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 […]
Read more...Whether you choose to see it as subprime contagion, repricing of risk, or a temporary correction, prices of debt in various markets are falling, which translates into higher yield requirements. At RGE Monitor, Nouriel Roubini took note (as we did) of a Fitch report warning of overheated lending practices in the commercial real estate lending […]
Read more...As Russ Winter describes the recent runup in margin debt in “Leveraged to the Hilt.” Needless to say, heavy use of margin is considered a sign of speculative excess. I believe much of the market move can be attributed to synthetic leverage (futures). But now we get more evidence that a parabolic move in the […]
Read more...That’s the question from Felix Salmon, and like Diogenes looking for an honest man, so far he hasn’t found anyone who has an answer. Salmon is getting close to the dirty secret: no one has an answer. The most they have are some interesting datapoints, factoids, and analyses. At the risk of having someone prove […]
Read more...The Wall Street Journal, in “Fitch Sees Rising Shakiness In Commercial Mortgage Arena,” tells us that the rating agency issued a warning Wednesday on frothy lending in the commercial real estate arena. The problem with this story is that the WSJ makes it sound as if that’s news. It isn’t. The Financial Times reported on […]
Read more...Readers of this blog know that I have been concerned about the state of the credit markets for some time. We’ve had (until the last month or so), rampant liquidity feeding asset bubbles in virtually every asset class except the dollar and the yen, tight risk spreads (that means inadequate compensation for risk assumption), lax […]
Read more...Bloomberg reports that Moody’s has dropped its ratings on 399 subprime related bonds and is reviewing ratings on another 32. Standard & Poors had announced earlier in the day that it is preparing to cut ratings on 2.1% of the bonds that have subprime exposure, or roughly $12 billion out of a universe of $565 […]
Read more...John Dizard, who writes a pretty-much-weekly column for the Financial Times, typically presenting an exotic investment idea, has long given me the impression he spends much of his day gossiping with people on trading desks. Which means he is very much plugged in, and some of the remarks he makes in passing can be more […]
Read more...Ciitgroup CEO Charles Prince, in an exclusive interview with the Financial Times, said something I expect he will come to regret: Chuck Prince on Monday dismissed fears that the music was about to stop for the cheap credit-fuelled buy-out boom, saying Citigroup was “still dancing”. The Citigroup chief executive told the Financial Times that the […]
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