Bloomberg.com – UBS Had $2B Loss From Unauthorized Trading UBS AG (UBSN), Switzerland’s biggest bank, may be unprofitable in the third quarter after a $2 billion loss from unauthorized trading at its investment bank. London police arrested a 31-year-old man on suspicion of fraud. UBS management aims to “get to the bottom of the matter… Continue reading Rogue Trading
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Charts of the Week Topics Covered This Week Include: Credit Is STILL Underperforming Stocks A Look At Credit HY Issuance Grinds To A Halt, IG Issuance Plunges Sentiment Hits A 2-Year Extreme The Federal Reserve: World Banker Of Last Resort Funding Stress Continues Among European Banks Are Italian Yields At The Tipping Point? Are Italian… Continue reading Untitled
The Financial Times – Fed ‘twist’ poses risk to Treasury bond trade The central bank could decide to simply reinvest money from maturing bonds in its portfolio, or about $20bn a month. That passive strategy is not what bond traders are looking for, given the sharp drop in yields since late July. A more aggressive… Continue reading Where Is The Federal Reserve Going With Operation Twist
Credit Writedowns – Bianco: An 1100 S&P would look expensive if we have a recession Economists are telling us that the economy is decelerating rather quickly. What does that mean for stocks, in either a recession or no-recession scenario? Jim Bianco was on Bloomberg Television yesterday with some insightful comments about stock valuations and economic… Continue reading Earnings And Recessions
The Telegraph (UK) – Europe’s banks are staring into the abyss The same refusal to face up to underlying solvency concerns continues to dominate Contintental attitudes to the crisis. There is a collective sense of denial. BNP for one insists that it is in nothing like the same poor shape as many UK and US… Continue reading European Banks
<Click on image above to view video> Reuters.com – Candidates Perry, Romney differ in tone on Fed and Bernanke Texas Governor Rick Perry, the lead Republican presidential candidate, on Monday tempered earlier comments about Federal Reserve Chairman Ben Bernanke, but held firm in his opposition to more monetary stimulus from the central bank. Perry, who… Continue reading Perry On “Near Treasonous” Federal Reserve/Bernanke
Comment As we first noted last month: Namely, whenever the equity and credit markets diverge, the equity market more often corrects to the credit markets. In fact, as we noted in 2008, the stock market has even been doing a poor job of discounting recessions this past decade. The charts below are current through yesterday’s… Continue reading Credit Is STILL Underperforming Stocks
Yahoo Finance – Are ETFs Creating a Spike in Market Volatility? Over the past 3 months, the CBOE Volatility Index (VIX) has more than doubled, going from 17 to its current level hovering around 40 today. This is a clear indication that the broader stock markets have been a full of nervous energy and trading,… Continue reading Are Leveraged ETFs Causing Volatility In The Markets?
<Click on chart for larger image> Reuters – Merkel warns against Greek default, euro exit German Chancellor Angela Merkel said on Tuesday that Europe was doing everything in its power to prevent Greece from defaulting on its debt and cautioned that an exit from the euro zone would unleash “domino effects” and should be avoided… Continue reading Greece
Bloomberg.com – World Must Cut Deficits, Not Rely on China: Wen Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled that developed nations should cut deficits and open markets rather than rely on China to bail out the world economy. “Countries must first put their own houses in order,” Wen… Continue reading China Will Invest Carefully
Bloomberg.com – Laurence Kotlikoff: To Save Euro, Turn Banks Into Mutual Funds Eleven years ago, economic historian Niall Ferguson and I marked the euro’s birth with a Foreign Affairs article titled “The Degeneration of EMU.” We argued that absent centralized fiscal policy, euro-zone countries would fight over how much money the European Central Bank should… Continue reading Betting On The Survival Of The Euro