Interesting news
Two news items today caught my attention, one in a positive way, one negative.
First, the consensus market gain from today's S&P level that a group of eleven market strategists at the major firms are predicting is 46% by year end. Their companies businesses are dependent on some recovery and some return to a new level of "normal" so it's not really a surprise that they would be looking for this horrible negative trend to break. That considered, it's still good to see that this group of leading strategists are able to muster some hope.
Second, the credit default swap market is still alive and active in the area of soveriegn debt. There are CDS investors that are required to hedge exposures to other countries debt holdings and there are also, apparently, plenty of investors simply using CDS's to bet on continued declines in country creditworthness. From this perspective it would seem unlikely that most financial institutions would continue to write these swaps after the debacle of the past year. Do they think that this product is fine now because it's not connected to subprime mortgage loans. Anything can go down in a panic, ask Iceland, and the CDS market will by its nature accelerate any such decline. This is disturbing.
First, the consensus market gain from today's S&P level that a group of eleven market strategists at the major firms are predicting is 46% by year end. Their companies businesses are dependent on some recovery and some return to a new level of "normal" so it's not really a surprise that they would be looking for this horrible negative trend to break. That considered, it's still good to see that this group of leading strategists are able to muster some hope.
Second, the credit default swap market is still alive and active in the area of soveriegn debt. There are CDS investors that are required to hedge exposures to other countries debt holdings and there are also, apparently, plenty of investors simply using CDS's to bet on continued declines in country creditworthness. From this perspective it would seem unlikely that most financial institutions would continue to write these swaps after the debacle of the past year. Do they think that this product is fine now because it's not connected to subprime mortgage loans. Anything can go down in a panic, ask Iceland, and the CDS market will by its nature accelerate any such decline. This is disturbing.
posted by John Borden at 2:56 PM
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