[davelj]

Risk has been dramatically mispriced across virtually every asset class (with the possible exception of commodities) for much of the last decade. And layers and layers of leverage have been applied to such assets. What we are witnessing is the simultaneous re-pricing of risk and an unwinding of the leverage. It must, by definition, end in tears.

But, hey, it could be worse. It could be MY money.

[davelj]

Risk has been dramatically mispriced across virtually every asset class (with the possible exception of commodities) for much of the last decade. And layers and layers of leverage have been applied to such assets. What we are witnessing is the simultaneous re-pricing of risk and an unwinding of the leverage. It must, by definition, end in tears.

But, hey, it could be worse. It could be MY money.

[davelj]

Risk has been dramatically mispriced across virtually every asset class (with the possible exception of commodities) for much of the last decade. And layers and layers of leverage have been applied to such assets. What we are witnessing is the simultaneous re-pricing of risk and an unwinding of the leverage. It must, by definition, end in tears.

But, hey, it could be worse. It could be MY money.

[davelj]

Risk has been dramatically mispriced across virtually every asset class (with the possible exception of commodities) for much of the last decade. And layers and layers of leverage have been applied to such assets. What we are witnessing is the simultaneous re-pricing of risk and an unwinding of the leverage. It must, by definition, end in tears.

But, hey, it could be worse. It could be MY money.

[davelj]

Most of the earnings reports tomorrow – and most of this week – will come from banks and other financial services companies. You are one of the world’s great optimists if you expect to see better-than-expected results out of this group. I suppose stranger things have happened. But not by much.

[davelj]

Most of the earnings reports tomorrow – and most of this week – will come from banks and other financial services companies. You are one of the world’s great optimists if you expect to see better-than-expected results out of this group. I suppose stranger things have happened. But not by much.

[davelj]

Most of the earnings reports tomorrow – and most of this week – will come from banks and other financial services companies. You are one of the world’s great optimists if you expect to see better-than-expected results out of this group. I suppose stranger things have happened. But not by much.

[davelj]

Most of the earnings reports tomorrow – and most of this week – will come from banks and other financial services companies. You are one of the world’s great optimists if you expect to see better-than-expected results out of this group. I suppose stranger things have happened. But not by much.

[davelj]

Most of the earnings reports tomorrow – and most of this week – will come from banks and other financial services companies. You are one of the world’s great optimists if you expect to see better-than-expected results out of this group. I suppose stranger things have happened. But not by much.

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

asianautica,

Let me explain. The “open” value – 12,130 – was the first open for Dow futures trading AFTER futures trading closed in the US markets on Friday afternoon. So that “open” value that you’re seeing on Bloomberg was the open for Dow futures in Asia on Monday morning (or Sunday our time). (Remember, we haven’t traded Dow futures here in the U.S. since Friday, but they still trade them in the rest of the world.) The 11,601 value reflects the CURRENT trading price for Dow futures. The -505 is the expected decline in the SPOT Dow value when the market opens in the U.S. tomorrow morning. (Remember, you can’t have a SPOT index value until the index actually trades, which it will tomorrow morning.) Does that make sense?

[Author]

Posts