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The Ultimate "Buffett-Black-Swan" Short
We are always on the look-out for low-cost long-vol trades with lots of convexity (large upside, low downside). We think we've found the 'ultimate' black-swan trade. Warren Buffett's Berkshire Hathaway bought Burlington Northern and implicitly assumed its debt which caused the company's CDS to collapse (risk to plunge dramatically as one would expect) to extremely low levels of insurance cost of only 15bps (or only $15,000 per year to protect $10,000,000 of debt - while gaining or losing ~$5,000 per bps shift in BNI's risk). However, as risk has picked up in the last week or so, BNI's CDS has risen by 7bps (just under 50%) to 22bps and looks set to go even wider if Buffett's Big Bullish 'Bernanke' Bet doesn't pay off. Buying BNI protection at 22bps seems like the ultimate cheap expression of the "All aboard the 'I wrote billions of naked puts just before 2008 market crash' train" trade.
Of course this is a very cheap play on a systemic problem in US (and global) equity markets which would implicitly hurt Berkshire Hathaway but we do note that BNI has plenty of debt outstanding (so short-term deliverables are there)...
(h/t Alex Gloy)
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Short BNI sounds good how about Long Gold short AAPL? Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Pointhttp://seekingalpha.com/article/606821-apple-top-leads-to-market-top-as-predicted-so-what-s-next-an-epic-gold-entry-point
Better off waiting for some sort of crossover movement in Gold, its been eating it for a while now
3:30 nasdaq almost even?
When will it actually be safe to short - looks like fucking never
Shorts are getting their heads handed to them today. It's all Bullshit! As long as the Fed, ECB, IMF, ect control the casino, I will remain on the sidelines watching this show every day.
LOL - You Think??? -
And I thought all the world's problems got fixed in the last 2 hours.
I was just wondering if Ben, Jamie, et. al., could make their manipulations any more obvious. Today, the apparent answer is Yes They Can.
Go long gold if you want but shorting apple will be a disaster.
We'll wait until it recedes back to 12-15bps and then we will lay into this trade.
Buffet will call into his special line to the white house from his bathtub.
Golf clap for Bernanke today. Standing golf clap.
Good eye Tyler.
I want to invest in the company that makes the ICBM rockets that boilermaker says are used to propel equities higher every fucking day. They seem to have their shit together as US stocks remain in an orbit all on their own.
BAC 3% off the lows? WTF? Whatever.
h/t Alex Gloy
Without LSAP, US equities will follow the European trajectory
I like the low risk/high potential thinking, but Berkshire could write a check for all of Burlington Northern's debt and still not be overdrawn.
Nonetheless, not a bad "black swan"-Talebesque sort of idea.
However, who is the counterparty on this trade? I find it difficult to think of a scenario where Berkshire Hathaway is bankrupt but Goldman and JP Morgan are not.
I dunno know about this. This is a bet on insolvency coming before a inflationary wipe-out of real debt burdens. I'm not a timing guy, so I pass...
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Patty Hearst is a friend of John (Pink Flamingos) Waters. He gives lectures from time to time. You could probably meet him and ask if he could snag a Patty photo for you.
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let's serve buffet up on a buffet!
It's not nice to fool with Father Buffoon Buffett.
But go ahead anyway. I'll just stand over here ----------> and watch.
Beautiful arc-mode plasma discharge.
"It is the thunderbolt that steers the cosmos."
- Heraclitus, 5th Century B.C.
"Buffett's Big Bullish 'Bernanke' Bet doesn't pay off."
When Uncle Warren tells Ben to Jump, he replies: "how far and in which direction"? Buffett can call the shots.
The dollar is getting to strong, Bernanke will soon act, june is my favorite, to lower the dollar by calling for another QE.
coordinated global shock and awe, coming soon to a theater near you
With 100% shock... and 0% awe...
I think you are right SD, when europe goes they dont want euros. Dollars, Krone, Francs, maybe canadian and PMs
We need to make it so Warren can no longer afford to rent Boys Town boys by the hour.
And....here comes the oh-shit pump this fucker rally into the close.
Shocking.
Yup because its normal market action for equities to levitate up on NO Demand. Keep playing that game PPT.
DOW just down 50 points now with 30 minutes to go ... Maria says the market is coming back "ferociously" ... this just never gets old ...
Nasdaq just went positive ... unfreakinabeliebable
Well, Fox Business News did tell me that the stock market was on sale
her hair looks terrible today.
Maria: "Huge comeback. Big win for the bulls"
She must have been going down on a banker for an exclusive.
At some point they will need to stop doing that if they ever want to hit print. Oh wellz...
So the NYFed and the primary stealers are drawing the line at 12,400 Dow and 1,300 S&P. Could have figued as whatever nonsense that comes out of Brussels tonight will be spun as positive.
Those are psychological numbers for the complete shit for brains still in stocks.
Can it be more fucking blatant and obvious?
How much does it actually cost to 'defend' this shit? Or, have we simply stopped caring about all that eventual cost stuff?
320 point round trip in the DOW so far today. Simply amazing!
The fumes from all of the tape painting going on are getting rather strong over here...
40 point round trip for S&P?
80 for Nasdaq.
... and we've got 15 minutes left to go
Groundhog Day Bichez!
Starting to remind me of last fall.
The fuck are you talking about?
Remember, it's free via the wealth effect that's created by propping up the stocks. They're doing it for you.
I thought they were doing it for the children. Isn't that how they justify everything? "Do it for the children, so people will buy them more cheap Chinese crap"
A logical fallacy of appeal to emotion. I hate that one particularly. And then it's backed up with a false dichotomy, "if you aren't for it, then you're anti-children". bullshit. bullshit. bullshit. bullshit. bullshit. bullshit. bullshit. bullshit. bullshit. bullshit. bullshit. bullshit. bullshit.
Don't forget the cripples and gimps.
They're doing it for you.
__________________________________________
US citizens are doing it for humanity. As usual.
Would you call this market a bubble, a blob or a blobble?
Chinese Citizenism shitting for humanity, blobbing up piles on the roadside for export. Chinese economy cannot function without Chinese Shitizensim.
Without a meaningful unit of measure, "cost" becomes an unintelligible concept.
Anybody and everybody (political hacks, elites, banksters, etc.) that can rape the system will continue to rape the system until they can't. "Can't-ness" will occur when karma, in one form or another. catches up with their sorry asses.
Fallacy of the "Just World Hypothesis"
What goes around doesn't come around... The world is random... Justice vs. getting away with it is simply an equally likely random outcome...
You are just as likely to get what you deserve as Jamie or The Corz...
Which retail investor platforms offer CDS trading?
is that you tyler, I mean warren?!
Love this trade, especially if the old man croaks unexpectedly
buffett only needs the s&p to hold 1200 until september if i remember correctly. Between the $14B cash at BRK and the bernank personally guaranteeing the buffett's bet it seems unlikely he will have to pay. calpers probably bought those puts with zero intention of selling anything at all. buffett wins again and grandma loses, again.
Which still leaves room for him to survive, AND allows time for an October Surprise collapse.
Win-fucking-win.
GREEN!
It's another Festivus MIRACLE!
S&P Green Shoots!
... must be "king dollar"
Who's the counterparty? If Buffett (BNI) fails, I don't think you will get paid in full, unless the the then Treasury Sec. used to work with you.
Wow. Really did not see this magnitude of a pump coming this PM. SP up 21 while the Euro only up 40 PIPS in same timeframe. WTF?
LOL! This shit is so fucking hilarious. Obvious PPT pumping as volume is nowhere to be found.
ok now we are into short covering. basterds!
Rumors never seem to lose their power. But that maybe they are launched after the bots are unleashed. Meaning rumor may be a cover for I'll say it "market manipulation."
Seventeen minutes to go - DOW goes GREEN! Oh fucking hurah...
TPTB must want Ma and Pa USA to have a happy Memorial Day. Don't want to give the natives to much to think about over a long weekend.
... it's only Wednesday ...
Being honest with myself, about two hours ago I said, "Self, it's time for the market to recover all its losses before closing. Everything except gold that is..."
Guess we can't be right about everything.
Wow. Good call. I, quite frankly thought the 3pm looked like a great spot to go short for the close. El Wrongo. Cost me about $1200 of the gains I'd made in the AM.
"The time of the voters is taken up during each campaign with furious debates over all kinds of issues except the most important one, a sound money system. In the meanwhile, presidential candidates are syndicated by the moneyed interests. "
US House of Representatives, 1911
http://unicornpoo.wordpress.com/2012/05/23/the-us-house-of-representativ...
the DOW closed at -6.66?! the sign of the beast ... how appropriate.
+1
DOW settles (6.66)
BBlack birds are circling.
Bullish! sarc off remember the SPX back in 2009 at the low of 666?
I have to spend some serious thought to determine where today fits in my "top 10 most blatant intervention pumping days".
This is seriously pitfiul now. What's even more pathetic is they obviously think it will eventually work.
I'm interested in seeing your list.
Long ICBM, brother
Have you ever talked to the average American about the economy and they retort with "but the markets are up!". Then realize that at least half of Americans are dumber than this guy. Face, meet Palm.
Yes, i know, you mention Federal Reserve and most people think it's a wine or a prison. One of my employees, a female, once said to me tthat she didn't care about the stock market because she was in mutual funds and not stocks.
I give up.
Great News everyone! HP just beat it's bullshit manipulated mind game earnings estimate big time. And even better news, the company will cut 27,000 of its sheeple drones by 2014!
Thanks
It has been a while since u gave me something tradable
Following the tyler has given me quick thirty percent returns twice and going contrary to the tyler once got me a fifty percent return in two months
I will not discuss my returns fading the tyler in other trades whose names must never be spoken lest I have to hide my head in shame
ES longs bitch slapped AGAIN, this time with a low risk entry in front of Monday's low & the 200 dma.
BEVIS: " We really cornholed those asswipes today"!
BENHEAD: "Pass me somemore of the chosen-one's slurpy, Bevis. I need to put some on my hair. Oh & let's send that Maria & that Indian girl, yeah yeah, I like her name, I think they call her Seman! That's a good name for a pump & humper!"
hmm playing chicken with John Galt himself? i'll stick to the sidelines on this one
Buffet made sure that through political connections the keyston pipeline was banned, this causes his burlington railway to be fully booked for the next 4 years with oil transport. No risk if you are well connected.
Now it is just waiting for the Atlas Shrugged oil train wreck.
Buffett Admits BN Purchase Was Brain Fart
http://outsidethe-cardboard-box.tumblr.com/post/462061588/buffett-admits-bn-purchase-was-brain-fart
Been saying it for years, rail wouldn't be the big winner that everyone would think (I once thought so) because when it would start to see increased use would be when the economy was also fucked, when consumerism fell off a cliff and therefore cargo volume would drop. There is, however, a need to fill up box-load after box-load with coal, though this isn't going to offset the declines elsewhere.
Just realised Warren is common to Buffet and Elizabeth. Can Bess arrange a buffet for the unemployed with the money made by the other Warren, when he shot down the Keystone Cops hose pipe to make sure the Pilkington Train heist made him as big a bang as in those pioneer days. No True native indian buck, forefather to Bess's high cheekbones, tolerated the intrusion when Iron Horse ramrodded his country. The least that Bess can do is to milk the Buffet of his new earned wealth, thus to salvage the honour of dead bygone forefathers. Sitting Bull will never be shitting bull to a true Indian loving girl and Crazy Horse will never talk shop with the Pilkington mob.
Elizabeth Warren Goes After Scott Brown On "Buffett Rule"