‘New Keynesian (thinking) is the dominant school in Macroeconomics…’ Noah Smith, Bloomberg, 16 July 2015 Waking up to this pronouncement nearly drove me to suicide. When you work in the financial markets, where market prices almost instantaneously reflect new information, one tends to hope that policymakers operate within the same market realities. The majority of […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-08-26 06:53:402018-05-14 06:54:21The Fed may surpise itself at lift-off…
When I first moved to Singapore in 2000, Chinese foreign reserves stood at $165billion. This was 10 times more than they had held in 1995, and the authorities were struggling to deal with the realities of day-to-day Reserves Management (for example, collecting and reinvesting coupons). Fifteen years later, foreign reserves stand in excess of $4trillion, […]
I have long held the view that investors trade too much. Capital markets’ raison d’etre are to provide an avenue for today’s savers to consume in the future. Savers receive a rate of return as a reward. How much trading is required to support this basic activity? Consider this simple math. If investment returns are, […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-08-11 06:55:542018-05-14 06:56:31Could a ‘Bond Market Liquidity’ Crisis be a Good Thing?
First Home Buyers Priced out of Sydney Market’, ‘RBA Considers Lending Constraints on Property’, ‘Rundown Shack Sells for $1m Over Reserve’ These are the headlines of nearly every Australian daily newspaper commenting on the residential property boom currently taking place in Australia, and in Sydney in particular. Many reasons are cited for the price appreciation […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-07-27 06:56:372018-05-14 06:57:45Wise Up, Sydney…Property Prices in Chinese Yuan Terms Have Gone Down!
We have been loathe to comment on the Greek pantomime for the last two or three weeks since, as this blog noted way back on June 22, the debt negotiations had everything to do with politics and nothing to do with finance nor economics. We are not political scientists. Now that the current Greek chapter […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-07-16 08:11:092018-05-14 08:11:36The Moral to the Greek Story: Democracy has no Role in EU Politics
Risk aversion is a powerful force. Risk aversion is a subjective feeling that investors use to assess their preference for cash over risky assets. Risk aversion can change quickly and affects markets quite broadly. These are temporary effects that can be exploited for profit On the face of it, Greece’s negotiations with its creditors are […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-06-30 09:58:332018-05-14 09:59:06RIsk Aversion: How a Little Problem Like Greece Causes a Temporary Global Selloff
“We propose a rationalisation of Greece’s debt repayment schedule along the following lines. First, to effect an SMP Buy-Back, Greece acquires a new loan from the ESM, then purchases the SMP bonds back from the ECB and retires them.” Greek Finance Minister, Yanis Varoufakis, June 18 2015 Few bankers like to take a haircut on […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-06-22 09:59:112018-05-14 09:59:58A Greek Moment That Will Last Forever
Governments deal with other Governments differently than they deal with private individuals. No Government would hesitate in foreclosing on a company that failed to pay its taxes or indebtedness. However, every Government hesitates to do the same to a fellow Sovereign. This is why Greece will not be allowed to default, nor exit the European […]
While the bond markets in Europe wobble under nervous Greek-inspired sentiment, and now ‘reflation concerns’, who would have thought that the Euro would appreciate? Surely selling Euro bonds means selling the currency too? My suspicion is the position unwinds taking place are the ‘fully hedged variety’, while the purchases are Euro long. The fully hedged […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-06-04 10:00:342018-05-14 10:01:14And the Winner From the Current Flight to Quality is…The Euro? Plus a Bonus Uber Footnote
For decades, the economic community has tried to prove whether monetary policy works or not. Scientists have been confounded by the lack of a controlled laboratory experiment and therefore have resorted to econometric analysis, which itself is hindered by stability issues. For instance, the long-held belief that monetary policy operates with a ‘long and variable […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2015-05-19 03:15:462018-05-21 03:17:19#FedDoNothing in the Interests of Science
The Fed may surpise itself at lift-off…
‘New Keynesian (thinking) is the dominant school in Macroeconomics…’ Noah Smith, Bloomberg, 16 July 2015 Waking up to this pronouncement nearly drove me to suicide. When you work in the financial markets, where market prices almost instantaneously reflect new information, one tends to hope that policymakers operate within the same market realities. The majority of […]
Yuan State, Yuan People, Yuan Currency
When I first moved to Singapore in 2000, Chinese foreign reserves stood at $165billion. This was 10 times more than they had held in 1995, and the authorities were struggling to deal with the realities of day-to-day Reserves Management (for example, collecting and reinvesting coupons). Fifteen years later, foreign reserves stand in excess of $4trillion, […]
Could a ‘Bond Market Liquidity’ Crisis be a Good Thing?
I have long held the view that investors trade too much. Capital markets’ raison d’etre are to provide an avenue for today’s savers to consume in the future. Savers receive a rate of return as a reward. How much trading is required to support this basic activity? Consider this simple math. If investment returns are, […]
Wise Up, Sydney…Property Prices in Chinese Yuan Terms Have Gone Down!
First Home Buyers Priced out of Sydney Market’, ‘RBA Considers Lending Constraints on Property’, ‘Rundown Shack Sells for $1m Over Reserve’ These are the headlines of nearly every Australian daily newspaper commenting on the residential property boom currently taking place in Australia, and in Sydney in particular. Many reasons are cited for the price appreciation […]
The Moral to the Greek Story: Democracy has no Role in EU Politics
We have been loathe to comment on the Greek pantomime for the last two or three weeks since, as this blog noted way back on June 22, the debt negotiations had everything to do with politics and nothing to do with finance nor economics. We are not political scientists. Now that the current Greek chapter […]
RIsk Aversion: How a Little Problem Like Greece Causes a Temporary Global Selloff
Risk aversion is a powerful force. Risk aversion is a subjective feeling that investors use to assess their preference for cash over risky assets. Risk aversion can change quickly and affects markets quite broadly. These are temporary effects that can be exploited for profit On the face of it, Greece’s negotiations with its creditors are […]
A Greek Moment That Will Last Forever
“We propose a rationalisation of Greece’s debt repayment schedule along the following lines. First, to effect an SMP Buy-Back, Greece acquires a new loan from the ESM, then purchases the SMP bonds back from the ECB and retires them.” Greek Finance Minister, Yanis Varoufakis, June 18 2015 Few bankers like to take a haircut on […]
Greek Realities
Governments deal with other Governments differently than they deal with private individuals. No Government would hesitate in foreclosing on a company that failed to pay its taxes or indebtedness. However, every Government hesitates to do the same to a fellow Sovereign. This is why Greece will not be allowed to default, nor exit the European […]
And the Winner From the Current Flight to Quality is…The Euro? Plus a Bonus Uber Footnote
While the bond markets in Europe wobble under nervous Greek-inspired sentiment, and now ‘reflation concerns’, who would have thought that the Euro would appreciate? Surely selling Euro bonds means selling the currency too? My suspicion is the position unwinds taking place are the ‘fully hedged variety’, while the purchases are Euro long. The fully hedged […]
#FedDoNothing in the Interests of Science
For decades, the economic community has tried to prove whether monetary policy works or not. Scientists have been confounded by the lack of a controlled laboratory experiment and therefore have resorted to econometric analysis, which itself is hindered by stability issues. For instance, the long-held belief that monetary policy operates with a ‘long and variable […]