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hornhorn

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Posts posted by hornhorn

  1. 4 hours ago, Wally Fairway said:

    My question is how significant is the bounce when the Max is approved for passenger flights, how quickly can they certify the hundreds of signed that are parked and give training to the 1,000s of pilots on the revised computer systems?

    I thought about buying calls or selling some puts in the weeks after the 2nd crash; so glad I didn't as I thought is was going to be a several weeks to a few months that they were grounded. Theta is a bitch.

    Its massive, Max was supposed to be the next cash cow and has plenty of orders on waitlist. Like FB/Google's struggles last year, its a true duopoly with Airbus and nothing can change that. They must figure it out and prove it to the FAA, once they do that though, they're golden. If you have a longer time horizon, buy leaps and uh....profit?

  2. 6 minutes ago, Mighty fine said:

    Thanks for the response. Your first paragraph clears up one of my concerns and the second confirms my understanding of the general mechanics.

    One follow up question, and then I'll pass the mic: how selective is the Fed when evaluating the loan, or how often do they say no or request a lower risk profile from the borrower? Curious as to whether that would be a canary in the coal mine type indicator, or if it's something that happens with regular occurrence.

    To mitigate losses for the FED, they have a clearing house bank as an intermediary who puts together the deal, does the due diligence and makes sure that the collateral involved is up to snuff. JP Morgan and Bank of NY Mellon used to be the only ones involved but that seems to have changed over the years.

    So it doesn't matter who the investment bank is on the other side as long as the collateral that's put up is AAA rated. And if something goes wrong, the clearinghouse bank is also on the hook for it.

  3. 2 hours ago, Newy25 said:

    The LHN is a branding, marketing machine. It’s a sign of stupidity to have your coach on there acting like a sophomore in high school flipping off the camera. Ultimately it obviously does not matter but holy shit man what a terrible look. Especially from someone who people think is a raging asshole to begin with. 

    I've already consulted my pastor to see where I go from here with this unbearable weight on my shoulders. Maybe you should too. 

    • Like 2
  4. 13 minutes ago, Mighty fine said:

    Thank you for the link. I'll surf around through this data later this evening.

    Ponzi scheme may not be the best descriptor. My concern is this: Fed loans Institution A $x dollars on Monday, to be repaid on Tuesday. Institution A is able to repay on Tuesday, but then at the end of the Tuesday, turns out they need to borrow more money. This continues daily for a couple of months.

    When Institution A repays their loan, where does that money come from? Why does Institution A need continual assistance to remain liquid? Also, It seems that there is not a healthy repo market currently, and without Fed support some of these institutions may be hurting.

    I suppose my real question are these: is there a fatal flaw in the structure/ operation of the repo market in which the Fed participates? And what is the real risk to Everyday Joe if some unforeseen event happens?

    For one, it isn't always institution A that requires this. It could be that they may come to the FED for help more often but if that occurs then the FED will either deny them or ask them to take less risk. This happened with Bear Stearns back in 2008 where the FED denied them access to repo facility if I remember correctly. 

    To understand it a bit better, look at the repo facility as a bridge loan for individuals. In this scenario you are a bank and your friend is the FED. Say you make $2,000/month and you have $2,000/month in expenses. For whatever reason you are sick on the day you're supposed to get paid and do not pick up that check. But your cable payment of $100 is due that night, so you go to your friend and offer him your brand new macbook as a collateral which is worth at least $800 on Ebay. You agree to pay him $110($10 in fees) back on Monday when you get to work and pick up(and cash) your check. He agrees to return that macbook to you if you pay him back $110. You do this several months in a row. But now your expenses are $2080($80 in racked up fees for using this bridge loan facility) when your income is $2000. Your friend realizes that you cannot sustain this forever so that's when your friend asks you to cut down on your smoking/drinking/entertainment expenses so you can recalibrate your income and expense. You do it and everyone walks away happy...in principle.

    For everyday Joe, if this gets out of control the biggest concern here is that it reduces liquidity in the market, which means less capital available or capital available but with a high downpayment to open or expand businesses. The inability of businesses to get new cheap debt causes a slow down which means fewer jobs which means fewer opportunities which will eventually cause a recession or worse.

     

  5. 2 minutes ago, bernorange said:

    It jumped in August and has slumped since (except for Japan).

    https://ticdata.treasury.gov/Publish/mfh.txt

    You cannot look at it month over month because of many many reasons like quarterly filings by investors, different fiscal years in different countries which may make them draw down investments to honor tax payments etc. Look at year over year, it is up 9.4%(6.2 trillion Oct 2018 vs 6.8 trillion Oct 2019). And if the current environment continues the demand will be higher.

    Its undeniable that given negative interest rates around the world and recession in most developed economies the demand for US treasuries is higher. Your sourced data says so.

  6. 1 hour ago, bernorange said:

    I posted earlier some analyst claiming the Fed was going to own 20% of the Treasury market by 2020.  I've read some pundits claiming that the Fed has already absorbed 90% of all new Treasury issuance since September ( here ).  I've read various analysis of the repo deal claiming the banks are constrained by regulatory restrictions on balancing reserves between actual cash and Treasuries.  I don't have any personal, first hand experience with the issues or data, but it seems like the bottom line is that the appetite for US Treasuries isn't what it used to be and the Fed is having to step in to finance the government.  This is a recipe for disaster. 

    Quite the contrary, the appetite for US Treasuries is at its peak. Given that yields in at least the safer markets in Europe is negative, BUND for example is at -0.25% vs US at 1.9% which is also the case in Asia. Insurance companies and Pension funds looking for a safe stable return have no where else to go but the US treasury. Yield curve inversion in the summer was directly a result of that high demand. 

    https://www.wsj.com/articles/foreign-demand-for-treasury-debt-surges-11571332228

  7. 11 minutes ago, Mighty fine said:

    Is there any source that shows how much is being injected daily and the feds net balance?
     

     

    https://www.financialresearch.gov/money-market-funds/us-mmfs-investments-in-the-repo-market/

    14 minutes ago, Mighty fine said:

    Now, not knowing the rules, it's also conceivable (in my lay understanding and with the data, or lack thereof, provided) that the borrowers could potentially be running the market in a ponzi scheme like operation.

    Ponzi scheme? How so?

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