When the story broke of trouble at a Bear Stearns hedge fund, the High-Grade Structured Credit Strategies Enhanced Leverage Fund, that led it to auction $4 billion of its holdings to raise cash, we speculated that this might wind up being the beginning of a liquidation. That scenario now appears likely. The Wall Street Journal […]
Read more...Many moons ago, we lamented, “Where Has the (Perception of) Risk Gone?” Even though the markets got religion for a couple of weeks after the global downdraft of February 27, things returned surprisingly quickly to status quo ante. Over the last week and a half, we seem to have had a mini rerun of February […]
Read more...The US has spent considerable time and energy hectoring the Chinese about the artificially low value of its currency (although there is considerable disagreement among experts as to how undervalued it really is). The notion that the currency is the chief culprit has become so fixed in the public imagination that Congress is determined to […]
Read more...Readers may recall that a Bear Stearns hedge fund, the High-Grade Structured Credit Strategies Enhanced Leverage Fund, scheduled an auction for $4 billion of mortgage securities to raise cash. That’s a pretty unusual move, a sign of acute distress. Although Bear Stearns officials initially denied that the big sale was to meet margin calls, we […]
Read more...The funny thing about the oft-repeated George Santayana saying, “Those who cannot remember the past are condemned to repeat it,” is that it is generally applied to historical events, like the folly of launching an attack on Russia that might extend into the winter. But these days, in the financial markets, with so many people […]
Read more...This story, which describes the in extremis sale of $4 billion of bonds by a Bear Stearns hedge fund, “Bear’s Fund Is Facing Mortgage Losses,” is currently the lead story on the Wall Street Journal’s website, so it is likely to get page one coverage in the print edition. The fund, the High-Grade Structured Credit […]
Read more...Bill Gross, storied bond investor and head of PIMCO, a fund manager with nearly $700 billion under management, made an important observation in a Financial Times comment, namely, that interest rate policy is having a very different impact on businesses and consumers. While the two groups were (most of the time) similarly affected, now interest […]
Read more...This Bloomberg story cites Federal Reserve research efforts that found that blacks and Hispanics were more likely to wind up with costly mortgages than whites. Even though this work is three years old and strong enough that FDIC chairman Shiela Blair says she is troubled by the data, no regulator has yet to take action. […]
Read more...We are a tad late on this story on rising foreclosures, “U.S. Mortgage Foreclosure Filings Rise 90% in May,” which ran in yesterday’s Bloomberg, but then again, at least as of this hour, the Wall Street Journal has failed to take note of it. Keep in mind that the source of the data, RealtyTrac, uses […]
Read more...Martin Wolf, in a Financial Times comment, “Villains and victims of global capital flows,” looks at the two competing theories of the causes of global imbalances. One is the savings glut story, in which parsimonious Chinese and Japanese force the US to consume to keep the world from falling into recession. This view is favored […]
Read more...Even though the US Treasury market has taken a nasty downward move through an important level that many participants see as the beginning of a bear market in bonds (which will inevitably lead to a bear market in equities), actors in other sectors of the financial markets seem remarkably sanguine, at least so far. Is […]
Read more...What the Fed and the Treasury would like take away, the SEC gives, and then some. The Fed is (finally) getting worried about systemic risk, and in this Financial Times story, the Treasury Department (which usually stays clear of this sort of thing, generally deferring to the Fed) says that it is concerned about hedge […]
Read more...I must confess that I have stayed away from this controversy, in which various unnamed hedge funds are grousing about investment banks, Bear Stearns in particular, somehow mucking with the assets underlying certain mortgage-related instruments, modifying them so as to help stressed borrowers. The hedgies are upset because they allege that the investment banks are […]
Read more...We have been saying for some time that a housing recovery was quite a way off, and official opinion has finally caught up with our views (or more accurately, has decided to acknowledge obvious but unpleasant reality). The Weekend Wall Street Journal reports in a page one story, “Economists See Housing Slump Enduring Longer.” The […]
Read more...We observed that the sharp fall in the bond markets Thursday, which was triggered not by news, but by a collective recognition that credit was too cheap, seemed to many to be an inflection point, an end of a long cycle of falling interest rates. This development is important not just for fixed income investors, […]
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