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Markets
Three Thoughts for Friday
The past two weeks have seen large disruptions in the global capital markets and various policy responses. Market participants are having a difficult time getting a handle on these developments. There are three things investors should…
Emerging Markets Continue To Outperform Developed Markets
We believe that this most recent correction in EM markets will help fundamentals to matter more. The easy part of this EM rally is over, so it will become much more important for global investors to continue focusing on the fundamentals. We…
Saving too big to fail French banks would cost AAA rating
There are two spotlights in Europe today. France and Switzerland and their problems are intertwined. Despite denials by various French officials, the market suspects there is sufficient smoke to indicate a fire. Reuters reports that an…
After the FOMC, Norway and the UK
If the Fed does not do anything new, Bernanke and Co. risk disappointing the market and the fallout that may follow. QE3 at this juncture does not seem a likely and few observers disagree. After the FOMC meeting is out of the way, the…
Andy Xie Recommends China Diversify Out Of Treasuries
The Chinese foreign reserve accumulation is really about the exchange rate peg. As long as the Yuan's dollar peg remains near present levels, the current account imbalance will result in an accumulation of dollar reserves. Former Morgan…
Gold is the New Deutsche Mark
We’re not taking a victory lap here but think gold is now in the midst of a massive repricing as a legit global currency/store of value. Central banks are buying even at prices north of $1,500 per ounce. These are strong hands and not the…
Why U.S. of AA Matters
A U.S. downgrade is, in itself, almost meaningless. A nation that issues debt denominated solely in its own currency and which is in full control of its monetary policy, cannot default unwillingly. Nations default because they run out of…
US Downgrade Shines A Light On Other Weak AAA Credits
With the US downgrade now out of the way, we think market attention will swing back to other Developed Markets countries that are facing downward pressure on ratings too. Here is a summary of our most recent ratings outlooks for Developed…
Holders of US Treasury Debt
Below is a pie chart representing the percentage of marketable U.S. treasury securities held by various investor classes as delineated in the latest Federal Reserve flow of funds report.
Implication of S&P Downgrade and Possible Policy Response
Standard and Poor’s downgraded U.S. creditworthiness to AA+, becoming the first to remove the triple-A status from the world’s largest economy and largest debtor. Moreover, a negative outlook has been retained. The element of surprise…