wednesday brainstorming

1. The market picked the wave 4 option up for window dressing as the max targets are the 1300-20 level for the SPX the move is almost exhausted since we played buy the rumor sell the fact game. The vote today is a sure thing but does not solve the problems. A ‘no’ would send markets 10% down right away but the yes leaves us with 1-2% upside before all the other problems are back on the plate. A yes vote will initially spark a little buying but nothing is really done by todays vote as the restructuring ideas for bailout 2.0 are technically defaults and we will see big trouble about that the next days plus the population of Greece will go wild along with populations in the paying countries being really pissed

Portugal Spain Italy, England and the USA have even bigger troubles ahead of them and China is in big trouble as well with Muni’s running 1.5 tril bad loans plus the 500 bil bad loans of banks and all the bad investments of China their 3 bil reserves can basically counted to be gone. For now the window dressers are happy for the higher levels as they can charge more to their fund clients and the losses of some banks will have narrowed allthough some blew serious money on fixed income bets.

Technically a wave 5 down is still in the cards and wave 4 up should end today latest on Friday.

excerpt

Former Goldman Trader Blows Up Morgan Stanley Rates Desk With Breakevens Bet Gone Horribly Wrong

Submitted by Tyler Durden on 06/28/2011 22:46 -0400

About a year ago, Goldman Sachs experienced an unprecedented P&L wipe out after in Q2 it bet on a decline in volatility, only to be caught offguard by the first Greek bailout which in turn cost the firm’s prop desk hundreds of millions in losses. Now, about a year later, it is again the same sellside hubris and pretty much the same players that make a repeat appearance, after Bloomberg just disclosed that a very wrong way bet on 5 and 30 year TIPS breakevens has cost the interest-rates trading group “at least tens of millions of dollars.” And while Jim Caron’s traditionally wrong rates call has up to now only cost his clients money, this time it is his own trading desk that may be left collecting the shrapnel. But topping off the irony is that it is once again an ex-Goldmanite who is responsible for the actual trade. Per Bloomberg, “The interest-rate group is run by Glenn Hadden, who Morgan Stanley hired from New York-based Goldman Sachs in January.” News of the loss made their way through the trading community earlier and was manifested in the weakness of the “hedge fund” banks: the Goldmans, the JPMs and, of course, the Morgan Stanleys of the world. As a result, MS is now forced to unwind the trade at a major loss (at least for the current quarter, we have to ask John Paulson if the trade is profitable on a cost basis), which will likely have substantial repercussions for the short and long breakeven curve for days, if not weeks.

wonder how many were bribed ?

Futures Pop After Greek Opposition Member Elsa Papadimitrou Says Will Cast Vote For Austerity Plan

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~ by behindthematrix on June 29, 2011.

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