Vols, Risk Reversals & Pin Risk – tradingfloor
FX option vols 22nd Sep 12:30 GMT
EUROCRISIS
Michael Boskin: simultaneous sovereign-debt, banking and currency crises. Everyone knows how to proceed – debt restructuring and selecting which banks are worth saving – and saving them.
Just a rumor, and would not have much effect anyhow.
European Liquidity Update – ZH
Libor dispersion continues, and the rates are not even workable.
** The Sovereign Risk Dislocation Trade Means Big, Black Clouds Coming To "Risk Free" – ZH
Given the amount of market manipulation and even lack of activity, CDS prices are better indicators for the risk-free rate, than the bond yields themselves.
“Disturbing” Charts – The Trader
Good European bond yield vs. CDS spread charts
When Italian bonds trade as risk assets – alphaville / FT
During risk-off, Ita bonds trade unchanged, suggesting the ECB tries to keep the bond yield from moving with risk
The Stability and Growth Pact - crisis and reform – ECB (pdf)
(pdf) Beyond the economics of the euro - analysing the institutional evolution of EMU 1999-2010 – ECB (pdf)
FINANCIAL CRISIS
Soros: We are in a double dip recession – Pragmatic Capitalism
Financial Markets Tumble on Endless Flow of Bad News – The Source / WSJ
Storm Clouds Send Investors to Dollar – The Source / WSJ
Markets are signaling an economic downturn – Humble Student of The Markets
Bond yields to new low, copper breaks below support, banks relatively weaker than market, USD stronger, next will be S&P breaking to new low?
The SNB presents… – alphaville / FT
Fresh data from Swiss National Bank shows the extent of intervention, and recent market activity shows that the franc is no more a safe haven.
FED AFTERMATH
** More Causal Confusion: The FOMC Decision and the Market Reaction – EconoMonitor
Very good post listing plenty of reasons for what happened before, at and after.
The Fed's "Operation Twist" – The Capital Spectator
Summaries of six articles on the FOMC outcome. Also see my Super Fed Aftermath.
The Twist in the Fed's Stimulus Plan: Banks – The Curious Capitalist / TIME
While lower interest rates are good, it does not matter, as banks are not lending.
Twist? We want more – Buttonwood’s / The Economist
With the twist priced in by the market, gloomy statement and no hint at extra action, markets tumbled
Look Out Below, Post FOMC Version – EconoMonitor
Twist and Yawn – EconoMonitor
The Fed seemingly disappoints everyone – Free exchange / The Economist
The not-so-fearless Fed? – alphaville / FT
The Fed Disappointed… The Great Collapse Is Here – Gains Pains & Capital
OTHER
Taming the banks: long overdue or utter folly? – John Kay Ring-fencing is the only way. The only job losses the bankers are warning are their own.
Don’t listen to the lobbyists: they never go away – John Kay
The UBS-case came at a perfect time, and maybe the ring-fencing has a chance. Bank lobbying is just like record company lobbying – money from the majority to a minority.
Economics fails to resolve exceptions to the rule – John Kay
A dynamic reflexive system is hard to model.
Economics Debunked: Chapter Two for Sixth Graders – naked capitalism
Long interesting essay on economics as science.
UBS
(reg) UBS Trader Faces New Charge – WSJ
Is Oswald Grubel leaving UBS? – Money Is The Way
UBS Trader to Remain in Custody – DealBook / NYT