Author Archives: Felix

Why China’s Wealth Fund is Right to Invest Domestically

Keith Bradsher reports that China’s $200 billion sovereign wealth fund will be investing mainly in China, its much-ballyhooed stake in Blackstone notwithstanding. This is a smart and sensible decision. As Sudip Roy says in this month’s Euromoney, it can often … Continue reading

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Blogonomics: Why Blogs Won’t Make Lots of Money for Millionaires

Scott Adams, the multimillionaire creator of the Dilbert comic strip, doesn’t like doing anything which doesn’t make him money. This conflicted with his blogging, the income from which was very small. Yes, we’ve been here before. But this time it’s … Continue reading

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The Strategy of Capital Injection

At the risk of repeating the mistake I made with the Bank of America – Countrywide deal, I have to say I like this Citadel – E*Trade deal a lot. The total cash infusion of $2.5 billion is actually larger … Continue reading

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And You Thought Bear Stearns Was Looking Cheap

Ah, those storied names. Dillon Read. SG Warburg. PaineWebber. Pactual. The reputations, the brands, the cashflow. Priceless. Literally. According to Credit Suisse (which admittedly might not be the most impartial arbiter in such matters), the value that the market is … Continue reading

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Extra Credit, Thursday Edition

Wall Street Rumor: Paulson leaving Treasury to run Citigroup The Liquidity Crunch Deepens: 2-month Euribor hits new highs. Loan Radar: Syndie loan bankers revert to type: "This month has seen BHP Billiton informally line up a $70bn loan, Rio Tinto … Continue reading

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Blogonomics: How a New Blog is Born

Some of the blogs linking to Andrew Clavell since I wrote about his Citigroup analysis yesterday afternoon: Paul Kedrosky, FT Alphaville, Fintag, peHUB, DealBreaker, Tim Price. There’s even a chap in India. The main effect of all this attention seems … Continue reading

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RPX: The Housing Futures Market With a Transaction Count

After posting my entry about house-price futures yesterday, a loyal reader tipped me off to another entity dealing in such things here in the US: Radar Logic’s RPX. Again, I have no idea how liquid these things are, but the … Continue reading

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Thought Experiment of the Day

Ranjan Bhaduri sets up the "balls in the hat game": The game consists of a hat that contains 6 black balls and 4 white balls. The player picks balls from the hat and gains $1 for each white ball, and … Continue reading

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Sovereign Wealth Fund Datapoints of the Day

More from the December Euromoney, this time from Sudip Roy’s cover story on sovereign wealth funds. Two datapoints jumped out at me: "For all of the headlines being generated by the investments in the US and Europe, it’s a fraction … Continue reading

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John Reed for Citigroup CEO!

Things are pretty bad at Citigroup right now: its tier 1 capital, while above the federally-mandated level of 6%, is below its own internal target of 7.5%. But things were much worse in 1990, when that same ratio was just … Continue reading

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In Praise of Cutting Dividends

What is the relationship between a stock’s dividend and its price? Complicated, obviously. The best-performing stocks and companies often have no dividend at all – Microsoft paid out $0 from the date of its IPO all the way through to … Continue reading

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Chart of the Day: Sock Manufacturing in the US

Pie charts are generally anathema to Tufte-heads and other connoisseurs of chartistry: they use far too much space to convey far too little information. But I like the one at the right, from an NPR story about Fort Payne, Alabama … Continue reading

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And You May Find Yourself in a Beautiful House…

One of my favorite bloggers ventures into political-economy territory: was the subprime-mortgage bubble responsible for the re-election of George W Bush in 2004? I wonder if the mortgage and credit debacle is a clue. Could it reveal one of the … Continue reading

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Welcome Andrew Clavell

After writing yesterday’s post about the coupon on Citi’s mandatory convertible, I stuck around Andrew Clavell’s new blog, Financial Crookery, to see what else he’d written. And boy is this guy excellent: I’ve already added him to the blogroll, despite … Continue reading

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Extra Credit, Wednesday Edition

Simons at Renaissance Cracks Code, Doubling Assets: Jim Simons grants an interview to Bloomberg’s Richard Teitelbaum. CPDOs Bloodbath [continued] Subprime Near a Bottom? Most bonds have a natural recovery value of at least 20 cents or so. Low-tranche subprime RMBS? … Continue reading

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Why Citi’s 11% Coupon Doesn’t Mean it’s Paying Junk Rates

I didn’t actually post my first entry of the day at 10:20 this morning, honest: Movable Type seems to have eaten my real first post, about the Abu Dhabi investment in Citigroup. My blog entry compared the 11% coupon on … Continue reading

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The Future(s) of House Prices

The UK has a new tradeable derivatives contract on house prices, which shows house prices falling by 7% next year. That has Tim Harford worried: futures markets are "better than cheap-talk forecasts" in terms of being right, he says. But … Continue reading

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Meme of the Day: The Sudden Stop

Brad Setser started it, back on November 19: Bottom line: private demand for US financial assets has disappeared. In emerging market terms, the US has experienced a sudden stop. Yves Smith picked up the ball, as did Wolfgang Munchau: "financial … Continue reading

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Countrywide’s FHLB Bailout

I agree with Chuck Schumer and Nouriel Roubini that the $51 billion lent to Countrywide by the Federal Home Loan Bank of Atlanta smells very fishy. Yes, it’s collateralized by $62 billion in mortgages, and it’s entirely possible that FHLB … Continue reading

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The Really Big Picture

You wait years for a magisterial overview of the entire global economy on a thousand-year timescale, and then two come along within a week of each other. Angus Maddison’s Contours of the World Economy 1-2030 AD: Essays in Macro-Economic History … Continue reading

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Cybershoppers Bring Down Yahoo

The WSJ tells us today that "Yahoo’s popular e-commerce system buckled under the strain of a surge in online shopping" starting at the ridiculously early hour of 5:30 a.m. EDT yesterday. Help me out here: isn’t the point of "cyber … Continue reading

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Capital Infusion Datapoint of the Day

Coupon on the convertible bonds Bank of America bought to help shore up Countrywide: 7.5% Coupon on the convertible bonds Abu Dhabi bought to help shore up Citigroup: 11%

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Extra Credit, Tuesday Edition

InTrade fee structure discourages selling the tails? Sweatshops, sweatshops everywhere CDO Dumping Ground Still Sinking Where Is the Fed? "Way, way behind the curve." The end of the world’s nastiest democratic politician: "I wondered when Gordon Brown became prime minister … Continue reading

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Consumers Should be Able to Choose Their TV Channels

Joe Nocera had a provocative column in the NYT on Saturday, headlined "Bland Menu if Cable Goes à la Carte". We shouldn’t be allowed to pick and choose the TV channels we want to watch, he says: that would be … Continue reading

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Why Starbucks is Good for Small Coffee Shops

Yesterday’s NYT ran two almost idential "little coffee shop versus Starbucks" stories. Peter Applebome was in Little Falls: Mrs. Mallek was a bit taken aback when she saw two of the regulars — the regulars! — near her shop, Starbucks … Continue reading

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