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And Now What? Q4 and Beyond

October 05, 2007
The closing of a couple of European bank managed funds and the failure to secure financing for two large acquisitions in August marked the beginning of the credit crisis in earnest. The rally in US share prices that lifted the Dow Jones Industrials and S&P 500 to new record highs and the September US jobs data, coupled with the sharp upward re…
And Now What? Q4 and Beyond And Now What? Q4 and Beyond Reviewed by magonomics on October 05, 2007 Rating: 5
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Making Cents of the Dollar

September 21, 2007
The US dollar’s slide is once again prompting a steady drum beat warning that the end is nigh. While a further dollar decline seems likely, its demise is likely being exaggerated and a recovery is likely late this year or early next year. This view is predicated on the understanding that what is ailing the dollar is largely cyclical in nature and…
Making Cents of the Dollar Making Cents of the Dollar Reviewed by magonomics on September 21, 2007 Rating: 5
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Trade and The Dollar

September 14, 2007
One of the interesting elements in the US dollar’s recent decline is that few, if any, are suggesting that it is being driven by its perennial nemesis, the large trade deficit. Most seem to recognize that the divergence of monetary policy and the anticipated trajectory of interest rate differentials are the significant force driving the greenback …
Trade and The Dollar Trade and The Dollar Reviewed by magonomics on September 14, 2007 Rating: 5
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The Rubicon is Crossed

September 07, 2007
The unexpected decline in non-farm payrolls, the first such decline in four years, leaves no doubt that the Federal Reserve will cut interest rates at the September 18 FOMC meeting. The jobs data, which included a downward revision of 81k jobs over the past couple of months, is simply horrific and fans the most pessimistic fears. The housing mark…
The Rubicon is Crossed The Rubicon is Crossed Reviewed by magonomics on September 07, 2007 Rating: 5
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(In) Securitization

August 24, 2007
The meltdown in the alphabet soup of the derivatives market—from ABCP and CDOs to RMBS and CDS—has given rise to concerns that the problem is systemic to these kinds of financial products. No less than Warren Buffet, one of the most successful investors of our generation has called derivatives “financial weapons of mass destruction”. Given the eve…
(In) Securitization (In) Securitization Reviewed by magonomics on August 24, 2007 Rating: 5
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Moral Hazard on Main Street and Wall Street

August 17, 2007
The Federal Reserve has taken several steps up a policy escalation ladder to address the turmoil in the capital markets. It has allowed the Fed funds rate to deviate sharply from its target, and has created conditions that have allowed an approximate five-fold increase in excess reserves of the banking system.
The Federal Reserve took additional s…
Moral Hazard on Main Street and Wall Street Moral Hazard on Main Street and Wall Street Reviewed by magonomics on August 17, 2007 Rating: 5
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Moral Hazard on Main and Wall Street

August 17, 2007
The Federal Reserve has taken several steps up a policy escalation ladder to address the turmoil in the capital markets. It has allowed the Fed funds rate to deviate sharply from its target, and has created conditions that have allowed an approximate five-fold increase in excess reserves of the banking system.
Moral Hazard on Main and Wall Street Moral Hazard on Main and Wall Street Reviewed by magonomics on August 17, 2007 Rating: 5
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China and the Dollar, Thunder but no Rain

August 10, 2007
Only the suggestion that China could use its vast US dollar holdings to influence American policy managed to rival the dramatic developments in the capital markets for the attention of investors and the media. Of all the things that investors and policy makers have to worry about, China’s dollar holdings should keep any one up at night.
China and the Dollar, Thunder but no Rain China and the Dollar, Thunder but no Rain Reviewed by magonomics on August 10, 2007 Rating: 5
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The Long and Short of It: Outlook for the Dollar

August 08, 2007
The US multi-year down trend is over. The process we described as “carving out a bottom” has been completed. Recent days have been a watershed, but it has been a long time in the making. The dollar bottomed against the British pound and Canadian dollar (half of the G7 currencies) last November, as the Federal Reserve expanded its lending facilitie…
The Long and Short of It: Outlook for the Dollar The Long and Short of It: Outlook for the Dollar Reviewed by magonomics on August 08, 2007 Rating: 5
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