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Markets still falling like whoa

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1 hour ago, Incredulity said:

Blowout jobs report.  Upward revision to Oct.

Start dialing your boat coke dealer.

fify

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6 minutes ago, workswithseed said:

I bought my first stock Monday, let's see how I fuck up.

did you buy low, or high?

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5 minutes ago, ChiTownDoc said:

Fuck.  Was hoping for a pullback to dump more in.  Good problems to have I guess...

I’m somewhat in the same boat.  I have quit a few dividends that keep piling up.  After a certain point I try to find an undervalued stock.  The last few times it’s worked but I’m not seeing anything that catches my eye.  

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2 hours ago, SDG said:

I’m somewhat in the same boat.  I have quit a few dividends that keep piling up.  After a certain point I try to find an undervalued stock.  The last few times it’s worked but I’m not seeing anything that catches my eye.  

So you take your dividends in cash, not auto reinvest and then sit on the cash to find something to invest in.
Interesting strategy

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Just now, Wally Fairway said:

So you take your dividends in cash, not auto reinvest and then sit on the cash to find something to invest in.
Interesting strategy

Absolutely.  (It’s not really cash as it goes to my brokerage account).  My strategy is to build reserves then find something I think is undervalued.  My last three have been SBUX,  KNX, & BAC.  They’ve all outperformed the market since my purchase.  

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So Surly guru's I need some help; I'm trying to figure if there is a problem that is being hidden or one that is being fixed

Why has the Fed had to pump billions (like lots and lots of billions) into the short-term liquidity markets? 
Overnight lending rates spiked in September, so the Fed threw cash at the problem .... is there a "big" bank with problems not being disclosed to the public or some other funding issue between institutions?

I'm trying not to be Chicken Little, just trying to figure it all out.

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6 minutes ago, Wally Fairway said:

So Surly guru's I need some help; I'm trying to figure if there is a problem that is being hidden or one that is being fixed

Why has the Fed had to pump billions (like lots and lots of billions) into the short-term liquidity markets? 
Overnight lending rates spiked in September, so the Fed threw cash at the problem .... is there a "big" bank with problems not being disclosed to the public or some other funding issue between institutions?

I'm trying not to be Chicken Little, just trying to figure it all out.

FWIW

 

I interact with people from most of the major banks commercial lending departments (mostly sales people, but also some market presidents, analysts and underwriters) on a fairly regular basis for work.  None of them that I have spoken with over the last 2 months have a fucking clue.

 

I read yesterday that a current theory is that the Feds removal of liquidity from the system compounded by "decay"(loss of experienced people) in the personnel and systems at major banks was the cause. 

 

Basically, there has been so much liquidity that the recent Fed tightening exposed that banks had lost the skill set needed in the Repo market.

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1 hour ago, Wally Fairway said:

...

Why has the Fed had to pump billions (like lots and lots of billions) into the short-term liquidity markets? ...

Short answer: JP Morgan

The BIS just published a report on the issue:

https://www.bis.org/publ/qtrpdf/r_qt1912v.htm

ZH highlights research showing JP Morgan was withdrawing from the market (and has been for roughly a year now):

https://www.zerohedge.com/markets/fed-was-suddenly-facing-multiple-ltcms-bis-offers-stunning-explanation-what-really-happened

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from the BIS report

Quote

At the same time, increased demand for funding from leveraged financial institutions (eg hedge funds) via Treasury repos appears to have compounded the strains of the temporary factors. Finally, the stress may have been amplified in part by hysteresis effects brought about by a long period of abundant reserves, owing to the Federal Reserve's large-scale asset purchases.

 

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So this analyst at Credit Suisse has worked for both the US Treasury and NY Fed.  He was apparently an important cog in the response team the 2008 financial crisis.  He just published an analysis of the repo market issue and says:

Quote

...
Our big picture conclusion is that the safe asset – U.S. Treasuries – is being funded o/n and therefore it depends on balance sheet to be held and printed. Balance sheet for the safe asset isn’t guaranteed around year-end and if balance sheet won’t be there, the safe asset will go on sale ...

Treasury yields will spike.

The FX swap market could be the trigger of forced sales of Treasuries around year-end, and these funding market stresses will likely pull away capital and hence balance sheet from equity long-short strategies which could spill over into a broader equity selloff...

during a Treasury selloff – that’s not the right kind of risk parity Christmas.
...

https://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=em&document_id=1081995001&serialid=3Wu3wFUMyBePtRtdFV1OMYgKjlWVo06EvleE1YFXV0o%3D&cspId=1767182447312478208&toolbar=1

 

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1 hour ago, bernorange said:

So this analyst at Credit Suisse has worked for both the US Treasury and NY Fed.  He was apparently an important cog in the response team the 2008 financial crisis.  He just published an analysis of the repo market issue and says:

https://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=em&document_id=1081995001&serialid=3Wu3wFUMyBePtRtdFV1OMYgKjlWVo06EvleE1YFXV0o%3D&cspId=1767182447312478208&toolbar=1

 

And just when I was starting to think there wasn't much to worry about....

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Stock market reacts to tweets; social media rules the planet

I'm going to quit worrying about the economy, the environment, interest rates, earning releases and just look to twitter for investment guidance

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So yesterday the Fed announced that they will be injecting ~$500B (yes, half a trillion US dollars) into the repo market over the next 30 days.  I expected them to take some drastic action if necessary, but I expected them to be reactive and not proactive.  They must know just how "healthy" the banking sector really is.

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I wanna short Tesla stock, and to that end, I set up a brokerage account with Vanguard.  Looks like no i gotta "borrow" Tesla stock from them and pay 9% interest to do so?  That sounds wrong.  What am I missing here?

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18 minutes ago, Parliament said:

I wanna short Tesla stock, and to that end, I set up a brokerage account with Vanguard.  Looks like no i gotta "borrow" Tesla stock from them and pay 9% interest to do so?  That sounds wrong.  What am I missing here?

Buy a PUT contract, it entitles but not obligates you to sell the stock at that price and date on the contract. If the price of the stock goes below the price on your PUT contract (or makes a big jump in that direction), the price of your contract will increase. At this point, you can choose to sell your contract off for a profit, or you can hold it to expiry where you can either 1) buy stock yourself to exercise the option or 2) sell the contract on the day of expiry, which may be slightly less profit than exercising it yourself. 

Alternatively, if the stock goes up and your contract price is farther below the current price, the value of your contract goes down. You can cut your losses and run and try to sell the contract to some other sucker, or you can HODL and hope. At expiry if your contract is out of the money, you have no obligation or liability to hold backing assets for the contract. 

Options are super different from stocks though, and are typically tracked and observed through derivitive values that track the rate of change, inflection, etc. It's just calculus applied to tracking stock trends basically. 

Edited by Captainant

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3 minutes ago, Captainant said:

Buy a PUT contract, it entitles but not obligates you to sell the stock at that price and date on the contract. If the price of the stock goes below the price on your PUT contract (or makes a big jump in that direction), the price of your contract will increase. At this point, you can choose to sell your contract off for a profit, or you can hold it to expiry where you can either 1) buy stock yourself to exercise the option or 2) sell the contract on the day of expiry, which may be slightly less profit than exercising it yourself. 

Alternatively, if the stock goes up and your contract price is farther below the current price, the value of your contract goes down. You can cut your losses and run and try to sell the contract to some other sucker, or you can HODL and hope. At expiry if your contract is out of the money, you have no obligation or liability to hold backing assets for the contract. 

Options are super different from stocks though, and are typically tracked and observed through derivitive values that track the rate of change, inflection, etc. It's just calculus applied to tracking stock trends basically. 

I am somewhat familiar with commodity trading, puts and calls.  The short sale I describe above very much reminds me of a call.  I think I prefer a put.  How do I buy those?

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So yesterday the Fed announced that they will be injecting ~$500B (yes, half a trillion US dollars) into the repo market over the next 30 days.  I expected them to take some drastic action if necessary, but I expected them to be reactive and not proactive.  They must know just how "healthy" the banking sector really is.

Are they still just buying T-bills or the longer dated treasuries?

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