Comments on: The Magnetar Trade http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Annice Debelak http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-55695 Mon, 20 Oct 2014 08:26:27 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-55695 wonderful issues altogether, you just gained a new reader. What may you recommend in regards to your put up that you made a few days ago? Any sure?

]]>
By: Agnes Hovorka http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-54537 Fri, 10 Oct 2014 03:22:31 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-54537 “Con la entrada en vigencia del acuerdo hoy hay cerca de 18 aos de proteccin para el sector lcteo colombiano que hay que aprovechar para hacer la transformacin de la industria lctea colombiana”, agreg por otra parte el ministro.

]]>
By: dariustahir http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13366 Sun, 11 Apr 2010 21:11:32 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13366 GingerYellow: looks like Goldman did similar in the U.S. market also: http://variousprovocations.blogspot.com/ 2010/04/curio.html

]]>
By: RichardSmith http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13356 Sun, 11 Apr 2010 11:06:36 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13356 Greycap:

“This is exactly the story that Yves Smith retailed in appendix II of her book Econned. She didn’t name any names, though”

Ehhh?? Chapter 9 of ECONNED is all about *Magnetar*. Did you miss that bit?

]]>
By: csissoko http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13352 Sat, 10 Apr 2010 21:47:53 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13352 Greycap:

With more time on my hands I read through the thread more carefully. If you are claiming that SIVs could have purchased all the super senior CDOs that were issued, I don’t know where you get data from, but it must be very different from mine.

The funded portions of the structured finance CDO market (i.e. the part that wasn’t super senior) were $300 billion in 2006 and $260 billion in 2007 per SIFMA. It’s seems safe to assume that we’re talking about at least $1 trillion in super senior tranches of structured finance CDOs.

The SIV market on the other hand was only $400 billion total and most of its assets were tier 2 bank capital. According to Bear Stearns only 11% of assets were CDOs and only 1% were ABS CDOs. How are buyers of $4 or even $40 billion in ABS super seniors, supposed to expand to cover a $1 trillion market?

]]>
By: csissoko http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13348 Sat, 10 Apr 2010 16:35:20 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13348 Greycap:

I am not mistaken. You appear to be claiming that the dealers would not have had to find buyers for the “super” senior tranche in an all cash deal. All cash means cash buyers who are willing to accept those negligible yields must be found. They did not exist.

When you state that the supply of underlying bonds was insufficient, the implication is the yields on those bonds needed to fall in order for supply and demand to be in balance. Synthetics were clearly used to delay the operation of the market forces of supply and demand in the mortgage.

]]>
By: GingerYellow http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13344 Sat, 10 Apr 2010 13:56:50 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13344 FWIW, the equivalent trade was possible, though not as profitable and hence not done as often, in the underlying RMBS. A handful of people (apparently including Goldman) did it in Europe, where CDOs of RMBS weren’t anything like as common. You’d buy the BBB or BB tranche to earn some positive carry, then short the AAA tranche for 10 times the volume. Those people made out like gangbusters in the crisis – hardly any of the BBB tranches have actually defaulted in Europe (some of the UK non-conforming paper, a few prime deals in Spain, but that’s about it), yet triple-A spreads went out to neary 1000bp at one point. Anyone who closed out the trade back in early 09 would have made a fortune

]]>
By: KidDynamite http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13343 Sat, 10 Apr 2010 12:45:11 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13343 wait Greycap – are you suggesting that you think that some buyers of the AAA tranches knew that the paper was overrated and bought it anyway? why? please elaborate…

that’s the beauty of the Magnetar trade – THEY bought the equity tranche fully expecting it to blow up, and knowing they’d still win. I don’t think anyone bought the top rated tranche thinking it was risky though… ???

]]>
By: Greycap http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13342 Sat, 10 Apr 2010 12:18:44 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13342 csissoko, you are mistaken: there was exactly as much leverage in an all-cash deal, as I explained. From the dealer’s point of view, the synthetic was only useful because the supply of underlying bonds was insufficient.

Yes KD, of course the AAA rating was bogus! And I would not be so quick to make the comfortable assumption that all buyers were deluded on that score, although as Lewis says of Hubler, most were not cynical enough.

]]>
By: EmilianoZ http://blogs.reuters.com/felix-salmon/2010/04/09/the-magnetar-trade/comment-page-1/#comment-13339 Sat, 10 Apr 2010 05:05:46 +0000 http://blogs.reuters.com/felix-salmon/?p=3320#comment-13339 I’m disappointed with Burry. I thought he was super-clever. But he couldn’t even think of this trade to get investors off his back.

]]>