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nikoschopen
2,824 posts
msg #54369
Ignore nikoschopen
8/26/2007 8:54:59 PM

Fed bends rules to help two big banks

If the Federal Reserve is waiving a fundamental principle in banking regulation, the credit crunch must still be sapping the strength of America's biggest banks. Fortune's Peter Eavis documents an unusual Fed move.
By Peter Eavis, Fortune writer
August 24 2007: 5:09 PM EDT

NEW YORK (Fortune) -- In a clear sign that the credit crunch is still affecting the nation's largest financial institutions, the Federal Reserve agreed this week to bend key banking regulations to help out Citigroup (Charts, Fortune 500) and Bank of America (Charts, Fortune 500), according to documents posted Friday on the Fed's web site.

This unusual move by the Fed shows that the largest Wall Street firms are continuing to have problems funding operations during the current market difficulties, according to banking industry skeptics. The Fed's move appears to support the view that even the biggest brokerages have been caught off guard by the credit crunch and don't have financing to deal with the resulting dislocation in the markets. The opposing, less negative view is that the Fed has taken this step merely to increase the speed with which the funds recently borrowed at the Fed's discount window can flow through to the bond markets, where the mortgage mess has caused a drying up of liquidity.


nikoschopen
2,824 posts
msg #54370
Ignore nikoschopen
8/26/2007 8:59:49 PM

Is the Fed outta whack?! I think this will only act as a catalyst for another panic selling. But, then again, I ain't no sage.

nikoschopen
2,824 posts
msg #54381
Ignore nikoschopen
8/27/2007 11:32:10 AM

Man, where the hell is everyone?! Volume is absolute crap.

heypa
283 posts
msg #54383
Ignore heypa
8/27/2007 12:07:36 PM

Scary man. The big boys must have gone on manual or their predictor programs are saying wait for something.

msummer2007
129 posts
msg #54384
Ignore msummer2007
8/27/2007 12:13:20 PM

$4.5 billion options bet on catastrophe within four weeks PDF Print E-mail

Written by Ticker Forum
Sunday, 26 August 2007
Anybody have a clue as to what these 'investors' are expecting?

[Editor's note: And guess what? Just as no one caught the criminal accomplices who short-sold airlines just before 9-11-01, so the financiers have kept their privacy walls despite all "anti-terrorism" legislation. Only those who plan and profit from such terrorism would be in favor of keeping such transactions untracable. Only merchant bankers have the power to prevent that logical anti-terrorism regulatory measure from being taken. -- Dick Eastman]

The two sales are being referred to by market traders as "bin Laden trades" because only an event on the scale of 9-11 could make these short-sell options valuable.

There are 65,000 contracts @ $750.00 for the SPX 700 calls for open interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not a single trade. But quite a bit of $$ on a contract that is 700 points away from current value. No one would buy that deep "in the money" calls. No reason to. So if they were sold looks like someone betting on massive dislocation. Lots of very strange option activity that I haven't seen before.

The entity or individual offering these sales can only make money if the market drops 30%-50% within the next four weeks. If the market does not drop, the entity or individual involved stands to lose over $1 billion just for engaging in these contracts!

Clearly, someone knows something big is going to happen BEFORE the options expire on Sept. 21.

THEORIES:

The following theories are being discussed widely within the stock and options markets today regarding the enormous and very unusual activity reported above and two stories below. Those theories are:

1) A massive terrorist attack is going to take place before Sept. 21 to tank the markets, OR;

2) China, reeling over losing $10 Billion in bad loans to the sub-prime mortgage collapse presently taking place, is going to dump US currency and tank all of Capitalism with a Communist financial revolution. Either scenario is bad and the clock is ticking. The drop-dead date of these contracts is September 21. Whatever is going to happen MUST take place between now and then or the folks involved in these contracts will lose over $1 billion for having engaged in this activity.

"$1.78 Billion Bet that Stock Markets will crash by third week in September Anonymous Stock Trader Sells 10K Contracts on EVERY S&P/Y "Strike" Shorts Stocks "in the money" effectively selling all his SPY holdings for cash up front without pressuring the market downward.

This is an enormous and dangerous stock option activity. If it goes right, the guy makes about $2 Billion. If he's wrong, his out of pocket costs for buying these options will exceed $700 Million!!! The entity who sold these contracts can only make money if the stock market totally crashes by the third week in September.

Bear in mind that the last time anyone conducted such large and unusual stock option trades (like this one) was in the weeks before the attacks of September 11.

Back then, they bought huge numbers of PUTS on airline stocks in the same airlines whose planes were involved in the September 11 attacks.

Despite knowing who made these trades, the Securities and Exchange Commission NEVER revealed who made the unusual trades and no one was ever publicly identified as being responsible for the trades which made upwards of $50 million when the attacks happened.

The fact that this latest activity by a single entity gambles on a complete collapse of the entire market by the third week in September, seems to indicate someone knows something really huge is in the works and they intend to profit almost $2 Billion within the next four weeks from whatever happens!

Source: Ticker Forum

nikoschopen
2,824 posts
msg #54386
Ignore nikoschopen
8/27/2007 12:56:35 PM

Tim Knight also mentions the huge run up in the SPX 700 call on his blog. Scarrrrrrryyyyyyy!!!

nikoschopen
2,824 posts
msg #54389
Ignore nikoschopen
8/27/2007 1:44:29 PM

I guess the traders on the floor as well behind the monitors are taking notice because ES (S&P eMini) is clearly the dog of the three.

msummer2007
129 posts
msg #54393
Ignore msummer2007
8/27/2007 2:01:44 PM

I have tried to figure out why someone would lay down such a big bet. Especially with a large probability of huge losses. I had a whacked out idea, that it might even be the fed. Far fetched I know, but you never know. Lets face it nobody believes any of the reports on inflation, or any financial tracking report for that matter. The Bush administration cooks the books on everything possible. So I wouldn't put it past them.

nikoschopen
2,824 posts
msg #54396
Ignore nikoschopen
8/27/2007 2:56:49 PM

Haha, I had the same idea myself. But the question remains as to whether Bernanke & Co. will lower the rate before OR after the doomsday.

nikoschopen
2,824 posts
msg #54400
Ignore nikoschopen
8/27/2007 3:59:44 PM

What's the reason for the last minute selloff? Did they announce a bomb scare on CNBC or what? This bodes well for a further selloff tomorrow and I feel so giddy. LOL

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