Nouriel Roubini predicted that hedge funds closures would be the next leg of the financial crisis. Large scale redemptions force hedge funds to sell assets at a time not of their choosing. More assets being dumped at a time of risk aversion is likely to lead to distressed prices, putting pressure on other players, since […]
Read more...Swiss investor Marc Faber, known for a long track record of good calls (he was a commodities bull until late this spring, for instance, when he reversed his view) and a fine grasp of financial markets history, confirms the estimate earlier in the week by Ken Ohmae that the US needs a salvage operation much […]
Read more...The latest sightings: Money market rates doubled overnight: despite considerable central bank intervention: The cost of borrowing in dollars overnight more than doubled as banks hoarded cash amid speculation more financial institutions will fail. The overnight dollar rate soared 333 basis points to 6.44 percent today, its biggest jump, according to the British Bankers’ Association. […]
Read more...The action overnight has been dramatic. The number for equity markets overseas seems to be four or more, as in declines of 4%-5%, with developing nation instruments suffering more.. The theme was a flight from risk and worries about further economic slowing The dollar fell, particularly versus the yen the preferred vehicle of the carry […]
Read more...Reader Vijay pointed us to an op-ed today in the Washington Post by Don Luskin, “Quit Doling Out That Bad-Economy Line.” Some of its priceless wisdom: Things today just aren’t that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about […]
Read more...This tidbit from the Wall Street Examiner came via reader Scott: Once upon a time, when faced with a market meltdown the Fed would have pumped a wad of cash nto the market and it would have been good for a rally of a couple or three hundred points. Today the Fed added a whopping […]
Read more...From the Nattering Naybob: Shares in the S&P 500 have climbed to an average 25.8X reported profits…. The last time that happened in 2001, the S&P 500 fell 38%. As they like to say, past performance is no guide to future return, but be warned.
Read more...We had written in mid July that money supply in the US, as measured by M1 and M2, had been contracting for several month s . Eurozone M1 growth had also fallen to near zero growth levels, and M4, the broadest measure of money in the UK, had actually dipped into negative growth territory. As […]
Read more...A colleague, who is close to a number of fund manager talking heads, observed that there was an uncharacteristic, gaping disparity between what many of them are saying on TV (“it’ll be over in a quarter or two”) and their far more downbeat private views. He did not offer a reason for their lack of […]
Read more...Despite the resurgence of the dollar, Ambrose Evans-Pritchard remains unconvinced that things in the US are now as rosy as the new found (albeit guarded) optimism suggests. He comes by his view without disputing the view that the dollar rally has legs. I’m not very optimistic about that. Why? A drinking buddy with amazing connections […]
Read more...Reader Saboor was kind enough to send me an August 1 report by Stephen Roach, former chief economist of Morgan Stanley, now chairman of its Asian operations. It’s noteworthy in two respects. First, although Roach remains a long-term dollar bear, he made a well timed call that it was oversold, due for a rally, and […]
Read more...Here we go again. Even though equities are theoretically forward-looking (Barry Ritholtz has pointed out that that ain’t as true as most people believe), bonds are more often the canary in the mineshaft, typically going into a funk before stocks do. Even though the credit markets started getting the heebie jeebies in early June and […]
Read more...Full disclosure: I have a great deal of respect for both Tim Duy and the hedge fund manager Scott who is also quoted in this post. As you will see, Duy wrote an interesting post addressing a question posed by Brad DeLong, in essence “Since we are in the midst of the worst financial crisis […]
Read more...In a TheStreet.com($) story with the above headline (hat tip reader MIchael), Doug Kass noted that the price increase in the Financial Select Sector SPDR was 13%, an 11 standard deviation event. According to Kass, the odds of an eleven standard deviation event is equivalent to the world ending – between three and four times. […]
Read more...Before you break out the champagne on the news that international investors like the US (or more accurately, hate its stocks less than those of other nations), the article does not address the weighting of equities relative to other asset classes (ie, total allocations could still be down due to shifting more capital to commodities, […]
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