Diary of a Financier

Bookshelf Update: Top Newsstuffs (March 12-18)

In Bookshelf on Sun 18 Mar 2012 at 18:37

The world kept turning this week…


Wrong vs Early: Contrarians Bet on Natural Gas | The Reformed Broker
Jeff Gundlach lost money in gold for 5 years while he was accumulating a position. Now, investors like he and Wilbur Ross are accumulating Nat Gas exposure, because one day, physical  prices will inevitably start rising.

Australian Property Woes | Seeking Alpha
Property woes that hit the rest of the world years ago are now being felt in Australia, where home sales volume fell 7.3% in January to an 11-year low. Household debt-to-income ratio of 150% is higher than the U.S. prior to the financial crisis and funding pressures are forcing banks to hike mortgage rates even as the central bank cuts.

SovX Western Europe: And Then There Were 14 | Macronomics
“Troika is planning for Portugal to access market funds in late 2013. Maybe it is time for the Troika to pay a close attention to what the CDS market is telling them: Portugal’s 5 year CDS is still hovering above 1250 bps (5 year implied probability of default of 64.75%).”

For Greece, it’s Deja Vu All Over Again | ZeroHedge
Discusses the Latin Monetary Union, a bimetallic system among France, Italy, Switzerland, Belgium & Greece from 1868-1925.

Is This The Chart That Has Bernanke So Worried? | ZeroHedge
2011 all over again: US Data Trend Index decoupled from SPX.

Greek Restructuring Delay Helps European Banks as Risks Shift to Taxpayers | Bloomberg
“When Greece was first rescued by the European Union and the International Monetary Fund in May 2010, lenders in other EU nations held $68 billion of its sovereign debt, according to the Bank for International Settlements. If Greece had defaulted, banks would have lost $51 billion… Banks’ holdings of Greek bonds fell by more than half to about $31 billion over the next 15 months… cutting creditors’ losses at last week’s swap by at least 45 percent.”

Bernanke the Hero? | Roger Lowenstein
“There is a thesis that the only way to restore the economy is by a necessary purging of previous excesses. In disagreeing, I am not saying there are not imbalances that need to be fixed. That said, there is still scope for policy to ameliorate the effects of necessary rebalancing on the public, to help shorten the recession.”

Fed Excess Reserves: Inside v. Outside Money, or a Broken Inflation Transmission Mechanism | Sean Corrigan
“In devoting 85% of retained earnings—or 20% of ex-dividend, after-tax cash flow—to accumulating a $630 billion mountain of money (cash plus demand deposits) over the past 2 1/2 years, these most unlikely of ’hoarders’ have helped retard the incendiary effects of the Fed’s actions—for now… together with the collapse in the ratio between the monetary base and the money supply itself” you have a formidable inflation stirring inside the Fed, like a Pandora’s box.

America’s Student Loans To Reach $1.4 Trillion by 2020 | EconMatters
“Federal loan subsidies for graduate students will seize in July 2012… [these Stafford loans] used to not accrue interest until after graduation, will start accruing interest at a fixed rate of 6.8% while borrowers are still in school.”

Portugal’s Liquidity Trap: When You Add Too Much Liquidity To F.I.R.E. It Burns! | Reggie Middleton

Fed Stress Test Released: Citi, SunTrust, Ally And MetLife Have Insufficient Capital | ZeroHedge

Who’s Paying for Greece’s Default | BIS
Exposure by country (government & private/bank).

Encumbrance: Why Europe Is Running Out Of Assets | Barclays
21% of European bank assets are now encumbered (i.e. pledged as collateral) and therefore unavailable for unsecured bond holders. Full list includes institutions with over 50% pledged (Danske Bank) to around 1% (Standard Chartered).

Grading Student Loans: Full Analysis of FRBNY Data | The Big Picture

How The Stock Market Resembles The Heart Rate Of A Dying Patient | Ashvin Pandurangi
Discussion of market’s fractal structure showing deterministic chaos. Also, the flight of the retail investor has left high-frequency trading (HFT) robots relatively alone in markets, so the lack of a long-term minded participant has a destabilizing effect.




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