By now, you are familiar with the carry trade, where one borrows in one’s own currency in order to invest in higher yielding foreign assets, often times with significant leverage. The Japanese were famous for making this trade in Australian Dollars, U.S. Dollars, you name it.
What a lot of people don’t realize that everyone [...]
financial leverage's tag archives
Reverse carry trade borrowing is deadly
Oct
519 views
Massive short covering at VW and massive losses for hedgies
Oct
I ran across a very disturbing news item today that is getting a lot of press in Germany. Apparently, the leveraged finance community is getting routed at the German Automaker VW. The crux of the situation is that Porsche, which controls VW, upped its stake in the company causing shares to rise. [...]
Forced liquidation
Oct
The recent movement in global markets has me scratching my head a bit. You have people dumping gold and the Swiss Franc in order to invest in the U.S. dollar and Treasury securities. Everyone says it is a flight to quality. I do not agree. Logic has it that the U.S., [...]
73 views
Dollar strength is an illusion
Oct
I have felt for sometime that dollar strength is a counter-trend that has a sell-by date written all over it. You see, the Federal Reserve is ballooning its balance sheet like nobody’s business as it tries to be the global lender of last resort. This is very inflationary. Apparently, the Fed wants to [...]
Hedge funds collapsing
Oct
CNBC and other media sources are reporting that a number of hedge funds are collapsing under the weight of poor performance and massive fund redemption. Given the market volatility in credit, sick, bond and currency markets, it was only a matter of time before we started to see this occurrence.CNBC reported the following today:
Citadel [...]
Quote of the day: Investment Bank Leverage
Sep
With Goldman Sachs and Morgan Stanley becoming bank holding companies, the traditional U.S. investment banking model has come to an end.
But it bears remembering that investment banks are highly leveraged institutions. Both Goldman Sachs and Morgan Stanley will have to either deleverage significantly or merge with an existing depositary institution with less leverage in [...]
UBS writes down another $5 billion
Aug
UBS reported a loss of 358 million Swiss Francs ($332 million) after writing down a further $5.1 billion in debt.
In my post yesterday, I said the market expected as much. But, more importantly UBS has confirmed plans also mentioned in yesterday’s post of splitting the bank up into three autonomous units – effectively ending the [...]
Credit Unions in trouble
Aug
I wish it were not so, but it is increasingly obvious that every part of the financial sector in the United States is infected by this menacing plague of credit losses and writedowns. Now it comes to light that the five biggest U.S. credit unions have lost so much on residential mortgage-backed securities that [...]
UBS reports Tuesday: brace yourself
Aug
Let’s hope the UBS earnings report is not as bad as Merrill. If you recall, Citi, Merrills and UBS are the three worst offenders when it comes to writedowns. Given the recent asset sales by RBS and Merrill, one would expect to see some real ugliness at UBS tomorrow. Stay tuned.
The pressure [...]
The inflation – deflation debate redux
Aug
I’m getting a lot of mail about the Rosenberg post and my mea culpa on inflation. To be blunt, a lot of you think I’m out to lunch and Rosenberg is too — after all inflation is over 5% and that’s just the bogus CPI measure our governments release.
But, alas, there is method to [...]
Archives
Recent Posts
-
- Where the wild things are
- Stop the madness now!
- Obama job approval now below 50%
- Morgan Stanley expects 10-year yields to rise 220 bps in 2010
- Largest U.S. refiner Valero now permanently shutting capacity
- News from around the web: 2009-11-20
- Bill Gross: "I think unemployment is here to stay"
- Ivy Zelman: “Home prices are going back down”
- Gross isn’t buying corporates, high yield or equities even with zero rates
- What would an alternative to bailouts have looked like?
Recently Popular
- China’s empty city: the emperor really has no clothes
- Meredith Whitney: “I haven't been this bearish in a year”
- Roubini: For unemployment "the worst is yet to come"
- Gross isn’t buying corporates, high yield or equities even with zero rates
- China slams U.S. for inflating global asset prices via carry trade
- Barack Obama: “if we keep on adding to the debt… that could actually lead to a double-dip”
- Hong Kong: “America is doing exactly what Japan did last time”
- If this is recovery…
- I am now moving from multi-year recovery to a double dip baseline
- Steve Keen: Debt and the economy - how do we pay for all of this?
Most Viewed
- Credit Crisis Timeline
- Switzerland threatened with bankruptcy
- Letterman’s Top 10 George Bush moments
- Is the State of California bankrupt?
- The Dummy’s Guide to the US Banking Crisis
- Top ten predictions for the 2009 global economy
- Marc Faber: I advise every American to hold his gold outside of the United States
- Chart of the day: Dow 1928-1932
- The Swedish banking crisis response – a model for the future?
- Quantitative easing: printing money like mad to ward off deflation
- The recession is over but the depression has just begun
- About
- Byron Wien: Ten Surprises for 2009
- Lehman Brothers: a primer on Credit Default Swaps
- The top 25 European banks by assets
- The TED Spread
- Marc Faber: China’s numbers are fake
- Currency crisis is gathering storm
- Chart of the day: Total US Debt
- Citibank has cut all lending in Denmark
Resources
Translate
- Powered by Google Translate.
Polls
- Sorry, there are no polls available at the moment.






