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CDS "Speculators" Focus Their Attention On Italy, Germany And Brazil In Prior Week
After France, Spain and Italy were the main net notional movers in the prior week, the fear about the Eurozone continues, only this time spreading increasingly to the core. While the Italy move of over half a billion in net notional increase is not surprising, as many perceive the nation as the next weakest link after Greece and Portugal, the German spike is a little surprising, although less so when one considers the failed 30 year Bund auction yesterday. Other countries that fill out the list of top 10 deriskers in the prior week include Brazil, Russia, Japan, Kazakhstan, Greece (yup, they're back), and the UK, which made the 10th spot, as CDS traders finally focus on arguably the most troubled "developed" country in Europe.
On the other side, top reriskers were Turkey, Ukraine, and the US, which according to DTCC saw a $39 billion net notional increase on exactly zero contracts. We are not sure how that works but whatever. It's too complicated and so must not be regulated or touched as else it will all blow up. Just ask ISDA.
Full list of all sov and muni names below in pdf:
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As if rewriting the rules of finance wasn't enough. Now they are rewriting the rules of math.
Think of the earnings possibilities if the algos can trade each other zero shares at a time and get their rebate. Infinity is closer than ever.
Wow. Excuse the elitism here, but i dont believe you know what youre talking about. The logic of your post i simply suggests 'fuck the algorithmic PCs'. Every single thread on ZH, despite being about gold or sovereign debt, someone always brings up algos.
You do realize the this has nothing to do with rewriting math? It IS possible for a change in values of a security without necessarily changing the state (i.e volume, position) of it.
No need to excuse your elitism, for you obviously cannot spot sarcasm. But you thinking that it isn't computer algos commanding the market right now shows you probably shouldn't place yourself in the "elitist" camp. All of these silly trades by the hedge funds, etc. are based on computer models (even if an actual person is placing the trade). These computer models are clearly based on prior results and there trades will most likely revert to EV, eventually. This will end in a pool of algo tears.
There is little else to do, but rant, when you only hold USD/Gold/Silver/Miners.
You own Miners?
I thought that was illegal. :)
I wasn't trying to be elitist, though i realize the post might have came off as such, hence the aforementioned warning.
What you (we, for that matter, pretty much anyone who frequents this blog) understand is indeed how the market is running at an unsustainable place. But you cant blame it on the PCs millisecond by ms, day after day. Like it or not, the computers are NOT going away. Yes they (market irrationality mostly) will lead to another bust following this boom, but after the bust another boom will come. It is just the cyclicality of things.
Algos don't shed tears, nor do they remember, which is why after the next crash, they will be right back up snatching the pennies (which are arbitrary cause they cannibalize each OTHER and not retail folk), clearing your trades, making your markets, and anything else they were designed to do.
Geez, what you said was soooo stunningly obvious, one wonders how lifeforms such as ZeroPower exists?
FYI, 0000power, dood, 97% of the world economic activity is foreign speculation (have someone else explain that to youse), and over 80% of the American GDP is leveraged speculation.
Dood, where's my economy?
FUCK YOU quants.
You are a disgrace to the discipline of mathematics.
Well one should not expect that quants would treat their discipline with more ethics and a more rigorous [remember that quants; its the foundation of the discipline] approach. Its not like they give a shit as to how their equations, algorithms and models are used.
Not surprising that quants don't care how their models are used. They are essentially arms dealers.
Or at least thats how I view them.
http://www.ireport.com/docs/DOC-435235?hpt=Sbin
Flying Toyotas ??
Soooo.... the World order cannot be put in order, or it will all blow up. hmmm .. an oxymoron...Looks like it will all blow up, one way or another because there is no real World order. .
DJ reports that our friend billy...
NEW YORK (Dow Jones)--The top six underwriters of California state bonds
completed $27.5 billion of trades since 2007 in a market where investors can
profit by taking a dim view of the state's credit risk, Treasurer Bill Lockyer
said Thursday.
He voiced concern about the firms selling state bonds on the one hand and
either betting against them or enabling others to do so on the other by
selling a form of derivative instruments known as credit default swaps.
The swaps enable bond holders to hedge against, and even profit, from a
decline in bond prices. They could harm the state's bond sales and burden
taxpayers with higher interest costs, Lockyer said.
Lockyer had asked the state's six key underwriters on March 29 to provide
information about their trading activity in the municipal CDS market. The
firms are Bank of America Merrill Lynch, Barclays, Citigroup, Goldman Sachs,
J.P. Morgan and Morgan Stanley.
The treasurer said the inquiry "marks the first step in an ongoing process
of closely monitoring bond underwriters' CDS trading activities." He said he
will seek more information from the six banks and that his office will require
all 86 firms in the state's bond underwriting pool to file quarterly reports
that provide detailed information each firm's CDS market activity.
"We're not going away," Lockyer said. "We will remain vigilant in
protecting taxpayers' interests. The potential for harm exists, and the
danger will only grow in the evolving municipal bond market."
Lockyer also urged Congress to pass strong legislation to regulate the
market for derivatives, including municipal CDS. He said legislation should
make the market fully transparent.
To protect against speculative trading, Lockyer said legislation also should
require CDS buyers to own the underlying securities, such as bonds.
California is the nation's largest municipal bond issuer.
Seriously,
The surge in the Russ. 2K today is absurd... when will this bubble pop?
That R2K surge is seen as a blessing because manipulating the markets on the way up is considered perfectly acceptable (and even encouraged I suppose). This market is truly pathetic now......
Goldman Sachs bucked the Specs from France. What you got Italia. Pedephelia won't do the trick, sorry, you will need a more viable scapegoat.
Worldwide default and the Heads of State can sing, "Ring Around the Rosies".
I'm still shocked that Germany had a failed Bund auction. You have to wonder or ask a few questions about this (since germany is the biggest financially of the EU). One, why would a 3 billion euro 30 year bund fail? I mean it's not alot of money and why didn't one of their banks buy up the last 300 million dollars of Bunds to make it a no fail. Two, if Germany was considered one of the bastions of flight to safety why did it fail? I think this is the answer for the most part, and it's two fold. Countries and corporations are keeping their money closer/at home instead of investing them in other countries debt (which would explain the massive printing operation of the US who seem to always have buyers for their massive auctions, I wish I knew what country or countries don't need those billions and instead invest them in the US.). Also if buying debt they want higher returns with bonds or Bunds in the year or 2 year range (so they can get in fast and get out fast when they smell or see the first signs of problems).
They are just delaying the inevitable and many know it. They are doing everything they can (by hook or crook) in order to milk more time, but time for what? Time in order for them to have an excuse ready and people and countries to blame for the implosion of economies and currencies. And if that doesn't work they will use the Martial Law provision that bushed got signed a few years ago. Ask yourself, why was it so important for them to get this provision signed into law. It's because they know once everything hits the fan, people will go insane in the US. Imagine if your on SS and Medicare and come to find out that there isn't going to be any checks in the forseable future and what checks that may come will either be reduced significantly or won't go to far because of devaluation of our currency. The majority in the US got some form of govt. subsidy and if that goes away, what then. Also all those pensions that people are getting Federal, State and private, you can forget that. If you don't believe me read this:
http://blog.al.com/live/2009/11/life_without_prichard_pension.html
"We worked there for a long, long time," Alfred Arnold said. "The city never paid any big salaries, but we always knew that one day we could retire on this money and kind of live halfway comfortably. That's what we depended on all these years."
The famous last words of a victim or victims who where taken.