Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

FICC Short Gamma

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One firm rakes more money trading energy in three-months then this entire industry 90th percentile in one year, it’s Goldman Sachs. For us Goldman FICC unmitigated success in the energy is the ultimate expression of the systemic dollar-at-risk entrenched in the long-gamma commodity firms and trade finance world.

Goldman’s Model

Goldman banks/deals with the solid counterparty, manage their risks, and then trade the insights 1/4 sec ahead of the earnings or physical in the finish line.

Goldman uses few or no working-capital.

Goldman commodity traders raked in $1 billion after positioning for april’s oil market collapse from Simon Jacques

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Finance Theory Sheds A Light On Stock Prices

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Asking what to expect from stocks may seem like a silly question.  After all, it depends on whose expectations we are talking about.  I am be bullish on stocks while you are bearish.  Although that is true, there is a finance theory answer that looks at the question from the standpoint of the overall market, not any particular investor.  That is a good place to start.

According to finance theory, stocks are priced so that they offer investors a fair rate of return for holding them.  For the market as a whole, say the S&P 500 index, decades of research has led to the conclusion that a fair risk-adjusted return is approximately equal to the risk-free rate, taken to be the yield on 10-year U.S. Treasury bonds, plus 5.5 percentage points.  Currently, the yield on 10-year Treasury bonds is 0.75%, so the theory implies that a fair expected return on the market index is 6.25%.  For individuals stocks, or sectors of the market, it may be somewhat more or less depending upon the risk of the specific investment.

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Sentiment and 11/3

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Preface from Tim: I want it made clear at the outset that I did not write this post. Most Slope posts are by me, but some come in through outside contributors, which I appreciate. I just don’t want anyone thinking I’ve backpedaled on my pledge to not write about politics myself. I haven’t. Anyway, here we go……….

Early polls combined with current news sentiment indicate Joe Biden is now the favourite in the presidential race.

Joe Biden is increasingly looking like the clear favourite to win the next U.S. presidential election. Biden has led since polling began, but he has widened this lead following Trump’s perceived mishandling of both the coronavirus pandemic and the public outcry over the death of George Floyd.

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Wirecard Tanks

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The company’s auditor, Ernst & Young GmbH, reportedly informed it that there was “no sufficient audit evidence so far of cash balances on trust accounts.” According to The Wall Street Journal, the amount of cash that was missing amounts to approximately 25% of the value of Wirecard’s balance sheet.

“There are indications that spurious balance confirmations had been provided from the side of the trustee respectively of the trustee’s account holding banks to the auditor in order to deceive the auditor and create a wrong perception of such cash balances or the holding of the accounts for to the benefit of Wirecard group companies,” Wirecard said in a statement.

It also said it is working with EY to clarify the matter of the missing money. The company also said that the delay in its auditor signing off on its accounts could mean that its loans amounting to about €2 billion could be called in early.

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