Unless there's a collapse in the dollar, of course. I'm betting against it.
SLV Oct 22 '11 $24 Put @ .32
SLV Oct 22 '11 $24 Put @ .32
Wednesday, April 27, 2011
Monday, April 18, 2011
Is the tide turning?
Bulls are starting to whine like bears have the last couple years (everyone/daytraders/SOMEONE!!! is just looking for a reason to keep buying/selling). I heard Barton Biggs whining on Bloomberg today about how the S&P negative outlook on the U.S. credit rating is just an arbitrary reason to sell; he couldn't see any other reason for a selloff today. How about multiple and continuing GDP downgrades? How about the Finnish elections and the imminent Greek debt restructuring? Or the Spanish insistence that it's not Portugal (which wasn't Ireland (which wasn't Greece (which didn't need a bailout!))) as its bills are hardly placed today, and its bond yields and CDS are rising fast? And Italy isn't far behind!
Well, we'll see how it goes.
Ah, and something else to keep an eye on - Beijing real estate prices are down something like 25%YoY, I think . Bubble popping? May be a good time to start looking at ways to ride the wave down...
Well, we'll see how it goes.
Ah, and something else to keep an eye on - Beijing real estate prices are down something like 25%YoY, I think . Bubble popping? May be a good time to start looking at ways to ride the wave down...
Sunday, April 10, 2011
Bravo, Iceland
Congratulations on refusing a compulsory obligation to pay someone else's debts. The Icesave deal would have compensated the British and Dutch governments for losses their depositor-citizens sustained while chasing yield in horribly-run banks. Private losses should be sustained privately, not piled on to someone else when something doesn't go your way.
Thursday, April 7, 2011
Why is the market so sanguine about a Portuguese bailout?
I want to see what the market sees; I need to know why "everything's going to be ok." What am I missing?
Portugal's 10-year stands at 8.58 after surging from 7.3 only a couple weeks ago; 6-month bills are at 6.5% and CDS are still at their highest level, i.e., its locked out of the market; Portugal was said to have about €4 billion cash, plus about €1 billion more from selling 6 and 12 month bills at rates higher than 10 yr. bunds; Portugal has bond redemptions and coupon payments totalling €5.3 billion this month, plus its normal monthly fiscal deficit. 1) Where is the money coming from to get through April?
Ok, assume April's bonds and deficit are paid for, and Portugal has enough cash on hand to cover its fiscal deficits from here to June. The only way to get though June's bond redemptions and coupon payments, totalling €7 billion, is with a bailout. The various "donors" still have to assess the situation, and if Ireland is a guide, the terms that would be given wouldn't be issued until the end of May. But given to who? 2) The "lame duck" parliament in Portugal does not have the legal authority to accept any bailout terms.
So that leaves everyone waiting until after June 5. For fun, lets assume that a government is able to be formed within a day of the election. That leaves 9 days with which to accept an austerity package. Consider the recent election losses by CDU in Germany and next week's Finnish elections in assessing the contents of a package; an austerity package already rejected in March is being labeled merely as a starting point in the budget reforms Portugal needs to enact to get bailout funds, with the Finnish Finance Minister stating, “The package must be really strict because otherwise it doesn’t make any sense...The package must be harder and more comprehensive than the one the parliament voted against.” 3) Is it reasonable to expect the new parliament to negotiate, debate and implement a controversial austerity package in less than 9 days, let alone at all?
That leads to my last question: 4) Could there be any funding of Portugal without strings attached through June? This begs the question, by whom? ECB? That may be a way of providing liquidity while raising rates (not sure about the mechanics of that one). China? They play realpolitik, so the question is, in exchange for what?
To recap, in order to justify the market's "they'll take care of it" view:
1) Portugal must have enough to cover this month's bond redemptions and coupon payments, as well as enough to cover fiscal deficits through June.
2) The June 5 elections take place and a government is formed quickly.
3) The new parliament is willing to implement an austerity plan stricter than one already rejected, with little debate or negotiation.
Portugal's 10-year stands at 8.58 after surging from 7.3 only a couple weeks ago; 6-month bills are at 6.5% and CDS are still at their highest level, i.e., its locked out of the market; Portugal was said to have about €4 billion cash, plus about €1 billion more from selling 6 and 12 month bills at rates higher than 10 yr. bunds; Portugal has bond redemptions and coupon payments totalling €5.3 billion this month, plus its normal monthly fiscal deficit. 1) Where is the money coming from to get through April?
Ok, assume April's bonds and deficit are paid for, and Portugal has enough cash on hand to cover its fiscal deficits from here to June. The only way to get though June's bond redemptions and coupon payments, totalling €7 billion, is with a bailout. The various "donors" still have to assess the situation, and if Ireland is a guide, the terms that would be given wouldn't be issued until the end of May. But given to who? 2) The "lame duck" parliament in Portugal does not have the legal authority to accept any bailout terms.
So that leaves everyone waiting until after June 5. For fun, lets assume that a government is able to be formed within a day of the election. That leaves 9 days with which to accept an austerity package. Consider the recent election losses by CDU in Germany and next week's Finnish elections in assessing the contents of a package; an austerity package already rejected in March is being labeled merely as a starting point in the budget reforms Portugal needs to enact to get bailout funds, with the Finnish Finance Minister stating, “The package must be really strict because otherwise it doesn’t make any sense...The package must be harder and more comprehensive than the one the parliament voted against.” 3) Is it reasonable to expect the new parliament to negotiate, debate and implement a controversial austerity package in less than 9 days, let alone at all?
That leads to my last question: 4) Could there be any funding of Portugal without strings attached through June? This begs the question, by whom? ECB? That may be a way of providing liquidity while raising rates (not sure about the mechanics of that one). China? They play realpolitik, so the question is, in exchange for what?
To recap, in order to justify the market's "they'll take care of it" view:
1) Portugal must have enough to cover this month's bond redemptions and coupon payments, as well as enough to cover fiscal deficits through June.
2) The June 5 elections take place and a government is formed quickly.
3) The new parliament is willing to implement an austerity plan stricter than one already rejected, with little debate or negotiation.
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