Archive March 2019
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Week InReview: March 29, 2019
My answer to this question, for at least the last five years, has been “lol no,” and I keep not being wrong. Here you go...
President Donald Trump on Wednesday issued a long-awaited memo calling for reform of Fannie Mae and Freddie Mac, but stepped back from suggestions his administration could push through wholesale changes while bypassing Congress. …
Policy experts said the memo, which makes reference to “legislative” reform, represented a defeat for advocates of a unilateral executive approach to GSE reform — an idea floated by Steven Mnuchin, Treasury secretary, and Joseph Otting, acting head of the Federal Housing Finance Agency, which oversees the GSEs.
With unilateral executive action off the table, all that is required now is for bipartisan majorities of the House and Senate to reach an agreement with the White House on how the housing market should be structured and whether hedge funds who own Fannie and Freddie stock should be rewarded in the re-privatization.
— Matt Levine's Money Stuff
Week InAdvance: March 25, 2019
Week InReview: March 22, 2019
(Mar 21) — The FOMC has come and it has gone. Depending on how you use the word, it is impossible not to be simultaneously quite impressed and decidedly unimpressed. They went further than almost anyone expected.
Don't listen to the Monday morning quarterbacks try to tell you that it makes perfect sense. After all, the economy is slowing.
Just look at the Atlanta Fed GDPNow model. And they are doing a solid for the rest of the world. On the other hand, they have made it quite clear that they are the ones converging with the market. Not only in their rate expectations but in the understanding that there is little reason to put a lot of faith in their ability to forecast.
— Trader's Notes, Bloomberg Government
Week InAdvance: March 18, 2019
Week InReview: March 15, 2019
Some fraud attempts are almost comical. One jet owner found himself charged 4,000 pounds ($5,300) for 240 sushi boxes apparently served on board his jet while it was empty, according to My Sky, a company whose software helps scrutinize and manage private-jet costs. Another was charged 6,000 euros ($6,800) for plastic cups after the provider mistakenly added two zeros to the invoice. Still another customerâ€™s refueling bill ended up exceeding the capacity of the planeâ€™s fuel tanks by more than two tons.
â€” Bloomberg Wealth
Week InAdvance: March 11, 2019
Week InReview: March 8, 2019
— Tilting at ETF Windmills
Week InAdvance: March 4, 2019
Week InReview: March 1, 2019
The standard story of bond market liquidity is:
- Big banks used to trade bonds by buying a large slug of bonds from a customer and holding on to them for as long as it took to find another buyer, smoothing out the market but also taking a lot of price risk for themselves.
- Since the financial crisis, new regulations (higher capital requirements, rules against proprietary trading, etc.) have made it more difficult for banks to trade bonds on their own books as dealers.
- Instead, banks have just matched up buyers and sellers without intermediating risk themselves, which is less convenient for the buyers and sellers. Also if anything goes wrong, the banks will not be there to take on their historic dealer role of smoothing out price moves, and there could be an ugly crash.
- People who do not want there to be an ugly crash tend to think this is bad.
- Other people think it is fine, though: If bond prices go down and someone has to lose some money, much better for it to be long-term fundamental bond investors with stable funding than for it to be banks. Banks are systemically risky, as we know, because losses at banks caused a massive systemic crisis in 2008.
— Matt Levine's Money Stuff