Author Archives: Felix

Merrill’s Financing Strategy: Harming Shareholders

Posted on March 6, 2008 by Felix

A bank issues a bond, which has a maturity date. When the bond matures, the bank needs to essentially roll over the debt: it issues a new bond for the same amount of money, at (these days) a higher interest … Continue reading →

Posted in banking, bonds and loans, stocks | Comments Off on Merrill’s Financing Strategy: Harming Shareholders

Richard Bitner, Teller of Subprime Tales

Posted on March 6, 2008 by Felix

I’ve been meaning for a while now to link to Richard Bitner, a former subprime mortgage broker who has published a very readable book entitled "Greed, Fraud & Ignorance: A Subprime Insider’s Look at the Mortgage Collapse". Here’s a taster: … Continue reading →

Posted in housing | Comments Off on Richard Bitner, Teller of Subprime Tales

BRICs: Over Half of the Top 25 Billionaires

Posted on March 6, 2008 by Felix

Forbes has released its 2008 ranking of the world’s billionaires; it now takes $19.3 billion to crack the top 25. What jumps out at me? Indians account for four of the top ten; Russians account for seven of the top … Continue reading →

Posted in wealth | Comments Off on BRICs: Over Half of the Top 25 Billionaires

Fannie Mae Datapoint of the Day

Posted on March 6, 2008 by Felix

Fannie Mae’s credit default swaps are trading over 200bp, despite their implicit government guarantee. Writing protection at these levels seems like a no-brainer to me: even if there is an event of default, recovery is going to be very close … Continue reading →

Posted in derivatives | Comments Off on Fannie Mae Datapoint of the Day

Tim Geithner on the Financial Crisis: A Mock Interview

Posted on March 6, 2008 by Felix

I popped uptown this afternoon, to the Council on Foreign Relations, to hear NY Fed president Tim Geithner give a big speech on the current financial crisis. Geithner is the central banker closest to the markets, but he’s been pretty … Continue reading →

Posted in banking, fiscal and monetary policy, regulation | Comments Off on Tim Geithner on the Financial Crisis: A Mock Interview

Search Engine Capitulation of the Day

Posted on March 6, 2008 by Felix

When I first saw this over at Aaron Schiff’s, I thought it must have come from the Onion. But no, it’s for real: In a dramatic about-face, Ask.com is abandoning its effort to outshine Internet search leader Google Inc. and … Continue reading →

Posted in technology | Comments Off on Search Engine Capitulation of the Day

Retail Sales and the Weather

Posted on March 6, 2008 by Felix

Parija Kavilanz is excited about retail sales reports: A surprising rebound in February sales gave retailers a much-needed respite after a very difficult winter sales season that had pointed convincingly to a pullback in consumer spending. "It’s very interesting that … Continue reading →

Posted in stocks | Comments Off on Retail Sales and the Weather

How Lahde Capital Makes Money

Posted on March 6, 2008 by Felix

Sam Jones has Lahde Capital’s month-by-month performance results for 2007. The flagship real-estate fund, which has already been wound up, returned 870% over the course of the year, which implies that it went up in value by more than 77% … Continue reading →

Posted in hedge funds | Comments Off on How Lahde Capital Makes Money

Deteriorating Statistics

Posted on March 6, 2008 by Felix

Mike Mandel asks what statistics I would like to see improved. Answer: all of them. Back in the post-war years, some of the smartest economists in the world set up statistical agencies in the leading industrialized nations. If they can’t … Continue reading →

Posted in statistics | Comments Off on Deteriorating Statistics

Carlyle Capital Brings Back the LTCM Memories

Posted on March 6, 2008 by Felix

Remember Long Term Capital Management? The problem there wasn’t that it was investing in risky securities, like Russian bonds. Instead, Russia’s default set off a more generalized spread widening and flight to liquidity, which hit super-safe assets like off-the-run US … Continue reading →

Posted in hedge funds | Comments Off on Carlyle Capital Brings Back the LTCM Memories

China IPO Datapoint of the Day

Posted on March 6, 2008 by Felix

Helen Thomas keeps an eye on the China Railway IPO: The Hong Kong retail portion of the $5.5bn dual listing was 250 times oversubscribed – representing orders worth about $58bn. And this in a market which is far from surging: … Continue reading →

Posted in china, stocks | Comments Off on China IPO Datapoint of the Day

Extra Credit, Thursday Edition

Posted on March 6, 2008 by Felix

Learning from history at the LSE: "Citi shareholders must act, Goodhart said: all prospective chairmen should be tested for their quotability, and any with a talent for phrasemaking should be passed over ‘in favour of someone more boring’." Annals of … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Thursday Edition

Google: Expensive, or Cheap?

Posted on March 5, 2008 by Felix

Herb Greenberg poses the conundrum, which I’ve translated into table form. Date Price p/e ratio IPO: August 2004 $100 52.3 July 2006 $386 65.3 March 2008 $444 23.6 By historical standards, the Four Horsemen are trading on very, very low … Continue reading →

Posted in stocks | Comments Off on Google: Expensive, or Cheap?

Blogonomics: Exit Through Acquisition

Posted on March 5, 2008 by Felix

Breakingviews, one of the least web-savvy websites in the world, ran a column by Jeff Segal on Monday about blog valuations. And given that breakingviews tries to disable copying and for all intents and purposes bans hyperlinks, it’s probably not … Continue reading →

Posted in blogonomics | Comments Off on Blogonomics: Exit Through Acquisition

Zubin Jelveh, Pacesetter

Posted on March 5, 2008 by Felix

February 25: Portfolio’s Zubin Jelveh publishes a definitive article about NYU’s David Yermack and his research into CEOs’ gifts to their family foundations. March 5: The WSJ and NYT write copycat pieces. Maybe they thought that if they waited for … Continue reading →

Posted in Media | Comments Off on Zubin Jelveh, Pacesetter

Delphi: The Post-Default Aftermath

Posted on March 5, 2008 by Felix

Were you someone who wrote credit protection on Delphi? If so, you’re feeling a bit as though you dodged a bullet write now. Alea reports: In 2005 when Delphi went bankrupt there was some fear of a short squeeze in … Continue reading →

Posted in bonds and loans, derivatives | 2 Comments

The Limits of Unemployment Statistics

Posted on March 5, 2008 by Felix

The Federal Reserve has a dual mandate: to promote maximum employment and low inflation. Note that it’s maximum employment, not minimum unemployment: that’s a very good thing, as any readers of today’s column from David Leonhardt will know. The average … Continue reading →

Posted in economics, statistics | Comments Off on The Limits of Unemployment Statistics

Blogonomics: Tipjoy

Posted on March 5, 2008 by Felix

Did you follow my link to Francisco Torralba’s blog entry on mortgage securitization in Spain? If you did, and if you read his entry all the way to the end, you might have seen a little button there: Clicking that … Continue reading →

Posted in blogonomics | Comments Off on Blogonomics: Tipjoy

Healthy Stocks, Unhealthy Economy

Posted on March 5, 2008 by Felix

Warren Buffett loves to talk about "moats": things which protect his portfolio companies from competition. And his core business – reinsurance – has some of the highest barriers to entry in the world. Chris Dillow takes these ideas to their … Continue reading →

Posted in stocks | Comments Off on Healthy Stocks, Unhealthy Economy

Foreclosure Datapoint of the Day

Posted on March 5, 2008 by Felix

From Barry Ritholtz’s Florida correspondent: There is currently an 8-10 month wait to get a court date to have a foreclosure filing heard in Dade and Broward counties… As one broker said to me, "these bums sitting in $3,000,000 homes … Continue reading →

Posted in housing | Comments Off on Foreclosure Datapoint of the Day

The Downside of Marking to Market

Posted on March 5, 2008 by Felix

Holman Jenkins has an excellent column today headlined "Mark to Meltdown?" on the degree to which mark-to-market accounting standards have exacerbated the current crisis. Certainly the present system is pro-cyclical, helping both to inflate credit bubbles and make their bursting … Continue reading →

Posted in accounting, banking | 1 Comment

Citi Trading Below Book

Posted on March 5, 2008 by Felix

Citigroup stock fell below book value yesterday – which is either despite or because of a long series of write-downs which served to lower that very value. Citi’s market capitalization is now $115 billion, which compares to, say, $177 billion … Continue reading →

Posted in banking, stocks | Comments Off on Citi Trading Below Book

Don’t Trust Prediction Markets in the Final Hours

Posted on March 5, 2008 by Felix

After the polls closed in Texas last night, the DEM.TX.OBAMA contract on InTrade – the one judging his chances of winning the Texas primary – spiked up to 85, before embarking on a long and steady decline to zero. Clearly … Continue reading →

Posted in prediction markets | Comments Off on Don’t Trust Prediction Markets in the Final Hours

Blogonomics: Peer Effects

Posted on March 5, 2008 by Felix

On Friday, David Harper asked me to introspect a little: he was impressed at how many blog entries I produced last week, and wondered how that happened. I try to answer any genuine questions which are asked of me, so … Continue reading →

Posted in blogonomics | Comments Off on Blogonomics: Peer Effects

Extra Credit, Wednesday Edition

Posted on March 5, 2008 by Felix

This is what happens when you don’t blog for a day but you did have offline access to your RSS reader: the end-of-day roundup starts to get very long. Treasury Five-Year TIPS Yields Fall Below Zero for Third Day Will … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Wednesday Edition