http://www.bloomberg.com/apps/news?pid=20601087&sid=aPeYrMmXcSYY&pos=6 Now, Lenihan is planning pay cuts of about 6 percent for government workers, and labor unions are threatening industrial unrest in response. He also has pledged to slash the deficit to 3 percent of output by 2013, meaning Ireland is facing austerity budgets for the next four years. Pay cuts for FEDERAL gov't workers. Good thing the ECB is focused on inflation. I prey for the day when we see pay cuts for US gov't employees.
It appears that the credit issue raised by Martinghoul came from MS in their report Calibrating Credit Growth, pg 20 http://www.scribd.com/doc/23368194/Morgan-Stanley-Research-China-Investment-Perspectives-11-30-09 Apparently they conclude that "Empirical evidence. Updating past empirical work by Fed researchers supports our conclusions: Given aggressive policy stimulus and the healing in capital markets, the recent slower pace of tightening bank lending standards is consistent with slower declines in bank lending and an improving economy. Two studies pioneered in examining the relationship between the proportion of lenders changing standards and loan and economic growth. They show that changes in loan standards have a strong correlation with loan volume and business activity: Tighter standards trigger events resembling credit crunch, easier standards promote recovery. Importantly, the proportion of lenders changing standards (the numerical level of the survey responses) influences growth in loans and output." If I understand them correctly, they seem to think that its not big deal that bank credit avaliability is reaching now lows, as a long the 2nd derivative of new lows is improving, because in the past people turned to capital markets for credit. To me, that seems crazy, that reflected the fact the bank credit as a % of total credit kept going down as the shadow banks and market provided credit was expanding. But market liquidity is a state of mind that can come and go at anytime, the spare tire is being used and if that goes that fact that bank credit avaliability is still reaching lows will hardly be considered a good thing, 2nd derivative or not Furthermore capital market access is restricted when it comes to consumers and small business
The Tiger Woods scandal will probably affect his line at the next major, so I won't get as good odds to fade him. I might have to skip it till he wins a few times(assuming he doesnt temporarily retires, I dont believe there is much chance he retires forever)
Began legging back into my GE options yesterday morning and expect to be back in full positions by the end of this morning. I've been saving 3 to 5 cents over a number of different strikes and expirations - $75-$125/option, not an insignificant amount. However, I should have been getting in right after last Friday's NFP number, and I could have saved 7-8 cents/option. In the final analysis, its probably not the best plan to try and get in and out like this. However, in my entire life, I've never owned anything that just went in a straight line up. When something I own more than doubles in a few weeks, its an instinct I can't hold down to try and lighten up. Plus, it feels good to capture a few points like this. Mental outlook is very important in this business.
I guess you are not into fed futures. I'm swapped most of the May 2010 for Jul 2010 ones, they usually make money every month like clockwork. And if the 'no 2010 hike' is correct, being long them is like selling overpriced insurance. The R/R is not nice but thats the insurance business
I believe the hedge fund run by Ralph Cioffi made money in every single month of its existence over a period of years. It then lost everything in the space of a couple of months. The 'insurance' sold by AIG made money every single day as well. Then, one day, it not only lost money, but lost enough to bring down the entire company and nearly the entire world financial system.
I follow (but do not own) the Aug FF futures. It fell 22 points over a period of a few days between Thansgiving and the NFP report. I'm not sure why you would want to own something w/a max 20 point upside that could fall by 22 points in a manner of days, and has a total downside of 5 times that amount. If that 22 point decline didn't seriously sting you, then the position size you have is so small that you shouldn't even be discussing the trade. The options trade is an excellent one because you can limit your downside and can make multiples of your money on the upside. The FF trade not so much and the move between Thanksgiving and NFP proves it.
Just run the numbers. ZQ 2010 appears overvalued, the true probability of a hike by Jul is probably 3-10%, yet the contract is pricing in more than that Extended period seems will still be around next week. So the earliest they will take it out will be 27 Jan 2010. There is no meeting in Jul 2010, so they would have to hike in Jun 2010 -Just a little after the mortgage buying program ending -While using unusual and exigent authority -Less than 6 months after removing 'extended period'(thats the interval they used for considerable period) -Meanwhile tons of forecasts and models are showing inflation will be even lower by then and UR still high Heck, the probability might be lower than 3%. Thats quite different from selling insurance on a bubbly housing market
And even if the fed hikes, you lose 13bps, meanwhile if they dont you make more than 20. I see that as a slum dunk