The gravity of the moment was no doubt lost on French President Sarkozy last Thursday when he was summoned to ‘stopover’ in Bejing to take tea with President Hu on his way to New Caledonia. China has close to USD 800B invested in European Government bonds, which effectively makes President Hu Europe’s private banker. Hu […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2011-08-28 07:06:592018-05-21 07:07:20Presidents Hu and Sarkozy Take Tea
The war declared by the US and EU governments on the ratings agencies has drawn blood. Standard &Poor’s CEO, Dewen Sharma, was yesterday replaced and the business placed on a ‘strategic review’. This follows an 11% drop in the value of the parent company McGraw Hill since S&P downgraded the US Treasuries’ credit rating. The […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2011-08-23 07:07:252018-05-21 07:07:49S&P’s CEO is the First to Go … ‘Letter-Ratings’ Should Be Next
Charlie Plosser, the President of the Philly Fed, was my thesis adviser. He is a well-respected, thoughtful professor who does not seek attention. Imagine my surprise when he openly criticises Bernanke’s latest experiment announcing that the Fed will keep rates at zero for two years! But Charlie is right…his argument is that the US is […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2011-08-19 07:07:522018-05-21 07:08:14Can Bernanke Commit for Two Years?
When the dust settles from the recent market volatility, the long-lasting effect of the US Federal Reserve’s decision to commit to zero-rates until mid-2013 will be the dominance of carry. One of the risks of the ‘carry trade’ is when the short leg borrowing cost suddenly jumps. The Fed’s commitment to hold cash rates at […]
The US invented the pizza delivery service. If you are too lazy to go out and collect a pizza, all you need to do is dial the pizza shop and a willing delivery man will satisfy your hunger quickly for a generous tip. The popular press has been focused on how the US can cut […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2011-08-01 07:12:522018-05-21 07:13:20A Generous Tip for the Corn Delivery Man
The EU has given the EFSF power to both swap existing Greek bonds for new 30 year bonds as well as to buyback Greek bonds in the secondary market. These powers are complimentary and a smart debt manager may well be able to reduce the stock of Greek debt by more than expected under the […]
Clause 15 of the EU’s communique extending the terms of the Greek bailout provides a clue as to the real reason for the Summit. It reads “15. We agree that reliance on external credit ratings in the EU regulatory framework should be reduced…and we look forward to the Commission proposals on credit rating agencies.” Oh […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2011-07-24 07:13:252018-05-21 07:13:51The Great Greek Summit: A Retrospective
Not since the Lehman default has there been such dislocation in the secondary markets for bonds. Last week, turnover in the GGB market ground to a halt and the recent price falls reflect an absence of liquidity. Total reported transactions on Thursday, for instance, were only EUR 6M versus something like EUR 300M on a […]
There is one thing that the European Finance Ministers meeting in Luxembourg know that the rest of the market does not: whether they will let Greece default. This is valuable information that they can and should take advantage of. My guess is that the debate taking place is all about how much a bailout will […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2011-07-12 07:14:272018-05-21 07:14:51Europe’s Bond Crisis: Why a Secondary Market Buyback Makes Sense
Many years ago I worked on a project that brought me into contact with senior Government Ministers in Australia. I was treated respectfully but it was clear that I was a foreigner in the world of government and politics. A colleague of mine, whose husband was a MP, explained that politicians are in awe of […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2011-07-07 07:14:532018-05-21 07:15:22Solving the European Debt Crisis: Start Thinking Like an Investor
Presidents Hu and Sarkozy Take Tea
The gravity of the moment was no doubt lost on French President Sarkozy last Thursday when he was summoned to ‘stopover’ in Bejing to take tea with President Hu on his way to New Caledonia. China has close to USD 800B invested in European Government bonds, which effectively makes President Hu Europe’s private banker. Hu […]
S&P’s CEO is the First to Go … ‘Letter-Ratings’ Should Be Next
The war declared by the US and EU governments on the ratings agencies has drawn blood. Standard &Poor’s CEO, Dewen Sharma, was yesterday replaced and the business placed on a ‘strategic review’. This follows an 11% drop in the value of the parent company McGraw Hill since S&P downgraded the US Treasuries’ credit rating. The […]
Can Bernanke Commit for Two Years?
Charlie Plosser, the President of the Philly Fed, was my thesis adviser. He is a well-respected, thoughtful professor who does not seek attention. Imagine my surprise when he openly criticises Bernanke’s latest experiment announcing that the Fed will keep rates at zero for two years! But Charlie is right…his argument is that the US is […]
Bernanke Cements the ‘Carry Trade’
When the dust settles from the recent market volatility, the long-lasting effect of the US Federal Reserve’s decision to commit to zero-rates until mid-2013 will be the dominance of carry. One of the risks of the ‘carry trade’ is when the short leg borrowing cost suddenly jumps. The Fed’s commitment to hold cash rates at […]
A Generous Tip for the Corn Delivery Man
The US invented the pizza delivery service. If you are too lazy to go out and collect a pizza, all you need to do is dial the pizza shop and a willing delivery man will satisfy your hunger quickly for a generous tip. The popular press has been focused on how the US can cut […]
An Effective Buyback and Bondswap Strategy
The EU has given the EFSF power to both swap existing Greek bonds for new 30 year bonds as well as to buyback Greek bonds in the secondary market. These powers are complimentary and a smart debt manager may well be able to reduce the stock of Greek debt by more than expected under the […]
The Great Greek Summit: A Retrospective
Clause 15 of the EU’s communique extending the terms of the Greek bailout provides a clue as to the real reason for the Summit. It reads “15. We agree that reliance on external credit ratings in the EU regulatory framework should be reduced…and we look forward to the Commission proposals on credit rating agencies.” Oh […]
The Greek Secondary Market Shuts Down: Arbitrage Opportunities Abound
Not since the Lehman default has there been such dislocation in the secondary markets for bonds. Last week, turnover in the GGB market ground to a halt and the recent price falls reflect an absence of liquidity. Total reported transactions on Thursday, for instance, were only EUR 6M versus something like EUR 300M on a […]
Europe’s Bond Crisis: Why a Secondary Market Buyback Makes Sense
There is one thing that the European Finance Ministers meeting in Luxembourg know that the rest of the market does not: whether they will let Greece default. This is valuable information that they can and should take advantage of. My guess is that the debate taking place is all about how much a bailout will […]
Solving the European Debt Crisis: Start Thinking Like an Investor
Many years ago I worked on a project that brought me into contact with senior Government Ministers in Australia. I was treated respectfully but it was clear that I was a foreigner in the world of government and politics. A colleague of mine, whose husband was a MP, explained that politicians are in awe of […]