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Sober Look 181 posts 0 comments

Sober Look is a no-hype financial markets/macro blog that typically relies on data analysis, primary sources, and original materials. We keep it concise, to the point, with no self-promoting nonsense, and no long-winded opinions. If you are looking for Armageddon predictions or conspiracy theories, you will be thoroughly disappointed. Topics include financial markets, banking, asset management, risk management, derivatives, global economy, policy, and regulation, with the emphasis on finance education. Follow him on his blog or twitter.

Economy

Expats’ leaving China in droves is a bad economic signal

Sober Look Sep 20, 2012

By Sober Look Anecdotal evidence suggests that increasing numbers of western expats are beginning to leave China. A recent article that has gone viral in the expat community in China called "Why I’m leaving the country I loved" describes…

Markets

Frothy fixed income yields send 8-year B+-rated junk paper down to 5.75%

Sober Look Sep 17, 2012

By Sober Look As an example of how frothy fixed income markets have become, Reynolds did a $3.25 billion HY issuance today. They repaid a great deal of existing debt, but also took half a billion of cash for general purposes - in effect…

Economy

The Fed’s selling volatility into the market will force a mispricing of risk

Sober Look Sep 16, 2012

By Sober Look Credit Suisse has made an important point with respect to the Fed's purchases of MBS. As we know, a mortgage borrower is long an option to prepay. That means a mortgage lender is short this same prepayment option. Therefore a…

Markets

Mortgage REITs’ leverage poses significant risks to the overall mortgage market

Sober Look Sep 11, 2012

By Sober Look With the GSEs (Fannie Mae and Freddie Mac) forced to shrink their balance sheets (see discussion), the private sector will need to step in. As demand for mortgages increases with the growth of the US population (see…

Economy

The pattern of increasingly longer payrolls recoveries

Sober Look Sep 10, 2012

By Sober Look Continuing with the recent theme of the US labor markets, consider the chart below. It's the total US employees on nonfarm payrolls going back to the mid 60s. We've heard numerous discussions about how the current payrolls…

Economy

Male labor participation rate in the US hits the lowest level on record

Sober Look Sep 9, 2012

By Sober Look Friday's employment figures were terrible across the board, although some have naively interpreted the decline in the headline unemployment rate (from 8.3% to 8.1%) as positive news. Unfortunately there is nothing positive…

Economy

Economic Surprise Index has turned positive

Sober Look Sep 8, 2012

By Sober Look The Citi Economic Surprise index was fairly accurate in pointing to a US slowdown in the first half of 2012. One therefore should not dismiss the recent reversal in the indicator's trend. The index just went into the positive…

Economy

Monetary expansion, the dollar, and commodity prices

Sober Look Sep 1, 2012

By Sober Look Economists continue to insist that there is no connection between Fed's monetary expansion and increases in commodity prices, particularly agricultural products globally (discussed here). Here is a typical comment: If it is…

Economy

Canada’s consumer leverage growth will not end well

Sober Look Aug 30, 2012

By Sober Look Canada continues to face rising consumer debt levels. Since the post on Canadian housing risks (here), we've gotten a number of comments that Canada's housing is not overpriced (for example if measured in terms of gold). And…

Economy

Latest on China: all is well and “economic growth is stabilizing”

Sober Look Aug 29, 2012

By Sober Look Here are some of this morning's key economic news coming out of China. Given that China has been the largest component of the global GDP growth, the situation is worth monitoring closely. 1. China's stock market hit a new…