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08-17-2014, 05:14 AM #1
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"Soros Put" Rises To Record: Is The Billionaire Investor Betting On Market Crash?
"Soros Put" Rises To Record: Is The Billionaire Investor Betting On Market Crash?
Submitted by Tyler Durden on 08/15/2014 14:54 -0400
Back in February we observed, with some surprise, when Soros Fund Management, the investment vehicle of the famous Hungarian billionaire investor revealed in its Q4 13F that the firm had taken its bearish S&P 500 ETF - aka SPY - put exposure to a then record $1.3 billion notional, prompting us and many others to ask if Soros was preparing for a market crash. Fast forward to today when following the latest 13F disclosure from the same fund, we note, with double the surprise that a quarter after the same ETF put was lowered to "only" $299 million notional, Soros has once again increased his total SPY Put to a new record high of $2.2 billion, or nearly double the previous all time high, and a whopping 17% of his total AUM.
Some observations, which we presented previously: the "Soros put" is a legacy hedge position that the 84-year old has been rolling over every quarter since 2010. Since this was an increase of 638% Q/Q this has some people concerned that the author of 'reflexivity' and the founder of "open societies" may be anticipating some major market downside.
Furthermore, remember that what was disclosed yesterday is a snapshot of Soros' holdings as of 45 days ago. What he may or may not have done with his hedge since then is largely unknown, and since there are no investor letters, there is no way of knowing even on a leaked basis how the billionaire has since positioned for the market.
Then again, considering that not only Yellen, who has warned about bubble pockets in stocks, but the BIS, Icahn and numerous other fund managers, now openly warn that the entire market has entered bubble territory, perhaps this is a case where the simplest explanation is also the right one...
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08-17-2014, 05:16 AM #2
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The Fed Has Set the Stage For Another 2008-Style Disaster
Submitted by Phoenix Capital Research on 08/16/2014 16:36 -0400
Time and again, we’ve been told that the Great Crisis of 2008 has ended and that we’re in a recovery.
Indeed, earlier this year, we were even told by Fed Chair Janet Yellen that the Fed may in fact raise interest rates as early as next year.
If this is in fact true, how does one explain the following statement made by the Fed’s favorite Wall Street Journal reporter, Jon Hilsenrath?
One worry: As they move toward a new system, trading in the fed funds market could dry up and make the fed funds rate unstable. That could unsettle $12 trillion worth of derivatives contracts called interest rate swaps that are linked to the fed funds rate, posing problems for people and institutions using these instruments to hedge or trade.
So… the Fed may not be able to raise interest rates because Wall Street has $12 trillion in derivatives that could be affected?
Weren’t derivatives the very items that caused the 2008 Crisis? And wasn’t the problem with derivatives that they were totally unregulated and out of control?
And yet, here we find, that in point of fact, all of us must continue to earn next to nothing on our savings because if the Fed were to raise rates, it might blow up Wall Street again…
Simply incredible and outrageous.
What’s even more astounding is that Hilsenrath is in fact understating the issue here. It’s true that there are $12 trillion worth of derivatives contracts related to the fed funds rate… but total interest rate derivatives contracts are in fact closer to $192 TRILLION.
And that’s just the derivatives sitting on US commercial bank balance sheets. We’re not even including international banks!
So…the US economy is allegedly in recovery… the financial markets are fixed… and all is well in the world. But the Fed cannot risk raising interest rates to normal levels because Wall Street has over $12 trillion (more like over $100 trillion) in derivatives contracts that could blow up.
That sure doesn’t sound like things were fixed to us. If anything, it sounds like the stage is set for another 2008 type disaster.
This concludes this article. If you’re looking for the means of protecting yourself from what’s coming, swing by http://phoenixcapitalmarketing.com/special-reports.html
to pick up a FREE investment report titled Protect Your Portfolio. It outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.
Best Regards
Phoenix Capital Research
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