Yeah, what else is new? Your "FV" has been 200 points above the market price since the birth of Christ.
Nothing to do. All the variables are set and the market is the ultimate arbiter. It appears that the SP downgrade was leaked on Friday. Very hard to say, but that giant sell-off from the opening tick didn't have the feel of the rest of the selling. I suspect that the most insidious and criminal insider trading occurred. I expect to see SEC charges coming down the pipe in two years. Follow the money and you will see the information flow between people. As to the downgrade itself, I have always considered US treasuries to be as close as risk free as anything on the planet in comparison to other securities. My feeling is that even though there is a great deal of pain to go through because of the downgrade, we are trading short term pain for long term gains. I support it. I believe that if firms like SP are allowed full autonomy to make up their own minds based on sound mathematical analysis, that they should, like everybody else, be allowed to weigh in. In fact, they could act as a sort of economic replacement for the republican/tea party's fiscal restraint, giving markets more political power, without all the deadlocked mind-numbing rhetoric that clearly is ineffective. Republicans/Tea Party are redundant with strong, high integrity Credit Agencies (although one wonders who leaked the downgrade, questioning that integrity.) Let the Democrats set societal goals, and let markets say when those goals have gotten out of hand. Perhaps the least of all evils. Tax reform is next, and if gotten correct, we are setting up for the biggest bull market in history. Back to Earth, if the downgrade was not priced in, which I believe it was to some extent (it has been telegraphed for months), the loss to SIFs is too much as I write this. It will cost about $200B a year in extra interest, ES (ditto other indices %-wise) should be down 20 handles max, not 30.
FOMC meeting tomorrow will be extremely key: http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm A summary of what may be said, and it will have large impacts: http://www.cnbc.com/id/44050480
Stopped out of both trades at SPX 1159. I am badly beaten up. Little makes sense to me at this point.
Well, I am beaten up, as well. I do acknowledge, however, that my model is unable to deal with this type of market.
What??!!!!!?????. Are these people friggin insane? "...Stocks shaved some losses Monday after Moody's said while they are maintaining the U.S.'s AAA status, the rating depends on how the budget deficit is handled in the future..." !!!!!!!!!!!!????? What a complete and total farce this has become. This is fucking ridiculous. I am seriously ill. http://www.cnbc.com/id/44058141 http://www.cnbc.com/id/44058747