Tuesday, March 24, 2015


"See the story in the Journal today?"

"Which story?  The Journal has a lot of stories."

"Come on Charlie, you know what I'm talking about."

"All you ever talk about is bonds, Max.  Yeah I saw it.  About the banks moving a bunch of their trading portfolio into hold to maturity accounts."

"Killer.  Absolute killer.  Like it's not bad enough already.  Charlie, there's nothing out there.  No inventory, which means no liquidity, which means trading is in the crapper, which means I can't eat!."

"Max, if I had what you spend for food in a week, my wife would be a happy woman."

"Stop bitchin'.  You got out way too soon.  Your choice made..."

"Made me a very content man if a poor one.  But seriously, is it really that bad out there."

"It's ten o'clock in the morning and I'm talking to you.  What does that tell you? Charlie, it's spooky.  Treasuries?  There's enough of those but there's nothing else.  Honest to God, I don't know what the emerging market guys are doing. And the real problem is you can't trade...like...you can't get real short no matter how you feel because you may not be able to cover.  There is NO inventory out there."

(Max, like all of his breed is prone to exaggeration).  "Why?  Any special reason?"

"Oh yeah, oh yeah.  Nobody can figure this out.  The Fed has to move but when and how much nobody's sure.  On top of that everybody thinks it will be at the wrong time because these guys no nothing about the markets.  I'm tellin' ya, nothing.  And when they do, everything is goin' in the take with them.  Everything.  Prices will crash...more than they should because everybody wants out.  Not just here, Over There, Asia, everyplace."

"So that's why they are moving stuff to the investment portfolio."

"That's why, so they don't take the mark when it happens.  But there's a problem there too, Charlie.  You remember?"

"There are rules as to one can be considered an "investment'--certainly for banks.  I doubt if that has changed, and even the banks have internal rules."

"You're still good, Charlie.  Of course nobody knows who's got what, so everybody's buying protection but that may not work because we're buying it from each other and nobody's doing anything without collateral which murders liquidity even more.  We're still smilin' but there's a lot of guys who are really spooked--or gettin' there, including me."

"Which is why I am here and you are there.  Max, you have that great place in the Keys, don't you think it might be time?"

"WHAT!  Are you nuts?!  This is the greatest opportunity I've seen in years!  Get this one right and I'm set!"

"Get this one wrong, and..."

"I'll make it back next time.  Gotta go, Charlie.  Love to the Bride."

Mad Max...trader.

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