The Spanish Bank Bailout: Separating the Wheat from the Chaff
The Spanish Bank Bailout – What to Watch For Coupon and Maturity This is a key indicator of how aggressive Europe is being. Longer maturities and lower coupons are key. If we see 3 year loans at 5%, we get a very different message than 10 year loans at 3%. Lower coupon makes the current […]
The T Report: The U.S. is Not Europe
How Much Worse Would Our Budget Problems be Without the Fed? The biggest difference between what is going on in Europe and what is happening here, is the ability of the Fed to get rates where they want them across the entire curve. For all the talk about Spain and Italy not being “sustainable” at […]
The Weekly T Report: 7%, Credit Hedge Funds & Goal Seeked Returns
Europe Nothing New to Say You can read about Europe from a lot of other sources this weekend. I maintain that when a Grexit became a real possibility, they finally looked at what it would mean and became scared of the risk. Since then there has been a change of attitude. I saw it in […]
The T Report: Did anyone not sell the news?
FAITH Basically everyone out there is saying to sell the news. Virtually everything I read points out flaws in the announcement. Why the plan won’t work. Who will vote against it. That it is too vague. That it doesn’t do enough. And largely I agree. The plan is vague. Some parts of it will probably […]
The T Report: JP Morgan – Reacting to Headlines is easier than Thinking
Algos, Twitter, or Laziness? I am surprised by the market reaction to the NY Times article about JP Morgan’s whale trade. The headline JP Morgan trading loss may reach 9 billion seems devastating. I can understand why a computer would react to the headline maybe programs missed the subtlety of the word “may”. But why […]
Europe won’t act unless it’s a crisis? Looks like a crisis to me!
I keep hearing that it will take a crisis for Europe to act. Well if you look at the S&P 500 to determine whether a crisis is occurring in Europe, you are probably looking at the wrong benchmark. Even the DAX might be the wrong one. Take a look at Spain. It is the lowest […]
The T Report: Smelling the Roses – Or Watching the Yankees
Another day of European headline watching. Yesterday Merkel supposedly said that Eurobonds would never happen while she was alive made many people wonder if that was the last condition to be met. Other than putting the “ding dong” song from the Wizard of OZ in my head, the statement did little. Tonight she is having […]
The T Report: Groupthink on Carry, Subordination, and Secondary Market Yields
A boring start to the day as the market briefly attempted to rally but has since settled back to mixed. U.S. stock futures are up a touch, CDS indices across the board are basically unchanged, while Spanish and Italian bond yields drift lower once again. High Yield remained strong yesterday, particularly the ETF’s, one of […]
Spanish Bank Bailout Analysis – According to EFSF FAQ
Straight from EFSF’s FAQ Okay, it is a bit scary that the only details that have made it to the public on what a Spanish bank bailout might look like are from the EFSF’s FAQ page. But it seems to have addressed a lot of the questions and the answers seem reasonable. Here is the […]
The T Report: Secondary Market Purchases are NOT the Answer for Europe
Do we finally get details out of Europe? Spain has finally made the “formal” request for aid. There is another summit. Expectations for anything positive seem incredibly low. There seems to be a scramble to shoot down anything that is said out of Europe. It really doesn’t matter what is said, the negatives and potential […]