Pension stuff, how's it all looking ? HAve you prepared ?

[Wscad]

I’m buying gold

[JackyJoll]

I’m buying gold

He loves only gold!

[the_priest]

Because the market is depressed I chucked more into the pension fund. Means I get more shares for my little bit of money and I get the government add on before they wise up and cancel it. Still not a huge amount, but better than nothing.

Edit!! Also, new tax year now, so does not mess my figures!!

[Tarmacsurfer]

Not yet it's not. 6th April is new tax year in UK.

[IccyV2]

Fill up your ISA today if you haven’t already, last chance.

Everyone I know that actually knows economics and finance has withdrawn from the stock market and they’re holding cash and easily liquidated assets.

This probably won’t be relevant to many here but instead of a pension that is going to be reliant on the markets you’d be better off (if it’s just cash that you have to spend as you please) putting it in a high interest account, a bond or an asset likely to increase in value.

People who do this for a living will tell you to spread your wealth. People who are managing their own wealth for survival are moving to protect what they have. I’m not going right into it because again I doubt people would read it or it’s just not relevant, but if you have control of your money then I’d keep it liquid or in tax efficient easily mobile assets.

[McSatan]

Gold. I'm not kidding, I sold my woods and used some of my pension fund to buy the stuff about five years ago. One of the few wise decisions I've ever made in my life. It's nice having money completely outside of the banking system as well. And guns

[Count Steer]

Gold. I'm not kidding, I sold my woods and used some of my pension fund to buy the stuff about five years ago. One of the few wise decisions I've ever made in my life. It's nice having money completely outside of the banking system as well. And guns

As in physical gold, like bars under the bed or electronic virtual gold like an investment vehicle?

(I think I'd rather have the woods in either case ).

I shifted everything that was easily shifted into 'cash' before Christmas before the latest brouhaha was looming large on the radar.

Still got the 'Plucky Little Portfolio' - which has recovered nicely. Having BP and Shell didn't hurt but GSK and Vodaphone have pulled their weight too - and the dividends keep rolling in. Got some old fund based PEPs and ISAs too and they'll be kept. But, basically it's >90% 'cash' now.

[McSatan]

Physical gold. Sovereigns. Actually my best investment was a top up pension I started in the 90s when I went contracting. And completely forgot about when I got divorced and stopped paying into it. I only found out about it when I had a letter from HMRC saying I should ring Aegon about a pension. I rang them, and fell off my perch when the nice lady told me how much I had. Apparently I'd specified high risk tech stock. Like Google, Amazon and Apple. Oh baby. It's like finding quarter of a million quid down the back of the couch

[MyLittleStudPony]

I’ve been watching what is going on in markets and my conclusion was that risk parity has blown up and Citadel and Millennium are in deep trouble. I just received a call from an old GS friend who now runs a large part of a Japanese bank balance sheet in the US and he was highly agitated...

His observation is that Bridgewater has faced massive redemptions from Saudi and others and that is what is caused some of the more dramatic moves last week (gold, bonds, equities and FX). He thinks AQR and 2 Sigma are in the same boat. There is massive forced liquidation of risk parity. All of them run leverage in the strategy, sometimes significant. Sovereign wealth, he thinks, is running for the hills as are others.

As you all know, I think Bridgewater goes under for reason not involving this but the exposure of massive fraud but this will force it.

My friend explained that due to the old Volker rule changes, now that vol has risen, we has to cut risk limits by 80% in many areas – to put it in perspective his Dollar Mex position limit has gone from 200m to 12m. Thus, just when he was supposed to prove liquidity, he has to reduce it. His hands are tied. Even worse, he has to hedge counterparty risk with corp borrowers and that is adding to the tail spin of selling. There is no liquidity from the banks.

The same VAR issue, he claims, is hitting Citadel and Millennium but with a twist. He, along with all the banks, is jacking up lending rates to counterparties from Libor +35 to Libor +90 and he has a $1.5trn balance sheet. The funding stress is forcing banks to reduce lending risk. The issue is that the funding stress is coming from Citadel and Millennium it seems. They rely on repo but via the banks but the transmission mechanism is broken (regulation). It appears that Bernanke probably called Powell and asked him to flood with liquidity at repo but instead of $500bn being drawn, only $78 was drawn. The banks don’t need the cash and don’t want to lend to counterparties. And there in lies the problem.

With rates going up, all the relative value trades have blown up. Nothing works any more as they were making 12bps in illiquid stuff on massive leverage (off the runs, etc). As funding goes up they instantly go wildly unprofitable and are stuck either begging for repo funding or having to unwind and realize massive losses. There is no funding. This is big trouble.

These guys are short vol (VAR), short liquidity and short rates. The perfect fucking storm.

Then on top of that, my friend who was almost yelling to me about it, says he cannot take any risk and therefore cannot provide liquidity. His hands are tied.

Liquidity is going to further massively dry up next week and for the next few weeks. You see under Series 24 of FINRA, a trader cannot make markets from home. It is illegal. So everyone is getting sent home but the traders. The problem is the traders are now falling ill – JPM and CS are the two I’ve heard thus far. They will have to go home and each day more do, or decide they want to, the lower liquidity gets. No one can make markets.

Also, in the corp credit markets things are equally fucked up. Credit, due to the liquidity issues, has stopped trading. That is causing IG etc to blow out. When banks lend to corps, a separate desk (CVA or CPM desk) shorts the stock or buys the CDS etc as a hedge (regulations again) and if the loan is still on the books (they are not allowed to own the bonds but can lend to counterparties, bizarrely) they continues to do that as stocks fall or CDS widens. Essentially, they are short gamma, creating a lob sided market. Everyone is a seller and no one is a buyer. The banks have made money on the hedges while the debt markets get worse.

This is causing the equity value of many firms such as Haliburton, to fall below the debt levels. Whether these borrowers have cash on balance sheet or not is irrelevant because of the falling equity value in this market and from the CVA hedging. That is causing spreads to blow out and it will cause downgrades, thus creating a doom loop.

So, we have a total shit storm if vol stays here for any period of time. I do not see vol falling yet and that is going to cause a really big issue with Citadel, Millennium, all the risk parity unwinds, all the riskier credit that is being shorted for hedging and the repo that no one wants in the banks but their counterparties desperately needs. Every day this situation continues, the more dangerous it is going to get....

We have a big fucking margin call under way.

In my friends opinion, the only way to stop this is to remove the Volker rule under the emergency powers act ( to allow banks to provide liquidity), the Fed to cut to zero and for them to buy corporate bonds. All the banks have been talking to FINRA and they have said go to the government.

This is likely the fix that needs to happen. What happens to Citadel, Millennium, Bridgewater, AQR, 2 Sigma and the corp bond market until they pull that trigger, I have no idea.

[McSatan]

I feel like the cat out of Red Dwarf "Eh?" I know those are words, but I am sans une clue as to what they mean.

[mangocrazy]

I seem to remember seeing MLSP posting the exact same verbiage a year or so back. I'm calling BS.

[MyLittleStudPony]

With rates going up, all the relative value trades have blown up. Nothing works any more as they were making 12bps in illiquid stuff on massive leverage (off the runs, etc). As funding goes up they instantly go wildly unprofitable and are stuck either begging for repo funding or having to unwind and realize massive losses. There is no funding. This is big trouble.

[IccyV2]

I seem to remember seeing MLSP posting the exact same verbiage a year or so back. I'm calling BS.

He cuts and pastes from somewhere and posts it up, that looks like something from around 2020/21 based on what is being said and the things that were happening.

He's a taxi driver, he doesn't understand what he's posting and I think he thinks he's being ironic or something, but it's just noising up a thread to be disruptive for no reason.

[Wossname]

I seem to remember seeing MLSP posting the exact same verbiage a year or so back. I'm calling BS.

He cuts and pastes from somewhere and posts it up, that looks like something from around 2020/21 based on what is being said and the things that were happening.

He's a taxi driver, he doesn't understand what he's posting and I think he thinks he's being ironic or something, but it's just noising up a thread to be disruptive for no reason.

You don’t understand it either?

[IccyV2]

You don’t understand it either?

I understand it, I just don’t know where he c&p it from, likely something random from early covid.

It’s either an AI generated report or it’s some panic monger but likely the latter because Bridgewater hasn’t gone under and I doubt AI would have predicted that.

What’s your take on it then?

[IccyV2]

If he wanted to post up something clever about protecting your money in a volatile market he should have taken a snip of Mark Cubans costless collar hedge when he sold out to Yahoo.

That’s an example of genius in a crisis that he predicted.
Very simple but difficult to understand unless you know how to manipulate the market, especially back then when there wasn’t so much opportunity for puts and calls that created a cylinder or collar.

But either way totally unhelpful in this thread and I don’t understand the humour or banter in just dropping random quotes in that have no context.

[Wossname]

You don’t understand it either?

What’s your take on it then?

My take is that I, personally, don’t understand it. I suspect I’m not alone.

Just as importantly, I don’t really care. I’ve got to a ripe old age without that understanding, and I don’t believe it has harmed me.

[Count Steer]

Since it mentions calling Ben Bernanke I'd say it was the 2007/8 financial fun and games as he was Chair of the Fed at the time. Citadel got in a spot of bother (Bernanke did join them some time later). Bridgewater did better but then missed out on the market recovery somewhat.

It does show that there's a whole language out there that is only understood by hedge fund managers and central bankers. (Wonder what an AI would make of it if you fed it all the jargon? 'Dear Claude, translate this into plain English please' ).

[MyLittleStudPony]

Come on lads!

What the first thing that would come to mind if I mentioned isolating risk, mezzanine financing and Special Purpose Vehicles in the same sentence?

I do assume at least some of you have worked for one of the Big Four or a major investment bank at some point.

Although opinions from tooleygoons also welcome!

[Taipan]

Come on lads!

What the first thing that would come to mind if I mentioned isolating risk, mezzanine financing and Special Purpose Vehicles in the same sentence?

I do assume at least some of you have worked for one of the Big Four or a major investment bank at some point.

Although opinions from tooleygoons also welcome!

Meet me under the flyover. Bring as much as you want to risk. No £50s. Returns are good but you gotta pay for protection from the local taxman. If you're in, it stays that way until we tell you different.