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Broken Markets Spreading
From Peter Tchir of TF Market Advisors
Broken
For those not "lucky" enough to be involved in the CDS market, liquidity is breaking down in Europe. Main was quoted as tight as 1/2 bp markets yeserday, is now being quoted on 2 to 3 bp markets, mostly by traders who seem to wish they had left an hour ago. XOVER, is at least 5 bps wide, and as much as 10 bps wide, but the dealers still brave enough to send something.
This is not good, and although wider, it hasn't yet felt like anyone is reaching and paying too much just to get a hedge on, which makes me think this is not yet over.
IG16 is holding in reasonably well, but even there the bid/offer has moved back to 1.5 bps so dealers do not want to provide liquidity here. My IG200 hats are still worthless, but MAIN 200 seems a distinct possibility, even before the close as the best offer I just saw was 196, and that is probably flaky given SPX just broke 1155.
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But definitely off the lows fuck off maria! Put the pom poms away /rant
Figures for me turning on cnbs
Ok I have a thing where I anally do that little chinky one with the dodgy mouth from behind while she screams "off the lows of the day"...it bothers me that I'm too far into this shit now too extracte myself...advice please
Wow dude, maybe switch to Bloomberg for a few days (the Asian chick that hosts the show in the evening covering Asian markets is a little vixen).
Like that will help his problem
Even if the markets are down 3%, its good news, as theyre 'off the lows'...I only hope to see the day when these whores are employed properly as $15 prostitutes. Then I could yell at them as I pass by 'HEY IT COULD BE WORSE, YOURE OFF THE LOWS! YOU COULD BE A $10 WHORE'!
LMFAO!
Too funny!!
Summed up nicely
Seek help.
1150 marks the spot.
To the extent that one believes technical damage can be done to the spooz (don't ask me, since The Bernank broke the global markets), a hard break below 1150 today will break many hedge funds.
Something about that leverage thing...
Now, who wants to be long over this, of all, weekends?
Not me, and I'm thinking of dumping my SPX short ETF and going cash.
Even a short is long in this ponzi.
"Even a short is long in this ponzi"
Dear espirit
with logic like that, do you work for the Fed or an Algo Scalper?
Yeah, but the problem is that 'weekends' are when those annoying sticksaves happen. And if you're short into the weekend, you just might wake up to a Monday morning ass-raping by the powers-that-be. The market opens 10 handles higher, and Stimulus 9.0 is making CNBC anchor women cream in their panties.
I've seen this movie way too many times before, and it's the reason I can't short even when shorting looks like the most obvious play in the world.
I feel your pain, but I think this weekend is a good one to chance it and hold on, at least I did. It really seems like this is actually going to be Greek Default 2011.
Trichet Prepares Draghi to Use Tools in ECB Box
http://mobile.bloomberg.com/news/2011-09-08/trichet-clears-the-decks-for...
What kinda 'tools'? *smirk*
T/A is bullshit. I can't see an positive in the EU. Greece needs to fucking default already. Quit the foreplay and let's move on.
Yea really, sick of watching round and round musical chairs the music never stops.
...and it's the same f'ing song!
Enough to drive one bat chit.
that is part of the plan... that is afterall how you boil a frog... slowly, so he doesn't jump out of the pot.
Damn I'm ready for some football and cold beer.
That could happen right after the markets close this afternoon.
Probably be bullish too!
Sad, but lol.
HF Market Analysis
HF 2Q net exposure the highest since 2007; cash levels low
Based on the quarterly 13F filings and estimated short positions of the
equity holdings of 895 funds, we calculate that hedge funds increased gross
exposure by roughly $50bn to $1090bn in 2Q. Net exposure rose by 6.7% in
the second quarter, after rising 38.8% in 1Q11 and 36.7% during the last
quarter of 2010. HFs had the highest net exposure & lowest cash level since
the 2007 market peak - net exposure was 54% in 2Q vs. 59% at the peak, and
cash levels were at 4.7% in 2Q vs. 4.3% in 2007. This may be dated data but
hedge funds are not likely positioned for the equity market to trade below
1100 on the S&P 500. Hedge funds can still drive equity prices lower.
Necessities cost more and your assets are worth less. Isn't that paying for inflation with assets and wages dinged by deflation? Isn't that a problem? When will the markets REALLY adjust to this reality? It isn't simply transitory unless your time line is very long.
BAC back in the 6's bitchez
It's gonna be back in the 3s
Bernanke would print money before that happened again.
Maybe Warren will double down after another bath or lemon party.
BAC is this year's Lehman. They'll be left out of the next bailout party. Somebody has to be the bagholder, this time looks like BAC's turn to me.
Buffet just filled another Depends.
Wish I understood more than the first sentence.
"Much to learn, you still have."
"...Young Padawan"
Credit is blowing out, which usually indicated market drops. The more credit widens, you get to collapse faster.
Luckily the world's master bankers (or banker masters, I forget) will have all weekend to fix it. It'll all be good come monday, just you wait and see.
So the market is float up on hot air that is rapidly cooling. Wonder if the politician's yapping will be able to keep it going. Thank you for the summery.
Increased rates on short-term liquidity means that big providers are increasingly concerned that there's going to be a major event which they can't recover from. If you think of it as gamblers at a poker table, where everyone is "known" to be really loaded, they can extend short-term loans to each other effectively "risk free."
Once someone starts thinking that one guy isn't good for it anymore, no one wants to take the chance.
Fear spreads instantly because of how closely intertwined all the balance sheets are.
Dominoes Bitchez!
Trichet
opens tool box
finds bent screw driver
and a hammer
with broken handle....
...and proceeds to pry the lock off of the liquor cabinet, yet again (which is how the tools were broken in the first place).
Since we have machines to vote, think and purchase for us, they will tell us what's right.
After this brief intermission there will be a few thousand dukes yelling "turn the machines back on" all weekend. May not be this one, but do you get the feeling that is how it ends? Someone in the travel business should alert us if a whole lot of big shots plan on flying so we will know.
And the President on the Oval Office saying "Who's been putting out Kools on my carpet?"
It was a Newport. And I couldn't find an ashtray anywhere.
LOL
Tricky
mmmm
Isn't it a violation of Federal law to smoke in the White House?
Hah.
Good thing it is Friday. Wonder if there will be an new surprise announcements tonight.
sitting on the sidelines on a bench made of Gold.. as uncomfortable as it sounds.. I promise that it is anything but.
Yea I'll let these lunatics devour each other while watching from the sidelines stacking up some PM coins.
You poor bastard. Pure Au is actually quite soft. You might have a tungsten bench...
I hear if you let it warm up in the sun first, it's good for the 'roids.
Explains the toilets at GS.
Yup, broken markets will levitate into the close for 2% or so down day. Warning, I'm almost always wrong on these nano-second trading patterns. I will probably be wrong once again!
Attention all dollar haters: Here comes your margin call! 77. Up 88 cents! Watching the carrytrade implode, the Yen implode, the run to cash. HOLY SHIT this may be bad
FED will go nuclear before they allow the dollar to rise, the whole thing depends on a low dollar.
so much for the exceptional corporate proftis for the mult-nationals!
Holy Peter Schiff Batman!!!
like the sarc about the CDS, but if you think about it, we are all priced in to CDS. It is the rotten floorboard holding up the vault with all the metals.
The Rodeo is here - ??? May be time to clean and oil the FAL.
please just let the markets open Monday morn.
my FAZ has some room to run.
brk is gonna limp dick the bear flag already?
My new motto: Be like buffett, pick yourself out a nice tranny.
**Breaking News**
3:35 est ......... BlowHorn [CNBC] ......after yesterday, announcing that bears needed to be cautious....Bob Pisani...
"If some sort of statement comes [from central banks], the Street is set up short and some sort of move upward would obviously happen."
So......we are down to saying it outright...the US equity market primary catalysts is......statements from bankers......the same bankers that destroyed both the economy and the markets.
Brilliant, Bob!
I share your dislike of Bob Pisani, however you really need to lay off of CNBC cause I heard if you watch more than fifteen minutes of it, your soul leaves your body. The soul doesn't come back 'till you buy a silver Eagle.
Jus sayin
my mom said somethin' about "going blind"
- Ned
{but I hear I could still get an acorn once in a while}
I wonder why PM's never levitate into the close?
Time for the fun run back above 11,000...
Sometimes this shit is so predictable I wish I still had some in.
Is 7 ES pts well off the lows following a 39 pt sell off? I don't think so
getting real bad, CDS markets have no liquidity. Greece/ Italy 2 yr Yields are now in default ranges. Greece will go...
RIP J M Keynes
349 pm "must. . . close. . . over. . . 11,000. . . <cough> <wheeze>" you can see it edging up. Fugging A.
the dow 11000 meltup is bulltrap prior to close...won't hold
DOW ... must ... close .. above 11,000 ....must close above 11,000
Sure....I'm wanna go very long this market going into a weekend that Greece might default and banks tank another 50% on the limit down open on Monday. It always makes so much sense. Therefore, markets will rally at least 4% on Monday, right? Isn't that the way this works.
5 mins to go and there is a mighty PPT battle going since 3:35pm - unbelievable NOT!. Will it hold? BB on the phone with a big market order.
Speaking of Broken Markets...
6.7 just hit Vancouver Island
http://earthquake.usgs.gov/earthquakes/recenteqsus/Quakes/usc0005rsj.php
done. it was a bidless market, nice bear signal for next week
Bob "the important thing" Pisani FTW!
Damn. Should I acquire some extra Bernanke bucks before the weekend hits, just in case?
SCORE! we close over DOW 11K.
Incredible.
Wait, no, screen refreshing, wait. . a . . minute. . Ben. . this can't be happening? Did the PPT take a last minute coffee break? It's below 11K. WTF??!?!?!?!
Turn those machines back on!
This is a small enough post, yet I don't understand any of it.
Can someone explain quickly what CDS markets are (I know it's about defaults, that's about it), what their relation is to liquidity, what does being at 10 bps wide mean...
With the number of posts Tyler's made about CDS in the last 2 months, I'm guessing it's got some importance...
I'm sure a few dozen other readers would appreciate.
Simple-minded overview answer:
CDS markets are where the price of "default insurance" is determined. Investors buy insurance against counterparties defaulting so that if the counterparty goes broke, they haven't lost everything. When default looks more likely, CDS prices increase.
When CDS prices are going way up, it's because people think "someone" is much more likely to default. They have to be more cautious with how much money they lend out, even very short-term, because the default is likely to affect their balance sheets.
10BPS is a tenth of a percentage point--if a given interbank loan rate is .25%, that's a significant range.
I'm not an expert, so this is a bit of an inference: "width" may refer to the difference in rates being demanded by different lenders. In normal periods, the rates should equalize almost instantly because of the huge amounts of money flowing and the ease with which a borrower can switch from one source to another.
I sit on a credit desk which deals specifically in this and since it was asked above again, ill chime in for some of this stuff.
CDS markets are quoted OTC, so you cant make a 'purchase' or sale on a CDS unless you are hooked into a market maker's quotes, or 'runs' as theyre called. Any decent bulge or even mid market trading desk will have their traders dealing in CDSs and once a relationship is established with a desk/bank, you start getting runs from the MM dealing in either a particular company, industry, or sector - the big sell side firms typically have guys on all of these types of CDSs, other times no as if you are a MM in CDS you are typically dealing with a very specific industry (i.e. EU Fins) or sector (i.e. MENA, CEEMEA).
The liquidity in CDS should theoretically always be there (assuming a run goes out indicating levels), but it will definitely be harder to attract somebody to take the other side of your trade if you want to go in with size (10MM+) or on an issue thats thinly traded or hard to be hedged. Typically, the more bonds are outstanding of an entity, the more common it is to see volume and more runs of that CDS go out.
What Peter wrote up above was specifically about CDS indices. Not too far off from the SPX or Dow... they each containt a bunch of CDSs which pertain to the characteristics necessary to be included in the index. Main, Crossover (XO), the Fins, the Sovereigns (SovX) are all very widely traded and thus you can get large clips out with barely moving the price. But soon as a MM is hit, he'll typically adjust his price right after to reflect whether the hit was on the bid or offer side, pushing his prices up or down accordingly. Just like in a liquid stock where youd want to pay no more than a $0.01 spread on the trade, in credit youd like less than a bp ideally, 0.5 is considered really good. When the market is 10bp wide, its cause the MM creates enough of a cushion to be willing to take either side of the trade. They take less directional bets (though inevitably are stuck sometimes with them) and more make money on simply the spread they charge.
Im not a market maker, but every time i see these guys on a day like today or basically that whole week in mid Aug, they look like death and are tired as shit from sitting at their desk with literally no breaks sicne they have to be on top of literally every little thing that can move the market and be adjusting their auto fill prices as well as runs they send to other participants.
Thank you both
Part of the PPT IS THE BANKS.
If the banks are get monkey hammered by lawsuits, CDS's, Administration backstabbing and margin calls then the PPT will turn off and the selling begins.
PPT only works if there is profit and a system to return to. Basically the entire financial machine is running backwards(credit implosion, higher dollar,less money supply, liquidity trainwrecks, lower asset values,mistrust, sovereign NON-cooperation and panic) and thats just how ponzi mechanics work.
At some point you need to run for cover and take what you have.
Cash (yes, FRNs), PMs and lead.
You don't say so yourself?