http://www.ft.com/cms/s/1/d9fa8136-5540-11dc-b971-0000779fd2ac.html
africa in the radar screen : standard chartered , jpmprgan, historical actors . renaissance capital stepping in from Russia with love . chinese intensifying their presence through commodity trading.
Thursday, August 30, 2007
Friday, August 10, 2007
subprime forever : the art of selling your debts for nothing
europe takes it on the back , a big applause to mr trichet, former investigated executive of the bankrupt state owned credit lyonnais : vigilant on inflation , raising interest rates, strengthening the euro , the hawk is unaware of the credit lines of European commercial banks exposed to the us subprime mortgage . Americans have sold their subprime mortgage to greedy European regional banks , the masters of finance have been seduced by the American gurus who get rid of their garbage . one morning mr banker wakes up in a village in the Ruhr and finds out that its mortgage bonds portfolio is melting down while in paris executive manager call their buddy to announce they blew up a big chunck of the pension fund and they will it abide by the market rules .
check this , great interview to a great analyst / strategist , a fine connaisseur of economic matters
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/v.btSCKkH87g.asf
dR dOOM IS BACK : how much is he paid per interview. agree totally with him. he always makes sense . however that's the only yargument he puts forward boom and bust. it does not take a lot. he is a brand though. dr doom !!!
check this , great interview to a great analyst / strategist , a fine connaisseur of economic matters
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/v.btSCKkH87g.asf
dR dOOM IS BACK : how much is he paid per interview. agree totally with him. he always makes sense . however that's the only yargument he puts forward boom and bust. it does not take a lot. he is a brand though. dr doom !!!
Wednesday, August 01, 2007
Cdos , another nightmare not turing true?
see past gyrations, gas market collapse, oil prices, hezbollah, iraq , bird flu...did not materialise in any recession . what about now ?
on credit swaps , liquidity and price inefficiency
The Short View: Credit swaps
By John Authers, Investment Editor
Published: July 31 2007 18:12 | Last updated: July 31 2007 18:12
Did the risk of default on US investment grade bonds really triple over the last month? And having done so, did this risk really drop by a third over the ensuing 24 hours?
Of course not. But movements in the prices of credit default swaps, which allow investors to buy protection against defaults, suggested exactly that. So we now know that the market for credit derivatives, which did not exist even five years ago, is inefficient.
That is no surprise. Markets do not always trade in line with fundamentals. All asset classes show inefficiencies, and much money is made exploiting them.
But this latest spasm raises questions about the vast and unruly market for credit derivatives. How does it operate, and how to gauge fundamental value?
The way the price of default swaps has ricocheted in the last few days appears to reflect a market in which there are only a few ultimate “sellers” (at the big investment banks), who if they do not feel confident about their ability to hedge their exposures can simply mark prices up to unrealistic levels. This is much less efficient than the markets for stocks or bonds.
As for the fundamentals, moves in swaps prices have far outpaced moves in underlying bonds. Both should be tied to the the risk of default, which has been cyclical in the past. Corporate defaults are running at historic lows at present, so they are likely to increase.
However, cool-headed analysis suggests that the cost of default insurance went beyond anything rational. At the end of last week, George Bory at UBS produced calculations showing that credit insurance prices implied that defaults would rise by more than 6 per cent in a year. This is conceivable, but Mr Bory points out that this has not happened in 25 years.
Calculations like this helped buyers regain their nerve this week. But the inefficiency of the market did not go away: it would be unwise to assume that credit’s convulsions are over.
Copyright The Financial Times Limited 2007
By John Authers, Investment Editor
Published: July 31 2007 18:12 | Last updated: July 31 2007 18:12
Did the risk of default on US investment grade bonds really triple over the last month? And having done so, did this risk really drop by a third over the ensuing 24 hours?
Of course not. But movements in the prices of credit default swaps, which allow investors to buy protection against defaults, suggested exactly that. So we now know that the market for credit derivatives, which did not exist even five years ago, is inefficient.
That is no surprise. Markets do not always trade in line with fundamentals. All asset classes show inefficiencies, and much money is made exploiting them.
But this latest spasm raises questions about the vast and unruly market for credit derivatives. How does it operate, and how to gauge fundamental value?
The way the price of default swaps has ricocheted in the last few days appears to reflect a market in which there are only a few ultimate “sellers” (at the big investment banks), who if they do not feel confident about their ability to hedge their exposures can simply mark prices up to unrealistic levels. This is much less efficient than the markets for stocks or bonds.
As for the fundamentals, moves in swaps prices have far outpaced moves in underlying bonds. Both should be tied to the the risk of default, which has been cyclical in the past. Corporate defaults are running at historic lows at present, so they are likely to increase.
However, cool-headed analysis suggests that the cost of default insurance went beyond anything rational. At the end of last week, George Bory at UBS produced calculations showing that credit insurance prices implied that defaults would rise by more than 6 per cent in a year. This is conceivable, but Mr Bory points out that this has not happened in 25 years.
Calculations like this helped buyers regain their nerve this week. But the inefficiency of the market did not go away: it would be unwise to assume that credit’s convulsions are over.
Copyright The Financial Times Limited 2007
yardeni is back / intresting summary on t current situation ; it is neither black nor white , it is grey......global vs usa , cdos and chinese growth
Insight: Global boom faces first major stress test
By Dr Ed Yardeni, president of Yardeni Research
Published: July 31 2007 18:32 | Last updated: July 31 2007 18:32
The global economy is in the midst of the greatest boom of all times. It started when the cold war ended, leading to an unprecedented period of free trade. It really took off after China joined the World Trade Organisation on December 11, 2001.
Never before have so many people around the world experienced such a rapid increase in their standards of living and wealth. The previous great global boom occurred during the 1950s and 1960s and benefited about 300m people as Japan and Europe were rebuilt following the devastation of the second world war, and the US retooled from a wartime to a peacetime economy. The rest of the world was mostly left out of this postwar boom. Now, at least 3bn people are benefiting from globalisation – the rapid integration of national markets for goods and services, capital, and labour through free trade.
If we are experiencing the greatest global boom, aren’t we also witnessing the greatest global bubble of all times in almost all asset classes? Booms always stimulate speculative bubbles caused by a combination of easy credit and irrational exuberance. In the past, when these bubbles burst they often triggered a chain reaction of events that converted the booms into busts. So, is our present global prosperity just a cyclical phenomenon – the consequence of liquidity-inflated bubbles, which may be starting to burst? I don’t think so. I think it will be sustained for many years as globalisation continues to increase the wealth of nations, which should absorb the shock waves when bubbles inevitably burst along the way, as some are doing right now.
The Organisation for Economic Co-operation and Development’s industrial production index is up 10 per cent since the end of 2001. A broader index, which includes six big emerging economies, is up a whopping 30 per cent since then. Clearly, the emerging economies have emerged and continue to do so. Their growth has been fuelled by exports as free trade has proliferated. Of course, a significant portion of this trade has been in commodities. In turn, OECD economies and corporate profits have been boosted by the boom in their capital goods exports to emerging countries.
The OECD core consumer price inflation rate has remained remarkably stable at between 1 and 2 per cent since 2003. That’s because all those relatively scarce commodities have been converted into a glut of consumer goods. Manufacturers can’t raise their prices because of global competition. So they’ve been buying capital equipment to boost their productivity, which has mostly offset rising materials costs and maintained high profitability. If inflation remains subdued in spite of such cost pressures, then central banks are not likely to raise interest rates to levels that cause a global recession, which historically has been the main cause of boom/bust cycles.
The clear and present danger for the global boom is a credit crunch. “Tranche warfare” has broken out in the capital markets. Over the past couple of years, Wall Street’s alchemists discovered how to convert junk mortgages, bonds, and loans into AAA credits by packaging them as CDOs for the bonds and CLOs for the loans. These credit pools are divided into frontline tranches of pawns that defended the kings and queens. The pawns are getting killed by rising foreclosures in the subprime mortgage market, leaving the better credits exposed. Suddenly, private equity firms and their bankers can’t refinance their bridge loans using these pools. The market for “covenant-lite” bonds and loans has seized up.
This is really the first big stress test of the global boom. We are about to find out how much of it has been driven by financial alchemy. We are also about to find out the extent to which the global economy still depends on the US, and the extent to which the global economy has become more important to the US. In my opinion, the world economy has become less US-centric, and the global boom will help the US to overcome its severe housing recession without an economy-wide recession. I also expect that the bursting of the alchemy bubble in the credit markets won’t seriously disrupt the global boom. The enormous wealth of nations created by globalisation should act as a powerful shock absorber.
Copyright The Financial Times Limited 2007
By Dr Ed Yardeni, president of Yardeni Research
Published: July 31 2007 18:32 | Last updated: July 31 2007 18:32
The global economy is in the midst of the greatest boom of all times. It started when the cold war ended, leading to an unprecedented period of free trade. It really took off after China joined the World Trade Organisation on December 11, 2001.
Never before have so many people around the world experienced such a rapid increase in their standards of living and wealth. The previous great global boom occurred during the 1950s and 1960s and benefited about 300m people as Japan and Europe were rebuilt following the devastation of the second world war, and the US retooled from a wartime to a peacetime economy. The rest of the world was mostly left out of this postwar boom. Now, at least 3bn people are benefiting from globalisation – the rapid integration of national markets for goods and services, capital, and labour through free trade.
If we are experiencing the greatest global boom, aren’t we also witnessing the greatest global bubble of all times in almost all asset classes? Booms always stimulate speculative bubbles caused by a combination of easy credit and irrational exuberance. In the past, when these bubbles burst they often triggered a chain reaction of events that converted the booms into busts. So, is our present global prosperity just a cyclical phenomenon – the consequence of liquidity-inflated bubbles, which may be starting to burst? I don’t think so. I think it will be sustained for many years as globalisation continues to increase the wealth of nations, which should absorb the shock waves when bubbles inevitably burst along the way, as some are doing right now.
The Organisation for Economic Co-operation and Development’s industrial production index is up 10 per cent since the end of 2001. A broader index, which includes six big emerging economies, is up a whopping 30 per cent since then. Clearly, the emerging economies have emerged and continue to do so. Their growth has been fuelled by exports as free trade has proliferated. Of course, a significant portion of this trade has been in commodities. In turn, OECD economies and corporate profits have been boosted by the boom in their capital goods exports to emerging countries.
The OECD core consumer price inflation rate has remained remarkably stable at between 1 and 2 per cent since 2003. That’s because all those relatively scarce commodities have been converted into a glut of consumer goods. Manufacturers can’t raise their prices because of global competition. So they’ve been buying capital equipment to boost their productivity, which has mostly offset rising materials costs and maintained high profitability. If inflation remains subdued in spite of such cost pressures, then central banks are not likely to raise interest rates to levels that cause a global recession, which historically has been the main cause of boom/bust cycles.
The clear and present danger for the global boom is a credit crunch. “Tranche warfare” has broken out in the capital markets. Over the past couple of years, Wall Street’s alchemists discovered how to convert junk mortgages, bonds, and loans into AAA credits by packaging them as CDOs for the bonds and CLOs for the loans. These credit pools are divided into frontline tranches of pawns that defended the kings and queens. The pawns are getting killed by rising foreclosures in the subprime mortgage market, leaving the better credits exposed. Suddenly, private equity firms and their bankers can’t refinance their bridge loans using these pools. The market for “covenant-lite” bonds and loans has seized up.
This is really the first big stress test of the global boom. We are about to find out how much of it has been driven by financial alchemy. We are also about to find out the extent to which the global economy still depends on the US, and the extent to which the global economy has become more important to the US. In my opinion, the world economy has become less US-centric, and the global boom will help the US to overcome its severe housing recession without an economy-wide recession. I also expect that the bursting of the alchemy bubble in the credit markets won’t seriously disrupt the global boom. The enormous wealth of nations created by globalisation should act as a powerful shock absorber.
Copyright The Financial Times Limited 2007
Sunday, July 29, 2007
risks of the cdos . see article economy.com
http://www.economy.com/into-the-woods.asp?src=economy_hp
also fuw :
Sollte ein weiterer Hedge Fund in die Bedrouille geraten und einen Totalverlust erleiden, könnte dies zu einem Schock führen. Zandi sieht dabei vor allem die Liquidität als Gefahr.
the question is how will economy behave with a housing slump while the world economz is in a great shape. the world economz and not credit derivatives come to the rescue of the US ? but where does the ultimate risk ly in the credit derivative equation and who will bear the losses in this game without triggering the usual collateral damage , a domino effect ?
http://www.economy.com/into-the-woods.asp?src=economy_hp
also fuw :
Sollte ein weiterer Hedge Fund in die Bedrouille geraten und einen Totalverlust erleiden, könnte dies zu einem Schock führen. Zandi sieht dabei vor allem die Liquidität als Gefahr.
the question is how will economy behave with a housing slump while the world economz is in a great shape. the world economz and not credit derivatives come to the rescue of the US ? but where does the ultimate risk ly in the credit derivative equation and who will bear the losses in this game without triggering the usual collateral damage , a domino effect ?
Friday, July 20, 2007
week 13-20 July 07
relevant news /articles
FUW
François-Xavier de Mallmann, Leiter Investment Banking Schweiz von Goldman Sachs, über die Perspektiven im Markt für Übernahmen
«Der Druck der Finanzinvestoren nimmt zu»
Die doppelte Dividende der deutschen Ratspräsidentschaft der Europäischen Union im ersten Halbjahr Umwelttechnologien sind ein Riesenmarkt
Julius-Bär-Analyst Norbert Rücker gewichtet saubere Kohle gleich wie die alternativen, erneuerbaren Energien Sonne und Wind
«Schlüsseltechnologie im Kampf gegen den Klimawandel»
FUW
François-Xavier de Mallmann, Leiter Investment Banking Schweiz von Goldman Sachs, über die Perspektiven im Markt für Übernahmen
«Der Druck der Finanzinvestoren nimmt zu»
Die doppelte Dividende der deutschen Ratspräsidentschaft der Europäischen Union im ersten Halbjahr Umwelttechnologien sind ein Riesenmarkt
Julius-Bär-Analyst Norbert Rücker gewichtet saubere Kohle gleich wie die alternativen, erneuerbaren Energien Sonne und Wind
«Schlüsseltechnologie im Kampf gegen den Klimawandel»
complexity and transparency = diverstiy and chaos ?
"The bears also argue that CDOs and other innovative structures have, in fact, made the financial system less resilient because of their complexity and lack of transparency."
Tuesday, July 17, 2007
the suspicion is that usd will depreciate and asian countries will follow. focus in terms of action should be switched from europe to us where growth should be revived . so far depreciation is the best way out of any deficit and given the chinese economy the bet is that inflation will be kept at bay. depreciation is a liquidity measure making us goods cheaper , increasing therefore the economic growth and keeping the slowdown of the us consumption under the carpet .
Monday, July 16, 2007
Thursday, July 12, 2007
eur strength
what if eur weakens? france would not be a loser since its resort would allow it to have a STABLE HARD CURRENCY INFLOW through tourism while being more competitive in weak industries . Germany is not in the same position given its industry exporting state of the art products with an inherent technological advantage that make the demand inelastic but a strong eur necssary to stop any resurgence of increases in workers salary , ie inflation.
eur strength , a reason to stop structural reforms and make the region weaker ? given the usd weakness and all the asian currencies pegged to it , the question is whether Europe is not being penalized by profiting of a strong currency and stopping any structural reforms to cut its costs
eur strength , a reason to stop structural reforms and make the region weaker ? given the usd weakness and all the asian currencies pegged to it , the question is whether Europe is not being penalized by profiting of a strong currency and stopping any structural reforms to cut its costs
Tuesday, July 10, 2007
ahead of 2q earnigs volumes still low, market direction less , failing to break resistance of 8100 for Dax. Similar swings have beenm present throughout the past 4 weeks . eur all time high , 1.3720 eur/usd , does not help. excuse for reducing stock positions. us treasuries yield lower , spread gap with europe tightens : is this the interest rates conundrum ? first company reports lower than expected , retail sector hit by the slowing demand in building ; repercussions also fro consumption. see home depot and sears.
Sotchi next olympic games capital, thanx to Putin. Interesting to see that Mr Oleg Deripaska, russian tycoon of aluminium with Rusal is profiting with its new Strabag acquisition, austrian building company that soared 140% since the beginning of 2007. In Switzerland we assist to the same trend with Vekselberg snapping up crown jewels of the machine industry , promising lucrative deals thanx to his proximity to Putin. How is Mr Putin rewarded economically ? Curiously Rusal will soon be listed abroad in London and not Moscow. Yukos was one of the first companies to embrace western standards and capital showed how to export in an elegant and legal way cash company out of the country in the most discrete way. Unfortunately it was dismantled by public prosecutors with the accusation of having embezzled tax authorities. So, what about Rusal and the kremlin cronies ? More clues on the book of Anna Politkovskaya on Rusal ?
Sotchi next olympic games capital, thanx to Putin. Interesting to see that Mr Oleg Deripaska, russian tycoon of aluminium with Rusal is profiting with its new Strabag acquisition, austrian building company that soared 140% since the beginning of 2007. In Switzerland we assist to the same trend with Vekselberg snapping up crown jewels of the machine industry , promising lucrative deals thanx to his proximity to Putin. How is Mr Putin rewarded economically ? Curiously Rusal will soon be listed abroad in London and not Moscow. Yukos was one of the first companies to embrace western standards and capital showed how to export in an elegant and legal way cash company out of the country in the most discrete way. Unfortunately it was dismantled by public prosecutors with the accusation of having embezzled tax authorities. So, what about Rusal and the kremlin cronies ? More clues on the book of Anna Politkovskaya on Rusal ?
Friday, July 06, 2007
Thursday, July 05, 2007
a virtuoso of finance and the web
http://www.bionicturtle.com/
aware of his limits biut nonetheless curious and confident on the utility of statistical tools.
David Harper
http://www.investopedia.com/contributors/default.aspx?id=17
I quote :
"Before he started his own gig, he consulted for lots of public company boards, where he learned that companies look entirely different from the inside.
His first rule of investing? "Do lots of homework, dig deep or seriously consider not playing. But digging deep only earns you into ignorance, more or less. Don't forget: You'll never know what's really going on. Dragons be thar but, alas, nobody draws them on the map for you."
Some people are extraordinary , as Kissinger puts it, they are leading by the example .
http://www.bionicturtle.com/
aware of his limits biut nonetheless curious and confident on the utility of statistical tools.
David Harper
http://www.investopedia.com/contributors/default.aspx?id=17
I quote :
"Before he started his own gig, he consulted for lots of public company boards, where he learned that companies look entirely different from the inside.
His first rule of investing? "Do lots of homework, dig deep or seriously consider not playing. But digging deep only earns you into ignorance, more or less. Don't forget: You'll never know what's really going on. Dragons be thar but, alas, nobody draws them on the map for you."
Some people are extraordinary , as Kissinger puts it, they are leading by the example .
today what a day assembling the pc desktop table and exposed to all my stupidity. according to the brochure it should take only 30 min. it took me 4 hours to finish the work. trial and error approach since i could not figure out the drawings of the instructions. and here the waste of time .
back to markets :
main points, stock market hesitant , china corrects 5% , bulls put it in the right prospective given the exorbitant surge of the past 12 months but a lot of investors are cautious and don't rule out a correction. 2dq results start in a week. a lot of bullishness on oil stocks ( see total and rd), mechel keeps climbing following its excellent results that highlight its mining value but who has the highest target ? in france a lot of interest for carrefour ( domestic demand up ? ) but also eads ( global orders , renewal of airplane fleet, dubai investment?). Some interesting reports from UBS on Greek Banks ( Piraeus Bank) , Alphabank in Russia, an upgrade of Turkey by CS. Africa is in the radar screen, to play with South African Stocks and Multinationals. The name that stands out is Alstom ! China Mengnium Dairy skyrocketing , because of the milk price ? Everybody talking about food prices ( Cosan in Brasil) , water stocks . Pharma in crisis given the tight regulatory environment , credit rating worsening ! What about biotech , f.ex. Intercell, or medical technology , Medtronic or Phonak, not to mention the report om nanotechnology and its synergies with pharma? INTC always to be watched , technically interesting as the whole tech sector , Infineon benefiting from IPOD sales ?
Bond Yields , analysts forecasting a rate cut , even Dr Doom doing it , soft landing scenario taking over ? Lehman Brother strategist recommending Brasilioan Bonds given the 3% inflation rate.
Last but not least currencies , what to do with the weak dollar ? Oil , above $70 stopping the markets bulls. CMOs are away, private equity helps: Blackston is employing the cash it raised from its public listing to buy the hotel chain Hilton and REIT are in demand. No wonder rich are more sophisticated investors and they buy property, tangible assets. at the end of the day it is about how much land you control like in the good old times. So what about Swiss Real Estate ? PSP ( commercial surfaces not restrained by Lex Furgler ) and Allreal + Mobimo constrained but legislation will evolve.
back to markets :
main points, stock market hesitant , china corrects 5% , bulls put it in the right prospective given the exorbitant surge of the past 12 months but a lot of investors are cautious and don't rule out a correction. 2dq results start in a week. a lot of bullishness on oil stocks ( see total and rd), mechel keeps climbing following its excellent results that highlight its mining value but who has the highest target ? in france a lot of interest for carrefour ( domestic demand up ? ) but also eads ( global orders , renewal of airplane fleet, dubai investment?). Some interesting reports from UBS on Greek Banks ( Piraeus Bank) , Alphabank in Russia, an upgrade of Turkey by CS. Africa is in the radar screen, to play with South African Stocks and Multinationals. The name that stands out is Alstom ! China Mengnium Dairy skyrocketing , because of the milk price ? Everybody talking about food prices ( Cosan in Brasil) , water stocks . Pharma in crisis given the tight regulatory environment , credit rating worsening ! What about biotech , f.ex. Intercell, or medical technology , Medtronic or Phonak, not to mention the report om nanotechnology and its synergies with pharma? INTC always to be watched , technically interesting as the whole tech sector , Infineon benefiting from IPOD sales ?
Bond Yields , analysts forecasting a rate cut , even Dr Doom doing it , soft landing scenario taking over ? Lehman Brother strategist recommending Brasilioan Bonds given the 3% inflation rate.
Last but not least currencies , what to do with the weak dollar ? Oil , above $70 stopping the markets bulls. CMOs are away, private equity helps: Blackston is employing the cash it raised from its public listing to buy the hotel chain Hilton and REIT are in demand. No wonder rich are more sophisticated investors and they buy property, tangible assets. at the end of the day it is about how much land you control like in the good old times. So what about Swiss Real Estate ? PSP ( commercial surfaces not restrained by Lex Furgler ) and Allreal + Mobimo constrained but legislation will evolve.
Monday, July 02, 2007
USD weak , liquidity hgh . why ?
something to observe , the decline of the usd against pundits expectations . the best way out of crisis is to depreciate its currency . long term treasuries up , confirm no inflation risk perceived by markets and the fed. depreciation means also competitive advantage of china in cheap labor is intact while exports keep rising as attested by the strong figures of last gdp and reserves in usd are reinvested in treasuries supporting favorable liquidity for the us . this is how china has turned into an important rib of he american economy. what about europe, cant they play the same trick with other continents ? africa, asia ? loooks eur does not have the same clout as usd in the world economy, no wonder german bunds are more sensitive and euro rates are higher relative to the current growth . is this a dumping policy of china and usa together?
P/E low ? why
given high earnings the stock prices do not reflect high valuations of the 1997 in terms of p/e. yet some differences are worth pointing out, globalisation has affeced also the stock market with broader diversity and higher stock supply for investors willing to invest in no traditional markets .this has also a dampening effect on stock prices , deflating historically high equity prices for industrialised markets like diluted earnings for a new stock equity issue. what is the relationship of lower prices with equity premiums given the lost competitive advantage of former first movers ? ( see gordon growth model http://www.investopedia.com/articles/04/012104.asp). have the perceived earnings diminished given the global dilution ? the world is richer , printing new money and spurring high growth from china. however global resources are not enough to sustain former ratios previous to sept 11. has dollar depreciation lowered global stock purchasing power deflating its p/e ?
something to observe , the decline of the usd against pundits expectations . the best way out of crisis is to depreciate its currency . long term treasuries up , confirm no inflation risk perceived by markets and the fed. depreciation means also competitive advantage of china in cheap labor is intact while exports keep rising as attested by the strong figures of last gdp and reserves in usd are reinvested in treasuries supporting favorable liquidity for the us . this is how china has turned into an important rib of he american economy. what about europe, cant they play the same trick with other continents ? africa, asia ? loooks eur does not have the same clout as usd in the world economy, no wonder german bunds are more sensitive and euro rates are higher relative to the current growth . is this a dumping policy of china and usa together?
P/E low ? why
given high earnings the stock prices do not reflect high valuations of the 1997 in terms of p/e. yet some differences are worth pointing out, globalisation has affeced also the stock market with broader diversity and higher stock supply for investors willing to invest in no traditional markets .this has also a dampening effect on stock prices , deflating historically high equity prices for industrialised markets like diluted earnings for a new stock equity issue. what is the relationship of lower prices with equity premiums given the lost competitive advantage of former first movers ? ( see gordon growth model http://www.investopedia.com/articles/04/012104.asp). have the perceived earnings diminished given the global dilution ? the world is richer , printing new money and spurring high growth from china. however global resources are not enough to sustain former ratios previous to sept 11. has dollar depreciation lowered global stock purchasing power deflating its p/e ?
Wednesday, June 27, 2007
after the redundant market gyrations triggered by the triple witch options expiration day ( 16.6.07), markets are turing reasonable, falling back to gravity at a moderate pace. bear stearns hedge funds problems linked to mortgage collateral securities are raising questions on the valuation techniques of these instruments and on the impact on us consumption following the spectacular liquidity driven cycle after sept 11 that has benefited us home builders. Equity markets look to be at a juncture and best guess and wisest development fron now onwards is a slow landing of indexes at lower levels ( see dax, supoport 7800, head and shoulder ?) . Yet , one point where the market is losing focus , interest rates , treasuries are hiking given the flight to quality shift from junk paper . not anymore a sufficient reason to step in , markets on the sideline waiting for the response of the fed this evening.
http://www.ft.com/cms/s/2b7e102a-2401-11dc-8ee2-000b5df10621.html
The Bear Stearns hedge fund fiasco removes the paradox. Banks’ capital is about to be slashed, and with it excess liquidity in the global system. Look at mortgage-backed collateralised debt obligations -– pools of debt assets, in which investors take stakes with different levels of risk. Suppose the CDOs held by banks were valued at “market” rather than “model” levels (a fancy new euphemism for illusionary historic book values). Their capital would turn out to be lower. Preservation of capital ratios against loans would require fewer loans: liquidity would have imploded......A bunch of hedge funds may have problems, but that is the tip of the iceberg for “Titanic” Wall Street. Who holds the toxic tranches? Answer: the originating banks and syndicating investment banks for the most part.....As these lower-rated tranches retain the bulk of the credit risk in the mortgages, their retention by such banks means the much-trumpeted shifting of credit risk off balance sheets was less than met the eye. If the higher-rate stuff is worth 85-90 per cent of face value at best, what is the value of the $750bn of mortgage-backed securities said to be held in US commercial banks’ balance sheets
http://www.ft.com/cms/s/2b7e102a-2401-11dc-8ee2-000b5df10621.html
The Bear Stearns hedge fund fiasco removes the paradox. Banks’ capital is about to be slashed, and with it excess liquidity in the global system. Look at mortgage-backed collateralised debt obligations -– pools of debt assets, in which investors take stakes with different levels of risk. Suppose the CDOs held by banks were valued at “market” rather than “model” levels (a fancy new euphemism for illusionary historic book values). Their capital would turn out to be lower. Preservation of capital ratios against loans would require fewer loans: liquidity would have imploded......A bunch of hedge funds may have problems, but that is the tip of the iceberg for “Titanic” Wall Street. Who holds the toxic tranches? Answer: the originating banks and syndicating investment banks for the most part.....As these lower-rated tranches retain the bulk of the credit risk in the mortgages, their retention by such banks means the much-trumpeted shifting of credit risk off balance sheets was less than met the eye. If the higher-rate stuff is worth 85-90 per cent of face value at best, what is the value of the $750bn of mortgage-backed securities said to be held in US commercial banks’ balance sheets
Monday, May 21, 2007
Wednesday, May 16, 2007
vietnam abn amro
http://www.abnamromarkets.com/showpage.asp?frmCookiesErlaubt=true&strosl=Russia&locale=EN&N=0&strotl=Region&Ne=10100000+10120000+10130000&nav=1&pageid=10&certid=65492&R=101065492
Monday, March 26, 2007
gorton/lime/ propgram trading
http://www.iht.com/articles/2007/03/26/news/bxlime.php
Mark Gorton, the 'classic entrepreneur' behind Lime Group.
By Lisa KassenaarBloomberg News
Monday, March 26, 2007
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NEW YORK: Step off the elevator into Lime Group's offices atop an 11-story brick building in the Chinatown neighborhood of New York and into a crowd of more than 60 stone Buddhas and Asian lions, all handpicked by the company's founder, Mark Gorton.
To the right, down a staircase, is a metal door that leads to Lime Brokerage, which Gorton says trades stocks faster than any other company on Wall Street - as many as 6,000 orders a second. At the end of a long hall is LimeWire, maker of the world's most-popular Internet file-sharing software, with 50 million monthly users. The U.S. recording industry says the product is designed for infringing upon music copyrights - an accusation Gorton denies - and is suing for damages of at least $450 million.
Gorton himself sits at a corner desk with a group of mathematicians writing algorithms for Tower Research Capital, Lime Group's quantitative hedge fund, a firm with $117 million in assets. His next project, scheduled for this spring, is Lime Medical, which will sell software intended to help U.S. doctors reduce paperwork. He is also developing LimeSpot, Internet-based software to help people build and share Web sites. And he runs a nonprofit Web-based venture in urban planning, part of his pet project to reduce traffic in New York.
"He's a classic entrepreneur," said Fred von Lohmann, an intellectual property attorney at the Electronic Frontier Foundation, a nonprofit group based in San Francisco. "He has a lot of businesses going at the same time, and if they don't work out, he'll start three more."
Gorton agreed.
"My to-do list doesn't ever seem to end," he said. "The biggest problem is that I may not be able to keep the focus; I can get distracted."
Gorton, 40, is an electrical engineer and former bond trader who has degrees from Harvard, Stanford and Yale. The Lime companies are slices of Gorton's view of the digital future - one in which the right software will smooth almost any human interaction, from trading stocks to swapping songs, from recording a patient's medical diagnosis to placing speed bumps on city streets. His 140 employees are mostly computer scientists in their 20s and 30s who share his ideals, particularly that software should be open source - that it can be modified by any of its users.
"It's the ideas that push things forward for him," said Rob Hranac, who worked for Lime from 2001 to 2003 as a software developer in the charity wing and now heads business development at Berkeley Transportation Systems in Berkeley, California. "The money is a vehicle to get things out there."
Even though it is private, Lime Brokerage has attracted the notice of Scott Appleby, an analyst who follows publicly traded financial exchanges at Deutsche Bank Securities in New York. "Lime is a leader, and this is the future of part of the broker-dealer world," he said. "Their pipes are built in such a way that you can get a lot of orders done in a short time."
But Gorton has his eye on other goals.
"I've beaten the markets a half dozen times and will do it a half dozen more," he said. "As a personal challenge, it doesn't mean that much anymore."
What means more, he said, is traffic. Gorton, who cycles six miles, or 10 kilometers, to work down the Greenway on the West Side of the New York borough of Manhattan and dreams of his three children riding their bikes on a car-free Broadway, said he spent $2 million last year on projects to promote pedestrian traffic and cycling in New York.
Since September, he has more than doubled the staff to 27 people at The Open Planning Project, the nonprofit group known as TOPP, which is developing software for a wiki, or collaborative Web site, to let anyone add to the urban planning in a given locale.
Gorton traded bonds for almost five years on the proprietary fixed-income desk at the investment bank Credit Suisse First Boston. In February 1998, Gorton and Alistair Brown, a Credit Suisse colleague and fellow engineer, rented a small office in Manhattan and started Tower Research with money they had earned at the investment bank.
Brown, who has an engineering degree from the University of Strathclyde in Glasgow, and who used to build computer systems to execute trading strategies at Credit Suisse, now is chief executive of Lime Brokerage.
Its trading is carried out by a hundred computers at a facility in Jersey City, New Jersey, where more than 50 customers, mostly hedge funds, also have their equipment. Those computers are set to profit from market inefficiencies that would be lost if their orders had to travel across town on a telecommunications line, said the chief technology officer of Lime, Anthony Amicangioli, who holds an electrical engineering degree from the Massachusetts Institute of Technology and joined Lime in 2003 from Juniper Networks.
Lime's computers grab price quotes from exchanges like the Nasdaq Stock Market and the New York Stock Exchange in one-tenth of a millisecond. That is more than twice as fast as other companies offering so-called data delivery, Amicangioli said.
Once Lime grabs the price quotes, the system executes trades in less than a millisecond.
Brokers working to shave times are increasingly important as so-called program trading explodes, said Brian Hyndman, senior vice president of Nasdaq Transaction Services. That activity - by Lime and rivals accounts for about 40 percent of the roughly 2.3 billion shares traded every day on Nasdaq, Hyndman said. That is up from about 5 percent in 1999.
Mark Gorton, the 'classic entrepreneur' behind Lime Group.
By Lisa KassenaarBloomberg News
Monday, March 26, 2007
ord = Math.random() * 10000000000000000;
document.write('');
on error resume next
p139172_FlashMode7=(IsObject(CreateObject("ShockwaveFlash.ShockwaveFlash.7")))
if ((!document.images && navigator.userAgent.indexOf('Mozilla/2.') >= 0) navigator.userAgent.indexOf("WebTV") >= 0)
{document.write('');}
NEW YORK: Step off the elevator into Lime Group's offices atop an 11-story brick building in the Chinatown neighborhood of New York and into a crowd of more than 60 stone Buddhas and Asian lions, all handpicked by the company's founder, Mark Gorton.
To the right, down a staircase, is a metal door that leads to Lime Brokerage, which Gorton says trades stocks faster than any other company on Wall Street - as many as 6,000 orders a second. At the end of a long hall is LimeWire, maker of the world's most-popular Internet file-sharing software, with 50 million monthly users. The U.S. recording industry says the product is designed for infringing upon music copyrights - an accusation Gorton denies - and is suing for damages of at least $450 million.
Gorton himself sits at a corner desk with a group of mathematicians writing algorithms for Tower Research Capital, Lime Group's quantitative hedge fund, a firm with $117 million in assets. His next project, scheduled for this spring, is Lime Medical, which will sell software intended to help U.S. doctors reduce paperwork. He is also developing LimeSpot, Internet-based software to help people build and share Web sites. And he runs a nonprofit Web-based venture in urban planning, part of his pet project to reduce traffic in New York.
"He's a classic entrepreneur," said Fred von Lohmann, an intellectual property attorney at the Electronic Frontier Foundation, a nonprofit group based in San Francisco. "He has a lot of businesses going at the same time, and if they don't work out, he'll start three more."
Gorton agreed.
"My to-do list doesn't ever seem to end," he said. "The biggest problem is that I may not be able to keep the focus; I can get distracted."
Gorton, 40, is an electrical engineer and former bond trader who has degrees from Harvard, Stanford and Yale. The Lime companies are slices of Gorton's view of the digital future - one in which the right software will smooth almost any human interaction, from trading stocks to swapping songs, from recording a patient's medical diagnosis to placing speed bumps on city streets. His 140 employees are mostly computer scientists in their 20s and 30s who share his ideals, particularly that software should be open source - that it can be modified by any of its users.
"It's the ideas that push things forward for him," said Rob Hranac, who worked for Lime from 2001 to 2003 as a software developer in the charity wing and now heads business development at Berkeley Transportation Systems in Berkeley, California. "The money is a vehicle to get things out there."
Even though it is private, Lime Brokerage has attracted the notice of Scott Appleby, an analyst who follows publicly traded financial exchanges at Deutsche Bank Securities in New York. "Lime is a leader, and this is the future of part of the broker-dealer world," he said. "Their pipes are built in such a way that you can get a lot of orders done in a short time."
But Gorton has his eye on other goals.
"I've beaten the markets a half dozen times and will do it a half dozen more," he said. "As a personal challenge, it doesn't mean that much anymore."
What means more, he said, is traffic. Gorton, who cycles six miles, or 10 kilometers, to work down the Greenway on the West Side of the New York borough of Manhattan and dreams of his three children riding their bikes on a car-free Broadway, said he spent $2 million last year on projects to promote pedestrian traffic and cycling in New York.
Since September, he has more than doubled the staff to 27 people at The Open Planning Project, the nonprofit group known as TOPP, which is developing software for a wiki, or collaborative Web site, to let anyone add to the urban planning in a given locale.
Gorton traded bonds for almost five years on the proprietary fixed-income desk at the investment bank Credit Suisse First Boston. In February 1998, Gorton and Alistair Brown, a Credit Suisse colleague and fellow engineer, rented a small office in Manhattan and started Tower Research with money they had earned at the investment bank.
Brown, who has an engineering degree from the University of Strathclyde in Glasgow, and who used to build computer systems to execute trading strategies at Credit Suisse, now is chief executive of Lime Brokerage.
Its trading is carried out by a hundred computers at a facility in Jersey City, New Jersey, where more than 50 customers, mostly hedge funds, also have their equipment. Those computers are set to profit from market inefficiencies that would be lost if their orders had to travel across town on a telecommunications line, said the chief technology officer of Lime, Anthony Amicangioli, who holds an electrical engineering degree from the Massachusetts Institute of Technology and joined Lime in 2003 from Juniper Networks.
Lime's computers grab price quotes from exchanges like the Nasdaq Stock Market and the New York Stock Exchange in one-tenth of a millisecond. That is more than twice as fast as other companies offering so-called data delivery, Amicangioli said.
Once Lime grabs the price quotes, the system executes trades in less than a millisecond.
Brokers working to shave times are increasingly important as so-called program trading explodes, said Brian Hyndman, senior vice president of Nasdaq Transaction Services. That activity - by Lime and rivals accounts for about 40 percent of the roughly 2.3 billion shares traded every day on Nasdaq, Hyndman said. That is up from about 5 percent in 1999.
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