Tag Archives: Bloomberg Television

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.”

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Meredith Whitney: States May Need Federal Bailout in Next 12 Months

The U.S. government will face pressure to bail out struggling states in the next 12 months, says Meredith Whitney, the banking analyst who correctly predicted Citigroup Inc.’s dividend cut in 2008, Bloomberg writes.

“It’s going to be an incredibly divisive issue.”

Meredith Whitney

While saying a bailout might not be politically viable, Whitney joined investor Warren Buffett in raising alarm bells about the potential for widespread defaults in the $2.8 trillion municipal bond market. She said state and local issuers have taken on too much debt and that the gap between public spending and revenue is unsustainable, according to Bloomberg.

“People will think the federal government will bail these states out,” Whitney,  the founder of Meredith Whitney Advisory Group Inc., says in an interview on Bloomberg Television.

“It’s going to be an incredibly divisive issue.”

Whitney’s comments coincide with her release of a report rating the financial health of the 15 largest U.S. states measured by gross domestic product, according to Fortune magazine.

The report, which Whitney said took two years to complete and hasn’t been released publicly, ranks California’s finances the worst, with New Jersey, Illinois and Ohio tied for second-worst.

Read the story here.

Watch the video.


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All Nordic Banks Will Pass Stress Test, Nordea Says

According to Chief Executive,  Christian Clausen, at the Swedish based Nordea, all Nordic banks will pass the EU bank stress test when the results are made – partly – public on Friday.

“We do not see any problems related to the passing stress tests.”

Christian Clausen

Christian Clausen, CEO, Nordea Bank, Sweden.

Of course not! Nordic bankers usually don’t see any problems at all – ever. And why should they? Most of them have their local governments as major shareholders, and no politician will let their good buddies, former and future employers, down.

The Nordic central banks have even agreed on bailing out the Baltic banks, who have caused the Scandinavian bankers most headache, and losses, so far.

Nordic Central Banks Agree On Baltic Bank Bailout

At the Nordea headquarter they’re also absolutely sure that the tests would strengthen rather than weaken the Nordic banks – in any case.

“We do not see any problems related to the passing stress tests,” Nordea Chief Executive Christian Clausen says in an interview with  Bloomberg Television on Wednesday.

Adding that all the Nordic banks will come out on the upside of the stress tests.

See the interview with Christian Clausen at Bloomberg Television here, where he also talks about the Scandinavian banks Baltic operations.

When similar tests were conducted by the US bank regulators last year, 19 banks were exposed to a hypothetical horror scenario.

The US stress tests uncovered by some banks need more cash, but that most did fine, and bank shares rose sharply in a  period following the stress tests.

Europe leaders are hoping for something of the same effect, but lately many have expressed skepticism about both the health of the European banks,  and how transparent and accurate the tests are.

The following Nordic banks are included in the EU stress tests:


Danske Bank

Jyske Bank



OP-Pohjola Group


Nordea Bank

Skandinaviska Enskilda Banken (SEB)

Svenska Handelsbanken



No Norwegian banks are submitted to the test, as Norway is not a member of the EU.

Guess that’s just as well:

Norway: Most Banks Fail In Stresstest

More related by the Econotwist:

European Bank Stress Tests Are Loosing Credibility

The EU Stress Test: Working The Media

Stress Level Rising In Europe; Some Banks Might Not Survive

EU Stress Test May Trigger Capital Injection Of EUR 85 Billion

European Banks Hunting For EUR 1,65 Trillion

German Banks With More Than 200 Billion Euro In Faul Credits

Swedbank To Merge Baltic Subsidiaries Into The Group

Estonia: Banks Lost USD 23 million in Q1

Morgan Stanley To Buy Bad Baltic Loans?

Swedbank Leaves The State Guarantee Program

Latvia To Split And Sell Nations Leading Bank

The Nordic Superbank Dream

An Estonian Mystery

Swedbank Buy Greek Bonds With Estonian Money

Estonian Company Claims $130mill from SEB

How To Make A Rat Look Like A Puppy

Swedbank In Estonia: “Daylight Robbery”

Swedbank Reports Record Loss of SEK 10,5bn

Baltic losses of Swedish banks at 3.7 billion dollars

How Sweden sent Estonian economy into free fall

East European banks needs $304bn


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Filed under International Econnomic Politics, National Economic Politics