Intersection notepad

Let me know your thoughts about the three points below: China slowly on its way to free floating currency. Banks that contribute to #Yuan's fxing decide on the use of "countercyclical factor" based on their own decision, said #PBOC late Tue in response to report that PBOC told lenders to suspend use of countercyclical factor … Continue reading RMB Yuan-Based Dollar Trade? Implications on Floating Chinese Yuan Currency

Tuesday Breakfast Morning Read: Impulse response to 1% increase in policy rate from Bank for International Settlements – BIS.  Monetary transmission is stronger in economies where debt is high. A possible explanation for the stronger effects of monetary policy when debt is high is the larger change in the debt service ratio (DSR) following a monetary policy … Continue reading Impulse response to 1% increase in policy rate from Bank for International Settlements – BIS

Recently, Steinhoff Internationals announced the closing of 200 Mattress Firm stores around the US (acquisition just happened a few years ago in which they paid a 100%+ premium above previous day's closing price). But debt binge financing has been utilized for the massive M&A spree. This one probably won't cause systematic shocks through the global … Continue reading Shadow Financing – Stock-Based Debt Financing

In many ways, text messages is still the dark web of sharing and commerce. Unlike social shares and link tracking, it's extremely difficult to know what's going on in folks' private text conversations. But it's clear that a lot of activity goes on there––and it's no surprise that brands (smart ones at least), would be … Continue reading SMS Text – Retail Conversion Funnel

If you want to understand government deficits, you need to see the sea change in business behavior since 2000. Business sector has gone from being a net borrower to being a net lender (meaning capex less than cash flow), which also coincides with corporations engaging in these so called EPS "financing engineering", most of which … Continue reading EPS Financial Engineering Won’t Result in Competitive Advantage

According to Black Knight, 4.44% of residential mortgages were delinquent in October, up from 4.35% in October 2016. 0.68% of mortgages were in the foreclosure process, down from 0.99% a year ago. This gives a total of only 5.12% delinquent or in foreclosure in the midst of tight credit spreads and low down payment (down … Continue reading Inverse Down Payment % is the Leverage You Have to Think About

As the merge between online and offline commerce and retail experience continues to grow, as evident with a decent major tech ecommerce players test a few pop-up shops in the past year or so with the likes of Ticketmaster and pure retail play like b8ta (personally very interesting in their model and how they could very well be on … Continue reading Future of Retail – Slow Shift in Consumer Spending Demographics

There are some fundamental divergences in the LIBOR rates, quoted in USD, British Pounds, the Euros, and Japanese Yen, which could have an interesting implication in how markets priced risks in different asset classes in different regions of the world. The divergence is probably mainly due to the lag or should I uncoordinated balance sheet … Continue reading Phasing out of LIBOR rate and U.S. Dollar ICE Swap Rate 10-Year Fixed to Floating Rate Notes

I came across an interesting quote yesterday that says we should gear our thought process and decision making "in terms of probability rather than possibility." This afternoon, I decided to spend some time browsing through SEC - EDGAR database's for "SEC Form 424B2", a form financial institutions have to submit before they offer their financial products to … Continue reading Growth of Structured Products – Upside Leverage but with Substantial Downside?

I wrote an piece a week and a half ago about the "Implication and Price Discovery of ETF Hedge on Illiquid Securities & The US Treasury's Public-Private Investment Program(PPIP)" which focuses on the intraday risks and potential dislocation of the nature of ETFs, which was well received by a few experienced investment professionals and not … Continue reading ETF Intraday Risks and Arbitrage in Non ETF-based Securities

According to Pericles and Thucydides, "Courage is when you sacrifice your own wellbeing for the sake of the survival of a layer higher than yours.' As we can see it fits into our table of preserving the sustainability of the system. A foolish gambler is not committing an act of courage, especially if he is … Continue reading The Logic of Risk Taking

Probability of default in Euro junk bond is now in the ranging of [-0.02, 0.01]. Yep, apparently accordingly to the bond calculation, you can go negative on default rate (basically implies junk debt will never ever and ever default and more, whatever "more" means in this scenario). There's probably a reason why they are called … Continue reading Negative Default Rate on Euro High-Yield Bonds?

Humans are hardwired to listen to authority. We’re tribal / hierarchical primates. Julian James makes the argument that the first Gods were actually dead kings whose authority we still craved. And it’s the nature of society that the people on top, either politicians or business leaders, want hero worship since it gives them power. I … Continue reading Tribal / Hierarchical Nature of Humans

By now, we probably all know central banks around the world have conducted/are currently conducting QE at an unprecedented level, as a percent of GDP or public and private securities holdings. And now with The Federal Reserve and Bank of England (BOE) hinting at quantitative tightening in the next quarter or two and European Central … Continue reading Sept 2017: Quantitative Tightening (QT) and US Liquidity Injection =/= Increase in Money Supply + Credit and Public & Private Sector Borrowing