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To: Squidpup

If this reading is correct you will likely see the biggest impact in the commodities futures markets. Let’s see if they sell off big Monday. It might also cause a short squeeze in stocks if margin is heavier on the short side. The effect on ETF’s is harder to tell.

Also watch out what happens with some of the closed-end funds that use leverage. If they get margin calls they might be forced to liquidate positions to get back to 100% equity. That could cause a double-whammy: Losses on sales and lower payouts on leveraged interest-earned makes these funds less attractive.

One stock to watch is AGNC. Its approach is to leverage Agency paper 7:1. If they are required to reduce leverage the stock could hit big (I am a financial adviser and I am not recommending anything long or short, just trying to point out a possible risk to this equity).


5 posted on 11/05/2011 7:08:54 AM PDT by LRoggy (Peter's Son's Business)
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To: LRoggy

At the high risk of sounding dumb...I’m no financial guru at all...

But is this talking about a liquidity crisis? Which if it is, then we’re entering a severe deflationary cycle?

While I sort of grasp that this won’t affect everyday stuff right away ...it will in th elong term?


6 posted on 11/05/2011 7:16:08 AM PDT by EBH (God Humbles Nations, Leaders, and Peoples before He uses them for His Purpose)
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To: LRoggy; EBH

8 posted on 11/05/2011 7:21:34 AM PDT by blam
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To: LRoggy

I would also look for those having sold “naked call options” to see a margin call.

Over all affect to the financial markets may be a zero sum gain or loss though as so many instruments are “insured” to make the net result a near zero if they have to be sold.

Just IMO of course, not by any means an expert or even an amature in such things.


15 posted on 11/05/2011 8:46:38 AM PDT by Mouton (Voting is an opiate of the electorate. Nothing changes no matter who wins..)
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