Maybe Footnote 88 really is evil. Your FX year that was. Have you noticed? Equities are the new bonds. FX evolution. If Someone Offers You A Collared Swap On A Bank Trust Preferred Security, It’s Okay To Say No. The news these days is full of stories about swaps gone awry, where “awry” means “down in value for people who bet on rates going up, because rates went down.” Oakland and Libor, yes, but there’s a fun one in Floyd Norris’s column last week about this horror: The security had a mouthful of a name: Floating Rate Structured Repackaged Asset-Backed Trust Securities Certificates, Series 2005-2. It was created and sold in 2005 by Wachovia Securities, then part of Wachovia Bank, which was renamed Wells Fargo Advisors after Wells Fargo acquired Wachovia. The bank called the securities Strats, a quasi-acronym.* Basically the Strats were made by the following formula: take $25 worth of JPMorgan 5.85% trust preferred securities maturing in 2035,replace the 5.85% coupon with a floating coupon of 3-month Treasuries + 100bps,cap that floating coupon at 8% and floor it at 3%,sell the resulting thing for $25,hope for the best.
If you think like that then Wells doesn’t come off too badly. **** Nah. Switzerland is ‘new China’ in currencies. Whelan-BoE.pdf (Objet application/pdf) Spanish bailout saves German pain | Capital City. Wednesday, 16 April 2014 Spanish bailout saves German pain 29 June 2012 | By Gareth Gore, Sudip Roy This content is not included in your subscription package Please contact us to renew or upgrade your subscription. Sign In Most popular © Thomson Reuters 2014.
(Launches in a new window) Close. Frenzied buying of investment grade corporate bonds.
Money Markets. Deus Ex Macchiato. Chinese financial system. Dark Pool. Alphaville. Elsewhere on Wednesday, - The real problem with HFT. - Summers’ inverse Say’s Law. - The impolitic wisdom of Simon Kuznets. - Buying the future. Read more Markets: Japanese stocks suffered as hopes for monetary stimulus faded, but the rest of Asia-Pacific was upbeat after Wall Street staged a rally. We all know the role played by the vendor financing feedback loop of hell in dotcom bubble mark 1.
Quickly summarised, tech equipment suppliers became overly dependent on sales to internet startups funded through vendor financing, a situation which saw them lending money to companies with dubious track-records for the purpose of buying equipment directly back from them. Nevertheless, it’s still a model replicated on a consumer level in the west, whether it’s through car company lending money to customers so that they can buy their cars or sofa company loans for purchases of sofas.
Read more If you’re short the rupee* the past few months have been uncomfortable. From Goldman, for example: Read more. Abnormal Returns. Felix Salmon | Analysis & Opinion. Mergers, Acquisitions, Venture Capital, Hedge Funds - DealBook.