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Clive Corcoran

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  • Key Market Movers for the Coming Week: No Easy Escape From Greek Contagion [View article]
    Agree with previous commenter that this a very good article.

    Your focus on euro for next week is key but I would be more inclined to track $EURCHF which closed Friday just above 1.24 and is either in the process of forming a triple bottom, or, if it continues to fall lower, this would suggest that the smart money in Europe is exiting the single currency in droves.
    May 22 06:05 AM | 8 Likes Like |Link to Comment
  • All for One Euro and One Euro for All? [View article]
    It certainly is a mess as your comprehensive article reveals.

    In my estimation, I think the day is coming when the German population are less interested in inflicting more "pain and suffering" on the Greeks and the other troubled states.

    More and more insightful observers in Europe - which, of course, excludes the Brussels technocrats - realize that the EMU and its Frankenstein currency - to use your words - is not sustainable in its present form.

    At some point the private banking system (including some US Banks) will be impacted even more critically than the ECB, and they will have to write down/off huge amounts from their balance sheets as the true marks are put on all of the funny paper that has been switched and repoed over the last few years within the EZ.

    I am afraid that the end of the story - when it comes - will be exactly the same as the 2008 bail out of the banking industry i.e. the socialization of private sector losses as they are absorbed through nefarious devices and are transferred yet again to public balance sheets
    May 22 06:00 AM | 2 Likes Like |Link to Comment
  • The Tangled Politics of Selecting a New IMF Chief [View article]
    Since writing this Kemal Davis has announced that he is not a candidate to head up the IMF
    May 21 10:07 AM | Likes Like |Link to Comment
  • As Strauss-Kahn Resigns, Europe's Debt Mess Enters a Sinister Phase [View article]
    Just suppose that Christine Lagarde gets the job do you still think that this would be a sinister development for the EZ mess?
    May 19 11:29 AM | Likes Like |Link to Comment
  • Country Betas: Risk and Convergence [View article]
    Interesting article.

    You mention that you use a rolling 5 year window based on monthly returns and I wonder whether this gives sufficient granularity to be able to detect short/medium term co-movements with a benchmark index.

    Also you suggest that during crises the betas for the markets you have discussed tend move to one - which is somewhat surprising. One would expect, and one does find (in other work on this topic) that while correlation coefficients across sectors/asset classes do converge on unity during crisis and bouts of illiquidity, the "riskier" sectors and asset classes tend to show more extreme beta values than during more "normal" times.
    May 19 11:19 AM | Likes Like |Link to Comment
  • Is the Bull Market Running Out of Breath? [View article]
    The best, and also most troublesome, metaphor in this good article is:

    "The new global imbalance is that the Fed generates the huge, sustained dollar tsunami that washes out the whole world."

    More than anyone the PBOC would not want to see that happen
    Apr 10 03:20 AM | 4 Likes Like |Link to Comment
  • U.S. Housing: Drop Bounce but Bottom Still Not Reached, No Recovery Until It Does [View article]
    Implicit in your article is a fascinating approach to a key mystery of macro-economics - i.e. a valid technique for determining proper valuations of assets - specifically in this case real estate, but there are ways of extending it, perhaps, to valuations of corporations etc.

    It is tempting to pursue further the methodology you have developed as it is based on sound rational principles, and if markets and policy makers were rational then the use of tools like the ones discussed would provide a much more compelling basis for monetary/fiscal policy than the seat of the pants stuff that currently prevails.

    Now if only markets and their participants were in fact rational - that's part of the problem. The other problem is that the global financial system is not transparent, and with so much going on in the "shadow " system - which is effectively out of control - the policy makers, even if they were smart enough to use valuation tools to fine tune their policies, they would only be able to regulate and measure the tip of the iceberg (metaphorically speaking).
    Apr 3 06:14 AM | Likes Like |Link to Comment
  • Market No Longer Has a Middle Ground [View article]
    The overnight trading issue is important but I think the author's main thrust is that the bi-polar nature of the markets - the switches from full blown risk on (most of the time) to abrupt risk off - reflects a new normal in market liquidity.

    The extensive use of macro correlation strategies is the underlying dynamic driving these super trending markets and the risk is that in an all or nothing type of support for asset markets we are likely to see very sharp sell-offs such as was seen on May 6, 2010 and more recently in mid March.

    Will these sell-offs be so easily contained in the absence of ongoing liquidity provisioning by the Fed? That's the big question that lies ahead.
    Apr 3 06:01 AM | Likes Like |Link to Comment
  • Good News: Foreigners Still Have Plenty of Appetite for U.S. Debt. [View article]
    Andrew

    Could I get the exact maths behind currency strength from your last comment. Thanks
    Mar 29 10:13 AM | Likes Like |Link to Comment
  • No QE3: Here's Your Chance to Frontrun the Fed, Again [View article]
    If you are correct about no QE3 (or at least not immediately), and I agree that the TIPS chart/indicator you show is very interesting, one would suspect that an early warning signal should come from long duration Treasuries.

    Yields of US 10 year notes have been in a narrowing channel for the last year and each time they looked ready to break above the channel there has been either some flight to safe haven issue to keep them within the channel, or bond managers have kept buying knowing that the Fed stands ready to mop up any excess supply.

    If your view is correct and the Fed goes MIA, and in the absence of a real pick up in demand from overseas investors, the trading positions you have suggested could be overshadowed by an even bigger opportunity in being short UST's and this may not be as conducive to a stronger dollar as you have suggested. Maybe best suggested trade is short USD/long CHF.
    Mar 29 09:37 AM | 4 Likes Like |Link to Comment
  • U.S. Treasury Yield and Nominal GDP [View article]
    Just a quick comment from the "cheap seats"

    Your S curve graph is very interesting and appears to have some predictive capabilities but how many times in the period covered has the Fed been the buyer of first, last and possibly only resort for UST's?

    What happens when they stop such programs?

    Or to be even more awkward, and metaphorically from one of those not even in the auditorium but out on the streets... can the piling up of seemingly endless amounts of Treasury paper, as being seen today, continue with a yield model that has most of its data from a period of (relatively speaking) financial sanity?
    Mar 27 03:05 AM | 1 Like Like |Link to Comment
  • Nuclear vs. Financial Disasters [View article]
    Let's hope that Dr. Oehman knows what he's talking about... as the BBC is reporting the following (March 14 14:00 GMT)

    Japanese engineer Masashi Goto, who helped design the containment vessel for Fukushima's reactor core, says the design was not enough to withstand earthquakes or tsunamis and the plant's builders, Toshiba, knew this.

    He say that as the reactor uses mox (mixed oxide) fuel, the melting point is lower than that of conventional fuel. Should a meltdown and an explosion occur, he says, plutonium could be spread over an area up to twice as far as estimated for a conventional nuclear fuel explosion. The next 24 hours are critical, he says.
    Mar 14 11:11 AM | 6 Likes Like |Link to Comment
  • 6 Market Aftershocks of the Japan Disaster [View article]
    Two partially relevant quotes on this piece - both taken from the BBC website Monday March 14 at 14:00 (GMT)

    Japanese engineer Masashi Goto, who helped design the containment vessel for Fukushima's reactor core, says the design was not enough to withstand earthquakes or tsunamis and the plant's builders, Toshiba, knew this.

    He say that as the reactor uses mox (mixed oxide) fuel, the melting point is lower than that of conventional fuel. Should a meltdown and an explosion occur, he says, plutonium could be spread over an area up to twice as far as estimated for a conventional nuclear fuel explosion. The next 24 hours are critical, he says.
    Mar 14 10:53 AM | 2 Likes Like |Link to Comment
  • U.S. Stocks: Decoupling From Domestic Economy, Coupling to Global Trade [View article]
    Good article which raises valid questions about the benefits of the economic "theory" of free trade.

    Most of the "theory" was laid down in the 19th century by the classical economists who had no real framework for understanding the dichotomy between the national/global economy and all of the consequences of multi-nationals engaging in regulatory arbitrage.

    This arbitrage includes - among other things - exploiting the cost advantages between those nations which adhere to varying degrees of legislated labor protection versus complete laissez faire, and very importantly the manner in which distributed global enterprises can engage in numerous legal (but perhaps not ethical?) practices designed to avoid the full impact of the taxation regimes which exist in many of their most lucrative markets.
    Mar 13 02:12 PM | 6 Likes Like |Link to Comment
  • Japanese Earthquake Sparks Yen Sell-Off [View article]
    As FX trading in the hours after the quake has shown the initial knee jerk reaction of selling the yen was not the way to go!
    Mar 11 08:13 AM | 2 Likes Like |Link to Comment
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