IntelligentguessIntelligentguessAnalysis of Market Economics - including but not limited to - the Stock Market, World Indexes, Economics, Hedging Business Risk, Currency, Commodity, Options and other Financial Instruments Articles
Alan Greenspan - The chutzpah!!!
2007-12-13 03:55:00 Alan Greenspan has written an article in the Wall Street Journal on the ongoing mortgage crisis in America. In it, he lays the blame for the crisis on almost everything else (including the collapse of the Soviet union) but for his own actions of keeping rates too low for too long as the Fed Chairman, even ... More About: Economics , United States , Regulation , Monetary Policy , Alan Greenspan
Adams Square Funding - RIP : From AAA to zilch in a year
2007-12-08 17:53:00 First there was Carina Now, Adams Square Funding I Ltd - A Credit Suisse managed hybrid CDO has gone into liquidation recently (Bloomberg Report). Further discussions at FT Alphaville and Calculated Risk show that even holders of AAA securities under the said CDO received nothing. Notable is the fact that this CDO was originated just a year ... More About: United States , Risk Management , Year
Carina CDO downgrades - A Lesson for all
2007-11-11 21:21:00 So, State Street (the manager) has begun liquidating securities held by the Carina CDO. Consequently the rating agency has to downgrade the senior classes (rated AAA earlier) by as much as 18 notches (to CCC- in some cases). Yup - You read it right - 18 notches in one go. What’s more the rating agency says that ... More About: United States , Lesson
An exercise in futility ?..
2007-11-07 16:33:00 The US Dollar gets into a free fall against most other assets after a Chinese official hints at diversifying deployment of reserves into stronger currencies The Euro sped past 1.47. It appears it’s only a matter of time we see 1.50 Crude nudges $100 per barrel. Still a little short of it but not much Gold goes past ... More About: India , United States , China , Australia , Exercise
A missed opportunity to fast forward reform
2007-11-02 04:53:00 That’s the headline for a piece i wrote for DNA. The full piece is reproduced below The mid term review of the monetary and credit policy is noteworthy not only for what it did (namely hike the CRR) but also for missing an opportunity for fast forwarding improvements in and developing the market structure, especially those related ... More About: India , Interest Rates , Markets , Reform , Opportunity
Inflation was low because oil prices surged..
2007-11-01 18:57:00 That’s the unusual headline of this Marketwatch news item. Greg Mankiw explains the phenomenon here. Share This More About: Economics , United States , Inflation , Flat , Prices
RBI - Monetary Policy : Hawkish
2007-10-30 08:19:00 The Reserve Bank of India has released its semi annual review of monetary policy. Key measures Increase in cash reserve ratio (CRR) by 50 basis points. No change in policy interest rates While many analysts are calling the policy statement neutral and attributing the CRR hike to liquidity management, the accompanying statements seem to convey a fairly hawkish view ... More About: Monetary Policy , Policy
To Hike or to Cut
2007-10-25 06:45:00 This is a guest post by KRG, treasury head of a leading financial institution in Mumbai, India . As the October credit policy is round the corner, few thoughts on what we could expect from RBI?. To start with, there is some pressure from the global quarters, with the US Fed likely to cut the next day of ... More About: Monetary Policy , Interest Rates , Hike
Of Misbah, misbehaviour and messiahs
2007-09-28 05:28:00 This is a piece I wrote that has been published in DNA. The published piece has a few minor edits. The full piece is reproduced below Mervyn King, the Bank of England chief has had a tough few weeks. Critics have decried his lack of timely action leading to the bailout situation with Northern Rock. On the other ... More About: Cricket , Economics , India , United States , United Kingdom
India relaxes rules for money outflows
2007-09-25 20:40:00 The Reserve Bank of India has relaxed norms for money to flow out of the country. This is an acknowledged attempt at relieving the upward pressure on the Indian Rupee (INR) in the foreign exchange market. Specifically a) Companies can now invest 4 times their net worth in overseas joint ventures b) Mutual Funds are now allowed to invest ... More About: Money , Markets , Currency , Rules
RBI?s Manual on Banking and Financial Statistics
2007-08-03 22:11:00 The Reserve Bank of India has released a Manual on Financial and Banking statistics. This 312 page tome is sure to become a wonderful reference for any analyst involved in analysing monetary, financial and banking aggregates in India. Great job done, I should say. Share This More About: Economics , Statistics
American Home Mortgage - RIP
2007-08-03 21:22:00 American Home Mortgage , America’s 10th largest mortgage lender has announced that it will shut shop effective Friday. About 7000 workers lose their jobs. When the history of this crisis is written, this would rank as a critical milestone, not Bear Stearns, not Blacksone, not KKR. None of those 7000 persons probably did anything to deserve ... More About: United States , American , American Home Mortgage
Time RBI issued bonds - My piece in DNA
2007-08-01 05:27:00 I wrote a piece for DNA after the release of the quarterly review of monetary policy by the Reserve Bank of India yesterday. This has been published in the Money section of DNA today Given below is the full text of the piece While governor Reddy has answered some questions through his policy actions, several others remain ... More About: Analysis , Monetary Policy , Time , Bonds
Yet another sub prime casualty
2007-07-31 20:54:00 American Home Mortgage now says it cannot borrow. Sigh! Share This More About: Casualty , Prime , Casual , Rime , Prim
Roll back, Roll back - I say Yes
2007-07-28 12:01:00 So, now the communists want the government (the government that they themselves support and ensure that it does not take any decisions) to roll back the decision to grant freedom to public sector undertakings to invest a portion of their surplus funds in public sector mutual funds. Frankly, I support their demand. But not for the reason that they cite. It’s hilarious. The commies say that this decision would only ensure that foreign investors heap handsome profits. This only serves to show their naivete when it comes to matters of economy and markets. It needs to be rolled back or should I say modified so that public sector undertakings can invest in all mutual funds, not just those that belong to the public sector itself. This ensures that there is a level playing field for all. No undue or unfair advantage should be provided to select entities based on lineage. Let competition rein and performance decide the turn of events in the marketplace. Share This More About: Roll , Back
RBI’s untenable currency policy
2007-07-28 11:42:00 Economist Ila Patnaik has written an excellent piece on the non tenability of India’s currency policy, specifically the Reserve Bank of India’s resolute defence of the Indian Rupee’s spot level against the US dollar. Coming as it does on another addition of USD 3 bn to India’s forex reserves last week and the upcoming monetary policy statement on Tuesday, the lessons to be learnt from the article are timely. In particular note the last two paras - repeated here: A consistent monetary policy is one that is speculation-proof. The Bank of England never gets into a dogfight with speculators. It learnt its lessons in 1992. Now it calmly targets inflation. An inconsistent monetary policy invites speculative capital flows. The policy mistakes of the RBI are a source of risk. They induce unstable speculative capital flows. The defence of the dollar is the root cause of these difficulties. The task of the credit policy announcement on July 31 is to show an exi... More About: Currency , Policy , Poli , Tena
Reddy-ing for another monetary policy
2007-07-24 04:34:00 This is my second piece for DNA, which looks at the options before the RBI Governor when he unveils the first quarterly review of monetary policy for the financial year 2007-2008. /the policy review is due July 31, next Tuesday. Here’s the link to the article. Share This More About: India , Monetary Policy , Policy , Poli , Reddy
Stress Testing for banks - My article in DNA
2007-07-11 06:47:00 DNA has published a small piece written by me on the subject of stress testing for India n banks and financial institutions. Here’s the link. Feedback and Comments are welcome. Share This More About: Banks , Article , Testing , Stress
Europe : No change in rates (ECB expresses fears over the medium and longer
2007-07-06 00:38:00 The ECB at at today?s meeting decided to leave the key ECB interest rates unchanged at 4.00%. The ECB stated that Monetary policy is still on the accommodative side The ECB’s percepective on its future expectations is explained below: . Economic Activity Economic activity in the euro area in the second quarter of 2007 continued to expand in line with the ECB’s baseline scenario. ... More About: Europe , Monetary Policy , Euro area , Change , Rates
Europe : Producer Prices in May?07 grew at its slowest pace since July?04 (
2007-07-05 08:30:00 Situation On a monthly basis Producer prices rose by 0.34% (0.43% in Apr?07) On an annual basis Producer prices rose by 2.36% p.a ( 2.37% p.a in Apr?07) Background Oil prices have risen by 6.29% on an average in Jun?07 (over May?07). This cause Core CPI ( ex Energy) to start rising. The Europe an Commercial bank ( ECB) aims at inflation ( CPI ) rates of below, but close to, ... More About: Inflation , Euro area , Pace , July
USA - Fed rate behavior under the various Presidencies since 1954
2007-07-04 23:21:00 (Click on image for a larger Visual) Share This More About: United States , Monetary Policy , Behavior , The V , Under
Europe - Inflation down in May?07, but rising energy prices can change this
2007-07-03 14:30:00 Situation On a monthly basis Consumer prices rose by 0.24 % (0.63 % in Apr?07) On an annual basis Consumer prices rose by 1.87 % p.a ( 1.91% p.a in Apr?07) On an monthly basis Core Consumer prices - EFAT ( Ex Energy , Food , Alchohol and Tobbaco ) rose by 0.17 % p.a ( 0.53 % p.a in Apr?07) On an annual basis Core Consumer prices ( EFAT) rose by 1.94% p.a ( 1.90 % p.a in Apr?07) Background Oil ... More About: Europe , Inflation , Euro area , Change
UK : Inflation ( CPI and PPI ) drops in May?07
2007-07-03 08:30:00 Situation in May?07 On a monthly basis Consumer prices rose by 0.29 % (0.29 % in Apr?07) On an annual basis Consumer prices rose by 2.54 % p.a ( 2.75 % p.a in Apr?07) On a monthly basis Producer prices rose by 0.40 % (0.50 % in Apr?07) On an annual basis Producer prices rose by 2.46 % p.a ( 2.47 % p.a in Apr ?07) On an monthly basis Core Producer prices ... More About: United Kingdom , Inflation , Drop , Flat
USA - Fiscal deficit of 67.69 bn $ in May?07
2007-07-03 00:40:00 Situation Fiscal deficit for the month of May’07 stood at -67.69 bn $ Fiscal deficit as a % of Real GDP stood at - 6.18% at the end of Q1 2007 ( Q1 always tends to have the worst fiscal situation as a % of GDP) . Background ( click on image for a larger visual) The first two months of ... More About: United States , Deficit
USA - Inflation (specially core) faces a rising risk
2007-06-29 10:34:00 Situation in May’07 On a monthly basis Consumer prices rose by 0.61 % (0.65 % in Apr?07) On an annual basis Consumer prices rose by 2.69 % p.a ( 2.57 % p.a in Apr?07) On a monthly basis Producer prices rose by 1.21 % (0.97 % in Apr?07) On an annual basis Producer prices rose by 4.09 % p.a ( 3.17 % p.a in Apr ?07) On an ... More About: United States , Inflation , Faces , Core , Risk
USA : No change in Fed rate - concerns remain on inflation
2007-06-29 01:00:00 Situation The Federal Open Market Committee ( FOMC ) met on June 27th 2007. The FOMC releases a statement after their meeting - reflecting the Interest rate decision and their thinking about the future. Statements are standardized so that there is no room for a mis - understanding. Comparing statements of the past - to the ... More About: United States , Monetary Policy , Inflation , Change , Once
Indian Money rates : Situation normal?..
2007-06-28 21:33:00 As we had predicted, India n money market rates have retraced to saner levels after hitting ridiculous lows of 0.01% p.a. on a sustained basis for the past couple of weeks. Overnight rates climbed to levels of 8.25%, higher than the central bank’s repo rate, the rate at which it infuses funds. No wonder the RBI received ... More About: Money , Indian , Monetary Policy , Interest Rates
Stress Testing : RBI releases guidelines
2007-06-26 19:46:00 The Reserve Bank of India has released guidelines, for banks, related to stress testing as part of its focus on improvement in risk management practices. The relevant notification lists a) the utility of stress testing, b) framework requirements, and c) relevant remedial actions to be taken. Banks have been advised to put in place appropriate stress test policies and relevant ... More About: Risk Management , Testing , Stress , Guidelines
Euro - Orders in Apr?07 grow at the same pace as Mar?07
2007-06-26 09:24:00 Situation On a monthly basis production contracted by -0.45% ( grew by 2.85% in Mar?07) On a yearly basis production has grown by 9.03% p.a ( grew by 10.17 % p.a in Mar?07) Background Production has been on a downward growth trend since May?06 ( 5.64% p.a in May’06 and 3.06% p.a now) The ECB raised interest rates to 4.00% on June 6 2007 Conclusion (click on image ... More About: Euro , Euro area , Industrial Production , Pace , Order
CRR Hike? - Unlikely
More articles from this author:2007-06-25 22:22:00 Ever since overnight money rates in the Indian money markets have crashed, sometimes to as low as 0.01% per annum, analysts have been expecting measures from the Reserve Bank of India to bring it back to normal levels (within the LAF band of 6% - 7.75%). Surprisingly, except for the odd small additional government borrowing (which is managed by the central bank), RBI has maintained complete silence on the issue. Many analysts have even expected (or called for) another hike in the cash reserve ratio (CRR). In my view, the central bank would be very wary of using a blunt instrument like an increase in the CRR. It’s ability to conduct open market operations is also limited, since the amount of securities held on its books are generally insufficient to effectively conduct one. And, on the issue of market stabilization bonds (MSS), it is fast approaching the limit it set for itself. It therefore has little choice but to let the liquidity remain within the system. A consequen... More About: Like , Hike 1, 2, 3, 4, 5 |
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