the process of writing a weekly roundup Fed Report that should be posted at http://wallstreetexaminer.com within the hour. I have written a lengthy rant at the beginning which I will make public for the benefit of those who are not subscribers. The meat and potatoes will be reserved for subscribers as usual. We got some nice comments on our podcast today. http://radiofreewallstreet.fm . I hope that more of you take the opportunity to subscribe to that. WSE subscribers get a discount on the podcasts. See the note in each daily report. Link to comment Share on other sites More sharing options...
K Wave Rider Posted July 3, 2008 Report Share Posted July 3, 2008 DUG noticeably underperformed the commodity last couple days...Crude is living on borrowed time here...could still see blowoff move to 150-160 area, but time is running short now methinks. Also XAX, which is heavily loaded with those kind of stocks, is still perfectly performing a crash wave, which I expect to see accelerate dramatically posthaste...another solid down day today as the window is totally wide open now Link to comment Share on other sites More sharing options...
K Wave Rider Posted July 3, 2008 Report Share Posted July 3, 2008 They managed to hold up GOOG and BIDU today...but both are at huge pivots GOOG hourly tracing underneath the 500 and 900 MAs and just kissed the 72 today...a break downward from here can only lead to disaster... BIDU...watch that 900...especially with that triple bottom test over the last week..a breach of that would be cataclysmic.... Link to comment Share on other sites More sharing options...
Speakeasy Posted July 4, 2008 Report Share Posted July 4, 2008 On June 26, 2008, the Federal Reserve Bank of New York (FRBNY) extended credit to Maiden Lane LLC under the authority of section 13(3) of the Federal Reserve Act. This limited liability company was formed to acquire certain assets of Bear Stearns and to manage those assets through time to maximize repayment of the credit extended and to minimize disruption to financial markets. Payments by Maiden Lane LLC from the proceeds of the net portfolio holdings will be made in the following order: operating expenses of the LLC, principal due to the FRBNY, interest due to the FRBNY, principal due to JPMorgan Chase & Co., and interest due to JPMorgan Chase & Co. Any remaining funds will be paid to the FRBNY. Well, uh, I know more about sail sheets, or bedsheets, or Aw Sheet's than balance sheets. But it looks to me like the Fed bought Bear Stearns, making JPM put up the down payment, and renamed it Maiden Lane. With their balance sheet now half gone to toxic paper, worth something in a market that ain't coming back, I have to wonder how many of the IB's can it buy. I also liked that scary part where if Bear were to fail and flail their assets in the open market, it would have collapsed every firm holding those same type assets. Whew! That'd be pretty much all the biggest financial players. Some solid world financial system, huh? The smartest guys on the globe, once again, use their advantage to rape and pillage their own system, let the devil take the hindmost. Link to comment Share on other sites More sharing options...
quanta Posted July 4, 2008 Report Share Posted July 4, 2008 Oil Arbitrage Here's a guy who figured out a play by buying DOY and selling USO LEAPS, looks interesting... Link Link to comment Share on other sites More sharing options...
Dharmaeye Posted July 4, 2008 Report Share Posted July 4, 2008 New doubles for USO/SZO DTO - 2x down crude oil OLO - 2x up The others mentioned , DOY/UOYare the DCR/UCR type of arrangement with the new median point at $100. Here's a link that explains them. 671155[/snapback] Careful gentlemen. The whole foundation of our western affluence and the 8 billion world population is based on oil - cheap energy. A major fall in oil would indicate a disaster of major proportions - as I mentioned before "freeze in the dark". It may well be a US government created disaster like the 30's. A little history of currency http://www.safehaven.com/article-10637.htm is instructive. Keeping track of government as in the WSE is critical. http://www.safehaven.com/showarticle.cfm?id=10653 Stay nimble and notice what happened in after hours trading in some of the Canroys today. Link to comment Share on other sites More sharing options...
Slappy Posted July 4, 2008 Report Share Posted July 4, 2008 Just in case Tangelo is one of our many fine lurkers, here's a little info I found about what to expect at Club Fed... Welcome to Club FedBy: Chuck Salter David Novak made 11 cents an hour baking bread during his stay at Eglin Federal Prison Camp in Florida. Now he makes a nice living advising white-collar felons on what to expect on the inside. Read on. It might keep your CEO scared straight. As a first-time felon, David Novak didn't know what to expect in prison camp. He worried that the experience would be like something out of The Shawshank Redemption, and he'd have to fight for his life. But he had also heard rumors about Club Fed and how white-collar criminals did not-so-hard time playing golf and tennis (which is untrue - they play basketball and softball). "Like a lot of first-time offenders, I was really confused," says Novak, who had owned and operated a flight-school prior to his mail-fraud conviction. "I expected the best and the worst." Don't go in where you can't get out.... Another likely story... Link to comment Share on other sites More sharing options...
K Wave Rider Posted July 4, 2008 Report Share Posted July 4, 2008 RTP at the edge of a very, very big cliff.... That massive reversal last 2 days looks ugly as hell, and the breach of the hourly suggests that the 200 day MA may not hold..if it doesn't....LOB... Link to comment Share on other sites More sharing options...
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