Did a derivative's bomb go off in the last 2 weeks?

roadrunner

See 2nd article

Nothing to see here for the derivative's naysayers. Nothing that a few bookkeeping entries can't fix.

Co-CEO's at Deutche Bank resigning.

ranshdow

I believe the transports divergence is bearish by Dow theory. Anecdotally the hype around hiring in the general media has reached a fever pitch (could be bearish), whereas the rise in mandatory minimum wages in various high-cost areas is supposed to be bad for employment.

I suppose the bold could go for deep OTM puts. For the rest of us, cash.

derryb

I suspect we will see an immediate mushroom cloud when a derivative bomb goes off.

I believe we are only witnessing the discovery of the bank's true risk by Deutsche Bank top level management.

Julio

Derivates, and stocks confuse my simple mind, but then again so do PM's at times. Oh heck, in my case, most of the time. I'm not what most would call diversified. I try to keep it simple. Majority of stock holdings consist of csx, and cvs. A transport RR and a Pharmacy. Kinda boring, but I like them. Take care. jws

MsMorrisine

<< <i>See 2nd article

Nothing to see here for the derivative's naysayers. Nothing that a few bookkeeping entries can't fix.

Co-CEO's at Deutche Bank resigning. >>




from just above. Where are these bombs exploding?


I will have more on this later, but now the legacy home equity loans left over from the big housing bubble are going to start torpedo-ing the financial system. No one has thought about these roadside financial exploding devices, but starting in mid-2014 and ballooning up quickly from there, home equity loans sitting dormant other than a small monthly interest payment have been and will be converting to fixed-rate amortizing 2nd mortgages. The monthly payment on these will double or triple for most homeowners with HELOCs resetting. The amount sitting on bank balance sheets is over a half trillion dollars. For its quarter ended March 31, the delinquency rate on its HELOC balances jumped 124%.

Just when mom and pop home flippers were thinking that the water was nice and warm, they are going to get ripped apart by a new wave of distressed home sellers and foreclosure auctions. For the record, I search for home listings on just one zip code in central Denver. I am now getting at least one “new price” email per day, including three yesterday and one today already. The next leg down in the housing market is starting…

TwoSides2aCoin

When Greece says they will tell us tomorrow what they plan is, and their plan already failed, it's all Greek to me.

bronco2078

Where I am even small 6 to 10 house developments feel like overbuilding. The garbage that Hovnanian and Lennar build out always baffled me. Mega developments of 100's or 1000's of identical houses in rows.

Even in the early 2000's when housing was blowing up everywhere I'd see this stuff building out in places like Tucson and be totally confused. Who wants to go there ?


4 Walls and a roof on a slab standing shoulder to shoulder in some desert hellhole. I remember talking with a guy that was high up at Lennar back then and saying "who are these houses for?"

He said these are second homes for California people that are priced out of the market there

So if I live in a place like California I'm going to buy a vacation home in Arizona ? Wouldn't it be cheaper to put a beach chair in the kitchen, crank up the oven to 450 and open the door ?

Looking ahead beyond this bubble , a bubble or 2 bubbles down the road,west of the Mississippi will be a great water rights bubble I think.

mariner67

Bronco....again, your analogies are great...I really enjoy your above post! Crank up the oven to 450F! Your point is also right on.

clouisejewelers

<< <i>Bronco....again, your analogies are great...I really enjoy your above post! Crank up the oven to 450F! Your point is also right on. >>


Agreed...Love your posts Bronco, very colorful. Keep 'em coming!

cohodk

No.

Another opinion piece written by an fear monger.

Just because the stock market may drop, (I'm lpoking for 1850 on sp500, which I wrote on this board months ago) does not mean derivatives blew up.

I do appreciate the fear mongers effirts. If he can convince enough emotional investors to sell them maybe I'll have a nice payday at 1850.

Now get back to work my fear mongering minuons. Buwhahaha

roadrunner

<< <i>.....just because the stock market may drop, (I'm lpoking for 1850 on sp500, which I wrote on this board months ago) does not mean derivatives blew up. >>



You must have read a different article than me. The mentioning of the stock market in that article just seemed like a quick analysis of that market in passing. The linkage between banks, interest rates/bonds, WS insider sentiment, DB May 26th settlement with the SEC, and particularly CEO resignations was what the author was bringing out. But leave it to naysayers to focus on the least important portion of someone's analysis and use that as the key note of everything going forward.

derryb

<< <i>Another opinion piece written by an fear monger. >>


There would have been no 2008 crisis had attention been paid to the opinion pieces of fear mongers who saw it coming.

Most Americans had no idea what was coming. And they still don't. They want to believe that greedy politicians, corrupt bankers, inexperienced academia and beholden political appointees know best how to run an economy. Time continues to show they are best at running it into the ground, unfortunately at the expense of the population. Sadly, the next financial crisis will have no effective weapons to counter it short of great personal sacrifice for many, many people.

When you label this as fear mongering answer me this:
Are our politicians greedy?
Are our bankers corrupt?
Do our leaders pulled from teaching positions have real world experience?
Are our financial decision makers indebted to the politicians who appoint them?

Just like a politician, you use words like "Fear Monger" and "Conspiracy Theory" in a poor attempt to discredit when facts cannot.

And now, a word from our sponsor, your favorite fear monger who was right the last time around.

cohodk

You all beg for the boogeyman to be proven.

Boo!!!.


There he is. Now back to your regularly scheduled conspiracy.

cohodk

Why don't you go back and read what I wrote in 07-08.

Nah, better to follow a loser...it makes us feel better.

jmski52

It must be fun for whoever is taking over the reigns at Deutschebank right now. I'd like to be a fly on the wall as they are going through the spreadsheets.

derryb

<< <i>You all beg for the boogeyman to be proven. >>


No, we just take notice when he appears.

The latest from that fear mongering, boogyman publication. Boo!:

Baley

"Watch out- the world is not ready for the next recession"

Maybe not, but WE are ready, right? We on this board have collectively and correctly predicted 47 out of the last 2 recessions.

Consider that articles such as the one in the Economist are increasingly common, and perhaps "the world" at large won't get fooled again, at least maybe not as bad as before...

dpoole

<< <i>We on this board have collectively and correctly predicted 47 out of the last 2 recessions. >>



That's better than TSA.

And we don't even get paid 5.6 billion a year to say so!

derryb

<< <i>Consider that articles such as the one in the Economist are increasingly common, and perhaps "the world" at large won't get fooled again, at least maybe not as bad as before... >>


Those who were watching in 2007 saw it coming. Those who were not are hopefully paying attention now. I believe more people are now economically wide awake and less are in denial.

Is Deutsche Bank The Next Lehman?

"First, we must state the obvious: If Deutsche Bank is the next Lehman, we will not know until events are moving at an uncontrollable and accelerating speed. The nature of all fractional-reserve banks — who are by definition bankrupt at all times – is to project an aura of stability until that illusion has already begun to implode. Deutsche Bank is sitting on more than $75 Trillion in derivatives bets — an amount that is twenty times greater than German GDP. Their derivatives exposure dwarfs even JP Morgan’s exposure – by a staggering $5 trillion."

The kicker:

"Meet Tom Humphrey. He heads up Deutsche Bank’s Investment Banking operations on Wall Street. He was also head of fixed income at Lehman."

bidask

The cost of my airline tickets are as high as ever. 😀

DrBuster

NM, irrelevant.

cohodk

Those who were watching do get it and know 2015 isn't 2007 ir 2008.

Those who think it is will be proven wrong..again. That poor broken record.

derryb

<< <i>Those who were watching do get it and know 2015 isn't 2007 ir 2008.

Those who think it is will be proven wrong..again. That poor broken record. >>


There's that "aura of stability" mentioned in my last link. I like the overconfidence. Please continue to preach it. It brought me great PM gains the last time. I'm reloaded and ready for action. Time is on my side. The longer prices remain lower the more I can reload.

roadrunner

<< <i>Those who were watching do get it and know 2015 isn't 2007 ir 2008.

Those who think it is will be proven wrong..again. That poor broken record. >>




Yes, 2015 isn't 2007-2008. The next derivative's crisis during the 2015-2022 period will be worse than 2008. Those guys "only" had to save AIG and a few other corporations that were not the size of the TBTF banks. Lehman and Bear Stearns were runts compared to the exposure the 20 big boy world banks carry. How can we be proven "wrong again" when we were right in 2007-2008? It took 6-9 years for the MBS/CDS bomb to go off after Borne, Sinclair, and others put out the initial warnings in 1999-2002. Good things take time.

Next time around the interest rate derivatives and bonds will come under pressure. They weren't touched back in 2007-2008. And just like in 2007 we have stock market bubbles to add fuel to the eventual fire. We're about due for another 8 year cycle top.

TwoSides2aCoin

Inflation is a strange bedfellow . Cash is not king when credit is the jeweled crown. So we can create our own demise or our own progress,… while on paper, look rich, with all them zeroes and a minus sign in front of just the first 1. So derivates or whatever we wish to call them, obviously don't matter, with how many zeroes follow that one.
We all sure seem to eat very well , considering it's a big minus. There is ONE PLUS. Some have better vision than others. Because many look forward while the masses look back.

Those who cannot survive , find another way to survive the financial crunch of the last few millenniums. We are resilient there. Because, in the end, derivatives are just a hedge. A form of gambing with money , using an entity as the "base". Some float, some sink. Some crash, some stink. Some invest in companies, some gamble trends…. Metal's just a heavy hedge in case of fire.

jmski52

Those who were watching do get it and know 2015 isn't 2007 ir 2008.

Those who think it is will be proven wrong..again. That poor broken record.

Please explain. You mean it will be much worse? Adding insult to injury, nobody from the last financial crisis was ever held accountable.

bidask

<< <i>

<< <i>Those who were watching do get it and know 2015 isn't 2007 ir 2008.

Those who think it is will be proven wrong..again. That poor broken record. >>




Yes, 2015 isn't 2007-2008. The next derivative's crisis during the 2015-2022 period will be worse than 2008. Those guys "only" had to save AIG and a few other corporations that were not the size of the TBTF banks. Lehman and Bear Stearns were runts compared to the exposure the 20 big boy world banks carry. How can we be proven "wrong again" when we were right in 2007-2008? It took 6-9 years for the MBS/CDS bomb to go off after Borne, Sinclair, and others put out the initial warnings in 1999-2002. Good things take time.

Next time around the interest rate derivatives and bonds will come under pressure. They weren't touched back in 2007-2008. And just like in 2007 we have stock market bubbles to add fuel to the eventual fire. We're about due for another 8 year cycle top. >>

RR, in 2008/2009 there was a HUGE widening of credit spreads relative to treasuries in the corporate and municipal markets.

cohodk

<< <i>

<< <i>Those who were watching do get it and know 2015 isn't 2007 ir 2008.

Those who think it is will be proven wrong..again. That poor broken record. >>


There's that "aura of stability" mentioned in my last link. I like the overconfidence. Please continue to preach it. It brought me great PM gains the last time. I'm reloaded and ready for action. Time is on my side. The longer prices remain lower the more I can reload. >>



Your Ira has been cut in half since 2010 and you are well behind the returns in equities. You only fool yourself.


Surely some derivative will go haywire and cost a bank a few billion. It will not result in 100s of trillion in losses and collapse the entire banking system.

cohodk

<< <i>Those who were watching do get it and know 2015 isn't 2007 ir 2008.

Those who think it is will be proven wrong..again. That poor broken record.

Please explain. You mean it will be much worse? Adding insult to injury, nobody from the last financial crisis was ever held accountable. >>



1 million bankers lost their jobs.

jmski52

1 million bankers lost their jobs.

No one was ever held accountable.

derryb

<< <i>Your Ira has been cut in half since 2010 and you are well behind the returns in equities. You only fool yourself. >>


My IRA successfully plays the ups and downs in metals, performing much, much better than equities, but thanks for the concern.

guitarwes

I think he was taking a shot at your stack of physical and assuming that is your only IRA.

derryb

<< <i>I think he was taking a shot at your stack of physical and assuming that is your only IRA. >>


The physical silver is not an IRA, it is my kids' inheritance, most of which was bought below current spot. Would be bigger but sold a few of boxes at $35+. Currently putting those funds back in at under $20. Nice thing about an inheritance of assets is that those assets get a new basis (cost for figuring profit) that is set at value at time of inheritance. If I leave them silver bought at $15 when silver is currently $30, its new basis for figuring profit when they sell is now $30. Works this way with all inherited physical assets, including homes, and is a good reason not to convert inheritance assets to cash before death.

My IRA's are performing just fine.

derryb

<< <i>Surely some derivative will go haywire and cost a bank a few billion. It will not result in 100s of trillion in losses and collapse the entire banking system. >>



Derivatives a big cause of 2008 entire banking system crisis

But it can't happen again.

When it does it will be an uncontrollable chain reaction.