From the Alchemy of Trading Blog -
'Round Midnight: Crisco, For All Your Cholesterol Needs
Roundmidnight_28
"It all started real fast," said Raymond Kennedy, high-yield portfolio manager at Pimco, a Newport Beach, Calif., asset-management firm. "Investment-grade index products are just getting slaughtered." Junk bonds were suffering even steeper losses.
The mayhem marks a substantial test for complex credit-derivative products, many of which involve leverage, or borrowed money. Thus small moves in the value of an underlying security can have a big impact on the value of such credit derivatives. Since these aren't listed on any market, closing out a position can be very costly." -- The Wall Street Journal, May 11, 2005
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Is another LTCM brewing?
Who knows, but as I've mentioned, The Maestro's Fed Fund forays often end in things blowing up and people breaking, so I wouldn't be surprised.
My Hedge Fund friend Josh The Quant and I exchanged e-mails today about the Chairman's legacy and whether he would ever be forced to account for some of these policy transgressions.
My take is 'are you friggin' kidding me?'
When a former National Security Chief can stuff classified documents in his Jockey shorts, cut them to pieces, and get away with a slap on the ..... wrist, why would The Maestro ever be called to account?
So, I must admit, I have given up hope that one day CNBC will show the Chief led away -- figuratively of course -- in leg irons and an orange jump suit.
No, with the rumors of a Hedge Fund choking to death on a wad of General Motors paper, and with visions of the Long Term Capital Management Armageddon repeating, and also with danger of the financial system "seizing up", -- as the Chief colorfuly put it 7 years ago -- The Maestro needn't worry.
After he saves Western Capitalism once more, Woodward will no doubt produce another sugary paen to the Fountainhead of........
Ok, I hear you. You don't care about this stuff. You think I'm being too hard on him.
Besides, you want to know what will go up tomorrow.... What should I buy?.....What should I short?.....How do I make big money?...Etc Etc....
Well, I don't have all the answers. I may have very few answers. But here are some charts I'm looking at tonight with commentary inserted.
Have a restful night.
I'll see you in the morning.
Stephen |
