Archive - Jul 2009 - Story

As Bernanke heads to Congress to defend the Fed's Independce, he releases this WSJ Op-Ed:

The depth and breadth of the global recession has required a highly
accommodative monetary policy. Since the onset of the financial crisis
nearly two years ago, the Federal Reserve has reduced the interest-rate
target for overnight lending between banks (the federal-funds rate)
nearly to zero. We have also greatly expanded the size of the Fed’s
balance sheet through purchases of longer-term securities and through
targeted lending programs aimed at restarting the flow of credit.

So many titles to choose from...

I have a limited supply.

Laboring tirelessly, an unsung Zero Hedger works behind the scenes into the wee hours and regularly saves my ass.

Tim Geithner is watching the Paulson interrogation clip and sweating hard.

Ye of the junk comment, you have been flagged.

Rep. Cliff Stearns not heart GS

If you have had your fill of Rosie for a while (not sure how that is possible, but a big hypothetical if), here is a wonderful piece by Hoisington Investment Management Company. Some great monetary and fiscal insights. Also lends credence to the theory that Gross very well may be spot on and the market is run by a bunch of herd-instincted, CNBC watching WOPRs (at least on the basis of upcoming deflation).

From The Fourth Branch Of Government's Secular Outlook, Interest Rate Strategies:

With Treasury yields near the top of our expected range, PIMCO plans to overweight duration and take exposure to the 5-to 10-year portion of the yield curve. However, consistent with our Secular Outlook, we plan to also retain an emphasis on the short end of the curves in the U.S., Europe and the U.K. as central banks are likely to tighten more slowly than markets expect.

Sure, that 10 year at 3.6% is such a bargain. So let me get this straight, equity markets are planning for near hyper-inflation yet Bill Gross is happy to lock in current inflation levels. Presumably someone is wrong: here is our guess who.

The VIX is hell bent on demonstrating it can go back to under 10 even as bond vol keeps on calling its bluff. However, someone keeps selling vol in wholesale amounts and reraising all in (the 5th round has been, of course, with taxpayer money) on stable market bets despite all fundamental signs to the opposite.

CNBC seems hell bent on clarifying what liquidity is. Oddly there was no commercial for JPM's Highbridge or Sigma X to follow the segment. Charlie - one sympathizes with having to butter up Van Praag. However, as you are digging into the other side of the story, can you ask your buddy Lucas just why is it that Goldman had to get a Fed VaR exemption and go with the toothless SEC as its risk regulator. This would make for some truly insightful reporting.

Spreads were tighter in the US as all the indices improved (with HY at new contract highs but IG staying wide of its tightest levels as the S&P closed at 2009 highs - although VIX is massively lower than the 60% levels last seen when SPY was here). Indices typically underperformed single-names (as a late day pick up in single-name activity suggest some index arb flows at play) with skews mostly narrower as IG underperformed but narrowed the skew, HVOL underperformed but narrowed the skew, ExHVOL outperformed pushing the skew wider, XO underperformed but compressed the skew, and HY outperformed but narrowed the skew.

Thought provoking