In-depth analysis on Credit Writedowns Pro.

Links: 2008-12-03

Yesterday was a good day in the markets, all in all. However, a number of anomalies still exist which we hope to cover in the coming days. Fist, there has bee an unprecedented rally in U.S. Treasury securities which some are calling a bubble. Simultaneously, you have a large spread to Treasuries in the corporate bond market (with corporate bonds yielding significantly more). High yield corporate binds are at record high yields (and record low prices since price and yield move in opposite direction). Since half of corporates are high-yield (so-called junk) bonds, one would think there is more value in corporates than Treasuries, but that is not how investors are behaving.

Then, there are some strange currency moves of late with the Euro cheapening against the Yen. The Pound is falling against the Dollar. It seems that currency traders are moving into currencies from countries that may do relatively better during this recession (Japan) or have already cut interest rates to near zero (Japan, the U.S.)

Below are a few articles I would like to highlight. Notice the ones on housing busts in Dubai and China. These two are harbingers of some interesting changes to come in the global system as both China and the Middle East are soon going to be more concerned with domestic economic concerns. There is talk of China actually depreciating its currency. Watch for this. The other news can be found in the news feed.

Starting tomorrow, I will be on holiday in the Bahamas through the weekend, so posts should be light. Perhaps, Marshall could step in and do his magic as he has had some very good posts recently.

Two other important notes are that we have moved to the WordPress platform and things seem to be working just fine. Please let us know if you run into any problems like missing links or the like. We will be updating the look and feel of the site at some point going forward, but for now, we’ll run with things as they are. Having moved platforms, all the RSS feds do still work. However, the best feed is www.creditwritedowns.com/feed.

The other note is that we are adding a weekly e-mail newsletter that will become available shortly. I have gotten some feedback that suggests some people might want to get weekly, rather than daily e-mail updates. I will be picking and choosing which posts do actually go into that newsletter so that it doesn’t become unwieldy. Look for the link on the site soon.

Cheers.
Ed

Bloomberg.com: Long Bond Returns Most Since 1995 Amid ‘Bubble’ Talk

immobilienblasen: Number Of The Day ” Percentage Of U.S. Companies With A Junk Rating”

Dean Baker: Government spending is the correct response to the economic crisis | Comment is free | guardian.co.uk

Amity Shlaes: Clueless as Ever | The Big Picture

Dubai’s troubles | Has the bubble burst? | The Economist

Bloomberg.com: China Property Slump Threatens Global Economy as Growth Slows

Bloomberg.com: Chambliss Wins in Georgia, Blocks Democratic Quest for 60 Votes

FT.com | Willem Buiter’s Maverecon | Stigma, schmigma

FT.com | Willem Buiter’s Maverecon | It is time for the monetary authorities to jump into the liquidity trap

FT.com / Stephen Roach – Insight: Post-bubble realities

EconomPic Data: Curve: Swaps vs. Treasuries

Bloomberg.com: SNB Looks for New Tools in Zero Interest-Rate World

Brad Setser: Follow the Money » Blog Archive » Bretton Woods 2 and the current crisis: any link?

Bloomberg.com: GAO Urges Treasury to Toughen Oversight of TARP

Bloomberg.com: Citigroup, Wells Fargo, GE Selling FDIC-Backed Debt

Berlin under fire as German car sales collapse – Ambrose Evans-Pritchard, Telegraph

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.