Archive - 2009 - Blog entry

To attach any significance to the market's current strength is wrong.

FHA announced last week that they were having some problem with their reserve levels. Making 100% loans in Puerto Rico might be part of the problem. Ski resorts may be another issue for the folks at FHA to worry about.

Are Teachers and other pension funds flying off course? Only time will tell but they sure are putting lots of eggs in the infrastructure basket. As with any investment, the benchmark should reflect the beta, credit risk and liquidity risk of the underlying investments. Infrastructure is a long-term asset class but it isn't free of risks and the benchmark must reflect this.

In my last article, I discussed two of the major factors to this week’s run-up in natural gas - Operation Flow Orders (OFOs) and pre-configured stop orders being hit. Here, I’d like to take a look at some other concurrent distortions in the natural gas market.

I asked the Fed a question on what was QE. Their response surprised me. It also left me confused. Does this bring any clarity to this big question?

The news in commercial real estate keeps getting grimmer by the day. This crisis will have severe implications for pension funds that are carrying these properties on their books and banks that are exposed to commercial real estate loans. In other words, the commercial real estate crisis isn't over - not by a long shot.

It seems almost each week, if not each day we learn of yet another FAIL from our alleged watchdogs at the Securities & Exchange Commission, but there is only so much facepalm a pseudonymous blogger can take before he is compelled to do something about it.

Senator "Johnny" Isakson from Atlanta wants to juice up the subsidy for home buyers. How much is this one going to cost us? Does the Senator have an axe to grind?

Buy a contango and high cost-of-carry burdened asset versus a stream of perpetual earnings? What planet am I from?

But the wizards of Wall Street remain undeterred. They will come up with new ways to model all risks, including systemic risk. Will the consuming public be fooled by their chicanery? I don't know about the consuming public, but I guarantee you that the pension parrots will be fooled by their chicanery.

A year after Lehman collapsed, what have they learned on Wall Street? Absolutely nothing. That's pretty much what I see on Wall Street and at the large "sophisticated" Canadian public pension funds. Behind the rhetoric, it's business as usual. Who needs risk management when the markets are on fire and you're looking to shoot the lights out?

The President asked the banks to do 'good'in his speech today. That isn't going to work. An old story of a bad deal.

Inflation is a possible but not a guaranteed outcome of what is taking place in the economy today. Deflation or a muddle-through economy with very low nominal growth are possible and probable outcomes.

Project Mayhem reviews the most important financial and geopolitical news of the past week and takes a look at the week ahead.