Not one to let a sleeping dog lie, today we’ve encountered a new explanation for the mysterious Bank of International Settlements’ 380 tonnes in gold swap operations. Before this week, James Turk, co-author of The Collapse of the Dollar, had yet to voice a theory on the swap. However, after learning Portugal is taking an [...]
Dagong International Credit Rating, a new Chinese credit rating agency, purports to adhere to “fundamental principles of truthfulness, timeliness, and consistency.” It warns that “over-reliance on financing income and debt roll-over will ultimately lead to a strong reaction of bond market, thus when the borrowing costs and difficulties increase, the credit risks will burst dramatically.” [...]
Credit risk always seems to come out of nowhere. But usually it comes out of somewhere…like the dirty, little recesses of a bank’s balance sheet – the places where bankers hide all their unrecognized losses. Ever since the suspension of rigorous mark-to-market accounting rules one year ago, banks have gained the ability to “time” their [...]
Market internals remain bearish. The rush to cut portfolio risk remains intact. Here is a two-year chart of the S&P 500 (in red) and the iShares High-Yield Corporate Bond ETF (HYG): Both lines in the chart reflect investors’ risk appetite. Over the past year, retail investors have been piling into corporate bond funds. This inflow [...]
The financial crisis that began in housing, and then with banks and insurers, has now moved onto the balance sheets of nations. And, among the fiscally unsound, it’s the euro that is suffering the most. It recently hit a 14-month low in dollar terms, and the ongoing uncertainty facing the EU continues to break records [...]
“Ask me how insurance works.” “All right, how does insurance work?” “Well, okay, you give me your money…” “Is that all there is to it?” “Yes.” “Is that a joke?” “Not exactly…” Fire insurance works by sharing out the risk of a fire among hundreds of homeowners. In effect, if one house burns down, the [...]
It’s Goldman this. And Goldman that. And Goldman rhymes with greed. But it’s “Thank you, Mr. Blankfein,” when it’s money that you need. Last week, Greek Finance Minister George Papaconstantinou slipped. He said not what he should have said, nor what he wanted to say. Unwittingly, he said something that was true: his country’s budget [...]
Greece is the word…or at least it was during yesterday’s trading sessions in Europe and New York. Everywhere you looked, there was that word again… “Euro Surges Against Dollar as EU Signals Support for Greece.” “Canada’s Dollar Rises Most in Month on Prospect of Greece Aid.” “US Stocks Rally on Growing Prospects for Bailout of [...]
The S&P 500 Index jumped more than 1% yesterday – lifting the index to within a whisker of a new one-year high. So let’s have a moment of silence, please, for the millions of S&P Index put options that have died in vain… Thank you. As it turns out, not every sort of put option [...]
The upcoming third-quarter earnings reports from real estate investment trusts will not be pretty. Second-quarter earnings for the sector were boosted by one-time gains from buying back publicly traded bonds at discounts, and taking advantage of bond investors’ newly whimsical attitude toward credit risk by floating new bond issues. Earnings were also boosted as REIT [...]
