Felix Salmon

The SEC’s weird case against Wing Chau

By Felix Salmon
October 19, 2013

Merrill Lynch closed its Octans 1 CDO in September 2006. By April 2008, a year and a half later, the CDO had completely imploded, inflicting roughly $1.1 billion of losses on its outside investors. Now, five and a half years after that, the SEC has finally got around to launching a lawsuit against the CDO manager, Wing Chau.

Bad investment of the day, Fantex edition

By Felix Salmon
October 18, 2013

Now that the ban on general solicitation is over, all manner of weird companies are emerging from the nether regions of the internet, trying to persuade people to part with their money in return for a nominal stake in some unlikely investment. One of the glossiest of these new companies is Fantex, which just filed a prospectus for its first athlete-IPO.

Barack Obama vs zombies

By Felix Salmon
October 16, 2013

There’s a strain of triumphalism coursing through the blogosphere today, on the grounds that the bonkers wing of the Republican party is going to have achieved exactly none of its own goals, while inflicting upon itself a massive black eye. The markets are feeling vindicated too: over the past week of DC craziness, the stock market has risen, pretty steadily, a total of about 2.5%. As a trading strategy, “tune out all news from inside the Beltway” seems to have worked very well — it’s a complete vindication of the Nassim Taleb idea that investors shouldn’t read the newspaper. On top of that, the potential debt default was by its nature almost impossible to trade: outside a few obscure instruments like US CDS, it’s very difficult to make money from a trade betting that tails are going to get fatter, for a short while.

The default has already begun

By Felix Salmon
October 14, 2013

The big question in Washington this week is whether, in the words of the NYT, we’re going to see “a legislative failure and an economic catastrophe that could ripple through financial markets, foreign capitals, corporate boardrooms, state budget offices and the bank accounts of everyday investors”. In this conception — and I have subscribed to it just as much as anybody else — the sequester is bad, the shutdown is worse, and the default associated with hitting the debt ceiling is so catastrophic as to be unthinkable.

Is JP Morgan being unfairly singled out?

By Felix Salmon
October 11, 2013

JP Morgan is the first big bank to suffer a quarterly loss on account of multi-billion-dollar legal bills. It is also the most profitable bank in America (or was, up until this morning). Which means there are three possibilities here:

Kill the sticky nav

By Felix Salmon
October 11, 2013

It might have been the Slate redesign which pushed me over the edge, I’m not sure. Maybe it’s just PTSD from Reuters Next. But at this point I will seriously donate a substantial amount of money to anybody who can build a browser plugin which automatically kills all persistent navbars, or “sticky navs”, as they’re also known.

How Janet Yellen should embrace the Fed’s dissenters

By Felix Salmon
October 9, 2013

The Fed Whisperer, John Hilsenrath, had a great insidery article yesterday about forward guidance, and about the Fed’s ability — or lack thereof — to effectively signal its future actions. And it was timely, too, coming as it did a day before the official nomination of Janet Yellen as the new Fed chair.

The un-terrifying Treasury bill market

By Felix Salmon
October 8, 2013

Neil Irwin isn’t mincing words. “What’s happening in the Treasury bill market today should terrify you” is the headline, and this is the accompanying chart:

Felix Salmon smackdown watch, debt prioritization edition

By Felix Salmon
October 7, 2013

On Thursday I said that the US is not going to default on its bonded debt, even if the debt ceiling is reached: “with Jack Lew (or anybody else, really) as Treasury secretary, you can be sure that debt service payments would be priority number one”.