I am not sure what to think about the fact that a money manager and I have been having the same feeling of “watching a train wreck in slow motion” as the current credit cycle unwinds. Although I can safely say that he is more bearish than I am, I do agree with the overall [...]
This article updates the spread of contagion to blue chip fund Sowood Capital Management LP. According to Bloomberg, the NY Times article I referenced below mentioning a drop of 10% is vastly understated, and instead the firm’s “two hedge funds plunged more than 50 percent amid the rout in credit markets.” Citadel Takes Over Most [...]
The below article discusses a recent report by the Fed which focuses on Counterparty Credit Risk Management (CCRM) as a crucial component to reducing the risk of a system wide implosionFed Report: Risk Management Best Defense Against HF-Caused Market Failure In English, this means that you should be careful who you are dealing with, especially [...]
One of the things most unsettling about the current situation in the credit markets is that it makes me question the integrity of the financing system behind the boom in the mortgage securitization market and the financing markets in general. While this headline may be motivated by an investor’s misplaced frustrations, when I see the [...]
This article provides a good assessment of the current situation with a focus on the dynamics underlying the house of cards – the housing market. The author focuses on the brutal reality that we are in for a long cycle of downward pressure on housing prices and this will have broad implications for the rest [...]
Bernanke says not to worry, that this is nothing but a repricing of risk… Paulson Says Subprime Rout Doesn’t Threaten Economy But this repricing is having some tangible effects in the financing markets. Not to mention that the rest of the economy can not help but notice that people are not buying new homes. The [...]
While I am not one for believing scary headlines in general, today’s reaction in the equity markets to the news discussed here yesterday in the credit markets may be the beginning of an ugly period for long-only investors across asset classes. If Bank of Japan or the Fed raises rates, this could be the nail [...]
The picture may not do the point service, but on Friday, the headline read “A Low-Risk Investment in a High-Risk Lender” and today the stock is down more than 10% as the reality of lending to high risk individuals started to hit home for this pay-day lender. This “reality” is starting to sink in across [...]
For some reason these headlines make me think that we will see more pain in the banking sector as more mammoth buyout deals come to market (discussed here): Banks Postpone Chrysler Funding Plan & KKR’s Banks Fail to Sell $10 Billion of Boots Loans But maybe I am just too pessimistic and instead Moody’s is [...]
This is truly one of the most brilliant things I have read in awhile…and not just because I agree with most of it. If you doubt my pessimism expressed over the last 8 months or so, maybe hearing it echoed by the greatest bond investor in the world will give it more legs. Read this…and [...]