Nov 24. Korea heating up

N Korea situation has potential to flare up.  Minutes show dissension at Fed about QE program (not surprising, as public comments had already indicated internal debate).  Forward growth estimates trimmed.  Ireland was downgraded…EDZ0 is beginning to show signs of front end credit worries…trade 9966 last night, from 68.5 trade yesterday.  Spanish bond yield at new high spread to German bunds.
–Fimat a buyer of about 20k TYF 126.5c covered yesterday.  Boosted TYF vol.  Trade appears to be cover according to prelim open interet sheets.
–Stocks fell, but held up amazingly well given surge in dollar, and rising geopolitical tensions.
–Clearly many banks need more capital to comply with Basel 3.  The larger theme in my opinion is that taxpayers are being asked to bear the burden of financial institutions’ mishaps. Even if the public was the beneficiary of lending gone wild, and of gov’t spending that was simply unsustainable, the costs of bailouts have become so overwhelming in terms of future austerity that a revolt of sorts is spreading.  Now we have many people, Jim Rogers, etc, saying the financiers, bondholders, stock holders should be the ones to take the losses. It is all about spreading the pain, and trying to maintain functioning capital markets.  The people of Iceland, Ireland, Greece…and growing…aren’t worried about the markets, they don’t want to pay….

Posted on November 30, 2010 at 9:48 am by alexmanzara · Permalink
In: Eurodollar Options

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