Ah, this is one of those days where there way too many good points for departure for commentary and here I am with a pricey and pokey Internet connection, and competing holiday activities. Finally, the reassessment of Greenspan’s tenure has begun. Not surprisingly, the Brits are more pointed in their critique. From “Greenspan has left […]
Read more...According to Bloomberg, in “Bulls Load Up on Stocks in Worst Rout Since 2002 ,” optimistic investors are undeterred. In general, bond markets downturns precede stock market declines, since equity market investors need to be convinced that the signals from the credit markets are valid. In my youth, the lag was usually four months. And […]
Read more...At junctures like this, when markets have come a bit unglued and may be undergoing a sea change, making forecasts is as scientific a process as reading tea leaves. And since I am (literally) at sea with pricey satellite access, I’m limiting myself to checking the usual suspect media sources rather than being as comprehensive […]
Read more...Today’s Financial Times has a good piece on the turmoil in the markets yesterday, which has continued into Asian markets today (although Europe appears to be staging a recovery). There were two noteworthy elements in this article, namely the divergence between the equity and credit market perspectives, the second on Bernanke’s posture. On the first […]
Read more...We warned earlier that if conditions deteriorated in the financial markets, investment banks were particularly exposed by virtue of their taking on multiple exposures to the same underlying risk. For example, they lend to hedge funds via their prime brokerage operations, and also may be exposed to them by providing credit default swaps on assets […]
Read more...The drumbeat of grim news on the housing front continues apace. From the Financial Times: Peter Kretzmer, an economist at Bank of America, said: “We are in the second wave of declining home sales. The first wave was the breaking of the upward momentum and flattened out late last year. But now we are seeing […]
Read more...The New York Times gave a succinct summary of conventional wisdom on yesterday’s stock market drop: Countrywide’s stark assessment signaled a critical change in the substance and tenor of how housing executives are publicly describing the market. Just a couple of months ago, some executives were predicting a relatively quick recovery and saying that most […]
Read more...Tanta at Calculated Risk reported on Fitch’s downgradesof two mortgage trusts. The amount at issue isn’t large. For each of the two First Horizon Home Loan Mortgage Trust issues (series 2006 AA-3 and Series 2006-F-2), Fitch downgraded the lowest two tranches (the BB tranche became B+, the B tranche was downgraded to CCC and and […]
Read more...This post by John Hussman at Seeking Alpha echoes an article by Martin Wolf (the Financial Times’ lead economics editor) in March in which he declared equities to be considerably overvalued but refused to call a turn. Both Wolf and Hussman’ looked at long historical periods, although Hussman’s assessment is specific to the US. I […]
Read more...There was cheery talk of the rally in Treasuries Monday, but that was in large part due to a continued flight from risk. One symptom was that the riskiest ABX index, ABX.HE 7-01, which is a proxy for recent vintage BBB- subprimes, took a nosedive and then recovered, Traders used swords like “panic” rather than […]
Read more...I am at a loss as to which allusion better characterizes rating agency behavior: ostriches, as per the headline, or monkeys, as in “See no evil, hear no evil, speak no evil.” But in each case, I think I am being unfair to the animals. I happened to miss skip past an article in Friday’s […]
Read more...Kuwait had a closed door session to discuss its reserves with Parliament before reaffirming the country’s proven oil reserves at 100 billion barrels. As Xinhua points out, this is a odd and troubling set of events. Parliament had refused to pass the budget, which shows a large deficit, unless the oil ministry came clean with […]
Read more...Even the relentlessly upbeat National Association of Realtors is predicting that 2007 will be the first year since the Great Depression to witness a decline in housing prices. With lackluster-to-bad real estate tidings a daily staple, the Associated Press tells us, in “Housing sales may be worse than data show,” that even that information is […]
Read more...Iran has asked Japanese buyers of oil to pay in yen, not dollars. It has always been the convention to denominate oil sales in dollars (the Scotsman in March 2007 reported that China’s Zhuhai Zhenrong Corp, the biggest buyer of Iranian crude worldwide, had started paying for Iranian oil in dollars last year). If other […]
Read more...This bombshell came courtesy Michael Shedlock, in “Fitch Discloses Fatally Flawed Rating Model“: What follows are excerpts from Absence of Fear, an excellent article written by Robert L. Rodriguez at First Pacific Advisors.We were on the March 22 call with Fitch regarding the sub-prime securitization market’s difficulties. In their talk, they were highly confident regarding […]
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