In todays news...

[Ant]

Ooh..upset are we? Snowflake.

I'll assume your family up and left, hence the comment. Upset? No , in fact you fascinate me a bit. Let's look at upset then....I have my view and you've gone on the attack.....how very left wing of you.....

Don't like being challenged?

Toughen up.

Buttercup.

But you haven't challenged me at all, you started dribbling on about something else. My view may have challenged yours but you're unable to use any thought process to discuss the topic at hand.

[Count Steer]

I'll assume your family up and left, hence the comment. Upset? No , in fact you fascinate me a bit. Let's look at upset then....I have my view and you've gone on the attack.....how very left wing of you.....

Don't like being challenged?

Toughen up.

Buttercup.

But you haven't challenged me at all, you started dribbling on about something else. My view may have challenged yours but you're unable to use any thought process to discuss the topic at hand.

Snowflake.

[Screwdriver]

Meanwhile, in today's news every man and his dog is "predicting" a run on the banks tomorrow. In the USA of course. That seems quite obvious even to me and I know nothing about these fragile looking financial instruments they all appear to be playing with...

Anyone want to hazard a guess what happens in the UK?

[MyLittleStudPony]

Meanwhile, in today's news every man and his dog is "predicting" a run on the banks tomorrow. In the USA of course. That seems quite obvious even to me and I know nothing about these fragile looking financial instruments they all appear to be playing with...

Anyone want to hazard a guess what happens in the UK?

I’ve been watching what is going on in markets and my conclusion was that Risk Parity has blown up and Citadel and Millennium are in deep trouble. I just received a call from an old GS friend who now runs a large part of a Japanese bank balance sheet in the US and he was highly agitated...

His observation is that Bridgewater has faced massive redemptions from Saudi and others and that is what is caused some of the more dramatic moves last week (gold, bonds, equities and FX). He thinks AQR and 2 Sigma are in the same boat. There is massive forced liquidation of risk parity. All of them run leverage in the strategy, sometimes significant. Sovereign wealth, he thinks, is running for the hills as are others.

As you all know, I think Bridgewater goes under for reason not involving this but the exposure of massive fraud but this will force it.

My friend explained that due to the Volker rules, now that vol has risen, we has to cut risk limits by 80% in many areas – to put it in perspective his Dollar Mex position limit has gone from 200m to 12m. Thus, just when he was supposed to prove liquidity, he has to reduce it. His hands are tied. Even worse, he has to hedge counterparty risk with corp borrowers and that is adding to the tail spin of selling. There is no liquidity from the banks.

The same VAR issue, he claims, is hitting Citadel and Millennium but with a twist. He, along with all the banks, is jacking up lending rates to counterparties from Libor +35 to Libor +90 and he has a $1.5trn balance sheet. The funding stress is forcing banks to reduce lending risk. The issue is that the funding stress is coming from Citadel and Millennium it seems. They rely on repo but via the banks but the transmission mechanism is broken (regulation). It appears that Bernanke probably called Powell and asked him to flood with liquidity at repo but instead of $500bn being drawn, only $78 was drawn. The banks don’t need the cash and don’t want to lend to counterparties. And there in lies the problem – a full credit crunch.

With rates going up, all the relative value trades have blown up. Nothing works any more as they were making 12bps in illiquid stuff on massive leverage (off the runs, etc). As funding goes up they instantly go wildly unprofitable and are stuck either begging for repo funding or having to unwind and realize massive losses. There is no funding. This is big trouble. These guys are short vol (VAR), short liquidity and short rates. The perfect fucking storm.

Then on top of that, my friend who was almost yelling to me about it, says he cannot take any risk and therefore cannot provide liquidity. His hands are tied.

Liquidity is going to massively dry up next week and for the next few weeks. You see under Series 24 of FINRA, a trader cannot make markets from home. It is illegal. So everyone is getting sent home but the traders. The problem is the traders are now falling ill – JPM and CS are the two I’ve heard thus far. They will have to go home and each day more do, or decide they want to, the lower liquidity gets. No one can make markets.

Also, in the corp credit markets things are equally fucked up. Credit, due to the liquidity issues, has stopped trading. That is causing IG etc to blow out. When banks lend to corps, a separate desk (CVA or CPM desk) shorts the stock or buys the CDS etc as a hedge (regulations again) and if the loan is still on the books (they are not allowed to own the bonds but can lend to counterparties, bizarrely) they continues to do that as stocks fall or CDS widens. Essentially, they are short gamma, creating a lob sided market. Everyone is a seller and no one is a buyer. The banks have made money on the hedges while the debt markets get worse.

This is causing the equity value of many firms such as Haliburton, to fall below the debt levels. Whether these borrowers have cash on balance sheet or not is irrelevant because of the falling equity value in this market and from the CVA hedging. That is causing spreads to blow out and it will cause downgrades, thus creating a doom loop.

So, we have a total shit storm if vol stays here for any period of time. I do not see vol falling yet and that is going to cause a really big issue with Citadel, Millennium, all the risk parity unwinds, all the riskier credit that is being shorted for hedging and the repo that no one wants in the banks but their counterparties desperately needs. Every day this situation continues, the more dangerous it is going to get....

We have a big fucking margin call under way.

In my friends opinion, the only way to stop this is to remove the Volker rule under the emergency powers act ( to allow banks to provide liquidity), the Fed to cut to zero and for them to buy corporate bonds. All the banks have been talking to FINRA and they have said go to the government. Problem is Jamie Dimon is in bed. They need him to run the US Treasury as he is the only person who understands all of this and can navigate it through the politics.

This is likely the fix that needs to happen. What happens to Citadel, Millennium, Bridgewater, AQR, 2 Sigma and the corp bond market until they pull that trigger, I have no idea.

[wheelnut]

Meanwhile, in today's news every man and his dog is "predicting" a run on the banks tomorrow. In the USA of course. That seems quite obvious even to me and I know nothing about these fragile looking financial instruments they all appear to be playing with...

Anyone want to hazard a guess what happens in the UK?

Who is ‘every man and his dog’? We must read different news sources.

As for being fragile, the whole economy is based on confidence so it’s always fragile.

[mangocrazy]

I’ve been watching what is going on in markets and my conclusion was that Risk Parity has blown up and Citadel and Millennium are in deep trouble.

So how does that translate to this side of the pond? What contagion risks are there and what exposure do UK banks have? Selfish I know, but...

[Screwdriver]

Meanwhile, in today's news every man and his dog is "predicting" a run on the banks tomorrow. In the USA of course. That seems quite obvious even to me and I know nothing about these fragile looking financial instruments they all appear to be playing with...

Anyone want to hazard a guess what happens in the UK?

Who is ‘every man and his dog’? We must read different news sources.

As for being fragile, the whole economy is based on confidence so it’s always fragile.

My YouTube habits are wide and varied. I suspect the algorithm casts its net widely. I have 5-10 channels sending out warnings for Monday.

So how does that translate to this side of the pond? What contagion risks are there and what exposure do UK banks have? Selfish I know, but...

Yeah, that's my question too. Is it still a good time to pop some cash into premium bonds for example? Or is it time to whip them out? My gut reaction is buy gold, actual heavy blobs of it, not the virtual type or get stuck into some vintage machinery, tangible assets I suppose you'd call them.

[Potter]

blah blah

So how does that translate to this side of the pond? What contagion risks are there and what exposure do UK banks have? Selfish I know, but...

Have you actually read what he's written and understood it? He's cut and pasted that from somewhere as a wind-up*, it's years out of date.
* well I think it's a wind-up, he might not know himself

It's painful to watch some of you regurgitate and discuss political ideology, banking, monetary theory, Nazis, Psychos, etc...

The only redeeming feature is a bit of entertaining ming-mong and as a Brucie bonus tonight I did enjoy the worlds most unstable moderator and Ant arguing about who's a snowflake

[Potter]

In other news affecting people https://www.bbc.com/news/uk-england-norfolk-64930989

This must be devastating, losing your home slowly to something like this must be agonising to watch. I don’t know if insurance or compensation is a thing that can be used in these instances?

[wheelnut]

So how does that translate to this side of the pond? What contagion risks are there and what exposure do UK banks have? Selfish I know, but...

It doesn’t - it’s a wind up.

Looks like HSBC have bought the UK arm of SVB.

[mangocrazy]

Have you actually read what he's written and understood it? He's cut and pasted that from somewhere as a wind-up*, it's years out of date.
* well I think it's a wind-up, he might not know himself

It's painful to watch some of you regurgitate and discuss political ideology, banking, monetary theory, Nazis, Psychos, etc...

So I ask a simple honest question about contagion and exposure and you come out with that shite? You must be desperate to show off how cool and knowledgeable you are. I'll see how this plays out over the next few days/months before coming to any conclusions.

[Potter]

So I ask a simple honest question about contagion and exposure and you come out with that shite? You must be desperate to show off how cool and knowledgeable you are. I'll see how this plays out over the next few days/months before coming to any conclusions.

You didn’t even understand his post, or what you’re asking, and you definitely won’t understand the answer.

I made a point that people regurgitate or talk about things that they don’t understand and you just proved my point.
Don’t feel bad, you’re not alone.

Watch out for those Nazis.

[KungFooBob]

I used to work with a bloke who thought the Haunebu II was real.

HTH.

[Mr. Dazzle]

I work with loads of people who think they, themselves, are real and not just an arbitrary continuation of consciousness!

[KungFooBob]

I work with loads of people who think they, themselves, are real and not just an arbitrary continuation of consciousness!

And they're Nazis?

[wheelnut]

My YouTube habits are wide and varied. I suspect the algorithm casts its net widely. I have 5-10 channels sending out warnings for Monday.

Yeah, that's my question too. Is it still a good time to pop some cash into premium bonds for example? Or is it time to whip them out? My gut reaction is buy gold, actual heavy blobs of it, not the virtual type or get stuck into some vintage machinery, tangible assets I suppose you'd call them.

Youtube isn't a news source Screwd.

Fwiw, I think there will be some market reaction today but I don't think it will be sustained. The fact that the US gov is insulating US account holders and HSBC has taken over the UK arm will help. But you know what opinions are like .....

[wheelnut]

In other news affecting people https://www.bbc.com/news/uk-england-norfolk-64930989

This must be devastating, losing your home slowly to something like this must be agonising to watch. I don’t know if insurance or compensation is a thing that can be used in these instances?

Same happens not far from us in Scarborough - the whole coastline is unstable. Not sure on insurance - it's unlikely as the risk is well known and probably uninsurable.

There's a caravan site in Horsea that is dropping into the sea at quite a hefty rate. Ok, Caravans can be moved but there's a newbuild housing estate not that far to the west. It will take a good few years to get there though.

[Mr Moofo]

In other news affecting people https://www.bbc.com/news/uk-england-norfolk-64930989

This must be devastating, losing your home slowly to something like this must be agonising to watch. I don’t know if insurance or compensation is a thing that can be used in these instances?

Same happens not far from us in Scarborough - the whole coastline is unstable. Not sure on insurance - it's unlikely as the risk is well known and probably uninsurable.

You buy a home on a cliff, or a flood plain, or eroding coastline - and nature eats it. It’s not strictly a surprise.
I am surprised that we continue to try and manage coastal erosion in ways that don’t work.
Shifting sand and shingle is one thing - trying to tame the force of a force 10 storm or a flood is another.
Best thing is don’t build there

[mangocrazy]

So I ask a simple honest question about contagion and exposure and you come out with that shite? You must be desperate to show off how cool and knowledgeable you are. I'll see how this plays out over the next few days/months before coming to any conclusions.

You didn’t even understand his post, or what you’re asking, and you definitely won’t understand the answer.

Interesting. When I don't fully understand something I ask a question. In my world that's what questions are for. On Planet Potter they're an opportunity to belittle. I fully understood what I was asking (it's not actually a complicated question) and if I didn't understand the answer I'd ask another question. That's how these things work. For most people, anyway.

I made a point that people regurgitate or talk about things that they don’t understand and you just proved my point.
Don’t feel bad, you’re not alone.

Watch out for those Nazis.

I didn't 'talk about things that they don’t understand', I asked a question so I could better understand. This simple point is obviously lost on you. Take some comprehension lessons.

[irie]

Have you actually read what he's written and understood it? He's cut and pasted that from somewhere as a wind-up*, it's years out of date.
* well I think it's a wind-up, he might not know himself

It's painful to watch some of you regurgitate and discuss political ideology, banking, monetary theory, Nazis, Psychos, etc...

So I ask a simple honest question about contagion and exposure and you come out with that shite? You must be desperate to show off how cool and knowledgeable you are. I'll see how this plays out over the next few days/months before coming to any conclusions.

You swallowed the MLS copy and pasted bait hook line and sinker.