Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1322.0 | 7.0 | 0.53% |
| Eurostoxx Index | 2147.7 | -0.3 | -0.01% |
| Oil (WTI) | 91.13 | 0.3 | 0.30% |
| LIBOR | 0.467 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 82.27 | -0.131 | -0.16% |
| 10 Year Govt Bond Yield | 1.72% | -0.02% | |
| RPX Composite Real Estate Index | 177.4 | 0.3 |
Markets are higher this morning on hopes of stimulus in China. Spain is working on a rescue plan for Bankia, its 3rd largest lender. Spanish banking woes have pushed their sovereign debt to around 6.5%, close to the highs of last November. While Greek and Spanish fears are pushing sovereign yields higher, we have not seen a corresponding rise in EURIBOR / OIS, which is a signal that the banking system in Europe is taking a sanguine view, at least for now. Meanwhile, Treasuries and bonds are higher, with the 10 year bond now at 1.73%
The S&P Case-Schiller index posted a slight sequential gain in March, but was still down 3% YOY, and made a new post-crisis low. Nationwide, house prices on average are back at their mid-2002 levels. That said, the pace of the decline has definitely slowed.
Chart: Case-Schiller
Filed under: Morning Report |
All Things in Moderation 
If the coupon on a 1 yr Aussie bond is 6.5% how does Spain compete for funds?
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mark:
If the coupon on a 1 yr Aussie bond is 6.5% how does Spain compete for funds?
The first thing to note is that what you should be looking at is the yield-to-maturity (YTM) not the coupon. The “current” 1yr note in the AUD market is actually an old bond issued in the early 2000s that has 1 year left to maturity, hence the high coupon. But because of the high coupon relative to current rates, it is trading at a steep premium price, about 103.50, producing a YTM of about 2.70%.
Aside from that, Brent is correct. Any investor seeking to take advantage of relatively high rates in a currency other than his base currency is necessarily taking on currency risk. Any attempt to hedge out this risk through the use of FX forwards (an agreement to convert one currency to another on a future date at a pre-determined FX rate) will necessarily give back whatever is gained on the interest rate differential.
An investor can, of course, not do the currency hedge and hope that FX rates remain unchanged or even move in his favor. This so-called carry trade was all the rage many years ago, when many investors borrowed in yen at really low rates, invested in higher yielding currencies like dollars, and picked up not only the yield differential between their borrowing costs and what they earned on the bonds, but also picked up on the FX when the dollar strengthened against the yen. The movement of the $ versus the yen over the last 5 years, going from 120 in ’07 to 80 now, has been pretty devastating to the trade.
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Those are not new issue Aussie bonds. Got it. Now. Thanx.
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Scott could probably answer this way better than I, but the expected return to an investor is based on the expected return on the bond and the expected return on the currency. My guess is that if you hedged the currency risk, the returns would be similar.
That said, I defer to Scott on this one….
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For those who haven’t seen this, the New York Times has a new piece on the Star Chamber process used by the Obama administration for it’s targeted killing/assassination program.
“Secret ‘Kill List’ Proves a Test of Obama’s Principles and Will
By JO BECKER and SCOTT SHANE
Published: May 29, 2012 ”
Reading carefully, what I found noteworthy was how the Times tries it’s best to give nuance to Obama’s motives while of course dismissing the motives in the Bush Administration:
Contrast
“Aides say Mr. Obama has several reasons for becoming so immersed in lethal counterterrorism operations. A student of writings on war by Augustine and Thomas Aquinas, he believes that he should take moral responsibility for such actions. And he knows that bad strikes can tarnish America’s image and derail diplomacy. ”
with the dismissal of the Bush Administration interrogation tactics as “brutal” and presumably illegitimate ipso facto:
“Mr. Brennan, a son of Irish immigrants, is a grizzled 25-year veteran of the C.I.A. whose work as a top agency official during the brutal interrogations of the Bush administration made him a target of fierce criticism from the left. He had been forced, under fire, to withdraw his name from consideration to lead the C.I.A. under Mr. Obama, becoming counterterrorism chief instead.
Some critics of the drone strategy still vilify Mr. Brennan, suggesting that he is the C.I.A.’s agent in the White House, steering Mr. Obama to a targeted killing strategy. But in office, Mr. Brennan has surprised many former detractors by speaking forcefully for closing Guantánamo and respecting civil liberties.
Harold H. Koh, for instance, as dean of Yale Law School was a leading liberal critic of the Bush administration’s counterterrorism policies. But since becoming the State Department’s top lawyer, Mr. Koh said, he has found in Mr. Brennan a principled ally. ”
The same person (Brennan) who is “brutal” in the Bush Administration is suddenly “principled” once he is in the Obama administration.
Glenn Greenwald on the piece:
“One of the most glaring myths progressives like to tell themselves and others is that the GOP refuses to praise Obama no matter what he does. This is patently false. Virtually every one of the most far-right neocon Bush officials — including Dick Cheney himself — has spent years now praising Obama for continuing their Terrorism policies which Obama the Senator and Presidential Candidate once so harshly denounced. Every leading GOP candidate except Ron Paul wildly praised Obama for killing U.S. citizen Anwar Awlaki without a shred of due process and for continuing to drop unaccountable bombs on multiple Muslim countries.”
http://www.salon.com/2012/05/29/obama_the_warrior/singleton/
http://www.salon.com/2012/05/29/militants_media_propaganda/singleton/
Really though, there isn’t anything more to say at this point. If the erosion of civil liberties is a concern, then both Obama and Romney are part of the problem. The only alternatives on these bipartisan consensus policies are the “fringe” candidates.
Hence my support for Gary Johnson.
http://www.garyjohnson2012.com/front
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jnc (from the article):
A student of writings on war by Augustine and Thomas Aquinas, [Obama] believes…
I wonder what exactly, in the view of this reporter, qualifies one as a “student” of Augustine and Aquinas. Does anyone actually believe this is true?
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Hence my support for Gary Johnson.
Hence mine, too.
This morning Greg Sargent at PL noted the irony of the apparent lack of anger on the left at the continuing executive disregard for due process. AllButCertain told him, in essence, that he was a traitor to the cause by joining in Greenwald’s criticism. I gently (IMHO) suggested that some of us took this assertion of the executive privilege to call (me) an enemy of the state quite seriously, and that unlike the false equivalences that are customary this is a true equivalence; further it is one that reflects the evil in both parties. So I told Mr. Sargent that I admired his recognition of the issue.
I do think the treatment of known enemies in combat zones is clearly within the war power; don’t misunderstand me. I also think that in the world of espionage there is plenty of room for activity we need never know of. But giving statutory cover to the indefinite detention of an American or even a legal alien within the USA or under US authority is intolerable, whether urged by Cheney or by BHO.
Scott, I have no quibble with the assertion about BHO’s familiarity with classic Roman Catholic philosophers on warfare. I think the author of that sentence is unduly impressed, however. I have read both Nietzsche and Kierkegaard, in translation, thankfully. Big deal – so what? If I knew BHO had absorbed, for example, I would think it worth mentioning.
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Mark:
Scott, I have no quibble with the assertion about BHO’s familiarity with classic Roman Catholic philosophers on warfare. I think the author of that sentence is unduly impressed, however.
Maybe I am being too ungenerous, but when I hear that someone is a “student of” something, I think it implies a lot more than just a passing familiarity with the subject, and even more than having received some sort of education on the subject. For example, if someone is described to me as a student of baseball, I expect a lot more than just an understanding of the rules or even the history of the game. I expect a true passion for, and some kind of expertise into, the subtleties of the game that the average fan, familiar though they may be with the game, does not possess. I think calling Obama a “student” of Augustine and Aquinas conveys an impression of his thinking and knowledge that is almost certainly false. But, again, maybe I am being too ungenerous.
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Mark:
But giving statutory cover to the indefinite detention of an American or even a legal alien within the USA or under US authority is intolerable, whether urged by Cheney or by BHO.
We’ve tolerated it before.
Mark, jnc, nova…a couple of questions for you. In 2008 Obama campaigned against the supposed injustice that is Gitmo and the indefinite detention of enemy combatants held there, promising to close it down. Obviously he has failed to follow through on that promise, and now seems happy to have the power to indefinitely detain not just foreign fighters captured overseas but American citizens within the USA. Was Obama’s 2008 stance on Gitmo a simple example of pure electoral cynicism, or was it an honestly held view of the notion of indefinite detention that has been transformed by the responsibilities of being the President?
If the former, is that something you believed at the time or have you come to realize it only after O’s actions as president? If the latter, what makes you believe that the same thing won’t happen with Gary Johnson?
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If the latter, what makes you believe that the same thing won’t happen with Gary Johnson?
GJ was a very pragmatic governor and pulled his D NM Lege gradually more libertarian, as an R gov. In the impossible event that NoVAH, JNC, and I elect him POTUS, I suspect he would pull Congress more libertarian no matter which party holds the Congress, rather than veto everything. He would pick his battles. That is the best I can tell you about Johnson. Unlike JNC, I do not think he is an idealogue. But I think he knows what direction he wants to go, and I think he is clear, consistent, and convincing about that.
Like others here, I think his presence in the debates would force the other two off their talking points.
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“ScottC, on May 29, 2012 at 12:11 pm said:
jnc (from the article):
A student of writings on war by Augustine and Thomas Aquinas, [Obama] believes…
I wonder what exactly, in the view of this reporter, qualifies one as a “student” of Augustine and Aquinas. Does anyone actually believe this is true?”
I’m pretty sure that President Obama has at least an undergraduate familiarity with Augustine and Aquinas and can discuss them with sufficient authority to be quoted as an expert by the NYT.
The key point is the lengths to which the NYT author is willing to go to in order to justify and preemptively apologize for the administrations actions. I’m sure a NYT piece on the Bush administration doing the exact same activities wouldn’t reference Augustine and Aquinas at all.
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jnc:
The key point is the lengths to which the NYT author is willing to go to in order to justify and preemptively apologize for the administrations actions. I’m sure a NYT piece on the Bush administration doing the exact same activities wouldn’t reference Augustine and Aquinas at all.
A NYT political reporter carrying water for Obama…who could believe it?
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“The Justice Department’s Office of Legal Counsel prepared a lengthy memo justifying that extraordinary step, asserting that while the Fifth Amendment’s guarantee of due process applied, it could be satisfied by internal deliberations in the executive branch.”
Okay then.
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Hence my support for Gary Johnson.
Hence mine, too.
Jeebus, I’m getting close myself. And in addition to that we just rented our house to a couple of bankers……………..lol
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/chanting
one of us. one of us
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“lmsinca, on May 29, 2012 at 2:15 pm said: Edit Comment
Hence my support for Gary Johnson.
Hence mine, too.
Jeebus, I’m getting close myself. And in addition to that we just rented our house to a couple of bankers……………..lol”
“You, you may say
I’m a dreamer, but I’m not the only one
I hope some day you’ll join us
And the world will live as one”
– John Lennon
(or in the case of us libertarians “And the world will live as a bunch of autonomous individuals”, but you get the point).
Even if Gary Johnson doesn’t win, the process will be better if he is in the debates rather than having to endure an hour of talking points being spewed back and forth between Romney and Obama.
Also, I thought of you lmsinca with the new reality show on evictions that’s come out:
“World’s Worst Tenants”
“Premiering Tuesday, June 12 at 10:00 PM, ET/PT only on SPIKE, World’s Worst Tenants follows professional evictor Todd Howard and his crack team, business partner Rick Moore and wife Randye, as they remove the most despicable, outrageous, dangerous and insane tenants from residential, commercial and retail units in which they manage.
Howard and his team take viewers behind closed doors into the most heated, high-stakes disputes between landlords and their tenants. Each mission documents the process and procedure that allows this no-holds-barred team to operate within legal guidelines to resolve each case on behalf of their clients. In season one, viewers will see Howard, Rick, and Randye step into several tumultuous situations, including an organized illegal fight club, a marijuana grow farm, and an unlicensed cosmetic surgery clinic, amongst many others.
Born and raised in Spartanburg, South Carolina, Todd Howard, 47, joined the U.S. Marines in 1983 at the age of 18. Following four years of duty, Howard left the Marines and relocated his home base to California, where he continued to work as a personal trainer and nutritionist. In 1990, Howard met his wife Randye in Palm Springs, CA while at a bodybuilding competition. In 1996, Howard was introduced to property management by his future business partner Rick Moore after selling him his home. Soon after the two started their San Diego County based business, which currently owns and manages over 100 properties with a portfolio that includes commercial, resident, and raw land development projects. The series showcases the most compelling stories in his career through reenactments of many of the actual confrontations that Howard and his team have experienced over the years.”
http://www.spike.com/articles/me4zot/worlds-worst-tenants-spike-tv-evicts-nightmare-neighbors-with-world-s-worst-tenants
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“novahockey, on May 29, 2012 at 1:44 pm said:
“The Justice Department’s Office of Legal Counsel prepared a lengthy memo justifying that extraordinary step, asserting that while the Fifth Amendment’s guarantee of due process applied, it could be satisfied by internal deliberations in the executive branch.”
Okay then.”
The key is the deliberations have to include PowerPoints and references to Augustine and Aquinas. And furrowed brows. Then they past legal muster.
“It is the strangest of bureaucratic rituals: Every week or so, more than 100 members of the government’s sprawling national security apparatus gather, by secure video teleconference, to pore over terrorist suspects’ biographies and recommend to the president who should be the next to die.
This secret “nominations” process is an invention of the Obama administration, a grim debating society that vets the PowerPoint slides bearing the names, aliases and life stories of suspected members of Al Qaeda’s branch in Yemen or its allies in Somalia’s Shabab militia. ”
And lest you be concerned that we get the wrong people:
““He realizes this isn’t science, this is judgments made off of, most of the time, human intelligence,” said Mr. Daley, the former chief of staff. “The president accepts as a fact that a certain amount of screw-ups are going to happen, and to him, that calls for a more judicious process.” ”
but it’s OK because:
““If John Brennan is the last guy in the room with the president, I’m comfortable, because Brennan is a person of genuine moral rectitude,” Mr. Koh said. “It’s as though you had a priest with extremely strong moral values who was suddenly charged with leading a war.””
As long as we are priest like about our screw-ups, it’s OK.
Former CIA director Hayden gets to the heart of the issue:
““This program rests on the personal legitimacy of the president, and that’s not sustainable,” Mr. Hayden said. “I have lived the life of someone taking action on the basis of secret O.L.C. memos, and it ain’t a good life. Democracies do not make war on the basis of legal memos locked in a D.O.J. safe.” ”
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Scott, I think the NYT reporter and, presumably, the editor are essentially shilling for their source and attempting to curry favor with the Administration. It wouldn’t surprise me either that the reporter and/or editor actually believe that Obama is the smartest person ever to be President and so, must be schooled in the moral justifications of war. If he wasn’t, how would he then differ from Bush?
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McWing:
I definitely agree, but it’s par for the course at the NYT.
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McWing:
BTW, when lived in Hong Kong I used to read the International Herald Tribune, which was a joint venture between the NYT and the WaPo. Talk about the spawn of the devil…
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jnc
I would like to see Gary Johnson in the debates. As I’ve mentioned this isn’t my first time around the block as far as third party candidates. If it wasn’t for the drones and the secret kill list as well as indefinite detention affecting US citizens, I’d have no problem voting for Obama again, Grand Bargain and all.
Re the eviction show, no thanks. When the sheriff’s department wouldn’t deliver the final eviction notice because the city had misspelled the street name on our street sign by one letter and it lost us another month’s rent, we passed beyond reality and into enough bizarre to last me a life time. Besides, it’s baseball season.
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Scott:
Was Obama’s 2008 stance on Gitmo a simple example of pure electoral cynicism, or was it an honestly held view of the notion of indefinite detention that has been transformed by the responsibilities of being the President?
You didn’t ask me, but I’ll weigh in with my two cent’s worth here: I think it was an honestly held view which has been corrupted by the powers of the unitary Executive. Having finished Drift I’ve become incensed all over again with the way the relationship between the military and the civilian government has become wildly unconstitutional, often abetted by a weak-kneed Congress. So I think that Obama really did mean to close down Gitmo, but between being stymied over the closing, then stymied over having criminal trials on American soil, and finding out how just so damned convenient it is to not have to worry about pesky little details he’s lost sight of the good fight on this one.
okie, forgive me for rooting for San Antonio tonight. . . 🙂
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“ScottC, on May 29, 2012 at 6:24 pm said:
…
Was Obama’s 2008 stance on Gitmo a simple example of pure electoral cynicism, or was it an honestly held view of the notion of indefinite detention that has been transformed by the responsibilities of being the President?”
The latter. I think he believed his own BS. Things change when there are attempted terrorist attacks on your watch.
Also, a certain level of organizational laziness:
“It was not only Mr. Obama’s distaste for legislative backslapping and arm-twisting, but also part of a deeper pattern, said an administration official who has watched him closely: the president seemed to have “a sense that if he sketches a vision, it will happen — without his really having thought through the mechanism by which it will happen.””
“If the former, is that something you believed at the time or have you come to realize it only after O’s actions as president? If the latter, what makes you believe that the same thing won’t happen with Gary Johnson? ”
Because Johnson actually has an ideology (aka principles) as opposed to raising “pragmatism” to the level of a guiding philosophy.
To reiterate, I’m not opposed to drone strikes, per se, but I believe there should be the equilivent due process that the FISA court provides for wiretapping for assassinations, detentions and interrogations. Unilateral executive decision making in regards to killing and detention of American citizens is anathema to our entire constitutional history.
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jnc:
Because Johnson actually has an ideology (aka principles) as opposed to raising “pragmatism” to the level of a guiding philosophy.
I actually think Obama has an ideology too. The whole “pragmatism” thing is just a marketing ploy.
I think it reflects poorly on the NYT, not Obama.
I agree, although I doubt that the reporter came up with that line himself. I suspect it was fed to him by an Obama spokesman, and he just regurgitated it.
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ScottC, on May 29, 2012 at 5:50 pm said:
“But, again, maybe I am being too ungenerous.”
I think it reflects poorly on the NYT, not Obama. Much like the awarding of he Nobel Peace Prize, some times the sycophanty is so obvious it’s counter productive. See also “smallest growth in government spending since Eisenhower”
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I think he would liked to have closed it down, but wasn’t going to spend any political capital to do it. like michi said, closing it hit a snag and immediately they figured it wasn’t worth the effort. especially if they’re don’t think it will cost him any support.
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