Tag Archives: Bloomberg L.P.

ECB: “What We Are Doing Is Actually Illegal”

Well, well, well… this must be the confession of the day!

“Maybe we might come to the conclusion that we should stop.”

ECB representative

Thanks to The Irish Economy Blog who picked up this amazing piece of selfinsight from one of the representatives of the European Central Bank, ECB:

This post was written by John McHale:

After a turbulent week, RTE’s This Week programme provides a useful stock taking with Mark Gilbert (Bloomberg), Dan O’Brien and Brian Hayes.

(You can listen here; starts min 5:19).  

Part of the background is a Sunday Times front-page story on the ECB’s reaction to Michael Noonan’s Washington statements (no web link).

“In the meantime, we may have to come to the conclusion that it doesn’t really make sense for the ECB to keep putting €100 billion into Irish banks.   What we are doing is actually illegal, but we have being doing it because we want to help Ireland.” 

“Maybe we might come to the conclusion that we should stop,” the ECB source says.

What !?

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Filed under International Econnomic Politics, Laws and Regulations, National Economic Politics

Options: Highest Put/Call Ratio Since Lehman

The cost of three-month put options to sell the Standard & Poor’s 500 Index is almost twice the price of calls to buy, the highest ratio since July 2007, according to data compiled by Bloomberg. Investors are paying a high price to hedge against a drop in the US stock market.

“We are buying puts and protection across the board. There are many open fronts, too many question marks.”

Sergi Martin Amoros


The end of the Federal Reserve’s Treasury repurchase program is prompting options traders to pay the most in four years for protection against stock declines, a signal that proved bullish in the past, Bloomberg reports.

The cost of three-month put options to sell the Standard & Poor’s 500 Index is almost twice the price of calls to buy, the highest ratio since July 2007, according to data compiled by Bloomberg.

The last 17 times that so-called skew rose as high, the benchmark gauge for American equities climbed a median 3.9 percent over three months, data compiled by Bloomberg show.

Traders are loading up on insurance in the options market on speculation policy makers will halt their program of quantitative easing in June.

“A Major Trend”

Similar purchases preceded gains in the past because they meant professional investors who use the contracts as hedges are buying stocks, said Pam Finelli, head of European equity derivatives research at Deutsche Bank AG.

Risk management and portfolio protection is a huge theme in the market and it’s not unusual to see people expanding their equity allocation, but doing so with a hedge in place,” Finelli says in an interview from London.

“The equity market goes up but the puts stay bid because there’s an underlying hedge that’s being put on at the same time. This has been a major trend.”

Sergi Martin Amoros, chief executive officer at Credit Andorra Asset Management in Andorra, added to equities following the March 11 earthquake in Japan, he said in a telephone interview on April 21.

He’s also buying protection on the firm’s 4 billion euros ($5.8 billion) in investments.

“Question Marks”

“We made the most of the March sell-off to add to positions as equities had weakened,” he said.

“There were good prices and we took the opportunity. We are buying puts and protection across the board. There are many open fronts, too many question marks.”

The S&P 500 fell 0.2 percent to 1,334.60 as of 9:42 a.m. in New York. It climbed 6.3 percent this year through April 21 as the US unemployment rate unexpectedly dropped to a two-year low of 8.8 percent in March as companies created more jobs than forecast, the Labor Department said earlier this month.

The economy probably expanded at a 1.9 percent annual pace in the first quarter and will grow at an average rate of 3.1 percent though 2013, according to the average of estimates in a Bloomberg survey.

Source: Bloomberg

Bloomberg’s Jeff Kearns and Whitney Kisling report the conversation between Howard Present, president and chief executive officer of F-Squared Investments Inc., and Carol Massar, Matt Miller and Adam Johnson on Bloomberg Television’s “Street Smart.”

Play Video

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Filed under International Econnomic Politics, National Economic Politics

Marc Faber Expects Market Sell Off On QE2 Announcement

With vacuum tubes expecting QE next Wednesday to come anywhere between $500 billion a $10 trillion, it falls upon Marc Faber to naturally take the other side of the bet, who, in this interview with Margaret Brennan, tells the impeccably coiffed Bloomberg anchor that instead of inciting the mother of all flash dashes and hitting the BlackRock 12 month target of Dow 36,000, Mr. Faber instead anticipates that the FED decision “could disappoint investors and may prompt a correction in US stocks.”

In response to Margaret’s question if size does in fact matter, Faber responds that anything under a trillion will “disappoint.”

And with Goldman now throwing out bogeys as high as $2-4 trillion, it is almost inevitable that a sell the news type day will be virtual certainty on mid-term election day.

“The markets are stretched: weak dollar, strong PMs and strong equities – I think a correction is overdue. But I wouldn’t think that a bear market is around the corner.”

In fact the opposite: “Maybe we will have a crack up boom in stocks and commodities like between the end of 1999 and March 2000 when the markets went up very strongly,” Faber says.

Marc “Gloom-And-Doom” Faber is once again mostly bearish on bonds (and cash), due to his long-running expectation that inflation, whether modest or hyper, will make all fixed paper investments lose value very fast.

As for specific equity sectors Faber highlights agricultural commodities and “I continue to recommend the accumulation of precious metals, whereby I think they are overdue for some kind of a correction here and then we’ll get the next move probably next year and then thereafter.”

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Filed under National Economic Politics