An unexpected rise in junk bond yields has led to a sharp fall in prices, and experts think the worst is yet to come. Note that the junk bond market is operating from a more pessimistic outlook than the equity market. This divergence is not uncommon. From Bloomberg: High-yield, high-risk bonds are off to their […]
Read more...A hedge fund correspondent pointed us to an article at Institutional Risk Analytics on the Bear-JP Morgan deal. While we don’t subscribe to its view that Bear was “raped” (please, the firm was going to file for bankruptcy a week ago Monday), it contains an intriguing analysis of JP Morgan. Differing with popular opinion, IRA […]
Read more...Well. at least we have a new addition to the finance scene that isn’t an acronym. A zombie deal is what happens when a LBO transaction with a cov-lite loan goes bad. Recall that “cov-lite” was a sign of how frothy lending conditions had gotten. Just think, a mere year ago, a private equity firm […]
Read more...Saying bad things about rating agencies may seem like beating a dead horse, except this horse is still very much alive. Even though by some measures Fitch has comported itself better than Moody’s and S&P (it downgraded Ambac to AA and was early to point out excesses in commercial real estate lending), it has shown […]
Read more...Nuclear Scanning Device Detects Radioactive Cat on Highway Seattle Times Senator Clintons Calls for Barry Bonds and Roger Clemons to Head Commission on Steroid Abuse Dean Baker Credit Market Turbulence Keeps Spreading Michael Panzner More lipstick on Bear Stearns’ pig MarketWatch Bottom Callers Run Rampant The Big Picture Antidote du jour. From reader Rene Y:
Read more...Andrew Ross Sorkin in the New York Times provides some important background on how the Bear deal wound up being retraded today. But he does his readers and the greater public a huge disservice by telling the story so as to flatter Wall Street. According to Sorkin, the $2 price for Bear was the Fed’s […]
Read more...Brad Setser, a source for thorough, thoughtful coverage on currencies and related topics, provides his monthly parsing of the Treasury International Capital report (this one from January, plus its survey of foreign holdings of US securities as of the end of June 2007) and does not like what he sees. Since the August TIC report, […]
Read more...What a complete and utter fiasco (see earlier post for background). And you have to get a load of the face-saving. No official acknowledgment of the legal screw-up that made this retrade necessary. Note there is no mention of any change in the Fed’s, role, something that was rumored earlier. This will not go down […]
Read more...Gillian Tett has an intriguing little piece in today’s Financial Times, in which she reports on the first public valuation of particular structured credit instruments. The odd bit (and theories by those that may have insight are welcome) is that JP Morgan apparently elected to make these prices public. JPM needed to value the securities […]
Read more...The comments in the Financial Times by Yoshimi Watanabe, Japan’s financial services minister, are extraordinary. He ventured to give the US advice on its credit crunch based on Japan’s experience during its post-bubble-years banking crisis. And it’s not pretty. Why are these remarks so unusual? Consider: Most countries don’t give other countries advice on how […]
Read more...This is the nuttiest situation I can recall in some time in deal land, assuming the rumor in the New York Times is true. The Grey Lady reports that JPM is working to increase its offer for Bear from $2 (well, roughly $2 since it is a stock-for-stock deal) to $10. Yes, Bear’s stock price […]
Read more...Hospital bridles at horse in lift BBC Taming the Beast Paul Krugman Campaign silence over Wall Street Woes Clive Crook, Financial Times The Long Dark Night of the Soul of the Monetary Economist: A Platonic Dialogue Brad De Long. He pointed to this archival post… Lying for Jesus? Richard Dawkins. This is in lieu of […]
Read more...As told in Bloomberg, currency traders anticipate the dollar will continue its slide until our trading partners decide they’ve had enough. Of course, the very expectation of intervention may limit the dollar’s fall, at least for a while. My sources in Japan tell me that the officialdom still sees the yen as cheap, and the […]
Read more...As readers may infer, this blog is not big on religion as a topic; it is way too fraught. Merely talking about money gets some people riled up. But whether you are religious, “spiritual” as Americans like to say, or a firm atheist, Willem Buiter’s post on sanctity (really, sanctimoniousness) is instructive. Buiter is Anglican, […]
Read more...There are two useful but frustrating articles addressing different aspects of the extraordinary measures implemented by the Federal Reserve in the last ten days, in particular the bailout of Bear Stearns. A New York Times article, “What Created This Monster,” is very much worth reading despite its shortcomings. It attempts to say how we got […]
Read more...