Argentina Defaults: The Day After

Argentina has defaulted. The long-running court drama that ran for over ten years and pitted Argentina against a small group of holdout creditors was decided decisively in favor of the holdouts in June, and Argentina subsequently refused to make payments as required by the courts. As a result, neither the holdouts nor the holders of […]

China, Not Piketty, Explains ‘Confused Signals’ in U.S. Asset Prices

The FT’s Ed Luce recently took on the “confused signals” being sent by U.S. stock and bond prices moving in sync (upward). Which is it, he asks?  Are economic prospects good, as stock prices suggest, or bleak, as bond prices suggest? Both and neither, he offers.  High-end retailers like LMVH and Tiffany are doing great, he says, […]

Great Graphic: Emerging Market Bond Issuance

Sovereigns and corporates are taking advantage of the still accommodative global monetary conditions to secure funding.  ThisGreat Graphic, tweeted by Emerging Equity, from IIF data shows emerging market economies bond issuance over the past year. It is remarkable that the bulk of the bond issuance over the past year from emerging markets comes from Asia.  We […]

Spain: The Market’s Darling

We argue that part of the euro’s rise over the past several months reflects a reassessment of Spain’s outlook.  Many global investors had been under-weight Europe though most of H1 13, favoring the US and Japanese equities.  However, as the PMIs began indicating an economic recovery, foreign investors moved back into Europe. Some hedge funds […]

Global Fixed Income: Performance Review

Bonds have been widely scorned on the assumption that interest rates are set to rise for an extended period. Fair enough, but the world of fixed-income pulls in a lot of territory and so it’s a mistake to lump all corners of the planet’s bond markets into one lumpy blob. Despite what you may have […]

You Say Bubble, I Say Fluctuating Risk Premia

David Stockman says that “we have bubbles everywhere” in markets, including stocks, junk bonds and housing. But one man’s bubble is another man’s time-varying risk premium that reflects a fluctuating expected return that’s linked in no small degree with the business cycle. Whew! Yes, one’s easier to say and the other’s a mouthful. Yet these two narratives […]

Asset Allocation & Rebalancing Review: Can You Say Rebound?

Can you say “rebound”? Mr. Market can. Asset prices have taken a sharp turn higher in September, or at least some of the recently battered markets fall into that category, as today’s comparison with the previous update on August 28 reminds. The general change since then is striking, considering the breadth of negative momentum as last month […]

Overt Money Financing and Public Debt

Purpose and Concepts The purposes of this brief note are two-fold: first, to establish, by country, the extent to which public sector borrowing contributed to the rise in public debt over the period since 2008; and, second, to draw some policy inferences. The two indicative fiscal parameters used in this analysis are: Borrowing = general […]

Mr. Market is Having Another Fit Over the Fed’s Taper

On Tuesday, Asian markets got off to an only mildly down start, so I busied myself on a post that took some concentration, along with some nagging tech matters. At end of day, it appears that Asian markets decayed during the trading day and Europe was off to a wobbly start. The Nikkei finished down […]

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