This thoughtful article in the Financial Times by Tim Bond, head of asset allocation for Barclays Capital, observes that some obvious fundamental developments haven’t been incorporated into prevailing financial market forecasts, both for developed and emerging markets. It also offers practical investment suggestions in the face of a difficult climate for financial assets. From the […]
Read more...Bloomberg carries a story today, “Treasuries, Oil May Foreshadow Bear Market After Yields Tumble,” that warns that the Treasury rally, driven by a flight to quality, may not simply be short-lived but a precursor to a nasty reversal, particularly on the longer end of the market. It suggests that those that see the recent decline […]
Read more...Another negative for the dollar: it is starting to displace the yen as the funding currency for the carry trade. As most readers probably know, the carry trade is when one borrows in one market that offers low borrowing costs and invest in one with high yields. It is easy money, but comes with the […]
Read more...Another day, another adverse development in the credit markets, or so it seems. Except now we are getting more than one troubling sighting a day. The latest tidings: liquidity in the credit markets is falling to the point where the European Central Bank has announced it will inject new cash. The underlying cause is worry […]
Read more...Maybe it’s the Prozac after all. During the dot-com era, some blamed the ever-levitating market on Prozac. With 28 million prescription written annually, a meaningful proportion of the investing population was on anti-depressants. Perhaps the shift in collective mood was enough to blunt caution. Now I have no idea of the use of antidepressants is […]
Read more...Charles W. Calomiris, the Henry Kaufman professor of financial institutions at Columbia’s business school, has an interesting but ultimately frustrating post at VoxEU in which he argues that the trouble we are seeing in the credit markets is not yet a Minsky moment (in very simplistic terms, the point at which an overlevered and highly […]
Read more...Nouriel Roubini, in his latest post, announces the “massive forthcoming losses” in commercial real estate. Note that the frothiness of commercial real estate has been reported for some time (Fitch first warned about it in April; Roubini made noise about it in July, when Fitch issued a second warning) but the financial media has chosen […]
Read more...Members of the Fed officialdom are doing their best to preserve the Fed’s policy options (i.e, not cave in to market pressures at the next FOMC meeting) by talking down expectations of another rate cut. Dallas Fed President Richard Fisher, in Sydney, spoke of solid US economic fundamentals and increasing inflation risks. Note that Fisher […]
Read more...John Dizard of the Financial Times has a fascinating article in which he goes to the blue-chip art auctions to get a reading of the mood of the Seriously Rich. And what he finds is not encouraging. Even the wealthy are rattled. He also argues that the Euro is overbought and will trade down by […]
Read more...Sometimes I feel like I am beating a dead horse, or in this case, an about-to-be-stillborn one. The leak over the weekend revealed that the sponsors of SIV salvage operation, the so-called Master Liquidity Enhancement Conduit, had come up with a deal structure. That’s an important hurdle, but it still puts the concept a long […]
Read more...The equity markets seem to have finally realized that conditions are ugly in the credit markets, due to get uglier, and the mess will pull down the real economy. And the bad news continues. The dollar index fell to a new low. Wachovia said the value of its subprime securities, largely “super senior” tranches of […]
Read more...The question posed in the headline isn’t exactly the one Gillian Tett and Paul Davies address in a long and worthwhile analysis at the Financial Times, “What’s the damage? Why banks are only starting to uncover their subprime losses.” But that’s because, as the piece make clear, we are only at the end of the […]
Read more...I will confess to being cynical about the reporting in the Wall Street Journal. As we have noted repeatedly in the past, it generally goes overboard to stress the positive its market-related reporting. That says the reporters too often lack the time or savvy to go beyond their sources’ spin. Now Thursday was undeniably a […]
Read more...Famed investor Jim Rogers has been down on the investment banking industry for some time, and thinks there is even more reason to be negative, as a Bloomberg story reports. However, I think George Soros would take exception to the characterization of Rogers as “co-founder” of Quantum. Rogers most assuredly worked for Soros. Note that […]
Read more...Despite the widely-held view that the Fed will lower the Federal funds rate another 25 basis points this Halloween, some continue to argue against further reductions. We’ve taken that position here before, and will recap some of the reasons. The 50 basis point cut in September was a pre-emptive strike, based not on evidence of […]
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