Hey Mo,..Re:.Fed ease and liquidity
Morning Mohan. I found this link on the TSO thread. It's a chilling read but, if fairly accurate, explains why there are no longer any funds for large capital spenders to borrow for shopping centers or other large projects. It further explains why the spread between corporate issues and treasuries got out of whack. It's called risk premium. Anyway, thought you would find it interesting.
geocities.com
After reading it, I looked at JPM's 10Q to try to get some idea of their commitments. Without getting out a pencil and paper and going through the numbers, several items were telling. Also, no one is going to reveal the extent of their derivative positions and they are mostly referred to as proprietary. (My trading is proprietary too!) <vbg>
sec.yahoo.com
MARKET MAKING
Results across developed and emerging markets were affected
by widening credit spreads, illiquidity and price declines in
many instruments, increases in market volatility, and the
breakdown of historical price relationships across markets.
REVENUES
The decline reflects lower positioning results in both
secondary and derivative market making activities.
I think the Fed was acutely aware of this back in June and the events in Russia finally caused the whole thing to be disclosed. So this pretty much clears up why we're getting these rate cuts in the face of fairly strong eco numbers. (At least in my mind) Also, market must have known too since these big money center banks cratered in Sept. and early Oct. At the time I couldn't figure out why they sold off so rapidly.
Looks icky, huh?
Regards,
Lee |
