<p>Asia and Europe got creamed last night. Perversely, this made the US dollar stronger which is not good for our companies, jobs and stock markets. This is starting to feel like 2008.</p>
<p>I see this thread and all I can think of is this:</p>
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</p>
<p>And that is why I’ll be teaching statistics for engineers instead of financial math next winter.</p>
<p>This is nothing like 2008. The talking heads said so and they know best. European sovereign debt issues and our problems aren’t nearly equal too Lehman.</p>
<p>One of the reasons Europe got hammered yesterday was a result of US action-</p>
<p>"Deutsche Bank tumbled 8.9 percent to 23.72 euros, Credit Suisse plunged 8.1 percent to 19.99 Swiss francs and Royal Bank of Scotland Group Plc (RBS) declined 12 percent to 21.78 pence after the lenders were among 17 to be sued by the U.S. to recoup money spent on mortgage-backed securities bought by Fannie Mae and Freddie Mac.</p>
<p>The Federal Housing Finance Agency, on behalf of Fannie Mae and Freddie Mac, filed the lawsuits in New York state and federal courts and in federal court in Connecticut. The FHFA accused the banks of misleading Fannie Mae and Freddie Mac about the soundness of the mortgages underlying the securities.
HSBC, Barclays, SocGen</p>
<p>Among European lenders, the FHFA claimed Fannie Mae and Freddie Mac bought $14.2 billion from Deutsche Bank, $14.1 billion from Credit Suisse, $30.4 billion from RBS, $6.2 billion from HSBC Holdings Plc (HSBA), $4.9 billion from Barclays Plc (BARC) and $1.3 billion from Societe Generale (GLE) SA. The FHFA sued UBS AG (UBSN) in July. HSBC slid 3.8 percent to 504.5 pence, Barclays lost 6.7 percent to 154.15 pence and Societe Generale sank 8.6 percent to 20.25 euros.</p>
<p>Banks also fell as the premium they pay to borrow in dollars for three months through the swaps markets climbed to the most since December 2008, a sign that Europe’s lenders may be struggling to get funding. </p>
<p>The cost of insuring against default on European sovereign and financial debt surged to records on concern the region’s debt crisis is worsening.</p>
<p>The Markit iTraxx SovX Western Europe Index of swaps on 15 governments rose 15 basis points to 325 while the Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers soared 24 basis points to 270, according to JPMorgan Chase & Co. Both gauges are at all-time highs based on closing prices.
European Markets Tumble</p>
<p>National benchmark indexes dropped in all 18 western European markets. Germany’s DAX Index (DAX) tumbled 5.3 percent, sending the gauge’s companies to their cheapest-ever valuation as a multiple of estimated earnings, according to Bloomberg data that began in 2006. The U.K.’s FTSE 100 Index dropped 3.6 percent and France’s CAC 40 Index lost 4.7 percent.</p>
<p>UBS initiated an “underweight” recommendation on global equities in a report dated Sept. 2, saying risk assets have come under pressure from weak data and a re-escalation in Europe’s sovereign-debt crisis.</p>
<p>“Developments suggest that rising risk premiums will push global equities lower in the period immediately ahead,” wrote Larry Hatheway, chief economist at UBS. “The circuit breaker lies with policy and politics.”</p>
<p>European efforts to contain the region’s debt crisis risk unraveling as individual nations’ demands for collateral, Greece’s deteriorating economic predicament and wavering commitment to austerity packages from euro members such as Italy throw any recovery in doubt. "</p>
<p>[European</a> Stocks Drop on Merkel Election Loss - Bloomberg](<a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?)</p>
<p>sure feels like a contagion to me…</p>
<p>Interesting the hit in the Germany market. I always thought that most Germans liked the fact their leader didn’t want to be joined at the hips with the PIIGS, but I guess there were more pressing issues. Please tell me our govt and fin institutions have enough sense to keep away.</p>
<p>Right now the S&P 500 Sept. futures is 1145 down close to 24 points. The august lows were around 1100. It will be interesting to see if the S&P 500 tests the 1100 mark or goes below.</p>
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</p>
<p>That does not seem to work too well for someone in his/her first year in the workforce after completing school. E.g. a 21 year old university graduate gets a $50,000 per year job. The formula says that s/he should have a net worth of $50,000 * 21 / 10 = $105,000. Pretty hard to do after working for less than a year.</p>
<p>Ucbalumnus…that post was just for fun…</p>
<p>Who gets bailed out?</p>
<p>Austerity vs stimulus</p>
<p>Bondholders and banks vs a large segment of the population</p>
<p>Things are just heating up…</p>
<p>Doct, do you carry option positions into a new year?
I had no idea what a pain options bring to a tax return.</p>
<p>Just to stay with he thread…
Equity options are taxed at a higher rate that equity index options. Hmmm</p>
<p>“So… we recapitalise the banks with public money and rack up more sovereign debt which will cause more bad debts for the banks… which we can then recapitalise with more public money and…”</p>
<p>I guess that’s why gold is over $1,900 an ounce right now.</p>
<p>US dollar index is over 75 too!</p>
<p>Flight to “quality”!</p>
<p>hmmmm…I kind of like post # 30. Looks like there is a lot of truth that post.</p>
<p>One year Greek debt yields over 70%.</p>
<p>I just have this feeling that debt will not be paid back in full.</p>
<p>“Doct, do you carry option positions into a new year?
I had no idea what a pain options bring to a tax return.”</p>
<p>I’m not sure of the pain. I was holding January 2012 DIA and SPY options. I sold some of them and was planning on buying options farther out to take the loss. The IRS isn’t too clear on the wash sale rule for options. Some consider options with a different expiration date to be “materially different”. I guess I’ll find out. I’m holding September puts on SPY and QQQ. My plan was to be long farther out - 2012 and short in the near term until Bernanke does something - I’m not sure what. There’s European stuff in September and Obama’s speech which sounds like more of the same stuff he’s been trying to sell unsuccessfully.</p>
<p>Those puts are going to look real good tomorrow.</p>
<p>It is a pain in the butt to trade stocks and use options against the stock position at Schwab. I don’t want to trash Schwab, but I have to go over each option trade that was exercised by hand to figure out the pnl. At least, I think I do…I will know more in a couple of days…</p>
<p>I think a computer can do it faster than I can. :)</p>
<p>I guess my sales of puts in BAC are going to going the money. i don’t even like BAC. :)</p>
<p>I sold Sept XLF 10 puts thinking they were so out of the money. Who knows - 12 more days!</p>
<p>A guy at work was pushing me hard to buy BAC when it was over ten, then nine. He kept adding as it went down but most of his shares are over ten. I do not understand th big bank and BAC does not pay a big divvy, so no go for me.</p>
<p>Well…my BAC puts closed in the money…by .01.</p>
<p>Well you still have some time for them to close out of the money unless of course you want to own them.</p>
<p>I don’t really want to own BAC.</p>
<p>I will probably sell calls if I end up with the stock. Haven’t decided yet.</p>
<p>Doct, full disclosure…I closed the puts out for a small loss…
Also lost a little on the weekly BAC puts…</p>
<p>Not worth it to me to see what happens…</p>