Barclay's It Is

The TLT was once called 'Lehman's' long bond ETF, but since Lehman went bankrupt, Barclay's became the proprietor of some of Lehman's assets such as the long bond ETF.

This ETF was the first example I had used to demonstrate the strong inverse correlation with long dated treasuries against GBN.V shares. In the Black Scholes options pricing model used at the heart of derivatives, you trade 30-year treasury bond futures algorithmically against the GBN.V share price. Because the theory is essentially correct, there is zero risk in doing so. Therefore, a bank can make massive leverage profits routinely by trading a liquid instrument against an illiquid one such as GBN.V.

GBN.V does not report on its profits and cash flow, and information on its reserves are not forthcoming. I believe this is mostly due to managment legacy issues, though its not as simple as that. Therefore a company like GBN.V, whatever the reason this publicly traded company does not operate normally makes the ideal target for equity swaps.

Anything not tied down, providing a yield for its shareholders will become the vehicle for commercial traders for leveraged gains. And we have seen this comparing GBN.V to the 30-year bond price, -0.86 correlation, GBN.V to LQD, -0.89 correlation.

We also saw that LQD could easily be sold, rather than treasuries into the market for GBN.V shares to rise. The same might be true for Barclay's 30-year U.S. treasury bond ETF. Without a major sell-off in the treasuries, the ETF might collapse as Barclay's sells its assets.

Goldman Sachs Cuts Barclay's 20-year +

http://www.jagsreport.com/2012/07/goldman-sachs-cuts-barclays-20-year-to-neutral-tlt/

LIBOR Warnings Were There, But Nobody Acted

Independant UK

I used the reciprocal of GBN.V to demonstrate the strong inverse correlation (-0.94) with TLT in a positive sense:

supersize: http://www.flickr.com/photos/11747277@N07/7636970226/sizes/l/in/photostream/

http://scharts.co/Qx4RWj

-F6