Congratulations to my competitors at Morgan Stanley. Really. I would hate to be working for the only profitable firm. Somebody else has to be there to buy up other failing firms.
Maybe we should start a new club, The Still Profitable Financial Firms. Employees could meet for drinks in major financial centers after work.
This is a sign of the times Morgan Stanley Pre announces "better" numbers. Don;t miss the $1.4B gains on their credit spreads worsening. perverse. Back them out and the gain on sale of MSCI ($750M) and the reported net income of $1.4B looks tad thin. Equity prop business looks good. What a charm, short the market/financials prop (or whatever they did) and take gains on the debt side as the credit deteriorates. The revenue line is a little too cute
Is anything but the earnings report out yet? Goldman's outlook was crappy despite beating projections. MS jumped in AH after the report, but then started giving back the gains in the past 10-15 minutes. I think MS is a nothingburger. Market lives or dies tomorrow based on AIG.
The quarter ended May 31, 2008 includes a pre-tax gain of $748 million on the sale of the Spanish wealth management business, Morgan Stanley Wealth Management S.V., S.A.U.
OT of direct personal interest - also, one of the last growing regional economies just got sh!tcanned
More than 3 million still without power after Ike
HOUSTON (Reuters) - More than 3 million homes and businesses remained without power in eight states on Tuesday after Hurricane Ike, federal officials said.
Those in the Midwest are expected to be reconnected within days, while many Texans will have to wait weeks, according to utility companies commanding armies of employees working around the clock. More than 3 million still without power after Ike
| Reuters
Really? My quote service shows MS as being down to $27.46 after hours. Is this a mistake? All the articles say they exceeded earnings expectations, so I can't see why the stock would be down.
spanish sale was last Q. This Q had $1.4B in credit spread gains and $750M from the MSCI sale. Offsetting that was about $600M in marks. Net the marks and looks like the Q was a miss by size. Tax rate was also sequentially lower by 1%.
MS hasn't factored in swaps or derivatives losses incurred this week or today for that matter. They have a 723% level2 asset to equity ratio and a 236% asset to level 3 equity ratio. Both are worse than Lehman brothers and merril. I promise the traders will figure this out VERY VERY soon. Todays report was yesterdays business. Here's to looking ahead.
As M Whitney has pointe dout repeatedly, not a lot of goodwill back in early 90s so BV anf YTBV looked similiar. That said, historical troughs 1990 sub 1x.'91-95: 1-2.5x . bubblitious from 1997-2006 stayed north of 3x maxed at 4x (avg)
Sept. 16 (Bloomberg) -- Barclays Plc, the U.K.'s third- biggest bank, struck a deal to acquire the trading and investment banking business of bankrupt Lehman Brothers Holdings Inc., a person with knowledge of the matter said.
WFC is dangerous short. it is currently THE moral hazard trade. Comapny riases dividend and then jams out a $1.7B capital raise a few weeks ago. The picture of health, no.
Really, this is how politicians ought to frame it. "A tenth of a Trillion" sounds a fuck of a lot worse than "100 Billion", especially cuz that's what the Prez is always pining for in Iraq.
The strategist Dick Cheney said debt does not matter. Short those casinos. The crash does not matter. We are goin down one way or nother. Let the chips fall where they may. You gotta know when to fold em.
Take those bonuses back. The cheerleaders for the Econ game have finally been silenced. Where is Dick Cheney now...
Rumor is AIG is sitting on somewhere in the neighborhood of 100 bio of unrealized losses. Looks like the US government may be going into the insurance business in a big way.
Where's Nemo? We need sleuth to see how much of the earnings came from a drop in the value of their issued bonds.
I appreciate the vote of confidence, but a) I do technically have a day job and b) we won't know for sure until the 10-Q is filed. (Although they may address it on the CC tonight.)
From the website: "Equity and fixed income sales and trading net revenues included approximately $0.5 billion and $0.9 billion, respectively, from the widening of Morgan Stanley's credit spreads on certain long-term debt."
So absent FAS 157 and 159 adjustment for MS's own credit, no income for the quarter.
i read somewhere that the F/F conservatorship did take on the cds exposure.
Purpose of an AIG consvship is very different than F/F. My guess is a completely different set of rules, one of which is that the bond holders will be zeroed out this time, cuz it won't cause a run on the US.
The derivatives unwind is the big issue, and that is what will be addressed.
From the Houston Chronicle:
CenterPoint Energy
1.49 million customers without power
2.258 million total customers
66 percent out
Updated: 10 a.m. Sept. 16
Entergy Texas
374,462 customers without power
395,000 total customers
94 percent out
Updated: 11:30 a.m. Sept. 16
Texas-New Mexico Power Co. 62,000 customers without power
113,000 total customers
58 percent out
Updated: 1 p.m. Sept. 15
Sam Houston Electric Cooperative
49,500 customers without power
50,000 total customers
99 percent out
Updated: noon Sept. 16
"To employees who participate in the xxxÂ’s Deferred Compensation Program and have AIG as their investment provider.
xxxx with the Department of Administrative Services has requested the following information be forwarded to employees so they have current information about AIGÂ’s situation.
AIG Retirement, one of the xxx's deferred compensation providers, has been in the news the last few days due to financial pressures it is currently facing. Below are links to 2 documents discussing this issue, one from the xxx and one from AIG. A link to a provider chart is also included.
Employees with concerns should call their AIG advisors to discuss the situation. Employees who have decided to select a new provider should call the new provider to open a new account and ask the provider's assistance in transferring their account balances."
AIG today. WaMu tommorrow. A new casino going down every day for the next 60 days. Maybe time soon for the Exec order to cancel the election. What do ya think eCON cheerleaders.
Depends on who is ahead in the polls...
Because the Ultrashorts get absolutely hosed over a length of time by volatility.
Not always true. I bought EEV and the single short equivalent (EUM) about the same time. I checked this morning early and my EEV was up 70% and EUM was up 34%, just what you would expect.
But there are some other patterns in which ultra short have definitely lagged benchmarks and single shorts. I'm still trying to figure out the patterns. On the whole, I'd still rather be double short than single short, when I think something will tank. But I might not go double short if I expected to hold more than six months because of this potential volatility problem.
Derivatives are the planted demolitions exploding the global eCON. Enough of these weapons of financial destruction
blowing up will cause a meltdown of the global eCON from the high heat generated by the eCON demolitions. Who planted or allowed the planting of financial demolitions. Central banking may be the real problem...
Ike isn't just whacking Texas. I live in Indiana and I've been lounging around the house 2 days now, Work lost power Sunday when Ike's remnants blew through. Still no power, have to call corporate HQ in the AM to see if we are running tomorrow.
In some sense, the bailouts don't bother me because I figure we are just sticking it to the Chinese/Middle Eastern/Japanese Industrial Complex who keep buying our Treasuries. They'll get nothing of real value, eventually.
Not always true. I bought EEV and the single short equivalent (EUM) about the same time. I checked this morning early and my EEV was up 70% and EUM was up 34%, just what you would expect.
What is the holding period, out of curiosity?
There's also the potential for the ultrashort to do better than twice the underlying would suggest, but if I remember correctly it requires a steady drumbeat of bad news. If the underlying would go down 2% each day for ten days straight, for example, the ultrashort would outperform what 2x down would suggest.
Because the Ultrashorts get absolutely hosed over a length of time by volatility.
It works in reverse too -- if you short the Ultra funds you actually make money from volatility. It's a great trade during a bear market -- you make money from volatility and market declines.
I think the bondholders for AIG will definitely take a haircut. Why the f*** not? The bailout is to provide cover for the CDS and insurance market, IMHO.
It works in reverse too -- if you short the Ultra funds you actually make money from volatility. It's a great trade during a bear market -- you make money from volatility and market declines.
I'd been thinking about that too, but I don't have the stones to go through with that trade.
Thanks though AC for helping to explain this ultrashort volatility problem a few weeks ago. Really clarified things for me.
The AIG derivatives unwind is nothing but a bogus excuse for a taxpayer bailout.
CDS are private contracts. The government has no business getting involved in private contracts. Consider, Pimco has guaranteed over $700 million of AIG's debts. Let PIMPCO pay, not the taxpayer.
Don't be fooled. Banks and reckless speculators should absorb their own losses.
Not always true. I bought EEV and the single short equivalent (EUM) about the same time. I checked this morning early and my EEV was up 70% and EUM was up 34%, just what you would expect.
I did some simulations, maybe they weren't comprehensive enough, but what I found is that whenever the underlying index makes a round trip (i.e. goes from 100 to something else and back to 100) these funds always end up below where they were. For example you'd never find that the Ultra or UltraShort fund is back where it started. It will be less in every case... at least according to the data I was playing around with.
It's entirely possible I missed something, but I'd like a scenario where that can happen. I suspect it wouldn't be hard to do a mathematical proof that this is the case either.
BTW I do use these UltraShort funds, but I don't sit on them for long periods of time. For that I'll short the Ultra flavor of that index.
There's also the potential for the ultrashort to do better than twice the underlying would suggest, but if I remember correctly it requires a steady drumbeat of bad news.
Yes, you can get an exponential rise in these funds from the compounding effect. It's just when (if) the gains get reversed that you get hammered.
Mix eggs, sugar, oil, and cinnamon. Sift together flour, soda, and baking powder. Add dry mixture to egg mixture. Stir in nuts and carrots. Pour into 2 8" or 9" cake pans, oiled and lined with wax paper. Bake 350 for 1 hour.
Icing:
1 Cube Butter, 8oz. cream cheese, 1t vanilla, 1lb powdered sugar.
Cream butter and cream cheese. Add sugar gradually until smooth. Add vanilla last.
If you do not know how to make cannabis oil, you can grind cannabis bud or shake and add the plant material directly to the recipe. Figure .75-1.5 grams of cannabis per piece. The plant material will have more of an aftertaste, but will blend in well with the sweet carrot cake. I do not recommend using cannabutter in the icing due to the taste, but if you choose to please factor that into the grams per piece recommendation.
No surprise; by my recordkeeping, today was the largest volume of S&P 500 futures purchases these over the last 15 mos.
I will not add to my short sale until WaMu gets taken over. I want a full public panic at my back when I add to my short sales. I have avoided a margin call to-date, and would like to keep my record of such pristine.
Purpose of an AIG consvship is very different than F/F. My guess is a completely different set of rules, one of which is that the bond holders will be zeroed out this time, cuz it won't cause a run on the US.
The derivatives unwind is the big issue, and that is what will be addressed.
JP, on the head. I think this is the only place the public and the players will believe that the derivatives will safely cancel, where the "conservator" has enough credit to take the radiation. From here on out, all miscreants get put into this garbage disposal.
LEH was the object lesson. Last night and today were "the rack" for AIG.
The remaining players get to pick over the pieces, but if you're dumb / slow enough to get insolvent, in you go for "processing".
That's the new "bailout".
If I'm right, we ride a slower curve to the bottom, and at a manageable pace.
Barney Frank gets to run the Congressional circus that will spin up the new RTC to process the bodies.
AC - totally agree. If you want to see a prime example of why you cant hold these, just look at the Shanghai market and the China etfs. The SSE index itself has been a steady downward run from 6000 to 2000 from last November.
So you want to get in on that action, right? So, if you held the FXI like a dummy, youd be down about 50% over that period, not quite the 67% the SSE is down.
But if you decided to go the other way and hold, youd have got into FXP (the ultra inverse) at around 80 or so, and youd only be at 114 now. Not even a 50% gain. And most of that was up since Sept. 08, when it was sure enough, at 80 again.
I just don't see how results from last quarter are any way meaningful in today's market. We're dealing with explosions left and right, who cares if they made or missed by a penny last quarter?
Would outright cynicism, arrogance, and disgust with humanity have better served that person? What if those attitudes now constitute "good judgment"?
Yes, disgust and rage are very appropriate, in fact, hard to keep in the box. Wall Street deserves a sound whipping, and they'll get it. I promise you that, because the gravy train doesn't have any more gravy in it. It's over.
Someone with your moxie is needed in the "what's next" discussion, which I hope will commence in a few weeks, and be led by the likes of ac.
Or maybe you could do it. I would suggest Nemo, but he's got a day job, and doesn't care for politics. Too bad.
Lefty with the colander on "Magnum" would also work.
Gasparino - no legal authority for conservatorship.
A solution would be for the Feds to step in after bankruptcy. Bankruptcy judges have very broad powers and I think any judge handed this monster would be relieved if the Feds came along and said "let us handle this; you just sign off on our recommendations". This also solves the problem of who the Feds are trying to help - this would leave them with no obligations save to the country. They can haircut shareholders or debtholders without a qualm.
yes
Somebody's doing okay at least.
Jeez.
First?
When will Morgan join the fallen?
I can't possibly be 1st
Probably 15th? 30th?
How real can expect these earnings to be - adjusted for write downs real, or CFC real?
more like CSC real - dope smokin earnins..
and the unwind ?
so the market will rally +300 tomorrow on just this niblet, right? Shockingly, I bet it will.
DING DONG THE BEAR IS DEAD
bear is well and alive. expect a 2-hr rally tomorrow, thats it.
only 640m in mortgage writedowns? does anyone believe it?
Just read this
Chase seen as a likely suitor for Washington Mutual - St. Louis Business Journal:
Chase was reportedly in advance talks with WaMu again about a potential deal.
Congratulations to my competitors at Morgan Stanley. Really. I would hate to be working for the only profitable firm. Somebody else has to be there to buy up other failing firms.
Maybe we should start a new club, The Still Profitable Financial Firms. Employees could meet for drinks in major financial centers after work.
LMAO.......nice profit.........now please tell me what your amount of level 3 assets was this quarter. Thanks.
How much of the net "income" is due to the MS debt getting a haircut in the market?
Morgan Stanley is not that easy to fall, I guess. Foreign money may indeed have some impacts.
If GS is still making money why are they in trouble and MS isn't?
......
Where's Nemo? We need sleuth to see how much of the earnings came from a drop in the value of their issued bonds.
Your loss is their (phantom) gain.
This is a sign of the times Morgan Stanley Pre announces "better" numbers. Don;t miss the $1.4B gains on their credit spreads worsening. perverse. Back them out and the gain on sale of MSCI ($750M) and the reported net income of $1.4B looks tad thin. Equity prop business looks good. What a charm, short the market/financials prop (or whatever they did) and take gains on the debt side as the credit deteriorates. The revenue line is a little too cute
Comrades,
Meh...I'm waiting to see what they're calling income.
Nostrovia,
Thanks FRED
ohh yeah and AUM fell in both Wealth Management and Asset Management.
With everything that's happened over the weekend, SKF is lower than it was last week. Strange!
"When will Morgan join the fallen?"
If enough others fall first, Morgan can stay upright simply by leaning against the towering pile of dead bodies.
Is anything but the earnings report out yet? Goldman's outlook was crappy despite beating projections. MS jumped in AH after the report, but then started giving back the gains in the past 10-15 minutes. I think MS is a nothingburger. Market lives or dies tomorrow based on AIG.
Hmm. Take a look at footnote 2.
The quarter ended May 31, 2008 includes a pre-tax gain of $748 million on the sale of the Spanish wealth management business, Morgan Stanley Wealth Management S.V., S.A.U.
MS up 8% in the aftermarket
I bet they say "Dr. Livingstone, I presume." on the conference call.
OT of direct personal interest - also, one of the last growing regional economies just got sh!tcanned
More than 3 million still without power after Ike
HOUSTON (Reuters) - More than 3 million homes and businesses remained without power in eight states on Tuesday after Hurricane Ike, federal officials said.
Those in the Midwest are expected to be reconnected within days, while many Texans will have to wait weeks, according to utility companies commanding armies of employees working around the clock.
More than 3 million still without power after Ike
| Reuters
Why are the financial markets as low as July and SKF at 118?
Let's see, next PPT stick save is... Cox to implementing NO SHORTING RULES on Thurs ahead of options expiry ?
Why are the financial markets as low as July and SKF at 118?
Because the Ultrashorts get absolutely hosed over a length of time by volatility.
Some live longer than others, but all ultimately die. Sic semper Morganus Stanlanus.
"MS up 8% in the aftermarket"
That's eroding quickly.
MS up 8% in the aftermarket
Really? My quote service shows MS as being down to $27.46 after hours. Is this a mistake? All the articles say they exceeded earnings expectations, so I can't see why the stock would be down.
spanish sale was last Q. This Q had $1.4B in credit spread gains and $750M from the MSCI sale. Offsetting that was about $600M in marks. Net the marks and looks like the Q was a miss by size. Tax rate was also sequentially lower by 1%.
To all,
sitting on some shorts that are got bushwhacked by aig rumor, don't need to sell...
what would your advice be...skf and eev...
average in..
take the loss...
hold and wait...
crazy think is I had stops on but after fed rate decision and immediate pop, cancelled stop...
WFC FTW! Srsly, I don't get why Wells is almost at 52-week high... Is everyone that enamored by Buffet?
cd
hold them. with the volatility eventually you'll be in the money. remember; bear mkt.
WFC, why not 5x TBV? priioir cycle lows sub 1x. But WFC is different.
USB is also doing very well. Warren doesn't invest long term in lousy companies. WFC and USB are two sound banks.
i had a long pissy comment written, but then i realized i shouldnt take my anger out on you.
if you are puzzled by SKF isnt at 300, you should read this
Inverse ETFs vs. LEAPS puts - The Sovereign Speculator
MS fading slowly AH.
The markets are simply going back to ice. I anticipate a rejection.
FRED,
How about some historical comparisons... Can you give typical TBV values for a company like WFC?
MS hasn't factored in swaps or derivatives losses incurred this week or today for that matter. They have a 723% level2 asset to equity ratio and a 236% asset to level 3 equity ratio. Both are worse than Lehman brothers and merril. I promise the traders will figure this out VERY VERY soon. Todays report was yesterdays business. Here's to looking ahead.
So if Fed hands AIG 100 Billion, wouldn't the equity get wiped out?
What kind of solution would possibly maintain any value for the common?
can I has tenth of trillionz thx bai LOLaig
CNBC Poll
Should US bail out AIG?
Poll: Should the US Bail Out AIG? - CNBC
AIG is sinking AH...
whoa, AIG plunging now!
More drama than Palin family reunion...
Gotta love those 2007/2008 asset management comparisons. I can't wait 'til 2009!
$3.90 to 1.90. nice.
As M Whitney has pointe dout repeatedly, not a lot of goodwill back in early 90s so BV anf YTBV looked similiar. That said, historical troughs 1990 sub 1x.'91-95: 1-2.5x . bubblitious from 1997-2006 stayed north of 3x maxed at 4x (avg)
Sept. 16 (Bloomberg) -- Barclays Plc, the U.K.'s third- biggest bank, struck a deal to acquire the trading and investment banking business of bankrupt Lehman Brothers Holdings Inc., a person with knowledge of the matter said.
Barclays Said to Reach Deal to Purchase Lehman Securities Unit - Bloomberg.com
AIG down 50% ah
haloscan is busted
WFC is dangerous short. it is currently THE moral hazard trade. Comapny riases dividend and then jams out a $1.7B capital raise a few weeks ago. The picture of health, no.
can I has tenth of trillionz thx bai LOLaig
Really, this is how politicians ought to frame it. "A tenth of a Trillion" sounds a fuck of a lot worse than "100 Billion", especially cuz that's what the Prez is always pining for in Iraq.
Use the Trill word, and it'll turn heads.
Somebody has figured out the endgame of AIG. And it doesn't look good for common.
US Gov't considering Conservatorship for AIG. The Big Picture
Conservatorship for AIG?
Am I dreaming?
it must be nice to have a Mom like the US Treasury.
Well, the "American" in AIG does provide an implicit backing from the Gov't.
bye bye Bucky.
This conservatorship does not have to preserve bondholders like fnm/fre.
The goal is probably to cause orderly winddown of CDS.
Whoa.
What are implications of conservatorship? Particularly on CDS market? Does gov't guarantee those contracts?
Do the MS earnings include consulting fees for putting the GSE package together for Benny and Hank? I am sure they were paid well for their services!
SKF
ASSET ALLOCATIONBy Percent Short Long Net
Cash 0 86 86
Stocks 0 13 13
Bonds 0 0 0
Other 0 0 0
Total 0 100 100
cash!!!!
The strategist Dick Cheney said debt does not matter. Short those casinos. The crash does not matter. We are goin down one way or nother. Let the chips fall where they may. You gotta know when to fold em.
Take those bonuses back. The cheerleaders for the Econ game have finally been silenced. Where is Dick Cheney now...
Rumor is AIG is sitting on somewhere in the neighborhood of 100 bio of unrealized losses. Looks like the US government may be going into the insurance business in a big way.
MS back under today's close in AH. Digestion apparently did not take too long.
I guess Lehman's record for the largest bankrupcy in US history isn't going to stand for very long.
"haloscan is busted"
No, it's just illiquid.
"AIG is woven intimately into the fabric of towns in America."
Thank you, Maria.
I feel better about that 100 Billion now.
I am helping to preserve the fabric of small-town USA. God bless.
Angry Saver --
Where's Nemo? We need sleuth to see how much of the earnings came from a drop in the value of their issued bonds.
I appreciate the vote of confidence, but a) I do technically have a day job and b) we won't know for sure until the 10-Q is filed. (Although they may address it on the CC tonight.)
in this environment its tough to keep up.
i read somewhere that the F/F conservatorship did take on the cds exposure.
Go fuck yourself.
From the website: "Equity and fixed income sales and trading net revenues included approximately $0.5 billion and $0.9 billion, respectively, from the widening of Morgan Stanley's credit spreads on certain long-term debt."
So absent FAS 157 and 159 adjustment for MS's own credit, no income for the quarter.
Nemo
quit your day job and play this casino.
i read somewhere that the F/F conservatorship did take on the cds exposure.
Purpose of an AIG consvship is very different than F/F. My guess is a completely different set of rules, one of which is that the bond holders will be zeroed out this time, cuz it won't cause a run on the US.
The derivatives unwind is the big issue, and that is what will be addressed.
I can haz par plez?
From the Houston Chronicle:
CenterPoint Energy
1.49 million customers without power
2.258 million total customers
66 percent out
Updated: 10 a.m. Sept. 16
Entergy Texas
374,462 customers without power
395,000 total customers
94 percent out
Updated: 11:30 a.m. Sept. 16
Texas-New Mexico Power Co. 62,000 customers without power
113,000 total customers
58 percent out
Updated: 1 p.m. Sept. 15
Sam Houston Electric Cooperative
49,500 customers without power
50,000 total customers
99 percent out
Updated: noon Sept. 16
Sources: The companies
The MS earnings link in CR's post is an easy read.
The earnings look weak to me. Add in a loss of faith in financials, deleveraging and a slower economy ahead and I don't think MS is in good shape.
Phant gains are not liquid.
"To employees who participate in the xxxÂ’s Deferred Compensation Program and have AIG as their investment provider.
xxxx with the Department of Administrative Services has requested the following information be forwarded to employees so they have current information about AIGÂ’s situation.
AIG Retirement, one of the xxx's deferred compensation providers, has been in the news the last few days due to financial pressures it is currently facing. Below are links to 2 documents discussing this issue, one from the xxx and one from AIG. A link to a provider chart is also included.
Employees with concerns should call their AIG advisors to discuss the situation. Employees who have decided to select a new provider should call the new provider to open a new account and ask the provider's assistance in transferring their account balances."
This is the email I got today...
What in the hell is SKF. I entered the symbol and got a stock selling for 2 cents per share.
AIG today. WaMu tommorrow. A new casino going down every day for the next 60 days. Maybe time soon for the Exec order to cancel the election. What do ya think eCON cheerleaders.
Depends on who is ahead in the polls...
The derivatives and the reinsurance..?
How can the government possibly justify bailing out AIG when it literally had a buyout offer last week?
Just because you didn't like the terms you get to come hat in hand to the American taxpayer?
Incredible.
Not always true. I bought EEV and the single short equivalent (EUM) about the same time. I checked this morning early and my EEV was up 70% and EUM was up 34%, just what you would expect.
But there are some other patterns in which ultra short have definitely lagged benchmarks and single shorts. I'm still trying to figure out the patterns. On the whole, I'd still rather be double short than single short, when I think something will tank. But I might not go double short if I expected to hold more than six months because of this potential volatility problem.
Comrade wallster,
"So absent FAS 157 and 159 adjustment for MS's own credit, no income for the quarter."
That's the kind of comment that can put you in gitmo.
Nostrovia,
Nice post energyecon.
Gadzooks!
sorry about AIG bearly. easy come easy go.
MW: Bush meets with top financial advisors: White House
Well, that should solve everything.
Anybody who wants to know a lot about ProShares short and ultra short ETFs should just look here.
ProShares ETFs - Funds - Overview (Hubpage) - Overview
So does market rally tomorrow on news of conservatorship?
Jeremy: "How can the government possibly justify bailing out AIG when it literally had a buyout offer last week?"
The buyout offer was contingent on AIG getting a loan or backup vow from the Federales anyways.
AIG getting killed after hours (-50%).
hey CSC,
Not sure if you are the source for the info, but FFDIC was looking for a carrot cake recipe with that Bob Marley magic to it...
MW: Bush meets with top financial advisors: White House
Well, that should solve everything.
Time to work on a strategery.
Derivatives are the planted demolitions exploding the global eCON. Enough of these weapons of financial destruction
blowing up will cause a meltdown of the global eCON from the high heat generated by the eCON demolitions. Who planted or allowed the planting of financial demolitions. Central banking may be the real problem...
Ike isn't just whacking Texas. I live in Indiana and I've been lounging around the house 2 days now, Work lost power Sunday when Ike's remnants blew through. Still no power, have to call corporate HQ in the AM to see if we are running tomorrow.
Time to work on a strategery.
Thank god that the markets are resilient.
Thank God deficits don't matter.
In some sense, the bailouts don't bother me because I figure we are just sticking it to the Chinese/Middle Eastern/Japanese Industrial Complex who keep buying our Treasuries. They'll get nothing of real value, eventually.
Not always true. I bought EEV and the single short equivalent (EUM) about the same time. I checked this morning early and my EEV was up 70% and EUM was up 34%, just what you would expect.
What is the holding period, out of curiosity?
There's also the potential for the ultrashort to do better than twice the underlying would suggest, but if I remember correctly it requires a steady drumbeat of bad news. If the underlying would go down 2% each day for ten days straight, for example, the ultrashort would outperform what 2x down would suggest.
AIG conservatorship = Bond boys bailout ...
Gross wins again.
Because the Ultrashorts get absolutely hosed over a length of time by volatility.
It works in reverse too -- if you short the Ultra funds you actually make money from volatility. It's a great trade during a bear market -- you make money from volatility and market declines.
And the dollar still won't weaken?
Both mortgage market and insurance markets are being socialized.
And dollar is solid as a rock.
AIG conservatorship = Bond boys bailout ...
You might be right, but don't assume the cap structure will be the same as the one for F/F.
MW: Bush meets with top financial advisors: White House
Attack somewhere? Always the solution for miserable leaders trying to direct peoples attention away from domestic affairs...
I think the bondholders for AIG will definitely take a haircut. Why the f*** not? The bailout is to provide cover for the CDS and insurance market, IMHO.
It works in reverse too -- if you short the Ultra funds you actually make money from volatility. It's a great trade during a bear market -- you make money from volatility and market declines.
I'd been thinking about that too, but I don't have the stones to go through with that trade.
Thanks though AC for helping to explain this ultrashort volatility problem a few weeks ago. Really clarified things for me.
Oh oh; did someone just break the buck?
Over at MarketWatch headlines:
5:07 p.m.
The Reserve: Redemptions frozen for up to 7 days
5:06 p.m.
The Reserve: Primary Fund NAV 97c a share
The AIG derivatives unwind is nothing but a bogus excuse for a taxpayer bailout.
CDS are private contracts. The government has no business getting involved in private contracts. Consider, Pimco has guaranteed over $700 million of AIG's debts. Let PIMPCO pay, not the taxpayer.
Don't be fooled. Banks and reckless speculators should absorb their own losses.
BofA ungrades AIG to Mu
Comrades,
"MW: Bush meets with top financial advisors: White House"
Our glorious leaders to the rescue. I'm feeling all warm and fuzzy.
Nostrovia,
if you are puzzled by SKF isnt at 300, you should read this
If you're puzzled by why SKF isn't at 300 then you haven't read the prospectus.
These funds are behaving exactly as designed and advertised.
Dick Cheney writes> Go F$ck yourself. Yes I know that is how he feels.
jg,
link pls
Gasparino - no legal authority for conservatorship.
Who cares? They just make up new laws on the go.
Damn Gasparino's magic cell phone.
Angry Saver,
You let them know you still have some money to steal with your screen name. Maybe you should become 'Angry Pauper' or something?
Nemo
rofl. Mu! Mu! Mu!
Mu (negative) - Wikipedia, the free encyclopedia
Can somebody translate the impact of conservatorship, frozen redemptions, and primary fund NAV 97c a share?
What does all this mean? Is this good? Are we hosed? Should we expect a 500 point rally tomorrow?
Time for a another War maybe.
How is FRE and FNM doing.
Idoc,
thanks for your reply...
even when you do things right, bad things seems to happen while utilizing these etf's
Not always true. I bought EEV and the single short equivalent (EUM) about the same time. I checked this morning early and my EEV was up 70% and EUM was up 34%, just what you would expect.
I did some simulations, maybe they weren't comprehensive enough, but what I found is that whenever the underlying index makes a round trip (i.e. goes from 100 to something else and back to 100) these funds always end up below where they were. For example you'd never find that the Ultra or UltraShort fund is back where it started. It will be less in every case... at least according to the data I was playing around with.
It's entirely possible I missed something, but I'd like a scenario where that can happen. I suspect it wouldn't be hard to do a mathematical proof that this is the case either.
BTW I do use these UltraShort funds, but I don't sit on them for long periods of time. For that I'll short the Ultra flavor of that index.
e-c-, partway down, under 'Latest News':
MarketWatch - Stock Market Quotes, Business News, Financial News
WE ARE ALL LOWER CLASS CREDIT CHALLENGED PAUPERS AND SERVANTS NOW. HOW DO YOU LIKE THE eCON GAME NOW. play on to endgame.
Ted: 2.19
What does all this mean? Is this good? Are we hosed? Should we expect a 500 point rally tomorrow?
Market direction is decided with a coin-toss in the morning before the opening.
This answer is as accurate as any you'll get here, or elsewhere.
To cynical?
You let them know you still have some money to steal with your screen name. Maybe you should become 'Angry Pauper' or something?
Let em try. I'm loaded for "bear" too.
My real specialty has become spotting fraud and scams. A must have skill in America (especially in financial markets).
ren --
I think a Zen approach to equities analysis might be interesting to read.
There's also the potential for the ultrashort to do better than twice the underlying would suggest, but if I remember correctly it requires a steady drumbeat of bad news.
Yes, you can get an exponential rise in these funds from the compounding effect. It's just when (if) the gains get reversed that you get hammered.
OT, but only a little:
Tanta's THC Carrot Cake
4 Eggs
2C Sugar
1C Cannabis Oil (Can sub regular oil)
1t Cinnamon
2C Flour
2t Baking Soda
2t Baking Powder
1C Chopped Nuts (or not)
3C Shredded Carrots
Mix eggs, sugar, oil, and cinnamon. Sift together flour, soda, and baking powder. Add dry mixture to egg mixture. Stir in nuts and carrots. Pour into 2 8" or 9" cake pans, oiled and lined with wax paper. Bake 350 for 1 hour.
Icing:
1 Cube Butter, 8oz. cream cheese, 1t vanilla, 1lb powdered sugar.
Cream butter and cream cheese. Add sugar gradually until smooth. Add vanilla last.
If you do not know how to make cannabis oil, you can grind cannabis bud or shake and add the plant material directly to the recipe. Figure .75-1.5 grams of cannabis per piece. The plant material will have more of an aftertaste, but will blend in well with the sweet carrot cake. I do not recommend using cannabutter in the icing due to the taste, but if you choose to please factor that into the grams per piece recommendation.
No surprise; by my recordkeeping, today was the largest volume of S&P 500 futures purchases these over the last 15 mos.
I will not add to my short sale until WaMu gets taken over. I want a full public panic at my back when I add to my short sales. I have avoided a margin call to-date, and would like to keep my record of such pristine.
Die, schmucks/shylocks/shysters, die!
WHY IN THE WORLD ARE WE GREEN? I have lost any perspective....
JP writes:
Purpose of an AIG consvship is very different than F/F. My guess is a completely different set of rules, one of which is that the bond holders will be zeroed out this time, cuz it won't cause a run on the US.
The derivatives unwind is the big issue, and that is what will be addressed.
JP, on the head. I think this is the only place the public and the players will believe that the derivatives will safely cancel, where the "conservator" has enough credit to take the radiation. From here on out, all miscreants get put into this garbage disposal.
LEH was the object lesson. Last night and today were "the rack" for AIG.
The remaining players get to pick over the pieces, but if you're dumb / slow enough to get insolvent, in you go for "processing".
That's the new "bailout".
If I'm right, we ride a slower curve to the bottom, and at a manageable pace.
Barney Frank gets to run the Congressional circus that will spin up the new RTC to process the bodies.
Yep, broke the buck!
Money market giant freezes redemptions - MarketWatch
Stop saying "orderly way/fashion" Dylan.
Dead Man Talking - I see statements from AIG starting to appear on the Marketwatch bulletins.
"Yep, broke the buck!"
What is a money market fund doing holding Lehman debt??? $785 million of the stuff???
Bill Gross Says ~
Payback is a bitch !
If AIG went down after hours, doesn't that mean somebody knows something bad, like the govt isn't going to bail it out?
I can't possibly keep up. Mercy, CR, mercy.
AC - totally agree. If you want to see a prime example of why you cant hold these, just look at the Shanghai market and the China etfs. The SSE index itself has been a steady downward run from 6000 to 2000 from last November.
So you want to get in on that action, right? So, if you held the FXI like a dummy, youd be down about 50% over that period, not quite the 67% the SSE is down.
But if you decided to go the other way and hold, youd have got into FXP (the ultra inverse) at around 80 or so, and youd only be at 114 now. Not even a 50% gain. And most of that was up since Sept. 08, when it was sure enough, at 80 again.
I just don't see how results from last quarter are any way meaningful in today's market. We're dealing with explosions left and right, who cares if they made or missed by a penny last quarter?
Oh oh; did someone just break the buck?
Whoa...
A run on money market funds would be juju bad. There isn't enough banking capital to absorb the run and the MM funds don't have access to the Fed.
If it happens, I'm going to take a bow. Said they would break the buck on this board a long time ago.
kicker, i do recall we went into that debate heavily quite a while back. I pray you aren't finally right.
Capital-S Sue:
Would outright cynicism, arrogance, and disgust with humanity have better served that person? What if those attitudes now constitute "good judgment"?
Yes, disgust and rage are very appropriate, in fact, hard to keep in the box. Wall Street deserves a sound whipping, and they'll get it. I promise you that, because the gravy train doesn't have any more gravy in it. It's over.
Someone with your moxie is needed in the "what's next" discussion, which I hope will commence in a few weeks, and be led by the likes of ac.
Or maybe you could do it. I would suggest Nemo, but he's got a day job, and doesn't care for politics. Too bad.
Lefty with the colander on "Magnum" would also work.
Gasparino - no legal authority for conservatorship.
A solution would be for the Feds to step in after bankruptcy. Bankruptcy judges have very broad powers and I think any judge handed this monster would be relieved if the Feds came along and said "let us handle this; you just sign off on our recommendations". This also solves the problem of who the Feds are trying to help - this would leave them with no obligations save to the country. They can haircut shareholders or debtholders without a qualm.
Any hedge fund news ?
The $ has tumbled against the yen as the carry trade implodes...
@jg | 09.16.08 - 5:27 pm
Nice catch, Thanks!
Sadder than MER in a way. Managed by the inventor of MM funds.
hooooooboy that should leave a mark...
Lehman had >4billion profits last year, apparently profits don't say anything about survival chances
It's hard to grow just on debts. This business model is dead. Forever.