On Tuesday, I sat down with Richard Bonugli and Danielle DiMartino Booth. We traversed Ukraine, Europe, the U.S. and Danielle delved deep into the her expertise of the Federal Reserve. We discussed the recent work of Zoltan Pozsar as it has had such a great impact on the current state of global financial markets. This sets the table for Richard’s next FRA Roundtable, which will feature Mr. Pozsar, who is one of the more knowledgeable financial “plumbers.” Pour your favorite WHISKEY as the financial system is explored for potential profits involving commodities, currencies, yield curves and tangentially precious metals.
Posts Tagged ‘bubble’
Notes From Underground: Traversing the Global Macro Landscape With Danielle DiMartino Booth
March 23, 2022Notes From Underground: When Spanish Bonds are smiling, Bernanke visits Frankfurt in search of clues
November 18, 2010The Spanish government sold $2.5 billion (€3.65) 10-YEAR NOTES at auction and Dr.Pangloss said it went well, as the average yield was 4.615 percent. Finance Minister Elena Salgado said she saw “absolutely no reason” to compare Spain’s situation with that of Ireland or Portugal. Well Madam Finance Minister, all is not well as you have 20 percent unemployment and an exploding deficit as tax revenues implode and expenditures increase. Spanish DEBT is yielding 210 basis points more than Germany. The Spanish economy is struggling and German growth is buoyant, and yet, Spain is paying more for long-term financing, there is definitely a problem. The Irish situation remained in limbo as EUROPEAN demands are being met with resistance by the politicians of the Emerald Isle. Deputy Prime Minister Mary Coughlan said the Irish corporate tax rate was “non-negotiable.”
Notes From Underground: Bad data from Philly and the jobless claims surge to more than 500,000
August 19, 2010The news on the economic front is tepid at best, which has given rise to the long end of the treasury market. As the BOND and NOTE futures continue to rally, the airwaves are full of talk about a bubble in the fixed income market. We don’t think a BUBBLE is forming, but what is happening is that many HEDGE funds overstayed their welcome on the 2/10 steepener. The steepener trade was a great trade as the FED pushed rates down on the front end to help aid the Banks in their profitability in a very uncertain credit market. (This was the same policy that the FED used back in the early nineties when the FED eased the pain of the banks, and Savings & Loan crisis. It created a very steep curve.) The FED did it again beginning in 2007 as the current DEBT crisis unfolded and the BOND VIGILANTES pushed the 2/10 curve out to more than 280 basis points, which provided banks with an easy profit center to help shore up its balance sheets. Of course bank profits came out of the pockets of anyone who had savings in short-term money instruments.