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Belligerent Bears Batter BNI's 'Buffett-Black-Swan' Bet

Tyler Durden's picture




 

Was it just a week ago that we suggested buying Burlington Northern CDS (credit protection) as the cheapest Black-Swan bet against Buffett and Bernanke's ebullience? The answer is yes. And from the start of May the cost of protection has doubled from around 15bps to just over 30bps - quite a surge as it seems more than a few funds thought this a worthwhile trade to tuck in the back pocket at a minimal carry cost. At 32bps mid (31/34), it remains cheap still from a carry perspective and while we are approaching the initial profit target, the reason for buying this low cost, long vol trade is the huge convexity upside should things go a little more pear-shaped for the Octogenarian-of-Omaha - or more specifically for the US equities in general. We do note that if this keeps pushing past our other profit-targets then some should be covered since counterparty risk will rapidly become an issue (unless the Fed officially becomes a CCP).

 

Chart: Bloomberg

 

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Thu, 05/31/2012 - 20:34 | 2481871 vmromk
vmromk's picture

Fuck Warren Buffet, Charlie Munger and most importantly FUCK Bernanke.

Thu, 05/31/2012 - 20:36 | 2481887 ACP
ACP's picture

Yes, they all deserve to be Quadaffi'd.

Thu, 05/31/2012 - 20:47 | 2481923 SilverTree
Thu, 05/31/2012 - 20:57 | 2481958 franzpick
franzpick's picture

The Oriface of Omaha, and note how the media never asks him about his 2006 silver sale of 37% of the float at $7.50.

Thu, 05/31/2012 - 22:02 | 2482169 LetThemEatRand
LetThemEatRand's picture

"The Oriface of Omaha"

Mmmmm.  Ori-face.....  

Supersize it, with a Diet Coke.

Thu, 05/31/2012 - 20:37 | 2481889 MendozaErika
MendozaErika's picture

Agree they deserve 

Thu, 05/31/2012 - 20:37 | 2481892 nmewn
nmewn's picture

A solid B+ ;-)

Thu, 05/31/2012 - 20:49 | 2481932 disabledvet
disabledvet's picture

I don't know what's worse. The Fed becoming my counter-party or me needing the Fed to become my counter party. "It's not a secret anymore" if you know what i mean...

Thu, 05/31/2012 - 20:52 | 2481940 SilverTree
SilverTree's picture

Robert Prechter and James Turk on inflation vs deflation

 

http://youtu.be/aVm-aVA-kU8

Thu, 05/31/2012 - 21:05 | 2481979 azzhatter
azzhatter's picture

Funny, I was just thinking today that Prechter is smiling somewhere

Thu, 05/31/2012 - 21:36 | 2482077 bsdetector
bsdetector's picture

Can someone please enlighten me with information about CDS and shorts? Is it reasonable to believe that purchasing either of these instruments results in the payment of some consideration to a long holder?

Thu, 05/31/2012 - 22:03 | 2482177 Doomer
Doomer's picture

The Gap has nice shorts, if you are into khaki.

 

Thu, 05/31/2012 - 23:02 | 2482366 BLACK_DOG
BLACK_DOG's picture

Doomer, Doomer, Doomer, that made my night, thanks!

Thu, 05/31/2012 - 21:41 | 2482096 slewie the pi-rat
slewie the pi-rat's picture

burlington/santaFe is gonna kick ass taking us all to campFema, and TPTB take our names later, when we get there

this isn't an unregulated industry, for pete's sake!  they have standards

speaking of  standards: HRW Calls on NATO to Investigate all Potentially Unlawful Attacks in Libya

no, not the moQ and his peeps, BiCheZ!

crazed NAT0 airstrikes where just a few too many accidents seem politically motivated or maybe we could make that a few thousand? 

seems as some have maintained since Day1 that some innocent civilians were much more protected than others, and now, HRW is sending a memo to...NAT0...? 

slewie is confident that NAT0 will get right on this for HRW;  rntChew?

Fri, 06/01/2012 - 07:25 | 2482983 CPL
CPL's picture

It must be back on because the Canadian Rail workers are ordered back to work after going on strike.

 

Instead of bags and cargo, it'll be Canadians to their new homes in one of the dozens of camps that have popped up across the country in the last three months.

 

Things are getting weird in Canada.  Highways exits and entrances have gates on them, for those huge accidents don't you know.  Plus cameras every five kms.  So if you are traveling to Canada, take the back roads.  They are faster than the highways anyways.

Thu, 05/31/2012 - 21:59 | 2482161 Doomer
Doomer's picture

Tyler, you alliterate slut!

Bad-mouthing Buffet and Bernanke will get the the belligerent Bozos at the DHS snooping around!

Thu, 05/31/2012 - 22:43 | 2482302 neilhorn
neilhorn's picture

ITYM: Tyler, thou tutu toting titmonger. Alliteration

Fri, 06/01/2012 - 07:22 | 2482976 CPL
CPL's picture

I agree that money can be made on the contra play, but the problem is you still get your "prize" in cash which is worth fuck all.

 

I think it's best to sit it all out and do fuck all.  The traders third position should be observed, do nothing.

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