Lots of shit to go through, headlines that leaked out sneakily last night.
MNUCHIN COURTS GOLDMAN TO OVERSEE $200B BAILOUT.
Mnuchin was a partner at Goldman, just like Dad. Now he’s tapping them for the bailout. While Goldman is more than capable, it doesn’t seem right.
WHITE HOUSE ECONOMIC ADVISER KUDLOW SAYS SENATE PACKAGE BEING NEGOTIATED WOULD BE WORTH MORE THAN $2 TRILLION
Everyone is getting bailed out, from airlines to restaurants, even Fintech firms want govt tit.
Before Fed Acted, Leverage Burned Hedge Funds in Treasury Market
Basis traders were borrowing as much as 50 times their wagers
ExodusPoint, LMR Partners among the losers in popular trade
The firms use borrowed money from the repurchase market for the popular basis trade, which exploits price differences between cash Treasuries and futures. Leveraged funds’ exposure to the basis strategy could be as much as $650 billion, JPMorgan Chase & Co. strategists said.
ZH out with a big story, highlighting a highly 50x leveraged trade that was done in recent years that could be the cause of the Fed intervention. Hint: another bailout.
The Federal Reserve is already about halfway done in a single week with at least $700 billion of bond purchases to provide emergency liquidity to financial markets, delivering a clear sign that it could blow past that marker.
That was fast. More BRRRRRRRRRRRrrrr.
Goldman Sachs economists forecast a historically sharp and swift recession, with second-quarter GDP sinking a stunning 24% after a 6% decline in the first quarter.
-24% seems rather conservative. On the other side of this, Goldman is projecting +12% for Q3.
DJ SOLOMON FROM $GS GETS 20% RAISE IN SALARY TO $27.5m
DJ Sol earned the big bucks in 2019. Should we now take away his earnings in 2020?
Three things I am interested in the week to come.
- What happens to high yield debt, now that WTI is below $20?
- What happens to leveraged loans, now that the c0mplex is blown out? Most of these loans are bullshit CLOs that are ‘covenant light.’
- Does the rate of change of infected people in America and Europe dissipate or hockey stick?
That’s all that matters now. I strongly advise you to ignore the advice from your fee based financial advisors and go to cash. You go to cash, not because you think stocks are expensive and go lower — but because you’re unsure what the future holds. You cannot invest on a model that shows -24% GDP with the entire globe on shut down. There is perma-bull and then delusional. You can always buy back later, EVEN AT HIGHER PRICES — god forbid.If you enjoy the content at iBankCoin, please follow us on Twitter