Archive - Blog entry

If the budget deficit is $1 trillion per year, how much do we have to borrow? The answer is closer to $2 Trillion. The existing debt has to be refinanced too. Can this be sustained? Forever?

Bank of America has just over $8 billion in 90+ days past due compared to a little over $14 billion in Non-Accrual. So for every $1.00 they have on Non-Accrual they have $0.57 in potentially near-term charge offs. Naturally, not every...

We are in uncharted territory, so now more than ever, pension fund managers, board of directors and plan sponsors need to review their asset allocation more frequently, making all necessary adjustments as the environment evolves. Complacency and following the herd is highly irresponsible, ensuring mediocre performance over the long-term.

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?