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  • Trading olives and feta cheese for submarines is a losing proposition

    Alexander Gloy

    Greek 10-year government bond yields, after having graced 8.73% merely a good week ago, are back with a vengeance (9.67%). Where is the insatiable demand for Greek bonds from China? On October 22, Eurostat published revised Euro zone government deficit and debt figures for 2009. One country was missing – Greece: “Eurostat is not publishing…

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  • Why the Fed is fighting deflation tooth and nail

    Alexander Gloy

    Economics class is in session! Let’s have a look on the impact of inflation and deflation on companies. We are focusing on the balance sheet only: Impact of inflation and deflation on balance sheets. Source: Lighthouse Investment Management Inflation means prices go up, so the value of the asset side of the balance sheet increases. Liabilities remain the…

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  • Bank of America under pressure

    Alexander Gloy

    Will Bank of America (BAC) get into difficulties because of a) legal problems to foreclose on delinquent homeowners and b) being forced to repurchase soured mortgage-backed securities? A mortgage is a publicly registered lien on the house. The attached mortgage note is a debt instrument that can be, like a check, endorsed to others. This…

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  • Chinese PM Wen bathes in 290 tonnes of olive oil while buying Greek bonds

    Alexander Gloy

    My favorite pinata (http://www.youtube.com/watch?v=wi3semJPQzk), Greece, has received some help from China. On a visit to Greece (first by a Chinese Prime Minister in 24 years), Wen said China had bought some Greek government bonds and would do so again in the future. This has helped bring down 10-year Greek government bond yields below 10% for…

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  • Ireland’s bank bail-out cost reaches EUR 50bn; bond sales suspended

    Alexander Gloy

    Irish Prime Minister Brian Cowen just announced the government decided to cancel all bond auctions for the rest of the year because of “market turbulence”. The 10yr yield, after having reached a record 6.8% in recent days, retreated to 6.57%. Irish 10 year government bond yield. Source: Bloomberg.com On Thursday, Finance Minister Brian Lenihan revealed…

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  • Ireland’s solvency now ranked between Pakistan and Ukraine

    Alexander Gloy

    Ireland is now right between Ukraine and Pakistan when it comes to likelihood of default (which, over the next 5 years, is at 35%). This after Irish GDP fell 1.2% in Q2 (vs +0.5% expected) and Q1 growth rate was revised down to 2.2% (from 2.7%). GNP (gross national product) fell 4.1% (-2.7% expected). Irish…

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  • Greece cancels plans to sell additional debt

    Alexander Gloy

    Greece just cancelled a road show that was supposed to begin on Wednesday in London to sell more debt. The Prime Minister said “Greece won’t come to the market now” and “Greece is on target for deficit cuts”. Guys at the EFSF (European Financial Stability Fund) – on your marks! Looks like you might be…

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  • Ireland: Rumors, rumors… and spread widening

    Alexander Gloy

    Here we go again: Irish 10yr government bond yields 6.27% (+0.23) this morning after article in the Irish Independent about possible IMF intervention. Rumors of Anglo Irish Bank going bankrupt. 10 year Irish government bond yield. Source: Bloomberg.com Portugal 10yr now at 6.07% (+0.11), highest since May.

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  • More on BoJ intervention; Swiss unions demand same

    Alexander Gloy

    According to rumors the BoJ (Bank of Japan) last night spent JPY 100bn ($1.16bn) on currency interventions. The Yen weakened by 3%. Will the BoJ be successful? The Japanese trade balance is positive by JPY800bn per month (or JPY 40bn per trading day) meaning they would have to buy half a billion USD per day…

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  • Gold reaches new all-time high

    Alexander Gloy

    Gold reached a new all-time high on Tuesday. Two broker reports were speculating about the possibility of further “quantitative easing” (= printing money) by the FOMC (Federal Open Market Committee), either after its meeting in September (21st) or November (2-3rd). Stock markets initially greeted the rumors with enthusiasm. But if those rumors were true, the…

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