Archive for the ‘Food For Thought’ Category

Collateral (Call) Damage – no pun intended

All those margin and collateral calls that JP Morgan Chase likely faced on its massive “London Whale” CDS trades likely had further reaching effects on several other related derivatives. Despite total CDS volumes having fallen to lower and …
Read More »

Guess what the CDS price would be

If you guessed then I hope you are right but we certainly don’t know exactly what it would or should be.

Priceline sold $1 billion of 1 percent notes due March 2018 that may convert into 1.06 shares for each

Read More »

The Rising Fear in Bank CDS Prices

Earlier this week, Andrew Atkeson and William E. Simon Jr., a couple professors at UCLA, wrote an Op-ed in the Wall Street Journal entitled “The Rising Fear in Bank Stock Prices” discussing how the banking system is essentially …

Read More »

When sharing risk actually increases risk

Based on the statements provided, (d) Bankers do not like to share good things and will only share bad things follows. The premises are positive and universal (logically speaking. No actual verification of fact or truth is needed to answer …

Read More »

Sovereign credit risk more risky than corporates

The WSJ recently highlighted an occurrence that has been in place in different locales including the United States for quite a while now: market perceptions of credit risk that appear to be somewhat out-of-line with that of their home countries. …

Read More »

69 CDS positions

An interesting post by Zerohedge outlines 69 companies whose credit risk is ranked better than the United States government as determined by credit default swap prices (see first chart below). This is not just a recent phenomenon that has occurred …

Read More »

Hugh Hendry turns out to be ‘right’?!

While no one usually wishes bad fortune to any group of people of things in life – the structure or setup of modern financial markets (especially derivatives) and capitalism seems to still have a way of ‘rewarding’ certain groups of …

Read More »

The beginning of the end for European Financial CDS?

EU proposals to write-down the debt of European banks in the event of another financial crisis could render the billion-dollar market of of credit default swaps referencing European banks worthless if it were to go into legislation in its current …

Read More »

Credit default swaps get another temporary exemption

The SEC recently extended “temporary” exemptions from the Securities Exchange Act for credit default swaps to allow for the anticipated implementation of the new Dodd-Frank Act which is meant to address gaps in current financial regulation.

The original exemption enacted …

Read More »

When ratings get politicized (Part 2)

Continued from Part 1

East vs. West (and by this we don’t mean a New York-Cali thing)

Separate from its NRSRO application, Dagong had already irked the rest of the western credit rating agency community by being the first …

Read More »