LIBOR: Non-linearity in a world that struggles with basic arithmetic
How 5 Liar Banks Could Get Away with it. Let’s say you could prove, beyond a shadow of a doubt that 5 banks all lied by 20 bps on Libor on a particular day, what is the lowest impact on LIBOR? ZERO. How could 5 liars have zero impact? It is possible for 5 banks […]
Investment Grade CDS going to zero.
Is IG18 going to zero? Probably not, but I think we could see an “eclipse” this week where IG18 trades lower than HY18. That has often been a sign of continued bullishness (though it failed in March) and I think IG could set new tights for the year. I don’t particularly like U.S. equities here. […]
High Yield High Beta CDS Can be High Reward
Where is the value in the market? Where is the value in this market? What looks cheap? What has good risk/reward? That is a constant complaint. The high yield market is trading at pretty tight levels. Big liquid names have been picked over, so you have to go for less liquid names or story credits […]
The Weekly T Report: From QE to PE
Don’t the Markets NEED QE? No. While QE has helped support the market and was the main reason the S&P 500 managed to stay above 1,300 in spite of weak data, it isn’t necessary. Taking the most “disruptive” scenarios off the table in Europe is more important. If Europe can stabilize, then the markets could […]
The T Report: Curing the Disease Will Alleviate the Symptoms
Weak Economic Data is a Symptom not the Disease Every day we get a new dumping of bad economic data. Our own data is marginal at best and Europe’s is somewhere between hideous and heinous. But that is a function of the complete uncertainty there. Europe is grinding to a halt as the threat of […]
How Much has Germany PROFITTED from the Bailouts?
Profits not “Costs” from the Bailout For all the talk about how much the bailouts are “costing” Germany and other countries, they have so far been very profitable. Minimal Cash Outflows In the early days, the countries did provide some funds. They may also have to provide the IMF with money (though the IMF also […]
The T Report: Draghi Responds to my “How Dumb is Draghi?” Report
Looking like the answer is “not so dumb” The key take away from yesterday was that Europe was on the cusp of contagion that was so obvious that policy makers would see it and finally react – we got a taste of that today with Draghi’s aggressive comments Markets are thin and can easily reverse […]
The T Report: How Dumb is Draghi? The Fed and AAPL too.
How Dumb is Draghi? The bear case continues to make a lot of sense. We have a global economy that is slowing. Profits are slowing. I see that and generally agree with it. I think housing may be stabilizing more than people give it credit as many of the problems slowly work themselves out, but […]
The T Report: China & LIBOR: Spain, Messy & Messi
PMI Chinese PMI was better than feared, but if I had to bet on what number is less manipulated, Chinese data or LIBOR, I would have to bet on LIBOR. Since we don’t have much else to work with, I guess we are stuck looking at it, and it shows that the slowdown is slowing, […]
The T Report: Spain, Greece, Spain, Greece, Spain
Spain Freefall. The Spanish 2 year bond is almost at 6.5%. It got as high as 102 in price terms during the height of the LTRO feeding frenzy. It is now at 95. Those are the sorts of moves that signal extreme danger. No one is will to buy short dated bonds aggressively. The Spanish […]
