Author Archives: Felix

Credit Markets Aren’t Liquid Enough for a Mass Selloff

Posted on February 29, 2008 by Felix

Jon Jacobs wants "an unrestrained, cathartic selloff" in the credit markets. He makes a good point: that banks are holding on to the assets they’ve written down in the hope, basically, that they’re smarter than the markets. The only way … Continue reading →

Posted in bonds and loans | Comments Off on Credit Markets Aren’t Liquid Enough for a Mass Selloff

Are Equities Attractive?

Posted on February 29, 2008 by Felix

Brad DeLong thinks that stocks look attractive over the long run, and has written a paper to that effect: As of this writing the annual earnings yield on the value-weighted S&P composite index is 5.53%. This is a wedge of … Continue reading →

Posted in stocks | 1 Comment

Municipal Default Alert: Vallejo, California

Posted on February 29, 2008 by Felix

Do municipal bonds really never default? The Californian town of Vallejo seems to have gotten very close. Portfolio’s Liz Gunnison filled me in on the details of the city’s bonds, from Bond Buyer: The city government and its related enterprises … Continue reading →

Posted in bonds and loans | Comments Off on Municipal Default Alert: Vallejo, California

Is a Mortgage Like a Marriage?

Posted on February 29, 2008 by Felix

It’s great to see my friend Christian Menegatti quoted in a front-page NYT article. But what will his wife think? Christian Menegatti, lead analyst at RGE Monitor, said the firm predicted more homeowners would walk away from their homes if … Continue reading →

Posted in housing | Comments Off on Is a Mortgage Like a Marriage?

ABX Datapoint of the Day

Posted on February 29, 2008 by Felix

As Peloton implodes, it’s liquidating its long mortgage positions, to nasty effect. The triple-A tranche of the most recent ABX index is now at just 61, while the double-A tranche has crashed all the way to 26. Yeah, that’s the … Continue reading →

Posted in derivatives, housing | Comments Off on ABX Datapoint of the Day

I’d Like to Escalate This Issue to Level Ballmer

Posted on February 29, 2008 by Felix

It was an experience suffered by millions: people with new PCs, or with newly-installed copies of Vista, finding themselves with peripherals which simply wouldn’t work because there were no drivers available. Aggrieved customer John Shirley decided to write an email … Continue reading →

Posted in technology | Comments Off on I’d Like to Escalate This Issue to Level Ballmer

It Could Have Been the Trade of a Lifetime

Posted on February 29, 2008 by Felix

Yesterday, John Carney asked why rogue traders always seem to lose money rather than making it. Today we find out exactly why, at least in the case of MF Global: their rogue trader, Brent Dooley, was trading his own account. … Continue reading →

Posted in derivatives | Comments Off on It Could Have Been the Trade of a Lifetime

Extra Credit, Friday Edition

Posted on February 29, 2008 by Felix

Narrow victory for battered UBS chief Opening the windows on Microsoft: "Mr Gates may be leaving the building but persuading his paranoid spirit to depart is something else again." The War on Error Oil Wealth Fueling Boom In Islamic Finance

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

Transplant surgery

Posted on February 28, 2008 by Felix

Liesl Gibson: Best doctor ever!

Posted in Not economics | Comments Off on Transplant surgery

Reasons to be Sanguine about CDS Counterparty Risk

Posted on February 28, 2008 by Felix

I spoke today to Nishul Saperia at Markit about credit default swaps, and I’m very glad I did: he’s cleared a lot of things up for me, especially on the problem of counterparty risk. Here’s one problem, as explained by … Continue reading →

Posted in derivatives | Comments Off on Reasons to be Sanguine about CDS Counterparty Risk

Lacey Gallagher, RIP

Posted on February 28, 2008 by Felix

I knew Lacey for many years, she was always vivacious and insightful. This is incredibly sad news, although not unexpected. Here is the memo which went out today from Mike Ryan and Bunt Gosh at her last employer, Credit Suisse. … Continue reading →

Posted in emerging markets | Comments Off on Lacey Gallagher, RIP

Bandwidth Datapoint of the Day

Posted on February 28, 2008 by Felix

Says Google: According to the TeleGeography Global Bandwidth Report, 2007, Trans-Pacific bandwidth demand has grown at a compounded annual growth rate (CAGR) of 63.7 percent between 2002 and 2007. It is expected to continue to grow strongly from 2008 to … Continue reading →

Posted in technology | Comments Off on Bandwidth Datapoint of the Day

No Security in Securities

Posted on February 28, 2008 by Felix

James Stewart is shocked – shocked! – to find out that his ARPS aren’t liquid. They were sold as a liquid, safe, slightly higher-yielding, tax-exempt alternative to money-market funds. I should know, since I bought some… What was a ready … Continue reading →

Posted in bonds and loans, personal finance | Comments Off on No Security in Securities

When Banks Don’t Manage Their Bankers’ Risks

Posted on February 28, 2008 by Felix

Dear John Thain has a thought-provoking piece up today about the way that risks and revenues are managed at investment banks. Think of banks as being divided in two: on the one side are the bankers, who generate fee income … Continue reading →

Posted in banking | Comments Off on When Banks Don’t Manage Their Bankers’ Risks

Brazil Datapoint of the Day

Posted on February 28, 2008 by Felix

From Annelena Lobb: Brazil edged past China to become the largest emerging market in the world, as measured by Morgan Stanley Capital International’s emerging markets index. Brazil has a free-float market capitalization of $509.10 billion and comprises 14.95% of the … Continue reading →

Posted in emerging markets | Comments Off on Brazil Datapoint of the Day

Phibro: Beneficiary of Citi’s Benign Neglect

Posted on February 28, 2008 by Felix

Sticking with Citi, Ann Davis has a fantastic front-pager in today’s WSJ on Andrew Hill, who runs commodity-trading subsidiary Phibro. Go read it, it’s full of wonderful details, like Hill’s thousand-year-old castle in Germany, which recently housed a massive Schnabel … Continue reading →

Posted in banking, commodities | Comments Off on Phibro: Beneficiary of Citi’s Benign Neglect

More Musical Chairs at Citi

Posted on February 28, 2008 by Felix

Michael Grynbaum, it turns out, was prescient back in November, when Citigroup replaced its long-time chief risk officer David Bushnell with safe-pair-of-hands Jorge Bermudez. The move seemed unconvincing, mainly because Bermudez is a commercial banker, not an investment banker: Mr. … Continue reading →

Posted in banking | Comments Off on More Musical Chairs at Citi

Extra Credit, Thursday Edition

Posted on February 27, 2008 by Felix

Trade: Leonhardt vs Baker The Debt Delusion: Thomas Palley on the unsustainability of the business cycle as we’ve come to know it over the past 25 years. Will Publishers Lose Their Bacon if Ads Are Traded Like Pork Bellies? Online … Continue reading →

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

When Numbers are Hard to Read

Posted on February 27, 2008 by Felix

One of the more annoying quirks of New Yorker house style is this kind of thing: A few weeks ago, the Bureau of Economic Analysis released its figures for 2007. They showed that Americans had collectively amassed ten trillion one … Continue reading →

Posted in Media | Comments Off on When Numbers are Hard to Read

Small Feet, Large Footprints

Posted on February 27, 2008 by Felix

Tyler Cowen explains why those of us without children should be less worried about our carbon footprint: Your net carbon impact depends far more on the number of children you will have than any other variable; remember good environmentalism uses … Continue reading →

Posted in climate change | 1 Comment

Blackstone to Banks: We Don’t Need You

Posted on February 27, 2008 by Felix

Blackstone has decided to disintermediate its banks when it comes to raising money for leveraged loans. Hell, Blackstone is a bank, I’m just surprised it’s taken them this long to take this step. Yes, it’s easier to just mandate a … Continue reading →

Posted in banking, bonds and loans | Comments Off on Blackstone to Banks: We Don’t Need You

One Question for John Carney

Posted on February 27, 2008 by Felix

I don’t want to drag this debate over municipal bonds on too long: I’ve pretty much said my piece. But I would like to ask John Carney just one question. Today, he says this: Investors in municipal bonds are interested … Continue reading →

Posted in insurance | Comments Off on One Question for John Carney

How I’m Helping Mike Moffatt Lose Weight

Posted on February 27, 2008 by Felix

Mike Moffatt is trying to lose weight, and has part of his weight-loss plan he’s going to give me $100 if he doesn’t lose at least one percentage point in body fat in March. Which is nice for me: all … Continue reading →

Posted in economics | Comments Off on How I’m Helping Mike Moffatt Lose Weight

The Psychology of Google Stock

Posted on February 27, 2008 by Felix

When do stock investors feel good? Kevin Maney thinks it’s when their holdings have gone up in value: Google shares are off their highs by so much, the AP writes today that Google’s "once-robust stock is looking haggard." Haggard? Well, … Continue reading →

Posted in stocks | Comments Off on The Psychology of Google Stock

Brit Art at Rockefeller Center: Disappointing

Posted on February 27, 2008 by Felix

I popped over to Rockefeller Center this morning to check out the new Electric Fountain by Tim Noble and Sue Webster. Rock Center has a long history of fabulous public-art installations: Jonathan Borofsky, Louise Bourgeois, Nam June Paik, and Takashi … Continue reading →

Posted in art | Comments Off on Brit Art at Rockefeller Center: Disappointing