Posts Tagged ‘OTC derivative positions’

Cost of Insuring Illinois Debt from Default Hits All-Time High; Illinois Pension Fund Loses $Billions in OTC Derivatives Positions

Cost of Insuring Illinois Debt from Default Hits All-Time High; Illinois Pension Fund Loses $Billions in OTC Derivatives Positions

Courtesy of Mish

USA, Illinois, Chicago, Millennium Park, Cloud gate sculpture, dusk

Congratulations of sorts go to the State of Illinois for having the most hopelessly underfunded pension plans in the US and also one of the biggest per capita budget deficits.

Topping off the misery, the Illinois Teachers Retirement System is losing money in risky derivatives bets in what one analyst says amounts to “collecting nickels ahead of the bulldozer.”

Given that sorry state of affairs it should be no surprise to discover Illinois Debt Default Insurance Climbs to Record.

The cost of insuring Illinois bonds against default rose to a record as lawmakers sought to close a $13 billion deficit in the state’s proposed budget for the year starting July 1.

The cost of a five-year credit-default swap for the state rose 2 basis points today to 304.64 basis points, or $304,640 per $10 million of debt according to CMA DataVision.

Illinois Loses $Billions on OTC Derivatives

Inquiring minds are reading Illinois pension fund uses OTC derivatives to recoup returns, jeopardizes pensions

Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities.

But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief.

“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said.

How bad is it? After losing $4.4 billion on investments in fiscal year 2009, and 5 percent on investments in fiscal 2008, the teachers’ pension is now underfunded by $44.5 billion, or 60.9 percent, according to the Commission on Government Forecasting and Accountability’s March 2010 report. By comparison, only 20.3 percent of the Chicago Teachers’ Pension Fund is unfunded.

For the quarter ended March 31, according to derivatives experts who studied TRS’ financial documents, the fund lost some $515 million on its derivatives portfolio. Since then, the fund’s derivatives positions have likely soured further, the experts


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ValueWalk

GILTI: The Ramifications On The Tax Burden Of Corporations

By Gorilla Trades. Originally published at ValueWalk.

In his Daily Market Notes report to investors, while commenting on GILTI standards, Louis Navellier wrote:

Q1 2021 hedge fund letters, conferences and more

We are now essentially in "economic nirvana." Examples: On Wednesday, the Atlanta Fed raised its first-quarter GDP estimate to a 6.2% annual pace, up from 6% previously estimated. The U.S. is still expected to boost the global GDP growth rate more than China in 2021, for the first time since 2005. Since the U.S. is a robust consumer-driven market, the U.S. has the potential to keep pace and exceed China’s overall GDP growth...



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Phil's Favorites

Margin Debt Has Exploded by 49 Percent in One Year to $814 Billion. The Actual Figure May Be in the Trillions. Here's Why.

Courtesy of Pam Martens

When Jerome Powell, the Chairman of the Federal Reserve, appeared for an interview this past Sunday night on the CBS investigative program, 60 Minutes, he asserted complete ignorance of the amount of margin debt currently being used to inflate the stock market to one new historic high after another. The exchange between Powell and 60 Minutes host, Scott Pelley, went as follows:

Pelley: “The securities industry has reported that $814 billion has been borrowed by people investing in the stock market, borrowed against their portfolios. Tha...



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Kimble Charting Solutions

Semiconductor Red Hot Performance Tests 20-Year Breakout Level

Courtesy of Chris Kimble

Will the “Red Hot” semiconductor index cool off or get even hotter due to the shortage of chips?

This chart looks at the Semiconductor Index on a monthly basis over the past quarter-century. No doubt the trend is up as it has created a series of higher lows and higher highs since 2009.

Fibonacci extension levels were applied to the 1996 lows and the 2000 highs. Currently, the index is testing the 261% extension level, while at the top of the rising channel as momentum is at the highest level since the 2000 highs.

The rare chip shortage coul...



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Zero Hedge

Beijing Plans To Mix Chinese COVID Jabs To Boost Efficacy As 'Vaccine Diplomacy' Falters

Courtesy of ZeroHedge View original post here.

The director of China's CDC has acknowledged an uncomfortable truth: China's vaccines aren't nearly as effective as the country's scientists have proclaimed - much less their competitors.

"We will solve the issue that current vaccines don’t have very high protection rates,” Chinese CDC Director Gao Fu said at a Saturday conference, according to a report from the ...



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Digital Currencies

Momentum Monday - Return Of The FAANG Gang as Rotation Continues and The Desperate Reach For Yield

 

Momentum Monday – Return Of The FAANG Gang as Rotation Continues and The Desperate Reach For Yield

Courtesy of Howard Lindzon

Happy Monday everyone…

Before I get started mark your calendars for this Saturday’s Stocktwits/AllStarCharts Virtual Chart Summit. It is FREE to register at the link enclosed. I will be doing a few special guest interviews covering markets and crypto.

Onwards…

Another great week for those that own stocks and crypto.

The governments around the world have turned cash into trash (I still love it) ...



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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

The Biden Yellen team have made their play, and it is not US dollar friendly.

Janet Yellen speech named "International Priorities — Remarks to The Chicago Council on Global Affairs" (here) can be summed to (via Luke Gromen) :


The US is accelerating a move away from "subjugating the US middle and working class to support the USD", to "subjugating the USD to support the US middle and working classes".



Well the above is true, but as we all know large US deficits and the trend of the US dollar are joined at the hip, and that trend is down '...

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Biotech/COVID-19

How worried should you be about coronavirus variants? A virologist explains his concerns

 

How worried should you be about coronavirus variants? A virologist explains his concerns

A COVID-19 patient in an ICU unit in a hospital in Capetown, South Africa, in December 2020. A variant emerged in South Africa that has since spread to other parts of the world. Other new variants could emerge elsewhere. Rodger Bosch/AFP via Getty Images

Courtesy of Paulo Verardi, University of Connecticut

Spring has sprung, and there is a sense of relief in the air. After one year of lockdowns and social distancing, mor...



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Politics

For autocrats like Vladimir Putin, ruthless repression is often a winning way to stay in power

 

For autocrats like Vladimir Putin, ruthless repression is often a winning way to stay in power

Russian police officers beat people protesting the jailing of opposition leader Alexei Navalny, Jan. 23, 2021 in Moscow. Mikhail Svetlov/Getty Images)

Courtesy of Shelley Inglis, University of Dayton

Russian dissident Alexei Navalny, sick with a cough and ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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