First, an old RealMoney Columnist Conversation post:
David Merkel
Moody’s Downgrades XL Capital Assurance
2/7/2008 3:34 PM EST
When the main rating agencies begin downgrading the lesser guarantors, the big guarantors are likely not far behind. Moody’s just downgraded XL Capital Assurance from Aaa to A3, and Security Capital Assurance From Aa3 to Baa3 (barely investment grade).
Psychologically, the major rating agencies, Moody’s and S&P, have been taking baby steps toward downgrading Ambac, MBIA and FGIC. But first they have to do the lesser guarantors that are in trouble. As I have pointed out before, the major rating agencies are co-dependent with the major guarantors, and that will only throw the guarantors over the edge if hurts them more to leave the guarantors at AAA. That will cost them future revenues to cut the ratings of the major guarantors, but it might save their larger franchises. (Fitch, on t...
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In a turnabout of fortune and what is clearly a children’s treasury for diabolical haters everywhere, Brian O’Hara, CEO of insurance giant XL Capital was forced to liquidate 80% of his personal holdings to meet a margin call .
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The bond market has had quite a shift since the last Fed meeting. What are the common themes?
Outperformance of credit, especially high yield.
Return of the carry trade.
Tax-free Munis have run.
Underperformance of Treasuries (longer= worse), and foreign bonds, particularly carry trade currencies like the Yen and Swiss Franc.
The willingness to take risks in fixed income has returned, particularly in the last two weeks. I don’t want to tell you that this is a trend tha... more
A word before I start: I’m averaging two book review requests a month at present. I tell the PR people that I don’t guarantee a review (though I have reviewed them all so far), or even a favorable review. They send the books anyway.
Included in every book is a 2-6 page summary of what a reviewer would want to know, so he can easily write a review. Catchy bits, crunchy quotes, outlines…
I don’t read those. I read or skim the book. If I skim the book, I ... more
Eight Fed Notes From: feeds.feedburner.com Post Date: 2008-04-24 23:23:15
1) Let’s start out with my forecast. I’ve given it before, but it has become the conventional wisdom — at the next FOMC meeting at the end of April, the Fed will cut by 25 basis points. They will make the usual noises about both inflation and economic weakness, as well as difficulties in the financial system, and comment that they have done a lot already — it is time to wait to see the power flow. The only difficulty is whether we get another blowup in the ... more
Sometimes we forget how bad it can be, and then we howl over minor bad times in the markets. We may be past a mania in residential housing, but we have not really experienced a panic or crash yet. People squeal over how bad the equity market is, but recently we haven’t had anything like the 2000-2002 experience, much less the 1973-1974 or 1929-1932 experience.
Two books come to mind when I think about disaster in a non-fear-mongering way: Manias, Panics, and Crashes, by Charles Ki... more
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