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It's 3 PM - The Daily "Free Money" Arb Is Here

Tyler Durden's picture





 

As we enter the last hour of trading, the daily late trading divergence we have grown to love and expect every single day in this broken market, is back. Using an FX basis for funding mismatches, the ES is about 10 points rich to "fair value." Should this spread close, it will indicate that FX is still at least a marginal player in determining stock levels, as opposed to putting full weight on the previously discussed butterfly (2s10s30s). Keep and eye, and in the meantime putting on a convergence trade would seem sensible.

 

 


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Wed, 08/18/2010 - 15:21 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

This little baby has been buying my (free) lunch for awhile. Keep it coming. Papa wants some hot wings tonight.

Wed, 08/18/2010 - 15:27 | Link to Comment functionform
functionform's picture

You should really trade more than a few bucks worth.

Wed, 08/18/2010 - 16:09 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

LOL

I assume you recognize the word play on the term "free lunch" rather than the actual noon time lunch special for $6.95. :>)

BTW, after my broker (meaning me) is through raping me on fees and commissions, all I can make off of this trade is enough to buy a few cold fries, a cup of hot water (pass the ketchup) and a half eaten sandwich stolen from the next table when the guy goes to take a leak.

Wed, 08/18/2010 - 15:30 | Link to Comment addvalue
addvalue's picture

Happy one year, I'll lurk as a friend just another year and then I'll hope find myself worthy commenting like you...

Cheers....

Wed, 08/18/2010 - 15:49 | Link to Comment hellboy
hellboy's picture

you guys think I can do a convergence trade with a simple spread betting account? Buy long / short is alright, just getting the ratio correct is my problem.. any ideas?

Wed, 08/18/2010 - 15:47 | Link to Comment Let them all fail
Let them all fail's picture

Anyone know what time details of the POMO tomorrow are being announced?

Wed, 08/18/2010 - 17:51 | Link to Comment bobbymak880
bobbymak880's picture

Details here:

http://www.newyorkfed.org/markets/tot_operation_schedule.html

Don't know the precise time though!

Wed, 08/18/2010 - 18:05 | Link to Comment bobbymak880
bobbymak880's picture

Starts at 10:15 AM, ends at 11:00 AM, NY Time.  (See bottom of web page)

http://www.newyorkfed.org/markets/tot_operation_schedule.html

 

Wed, 08/18/2010 - 15:54 | Link to Comment -1Delta
-1Delta's picture

i got my broker to give me spread margins on this biatch 3 months ago (85% leverage using futures), and it has bought me more than lunch....

Wed, 08/18/2010 - 15:28 | Link to Comment lettuce
lettuce's picture

The interesting thing here is that yields and stocks are moving together.

 

It's been a lot of the AUDJPY and stocks moving together with yields staying "down" in the charts.

 

Today seems to be having things move in the opposite direction. Granted, a spread is a spread is a spread and will close (based on what we've seen for weeks). Thanks Tyler. Good post and have been watching this one all afternoon as well.

Wed, 08/18/2010 - 15:30 | Link to Comment plocequ1
plocequ1's picture

But, But, But the charts , The death cross, The Hindenburg Exorcist or what ever the fuck you call it. This can't be!!!

Wed, 08/18/2010 - 15:32 | Link to Comment lettuce
lettuce's picture

Street talk said a lot of the risk trades were being taken out of the equity markets. Specifically, this meant short positions were being closed on a lot of the names where there were large amts of open short positions.

 

Should be fun to see what happens here.

Wed, 08/18/2010 - 15:46 | Link to Comment Sudden Debt
Sudden Debt's picture

Now what do we have here:

http://www.reuters.com/article/idUSN1820166820100818

New Jersey being charged with securities fraud as they underfunded their pensions. Nice

Wed, 08/18/2010 - 15:51 | Link to Comment NotApplicable
NotApplicable's picture

How this is any different than what the other 49 states do is beyond me.

So who ordered this slap-down?

I wonder, did NJ sell its own debt instead of using the new taxable Build America Bonds?

Wed, 08/18/2010 - 15:58 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The first two paragraphs of the article.

Aug 18 (Reuters) - The U.S. Securities and Exchange Commission said on Wednesday it charged New Jersey with securities fraud for failing to disclose to municipal bond investors that it was underfunding its pensions.

New Jersey, the first state ever hit with securities fraud charges by the SEC, agreed to settle the case without admitting or denying the findings, the SEC said. The state was not required to pay any civil fines or penalties, but it was ordered to cease and desist from future violations.

Sounds like a slap on the wrist. Nice to see NJ leading the nation in something more than highest state and local taxes.

BTW, why would they agree not to do something they said they didn't do? Is that some of this new math my grand kids tell me about? :>)

Wed, 08/18/2010 - 15:48 | Link to Comment dailymarketadvi...
dailymarketadvice.com's picture

Hello. New here.

 

Wed, 08/18/2010 - 15:55 | Link to Comment scratch_and_sniff
scratch_and_sniff's picture

And what do you want? Free money?

Wed, 08/18/2010 - 15:55 | Link to Comment lolslayedyou
lolslayedyou's picture

Im a newb at these convergence trades....How many ES contracts do I need for every Aussie yen currency contract??  Thanks for the help

Wed, 08/18/2010 - 15:57 | Link to Comment Ragnarok
Ragnarok's picture

OT: An old zero-hedge favorite back in the news


Bank of America Sues to Prevent Stuytown Foreclosure

 

http://noir.bloomberg.com/apps/news?pid=20601087&sid=and7AiDqtok0&pos=6

Wed, 08/18/2010 - 16:02 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The death defying news story that refuses to die a natural death. It used to be (meaning the public myth proclaimed) that prosperity raised all boats in the harbor. Now it's the Ponzi raises even the dead.

Wed, 08/18/2010 - 16:09 | Link to Comment bada boom
bada boom's picture

Apparently the free money disappears after 4.

Yikes.

Wed, 08/18/2010 - 16:14 | Link to Comment Hunch Trader
Hunch Trader's picture

What's going on with the dump? Can't find a reason.

Wed, 08/18/2010 - 16:18 | Link to Comment hdunn2
hdunn2's picture

I looked away for about 5 minutes after close, walk back and b/a's on all my q/aapl puts were moving quickly. 

 

unemployment claims, bitchez

Wed, 08/18/2010 - 16:19 | Link to Comment lettuce
lettuce's picture

Change ESU0 for USGG10YR aka 10yr yield.

Wed, 08/18/2010 - 16:12 | Link to Comment Iranian Dictator
Iranian Dictator's picture

Exact replay of yesterdays close. Short highs of yesterday, quick 10 ES points. The market is only broken if you don't know how to play it. 

Wed, 08/18/2010 - 16:14 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

4 PM and for the second day in a row the (strong) early morning market rise fails late in the day. Can you say "The DOW dog rolls over once again" five times real fast? 

Market closes well off it's highs and very listless. Is it shark week on the Discovery Channel?

Wed, 08/18/2010 - 20:12 | Link to Comment maddy10
maddy10's picture

ZH rulezzzzzzzzzz!!!!!!!!!!!

 

Sat, 10/02/2010 - 06:49 | Link to Comment Herry12
Herry12's picture

There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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