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Strategies & Market Trends : John Pitera's Market Laboratory
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To: Elroy who wrote (13191)6/12/2012 4:35:11 AM
From: John Pitera2 Recommendations  Read Replies (1) of 33421
 
Elroy,

Banks make more money in FX, derivatives, bonds etc in volatile markets. The bid ask spread expands and that enables the dealing desks to make more money...... big banks have corporate and institutional orders above and below the current level and there is no reason they can not front run the orders. Also if the Euro is at 1.2401 and their are a slew of corporate hedging orders at 1.2400 or 123.99 then the dealer can go long at 124.02 knowing he has a stop loss at 124.01......... the customer order that gets filled. MCD, CSCO, IBM GOOG are not in the business of currency trading.... they are hedging the money they make in their business.

The CFO is not a hero and also not seen in most companies as a profit center. They get the big paycheck with zero risk. why take on risk.. which they are mandated to not take..... no reward for being the hero...... earn your money by reducing risk.

Henry Volquardsen, who is a name for only the old timers on SI around for 12 years or more pointed out that the swaps market used to have a 10 point spread and on a 500 million dollar swap or a 3 billion swap that was big enough to drive a mack truck through....... ie easy money for price makers.

1 million bonus points for anyone who can find that post....... that's a limitation of S I.

I don't believe it's easy at all , unless you go over the derivatives, Dark Vadar's revenge. His posts are so cogent and illuminating they must be compiled into a book.

John
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