Good day all. I’m a bit more confused than usual. Recently I supplied a link to what I consider a very good investment advisor Anthony Boeckh who mentioned in his missive the current quandary the Fed seems to be in. This quandary “a liquidity trap” was mentioned over the weekend by Chicago Fed President Charles Evans. Both he and Boeckh agree we are in one. Both seem to agree that a liquidity trap is defined as a state in which pumping more liquidity into the economy no longer has any stimulative effect. So of course Boeckh goes on to warn against pursuing that path as the risks to an out of control inflation via a currency devaluation could be a major horror show. Now this is the confusing part; Evans, after agreeing that we are in a liquidity trap – apparently says we need “much more” monetary accommodation in the face of high unemployment and inflation that is too low. I mean why would you recommend giving more heroin to a junkie?? In a question posed to Evan’s he admitted that his views on this are “evolving”. So maybe something a bit less confusing will be forth-coming, but after the likes of the “Maestro” and “Helicopter Ben”, maybe we should just get a plain talking stripper with a whip sticking out of her ass, and have her take a run at monetary policy . Think about it or don’t, a shameless plain talker might be a nice change of pace , to outlandish you say, too incredibly perverted, pehaps how about an ardvark..– discuss.
For larger flows from the a.m. session see below.
| 10/18/2010 | |||||
| Paper | B | 10,000 | EDX097c | 0.5 | 9963.5/64 |
| New Edge | S | 5,000 | EDH3 87c | 18 | 9872 |
| Paper | S | 1,000 | EDH9962 strad | 20.5 | N/A |
| Paper | B | 1,000 | EDX95/96 pspasread | 2.25 | 9664 |
| Paper | B | 1,000 | EDX9962 strad | 10 | N/A |
| Paper | B | 3,000 | EDH1 9900 p | 3.75 | N/A |
| Merril | B | 5,000 | EDX0/EDZ0 96c spred | 1.75 | 9963.5 |
| New Edge | S | 12,000 | EDX95/96 squash call over | 3.5 and 3.2 | 9963.5 area |
| Paper | S | 500 | EDZ096 strad | 13.5 | 9963.5 |
| Paper | B | 5,000 | EDZ0 9900 p | 1 | 9963.5 |
| Paper | B | 1,500 | EOH 93 strad | 26 | 9930 |
| Paper | B | 500 | EDZ0 96 strad | 14 | 9963 |
| straddles: | |||||
| edx0 9962 9.5/10.5 f=9963.5 | |||||
| edz0 9962 13/14 | |||||
| edz0 9962 13/14 shorts | |||||
| edf1 9962 15/16 f=9958.5 | |||||
| edh1 9962 20/21 f=9958.5 EOx 9937 12.5/13.5 | |||||
| edm1 9950 32/33 f=9955 EOz 9937 16/17 | |||||
| edu1 9950 34/35 f=9949 EOf 9925 19/21 | |||||
| reds EOH 9925 29/30 | |||||
| edz1 9937 45/46 f 9940 EOM 9912 41.5/42.5 | |||||
| edh2 9925 55/56 f=9930.5 EOU 9900 53.5/54.5 | |||||
| edm2 9912 64.5/65.5 f=9918.5 | |||||
| edu2 9900 74.5/75.5 f=9906 | |||||
| Paper | S | 5,000 | EDZ091/93 p spread | 1.25 | 9963.5 |
| Paper | B | 10,000 | EDH2 9912p | 22 to 22.5 | 9931 |
| Paper | B | 1,000 | EDZ0 95/96/97 c fly | 4 | 9963.5 |
| Paper | B | 5,000 | EDZ092/95 pspred vs. 97c | 1.5 pspred | ^9963 |
| Paper | B | 500 | EDX096 strad | 10.5 | 9963.5 |
| Paper | S | 1,000 | EDH196 strad | 21 | 9958.5 |
| Paper | B | 500 | EDX093/95/96 pfly | 1.25 | 9963 |
| Paper | S | 1,500 | EDZ0 97c | 1 | 9963 |
| Mann | B | 5,000 | EDZ097/98c 1X2 | 0.5 | 9963 |
| 10yr. | |||||
| Paper | Sold | 500 | TYX126.5/127 strangle | 0.3 | ^12616 and 17 |
| After this sold bid on strad filled see below | |||||
| Paper | B | 1,000 | TYX126.5 strad | 0.43 | 12616/16.5 |
| Mann | B | 1,500 | TYX127p | 0.43 | ^12614.5 |
| Paper | B | 2,000 | TYX124.5/125/125.5 p flys | 0.02 | 12615.5/16 |
| Merril | Sold | 2,000 | TYX126.5c | 0.23 | ^12618.5 |
| RJO | B | 2,000 | TYX128c | 0.01 | 12619/19.5 |
| Mann | Sold | 1,000 | TYX/Z 126 call calendar | 0.45 | 12616/17 |
| 30yr. | |||||
| Paper | B | 500 | USX134c | 0.08 | 13125 |
| Ultra | |||||
| Merril | S | 400 | ULZ135p | 2.32 | 13606 |
| Merril | S | 600 | ULZ127/132 p spread | 1 | 13600 |
hi,
do u have ne idea y front month eurodollars r cumin down??im totally clueless..v r talking abt qe and front months cuming down...this is totally illogical for me
Posted by: KTT | 10/18/2010 at 11:29 AM
One fair point is that the concern over the health of banks - focus on Ireland for the moment could cause a rise in overnight rates as entities might become fearfull of counter party risk as we went though during the crisis in the early phases. The longer end could be a grab for what is perceived to be a safe long term yield and the Fed buying treasury notes today along with expectations of further buying via qeII.
I think the banking issue given that there has been fresh criticism leveled at the recent "stress tests" - now clearly looking dubious could trigger more banks coming under harsher review.
Posted by: Tom Pantelis | 10/18/2010 at 12:02 PM