Introducing: the TED spread. It’s the difference between (formerly) risk-free 3-months Treasury Bills (hence the “T”) and the 3-months Eurodollar Libor (London Interbank Offered Rate, ticker symbol “ED”). The Libor is an average of interest rates banks charge each other for borrowing money. Currently 3-months Libor is at 0.54%, T-bills at 0.12%, hence difference = 0.42%…

Know More

Monday the S&P 500 made a new 52-week high. On Tuesday hell broke lose after S&P downgraded Greece by 3 steps to junk (from BBB+ to BB+) with negative outlook. Expected recovery in case of default: 30-50%. Greek government bonds (10yr yield 10.5% this morning, 2yr above 18%) would no longer be eligable as collateral…

Know More

Would you raise your prices if you had 30% idle capacities? No, since the producer next door would be more than happy to increase production and sell his stuff at the lower price.

Know More

Today we take a look at the growth of the US Monetary Base, and why inflation has not occurred. With M1 / M2 growth slowing down dramatically, and possibly turning negative, implications for the stock markets are negative.

Know More