Posts Tagged debt
Dealers Digest Central Bank Views And Buy Bonds
Posted by Tetyana Matychak in Investing on September 1st, 2010
Friday’s initial response to the words from Ben Bernanke is being reversed on Monday. Bond yields jumped sharply as the Fed Chairman said that the FOMC stood ready to perform whatever action necessary to safeguard the economy from failing. Investors immediately looked beyond the action of further quantitative easing and took this as a sign that ultimate economic recovery would be bearish for bonds.
Eurodollar futures – Short-end Eurodollar futures are making gains again on Monday with the rise in deferred maturities almost at a double-digit pace. September treasury note futures have climbed by a half-point this morning to stand at 125-23 to yield 2.59%. The initial response to the speech at Jackson Hole in Wyoming was a fear that meaningful measures to support the U.S. economy would revive growth sufficiently so as to put the era of extremely low interest rates at risk. But as dealers ponder further this morning the renewed buying suggests that they recognize that although the Fed is prepared to act, it can’t go the distance without a confluence of other resources pulling in the same direction at once.
European bond markets – September bunds have recovered from Friday’s slump to 133.25 as weaker longs were knocked out of the market. The contract has climbed once again on Monday to 134.19 where the yield of 2.13 stands seven basis points below that at Friday’s close and compares to last Monday’s record low of 2.09%. The demand for German bunds remained firm despite the headwind of relatively bullish economic data. A European Commission report showed a rise to a two-year peak in confidence in the economic outlook. An unsourced report running in today’s Financial Times says that the ECB will extend its emergency aid to the region’s banking system through 2011. Euribor futures made minor gains on the story. Read the rest of this entry »
4 Investment Ideas That Provide Income
Posted by Tetyana Matychak in Investing on July 1st, 2010
As of this moment, the S&P/TSX Composite index is down 384.58 point or -3.27% year to date. The S&P 500 is down 67.32 or -6.04% year to date. That is your market update. When the global economic outlook appears uncertain and on the brink of another recession, equity markets reflect this reality in terms of greater than normal volatility. In markets like these, what we should be looking for are non-correlated assets and managers that have demonstrated the expertise to preserve capital during uncertain times like today.
In addition, one should also be focusing their efforts on receiving some form of income while the economic climate sorts itself. The following 4 ideas should hopefully accomplish both those goals. While we cant speak to the best/worst time to buy/sell particular securities, as that depends on one’s personal circumstances, the approach we usually take, especially with closed end funds, is to purchase them when they are trading at the steeper than normal discount to their Net Asset Value (NAV). The only other thing we would like to add is that you should do you own due diligence.
Trident Performance Corp.
This closed end fund is managed by CI Investments. Its investment objective is to provide tax-efficient risk-adjusted long term rates of return by obtaining exposure to a Global Macroeconomic Portfolio, advised by Trident Investment Management. Co-Founded in 1998, by Nandu Narayanan, Trident Investment Management seeks to exploit macroeconomic trends to generate attractive risk-adjusted rates of return with low or negative correlation to traditional ‘long’ investments. This is exactly what Mr. Narayanan did during the financial crisis, when the CI Global Opportunities Fund recorded positive performance of 109% in 2007 and 42.6% in 2008. Since inception in March 1995, the fund has averaged 19.69% as of the end of May 31, 2010. Read the rest of this entry »
ECB Governor: Rates On Hold
Posted by Tetyana Matychak in Banks on June 14th, 2010
European Central Bank governor Athanasios Orphanides indicated in an interview with Dow Jones Newswires that interest rates in the euro zone will remain on hold for many months, urging European politicians to tackle yawning inefficiencies in fiscal governance.
If Europe’s leaders fail to get their act together, then another financial crisis or debt crisis may well be around the corner, he warned.
Speaking in an interview following the ECB’s policy-setting meeting on Thursday, Mr. Orphanides said the outlook for consumer price inflation in the euro zone remains benign, despite the recent uptick in prices.
Core inflation, which excludes volatile components such as energy and food, has been trending down, he said, pointing to slack private consumption in the 16 countries that make up the euro zone.
“In light of these developments, I do not view high inflation as a concern,” said Mr. Orphanides, who was born in Cyprus and educated at the Massachusetts Institute of Technology. Read the rest of this entry »
Euro-zone troubles may keep stocks on edge
Posted by Tetyana Matychak in Fund Markets on May 17th, 2010
Stocks could face more volatility this week as growing doubts about whether Europe can solve its deepening debt crisis are likely to take center stage again.
A $1 trillion rescue package unveiled at the week’s start gave only temporary relief to investors, who are increasingly worried about the impact of the crisis on the global recovery and the euro.
Wall Street also will be anxious to see the results from retailers next week, and will pay special attention to their forecasts for the rest of the year. Wal-Mart Stores (WMT.N) and Lowe’s Co (LOW.N) are among companies expected to report.
Below-par results on Friday from retailers, including Nordstrom (JWN.N) and J.C. Penney Co Inc (JCP.N), cast some doubt on the consumer’s health.
The week also brings government data on inflation, which is expected to remain tame, and on housing, a sector still struggling to recover from the country’s worst economic downturn since the 1930s.
The three major U.S. stock indexes ended Friday’s session with losses ranging from 1.5 percent to 2 percent amid worries over Europe’s debt problems. The CBOE Volatility Index .VIX or VIX, which is Wall Street’s fear gauge, jumped 17.1 percent. Commodity prices also dropped sharply, with oil sliding to a three-month low below $72 per barrel. The euro fell to an 18-month low against the dollar. Read the rest of this entry »
What If Your Tax Refund is Wrong?
Posted by Tetyana Matychak in Budget, Favourites on May 12th, 2010
Most of us get refund checks at tax time. And most of the time, those refunds are just what we had been eagerly awaiting. But occasionally, the amount on an IRS check is not what we expected. In some cases, it’s less than we figured on our 1040s. Every now and then, it’s more.
Regardless of whether the refund discrepancy goes against you or favors you, some steps can be taken to resolve the matter. That way, even if you and the tax collector aren’t necessarily satisfied with the eventual amount, you’ll at least understand the mathematical misinterpretation.
Explanation en route
First, don’t panic. There’s usually a logical explanation for why you and the Internal Revenue Service came up with different numbers.
The IRS will send you a written explanation for the unexpected amount. The only problem is that the explanation doesn’t always accompany the check. Such coordination of cash and comment is particularly difficult with directly deposited refunds, which are likely to show up unexplained in your account first.
Why your refund might be an unexpected amount: Read the rest of this entry »
Europe’s Debt Crisis Is About to End
Posted by Tetyana Matychak in Favourites, Trading Markets on May 6th, 2010
With the likes Nouriel Roubini, Jim Rogers and George Soros predicting a disastrous default by Greece and others in the euro zone, the contrarian in me has to ask if they could be very wrong. Sources from the City of London who would not go on the record have told me this week that Greek debt is currently a screaming buy.
They believe huge profits will be made for those holding Greek paper when Germany, the IMF and ECB outline a new rescue package that will convince investors they are serious about drawing a line in the sand on the sovereign debt crisis.
Rumors of a European TARP moment could yet be unfounded but with Merkel now serious about getting to grips with the crisis, investors who stay short Greek debt over the weekend could be scrambling to reverse their positions on Monday morning.
Officials at Greece’s debt agency did not respond to CNBC requests for comments. Fears over the long-term health of the euro zone remain high and it is difficult to argue with those who see the possibility of some members exiting the euro on a long term view.
Adam Cole, the Global Head of FX Strategy at RBC Capital Markets, is a euro bear and thinks we could hit $1.10 or $1.15 versus the dollar over the medium term but suggests an announcement on Greece this weekend could offer temporary respite for the market. Read the rest of this entry »
S&P Downgrades Spain
Posted by Tetyana Matychak in Favourites, Trading Markets on April 30th, 2010
Standard & Poor’s Corp. on Wednesday downgraded Spain’s long-term credit-rating by one notch, in a new sign of a deepening euro-zone sovereign debt crisis.
Spain become the third euro-zone nation to be hit with a S&P downgrade in just two days, following steeper cuts on Portugal and Greece. On Tuesday, S&P slashed its ratings on those nations, even junking Greece, amid concerns that nation’s policy options are narrowing because of weak economic growth prospects.
The ratings actions underscore mounting concerns that Greece could default on its debt and that European Union authorities are failing to halt contagion of its financial problems to other highly indebted euro-zone sovereigns. Spain, the euro zone’s fourth largest economy, is grappling with a double-digit budget deficit and faces years of weak growth following the collapse of a decade-long construction boom.
“Spain is the 800 pound gorilla in the room. Greece and Portugal are small countries, but Spain is about five times their size with regards gross domestic product,” Win Thin, senior currency strategist at Brown Brothers Harriman & Co, said in a note to investors.
The news of the Spanish downgrade sent equities in Spain broadly lower. S&P said it reflects a downward revision of its medium-term macroeconomic projections. Read the rest of this entry »
GLOBAL MARKETS: European Stocks Edge Higher
Posted by Tetyana Matychak in Fund Markets on April 29th, 2010
European stocks edged higher early Thursday, with investors finding some comfort in the U.S. Federal Reserve’s easy-money stance amid better-than-expected corporate earnings. However, overall sentiment remains one of caution given the euro-zone’s ongoing sovereign debt crisis saga.
The two-way pull between still decent macro and corporate news flow and the apparently deepening black hole of debt dug by the peripheral euro-zone economies will continue a while longer, said Ian Williams, strategist at Altium Securities.
By 0735 GMT, the Stoxx Europe 600 index was 0.3% lower at 259.94. London’s FTSE 100 index was up 0.2% at 5598.99, Frankfurt’s DAX. Read the rest of this entry »
Stocks pull back on Europe’s deepening debt woes
Posted by Tetyana Matychak in Fund Markets on April 28th, 2010
U.S. stocks followed European markets sharply lower Tuesday after Standard & Poor’s downgraded the debt of Portugal and Greece. The rating agency’s move intensified investors’ fears that Europe’s debt problems are spreading.
The Dow Jones industrial average fell nearly 130 points. All the major market indexes were down more than 1 percent.
The ratings downgrades sent the dollar up more than 1.1 percent against the euro, hitting its highest level in about a year. At the same time, gold and U.S. Treasury bond prices also rose as investors sought perceived safe-haven investments. The three often do not trade in the same direction.
“It was a knee-jerk reaction,” said Brian Peardon, a wealth adviser at Harrison Financial Group in Citrus Heights, Calif. Peardon said the small size of Greece and Portugal’s economies mean their debt struggles are not yet a major problem. But if they were to default on their debt, other countries that hold their bonds would also suffer.
Debt-strapped countries might also find it harder to spend more to stimulate their economies and help feed the global economic recovery. Read the rest of this entry »
Greek uncertainty hurts euro
Posted by Tetyana Matychak in Currency on April 27th, 2010
Confusion about the timing and amount of emergency aid for Greece prompted investors to sell the euro on Monday as markets worried whether the euro zone country will manage to avert a debt default.
The euro dipped briefly below $1.33, falling against the greenback for the seventh trading session in the last eight. It also hit a three-month low against sterling on investor concern about potential conditions attached to a loan for Greece.
The Federal Reserve’s policy meeting this week drew renewed attention to when the U.S. central bank will likely begin raising interest rates. The dollar rose above 94 yen as investors bet the Fed would raise rates before year end, well ahead of any move by the Bank of Japan.
Confusion over aid for debt-stricken Greece arose on Monday after German Chancellor Angela Merkel said the euro zone member, which on Friday had requested emergency aid, must commit to further savings measures and show it can return to a sustainable economic path before Germany can approve aid.
Greece had tried to reassure investors over the weekend that the 45 billion euros ($60.5 billion) in aid from the European Union and the International Monetary Fund would arrive in time to avert the euro zone’s first sovereign default. Read the rest of this entry »
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Consumer Spending in U.S. Rises More Than Forecast
30 August 2010
Monetary Policy Gets No Respect
19 July 2010
Stocks May Surprise By Year-End
5 July 2010
Is A Global Reserve Currency A Necessity?
28 June 2010
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