Earlier this year, when Congress seemed to come together and avoid a debt ceiling crisis, I listened to a podcast that said we would right back to the same problem in the fall. I didn’t pay much attention because I was annoyed with the government and the fall was months away. Although I am loving the cooler weather, I’m annoyed again because the deadline to deal avoid a government shutdown… Read More
September will mark the 25th anniversary of the failure of the massive hedge fund, Long-Term Capital Management (LTCM), and my podcast feed is filling up with retrospectives. One podcast featured Roger Lowenstein, the author of When Genius Failed, which is considered the definitive work on the subject. I read it when it came out in 2000 and once again in subsequent years, and it’s a great book that I thoroughly enjoyed…. Read More
“Businesses are Falling Behind on Their Loans Like it’s 2008.” This is a headline that popped up on my Bloomberg TOP news screen recently. Since the financial crisis, every bank I have talked to has been focused on increasing C&I lending. After being snake bit by real estate, banks have all chased after commercial loans. That makes a headline like this particularly alarming and a situation worth further investigation. Looking… Read More
Yesterday, I was in the middle of updating a chart about the basic risk and return characteristics of corporate bonds when Standard and Poor’s announced they were downgrading bonds issued by Exxon-Mobile from AAA to AA+. It’s a shame to see another company lose their prime rating – there are now only two companies that have an AAA-rating. Exxon had held the prime rating since 1930, if you include predecessor entities,… Read More
It should not come as a surprise to anyone that markets have performed very well over the past five years. The S&P 500 has earned 16.12 percent per year in the five years that ended in February. Few investors realize that corporate bonds have also done very well over the past five years. For the five years that ended in February, the Barclays US Corporate Bond index has earned 6.22… Read More
In the December 2012 issue of ALM Insights, I wrote an article titled Basel III’s AFS Provision. At the time of the article, the provision detailing the effects of Accumulated Other Comprehensive Income (AOCI) on regulatory capital had been delayed due to a “wide range of views”, and the final outcome was still very much up in the air. Few in the banking industry thought that forcing banks of all… Read More
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: King Dollar Finally, A Regulation You Can Opt-Out Of Reading The Tea Leaves
A client called me last week and asked if I had seen an exchange traded fund (ETF) with a 20 percent yield. In fact, I hadn’t. The client said that he was sure that the yield was phony since it was so high that it was ‘too good to be true,’ but wondered how the ETF could have such a high yield. Good question. In this case, the product is… Read More
The Wall Street Journal had a headline yesterday that I couldn’t resist: Junk Bonds Deserve a Place in Investors’ Portfolio. I like to read articles where I agree with the fundamental proposition, but I REALLY like to read articles where the premise completely contradicts my view, or the view of Acropolis. This article falls in the second category since we believe that junk bonds don’t deserve a place in your… Read More
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: The Plan to Wind Down Fannie and Freddie Economic Analysis – Fed Digests Mixed Data Bond… Read More
