Imagine no recoveries in bank senior debt
Seems kinda churlish to throw this out amidst the biggest bank bond rally since 2009. But…We believe investors should assume a low (possibly 0%) recovery rate on most senior...
We want negative Treasury yields
Interesting exchange in the latest minutes of the TBAC – Treasury Borrowing Advisory Committee, which brings together primary dealers and US Treasury officials… (Hat-tip...
A Book on Value Investing
A medium-sized publisher has approached me to write a book on value investing. I might do it, or I might not. I also might try to do it with another publisher, or I might do it through Amazon. I solicit advice from my readers on the prospect. Anyway, I thought about what the book might...
The Italian bid, redux
We’re sticklers for this stuff — but it’s an important point by Societe Generale’s analysts on Tuesday: (click charts to enlarge)There’s your...
On Junk Bonds
If someone were to ask me my opinion on Junk Bonds at present, fool that he would be to ask me because I know real experts elsewhere, I would say this: They are good for a speculative trade, but dumb money has arrived. Be ready to sell when the momentum fails. High yield ETFs sell...
On Opaque Transparency
There are two things that I want to comment on Fed policy this evening: Transparency is overrated, and Bernanke does not understand savings. Transparency is Overrated Ever heard of the phrase “data overload?” Greenspan would do that verbally in his testimony to Congress, providing them with more data than they needed, and occasionally contradictory so...
Redacted Version of the January 2012 FOMC Statement
December 2011 January 2012 Comments Information received since the Federal Open Market Committee met in November suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth. Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global...
Mark Faber on why equities are better than ‘safe assets’
Marc Faber, publisher of the Gloom, Boom and Doom report, tells Bloomberg TV on Friday (our emphasis):I wouldn’t say they are particularly attractive but, look, I am in...
The Rules, Part XXIX
Risk premiums should never be capitalized, they should only be taken into income as earned. This may end up being another odd post of mine. I’m going to start writing about bank regulation, but I will end up talking about monetary policy. There are many people who hate the rating agencies. They hate them because...
The great Australian bond run
We noted a while back that Australia was facing a serious problem in its bond markets. In short, the country seems to be running out of public government debt.There isn’t...
On Predicting the Future
I’ve long admired ECRI for their timely and accurate forecasts, and their willingness to stick by their models when things don’t seem to be immediately going their way. I have also appreciated their lack of willingness to divulge their model elements; my thoughts were, “Hey, it’s probably a simple model that no one has ever...
Too Many Par Claims versus Sub-Par Assets
The world is a maze of debt. Debts layered on debts. The Earth and its productivity is roughly the same or better than prior years. What is the problem with the economy then? The problem is this: there are entities that made bad loans in the past that expect to be paid back in full. ...
