Felix Salmon

Counterparties

By Nick Rizzo
November 23, 2011

Izzy Kaminska cleverly argues that Swiss bonds are now Giffen goods — FT Alphaville

The Greece basis trade: What could go wrong?

By Felix Salmon
November 22, 2011

Why did Gretchen Morgenson write that column on Sunday about Greek credit default swaps? The answer is that the irresistible lure of writing about CDS lured her into the very murky waters of the Greek basis trade — the trade where you own Greek bonds and then hedge them by buying credit protection on Greece. Now this trade is emphatically not a big deal even in the context of the Greek debt restructuring: it’s probably a couple of billion euros in total, and won’t make much difference either way. But the outcome of the trade is likely to set an important precedent for the sovereign CDS market more generally, so it’s worth looking in a bit of detail at exactly what’s going on here.

Counterparties

By Nick Rizzo
November 21, 2011

Some fresh links selected today from Counterparties.com:

Credit Suisse: The “last days” of the Euro are here — FT Alphaville

Why you can’t always trust auction results

By Felix Salmon
November 21, 2011

Back in May, Sarah Thornton started worrying about the system of third-party guarantees and irrevocable bids at high-profile auction houses. I struggled to see what the fuss was about:

Can austerity cure contagion?

By Felix Salmon
November 21, 2011

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I love this video from Mark Fiore:

Sovereign Transmitted Debts don’t have to be embarrassing or keep you from other financial relationships…

Correlation chart of the day, hedge-fund edition

By Felix Salmon
November 21, 2011

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Mark Gongloff finds this astonishing chart in a Morgan Stanley note this morning. It shows the degree to which hedge fund returns, in aggregate, are correlated with our old friend the S&P 500. And it turns out that even though the correlation has never been higher, it’s still somehow rising.

Why tuition costs are rising

By Felix Salmon
November 21, 2011

I’m late to Jim Surowiecki’s column on student loans, but I wanted to respond quantitatively to his theory about productivity growth at universities:

CDS conspiracy theory du jour, Gretchen Morgenson edition

By Felix Salmon
November 20, 2011

Why oh why does Gretchen Morgenson insist on writing about credit default swaps as though she understands them? She’s done it again today, with an article about Greece which ratchets the conspiracy theorizing up to frankly bonkers levels:

Counterparties

By Nick Rizzo
November 19, 2011

Europe’s web of debt, illustrated — BBC

S&P makes a bit of an error with a headline about Brazil’s credit rating — Bloomberg