As readers doubtless know, a nasty day in the markets yesterday was followed by distress overnight as the Japanese central bank injected funds into the marketplace and the European Central Bank added liquidity a second day, following an unprecedented, unlimited injection Thursday. The Dow opened down over 100 points, and due to a spike up […]
Read more...The news item of the morning (aside from the markets suffering a loss of confidence) is that BNP Paribas has blocked withdrawals from three funds that had an aggregate of $2.2 billion in assets, which had fallen by 20% in a mere two weeks. Note that this action is not the direct result of subprime […]
Read more...Sunday’s New York Times features a story, “Mortgage Mania Didn’t Grip Everyone,” by Gretchen Morgenson on Michael A. J. Farrell, chief executive of Annaly Capital Management, a high-grade mortgage real estate investment trust, who has stuck strictly with high grade mortgage paper (despite considerable pressure from investors in recent years) and is coming through this […]
Read more...Jim Rogers, who is by no means a card carrying bear, thinks the US housing market, and therefore homebuilder and investment bank stocks, still have further to fall. And the news of the last few days provides confirming data points. First, this morning’s Wall Street Journal has as a page one story a news item […]
Read more...Many observers had expected quite a few hedge funds that had subprime exposures to report significant losses for June, and there have been rumors of funds that had begun the liquidation process because it was apparent they were too badly damaged to survive. But the specter of investors clamoring to pull funds out of a […]
Read more...Credit default swaps prices have risen sharply all over the globe. Nevertheless, the CDS related to the debt of major Wall Street players have been particularly hard hit, which isn’t surprising, given their LBO financing commitments, exposure to hedge funds via their prime brokerage operations, and falling profitability. Some experts, however, think the CDS are […]
Read more...European and Asian equity markets performed well overnight, and according to the futures market, US stocks are set to have a good day as well. Yet the credit markets are in a state of near-panic. Some illustrative factoids and comments from the Financial Times: “It is nothing short of ugly in credit land,” said Alan […]
Read more...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 […]
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