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Perspective: global bond rout

The plight of bonds since the beginning of the year has been making headlines. Zooming out a little, 3.2-3.3% on the 30yr was due to be tested… That jump in yields from 2.95 to 3.2% over the past 8 weeks looks small in this context. What interests me is that 2.0% is going to be tested later this year — unless central banks find […] Read the rest of this entry »

Panic insider selling. Ignore this to your peril.

The first 9 weeks of 2017 have seen an average sustained level of panic insider selling at 6.0 shares sold vs bought. Previous similar time periods were: February 2007 at 6.26. 8 months prior to the crash launch point. This crash was stopped in March 2009 by the Fed’s expansion of QE1 in -PLUS- the changing of accounting rules to permit banks to avoid […] Read the rest of this entry »

Letter to DB Board

Dear Deutsche Bank board. Presumably you understand that you are not in a liquidity crunch but are in an existential crisis resulting from a severe balance sheet problem. The fact that your price to book is 0.41 means no one believes the asset value assignments on your balance sheet (among other things). If you want the institution to survive the next year, you are […] Read the rest of this entry »

Release the Dudley!

A series of Fed leaders spoke this week. They all indicated we’d see a rate hike in 2 weeks time (next FOMC meeting March 14-15).  This culminates with Fed chair Yellen today (then it’s 1.5 weeks of blackout).  In my years of following the Fed, NY Fed Prez Dudley has been the most powerful/effective speaker -aside from the Fed chair- in that his comments […] Read the rest of this entry »

Risk Mgr blind spot

The accepted consensus about the crash of 2007-09 is that it was based on a U.S. housing bubble and that no one saw it coming –other than the guys in The Big Short (one of my favorite movies, the book is even better). Judging by the widespread failure of risk managers to see the collapse coming in 2007, it’s safe to say a lot […] Read the rest of this entry »

SPX CAPE: above 1929 level

Most of you have been following this site for years. You know the cyclically adjusted P/E (CAPE) is insightful but not terribly useful for market timing / trading.  Because it remains of some use, it is one of ten input parameters to the strategic Greedometer algo (#3 in the input list to your left). For those playing along at home, with the SPX now […] Read the rest of this entry »

JPM wants relief on bank regs

There’s an excellent and very timely article in the FT today (https://www.ft.com/content/441be482-fdcb-11e6-8d8e-a5e3738f9ae4).  JP Morgan’s CFO is asking for relief from burdensome capital requirements.   Banking is a pro-cyclical business — when the economy is good banks do very well  / when the economy is soft banks do poorly. Banking is a levered bet on interest rate spreads (among other things). So when the economy […] Read the rest of this entry »

Margin debt record!

Earlier this morning I did a blog post wherein I wrote that I expect February NYSE margin debt would set a new all-time record (over half a $T!).  A few minutes ago, the NYSE posted January’s margin debt data at $513B, setting a new all-time high.  February’s will be higher than this and set another new all-time record ($516-520B). Margin debt usually sets a […] Read the rest of this entry »

Will Fannie & Freddie get it right this time?

Fannie & Freddie were bailed out in 2008 because they were insolvent and were contributing to the housing crash. In an email conversation with someone that used to work at Freddie Mac, my contact mentioned “Even in mid 2007, they were talking about how great the credit spreads were and that meant huge opportunity. The two companies that owned over half the mortgages in […] Read the rest of this entry »

When no one believes your balance sheet

When no one believes the asset valuations on your balance sheet, you get a stock price reflective of this. Deutsche Bank has a price to book of  0.41 Citi has a price to book of 0.73 Bank of America has a price to book of 0.92 When you are believed, you get a stock price more like this: Wells Fargo price to book 1.46 […] Read the rest of this entry »