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Angel Martin

Angel Martin
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  • Negative Yields: Macro And Investment Perspectives [View article]
    i don't see why any retail investor would ever accept a negative yield.

    one million swiss francs in currency (1000 franc notes) would fit into a small safety deposit box

    current deposit rates in switzerland are like -1.25%; that's -12,500 francs per year
    why would anyone accept that?

    even institutional investors, i think, can get around this. in the overnight money markets they are doing arbitrage for 15 basis points on the annual rate.

    guys who are doing that are going to accept -0.9% libor or -0.7% overnight repo ?

    i don't buy it.

    maybe i am reading these goofy fx forward tables wrong, but it looks to me that there are some pretty significant deviations from covered interest parity for the CHF/GBP and CHF/USD
    Mar 5, 2015. 01:04 PM | 1 Like Like |Link to Comment
  • What Is Putin's Next Move? [View article]
    Marc, i believe Putin's next move is to test if the NATO troops stationed in the baltic republics will get involved in actual fighting. i expect he will use the same sort of tactics we have seen in the Ukraine.

    my guess is Estonia will be the target.

    the single most aggressive move Putin has made on this front was the cross border kidnapping last year of an Estonian security service officer. (an action that immediately followed Obama's visit to Estonia.)

    having some obvious parallels to the "phoney war" Venlo incident.
    Mar 4, 2015. 05:36 PM | Likes Like |Link to Comment
  • Is The U.S. Really Experiencing Deflation? [View article]
    another interesting perspective is to compare US CPI to europe's calculation.

    EU excludes housing.

    US CPI on a equivalent basis is -1.5 percent y/y and heading lower
    Feb 27, 2015. 12:42 PM | 1 Like Like |Link to Comment
  • Is The U.S. Really Experiencing Deflation? [View article]
    there are some significant differences, most importantt - the US now uses a chained cpi
    Feb 26, 2015. 08:20 PM | 1 Like Like |Link to Comment
  • The Media's Overdramatization Of The 'Grexit' And Its Impact On Your Portfolio [View article]
    gold is an important source of diversification.
    Feb 24, 2015. 04:44 PM | Likes Like |Link to Comment
  • The Media's Overdramatization Of The 'Grexit' And Its Impact On Your Portfolio [View article]
    yes, absolutely
    Feb 24, 2015. 04:29 PM | Likes Like |Link to Comment
  • The Media's Overdramatization Of The 'Grexit' And Its Impact On Your Portfolio [View article]
    a precondition to investment success is to be realistic about what you know, and humble about what you don't know.

    fact is, no-one knows what the probability of a greek exit is, and no-one knows what the impact will be if they do go (including insiders like Lagarde and Varoufakis)

    that's part of the core of tail risk: an unknown probability with a unknown impact

    the other part of tail risk is that the downside of negative events can be so large, that all the prior gains from ignoring tail risk can wiped out (and then some!)

    from the author's discussion of low probability/high impact events, it is clear that he does not understand this
    Feb 24, 2015. 11:55 AM | 3 Likes Like |Link to Comment
  • Weighing The Week Ahead: Help For The Economy From Housing? [View article]
    a lifetime of experience suggests that incompetence is a much more likely explanation than any malign intent - something obama's critics should keep in mind as well
    Feb 22, 2015. 02:49 PM | 3 Likes Like |Link to Comment
  • Tsipras declares victory [View news story]
    every investment disaster starts by assuming ... can never happen
    Feb 22, 2015. 02:31 PM | 2 Likes Like |Link to Comment
  • Tsipras declares victory [View news story]
    your list is obsolete. the top six budget "surplus" countries are now running deficits, including norway, where the 2015 budget "surplus" assumes $100/barrel oil
    Feb 22, 2015. 02:23 PM | 2 Likes Like |Link to Comment
  • The Key Tail Risk That The FOMC Missed (And You Should Pay Attention To) [View article]
    key quote: "What about the liquidity concerns voiced by FOMC staff over mass mutual fund redemptions, wouldn't an EM bond market rout be even worse?"

    Outstanding article !!

    i would only add that bank lending in dollars outside the US is now larger than all US dollar debt issued outside the US.

    the dollar has already gone up a lot since midyear 2014. gains in the value of the dollar make it harder for those banks lending outside the USA to fund themselves

    any shock such as a greek exit or another global recession is going to drive the dollar up more and make those bank funding problems worse.
    Feb 20, 2015. 11:51 AM | 1 Like Like |Link to Comment
  • Negative Volatility In Long Bonds Surges [View article]
    long duration treasuries are not just a dis/deflation play.

    they are also insurance against against recession/financial crisis
    Feb 18, 2015. 08:56 AM | Likes Like |Link to Comment
  • Still Fishing For The Bottom [View article]
    Boomer, i don't know what to do either than be cautious and try to figure this out.

    for me, any explanation has to cover why this is happening now, and also, why it hasn't happened in past deflations.

    some other considerations:

    this started in the shortest maturity sovereigns and has spread to longer maturity sovereigns and short AAA corporates.

    the scale of this thing is massive, something like 30-40% of developed world debt is now trading negative yield.

    so the buyers are huge (systematically large in my view) and appear to be willing to pay whatever the price to buy high quality bonds for use as collateral (?) or eligible for swaps (?) or ?

    which suggests that maybe we might be at the start of another financial crisis... except that none of the usual indicators of financial market distress like swap spreads, basis spreads, LIBOR etc are showing any indications of another crisis.

    so, what i am trying to figure out right now is, can the negative yields so distort the usual signals of financial crisis so that indicators that worked in the past are not working this time ?

    it seems to be possible in the case of basis swaps but frankly,
    as a retail investor, i know very little about basis swaps etc which are institutional only transactions.

    bottom line for me, no-one knows what is causing this but i bet when we find out, it is not going to be positive for risk assets.
    Feb 13, 2015. 11:10 AM | Likes Like |Link to Comment
  • Still Fishing For The Bottom [View article]
    Marc, thanks for the clarification. however, past episodes of deflation have been much more severe than what we are seeing now. for example, this chart has UK inflation estimates back to 1750.
    esp look at 1758-61; 1773-80; 1826-34; 1874-96... etc

    the excess capital supply framework is fine, but it does not explain why we don't see widespread negative interest rates in previous deflations which were much more severe.
    Feb 13, 2015. 09:13 AM | Likes Like |Link to Comment
  • Still Fishing For The Bottom [View article]
    Boomer, there is nothing remotely like this in the past. there have been instances of negative bond yields. but they could be explained as targeting an exchange rate (swiss in the 1970's), or in the 1930's the US gave a pricing advantage to bondholders who rolled over their bonds at maturity.

    which is why i find this so worrisome: i like to look at past examples of something to get an idea of the range of possible outcomes. the problem is that we have not had negative rates to this scale and breadth in 500 years of capitalist economics.

    Marc's list of potential buyers of negative yield bonds is fine. but it is not unique to today. there have been plenty of deflationary episodes in the past... why aren't there more examples of negative yields in history? many if not all of Marc's potential buyers would be present in previous deflations.
    Feb 12, 2015. 11:01 PM | Likes Like |Link to Comment