Discover and read the best of Twitter Threads about #GFC
Most recents (24)
A short 🧵🪡
1/7
Equity markets remain on a ‘hair trigger’ and today’s wobble probably due to $FRC and regional bank model concerns
👀 on #Fed FOMC 5/3-5/4
- we still expect a ‘dovish’ +25bp
- regional softness one factor
- other is lots of disinflation in pipeline
1/7
Equity markets remain on a ‘hair trigger’ and today’s wobble probably due to $FRC and regional bank model concerns
👀 on #Fed FOMC 5/3-5/4
- we still expect a ‘dovish’ +25bp
- regional softness one factor
- other is lots of disinflation in pipeline
2/7
Case-Shiller showed upside surprise on price (MoM) but arguably as important is home prices went to ZERO YoY
- zero price inflation on homes
- @Redfin rent yoy negative
- Yet, #CPI showing 8.6% yoy gains for housing
CPI lagging real-time measures = disinflation in pipeline
Case-Shiller showed upside surprise on price (MoM) but arguably as important is home prices went to ZERO YoY
- zero price inflation on homes
- @Redfin rent yoy negative
- Yet, #CPI showing 8.6% yoy gains for housing
CPI lagging real-time measures = disinflation in pipeline
Link to 3 (broke somehow)
Thanks for useful summary of how “heterodox” economics is defined. The name is problematic, since it appears to be “non-orthodox”, yet “orthodox” economics is left undefined. Is it “mainstream”? I prefer “new” versus “old” economics, which are not defined by their age but …
.. in relation to the Keynesian revolution of the 1930s. Keynesian economics was characterised after WW2 as “new” in relation to the “old”, neoclassical, Marshallian, economics that preceded it. The counter-revolution of the Samuelson neoclassical school eventually prevailed.
However, #NeoclassicalEconomics has, essentially met its demise in the ongoing collapse of free-market capitalism (or neoliberalism), inaugurated by the #GFC, which exposed that “the banks were too big to fail”. Bankruptcy is an essential feature of capitalism.
🎓Bonds 101🎓
We all have been hearing a lot about bonds and yield inversions and them being a marker for recession etc etc… but what is it all really?
Complicated stuff - NOT AT ALL!
Let’s go over some quick basics to understand it all and make you a Pro, shall we?… twitter.com/i/web/status/1…
We all have been hearing a lot about bonds and yield inversions and them being a marker for recession etc etc… but what is it all really?
Complicated stuff - NOT AT ALL!
Let’s go over some quick basics to understand it all and make you a Pro, shall we?… twitter.com/i/web/status/1…
What are Bonds and how do yields move:
Bond is nothing but a Loan Certificate, you loaned $100 of your money to someone and got a certificate back stating they will pay you in so and so time (Tenure) with so and so interest (Coupon).
Now when you try and sell this Certificate/… twitter.com/i/web/status/1…
Bond is nothing but a Loan Certificate, you loaned $100 of your money to someone and got a certificate back stating they will pay you in so and so time (Tenure) with so and so interest (Coupon).
Now when you try and sell this Certificate/… twitter.com/i/web/status/1…
What is Bond Yield Inversion?
Bond yield inversion is when yield of short term bond becomes higher than yield of long term bonds.
Why it happens you ask? - It’s simple…
if demand for short term tenure bonds is higher than demand for long term tenure bonds, the price of… twitter.com/i/web/status/1…
Bond yield inversion is when yield of short term bond becomes higher than yield of long term bonds.
Why it happens you ask? - It’s simple…
if demand for short term tenure bonds is higher than demand for long term tenure bonds, the price of… twitter.com/i/web/status/1…
Too true. The #SiliconValleyBank collapse is another confirmation & deepening of the #SecondGFC. Another straw in the global financial hurricane. We are seeing an acceleration of major bankruptcies in #Crypto, now #Tech. The danger is #Contagion. Do the banks have it covered? No
How can the banks, the Central Banks, the retail banks, Barclays Execution, manage a global crisis, without having sovereign power? They could not. They need to take over governments via threat & bullying, as they did in the #GFC financial crisis in the USA and the UK in 2008.
Bankers saved banks & the bankers in trouble, because they captured the USA Govt under Bush. It was shocking and unprecedented, but they justified themselves via PR and tame, greedy, or cowardly journalists, as “too big to fail”. The rest of us can fail & suffer, but not them.
🧵on $SIVB (thoughts on current situation)
1/ it may not have mattered in the end but I'm shocked that when $SIVB announced the losses in their securities book & subsequent capital raise, that the raise wasn't already subscribed; created their own bank run: "Capital Markets 101"
1/ it may not have mattered in the end but I'm shocked that when $SIVB announced the losses in their securities book & subsequent capital raise, that the raise wasn't already subscribed; created their own bank run: "Capital Markets 101"
2/ I always talk about reading "10Q's and 10K's"; this exposure in $SIVB securities book was in plain sight & if forced to "mark to market", the losses would (did) exceed the equity capital at the bank; but I guess if the CEO sits on the Board of the San Fran #FED then all is ok
3/ b/c $SIVB had a heavy concentration of VC clients as depositors (clients) they experienced the boon of easy money & subsequent bust when the capital raising became difficult in VC world and companies were forced to spend their cash on hand which forced $SIVB to fill that hole
The Biden administration keeps proving that personnel are policy. Biden himself is a kind of empty vessel into which different wings of the Democratic party pour their will, yielding a strange brew of appointments both great and terrible. 1/
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
pluralistic.net/2023/03/06/per… 2/
pluralistic.net/2023/03/06/per… 2/
On the one hand, you have progressive appointments like #JonathanKanter at @JusticeATR and @linakhanFTC at the @FTC, leaders who are determined to challenge and curb corporate power:
pluralistic.net/2022/01/10/see… 3/
pluralistic.net/2022/01/10/see… 3/
A 🧵 on the oh so crazy @CathieDWood and $ARKK.
1/n I bought into her top 10 wealth destroying actively managed ETF (Morningstar) this morning at $29.50 as an experiment.
One might think from the below chart that Cathie has been all hat and no cattle.
With huge hype from...
1/n I bought into her top 10 wealth destroying actively managed ETF (Morningstar) this morning at $29.50 as an experiment.
One might think from the below chart that Cathie has been all hat and no cattle.
With huge hype from...
2/n (ex) Bloomberg's @Matthew_Winkler in 2020, ARKK hit nearly $140 a share and has lost nearly 80% of its then value.
Cathie was (is) selling a concept she calls "disruptive innovation" claiming that she can spot those with real disruptive technology and business models and...
Cathie was (is) selling a concept she calls "disruptive innovation" claiming that she can spot those with real disruptive technology and business models and...
3/n separate them from the 'fake it til you make it' crowd.
Very Schumpeterian of course, but Cathie packs a larger ideological bag as a disciple of Arthur Laffer, and is a still-avid supply sider and producerist -- long past the sell-by date for those theories.
Yet she has...
Very Schumpeterian of course, but Cathie packs a larger ideological bag as a disciple of Arthur Laffer, and is a still-avid supply sider and producerist -- long past the sell-by date for those theories.
Yet she has...
Earlier this week the @federalreserve raised #policy rates at an extraordinary 75 basis point increment (its fourth time doing so this year), in an attempt to moderate excessively high levels of #inflation.
Still, if the central bankers were hoping to see signs of slowing in the persistently solid #LaborMarkets, as an indicator that policies were slowing growth and in turn #inflation, they may be somewhat disheartened by today’s data.
Indeed, nonfarm #payrolls increased by 261k jobs in Oct, with private employment rising an average of 262k/month over the past three months, which does not yet imply that the slowing that policymakers believe we’ll need to see to tame #inflation has arrived.
New thread on the #SecondGFC follows.
So Moody’s has downgraded the UK as a “warning sign” re the volatility of £ & UK politics. One of the rating agencies that awarded top grades to junk bonds etc in the #GFC. A 100 yrs ago Moody himself gave the UK our now lost top rating. How times change. C/f £⬇️ since then.
Clearly governments were in charge of the markets then. And now, shockingly, markets seem to be in charge of governments! The “markets” are warning the UK to appoint the right finance minister and maybe PM. [lunch beckons, more to follow]
Let’s be clear, BJ does *not* have a mandate to govern the UK. The meme comes from the populist plot to divide & create chaos. Incredibly, we are seeing Naomi Klein’s The Shock Doctrine (2007) in action. Our global political-economic-energy system #capitalism has been corrupted.
The UK’s unwritten constitution has the PM as primus inter pares, first among equals. He/She is not elected by popular demand, but in secret ballots in orderly elections. The UK’s constitutional checks & balances are in @HouseofCommons rules & procedures that BJ likes to flout.
So how has our Western version of #capitalism been corrupted? My guess is by the pursuit of money, and the gradual, insidious spread of insider trading in markets, the buying & selling of politicians & policies, and regulatory capture by those being regulated.
The crisis is upon us. The PM & Chancellor have provoked the interlinked financial markets & the bear has woken, angry & hungry. What should the PM, with power, do? Remove the dart that wounds the beast. Calm & if necessary subdue it. Convene wise & experienced councils.
Combat climate change. But now, today: 1. Replace Kwarteng by Sunak, & cancel #budget2022. It has been an unmitigated disaster, politically & economically. 2. Reappoint a previous respected mandarin to head @hmtreasury to reassure the public & the markets.
3. Convene an open public meeting of the PM, the Chancellor, the Governor @bankofengland , the head of the @OBR_UK & the head of the @TheFCA to further reassure the markets. The turmoil must be stopped urgently before bankruptcies overtake policy. The markets take no prisoners.
The #Taiwan Manufacturing #PMI dropped to 42.7 in August, indicative of a sharp deterioration in operating conditions that was the worst recorded since May 2020 (1/5)
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Taking a closer look at the Taiwan Manufacturing PMI data for August shows a deepening downturn in #production. Excluding the initial pandemic lockdowns in 2020, the drop in output was the worst seen since the #GFC in 2009 (2/5)
Nuevo ciclo económico. Mercado #Oficinas afronta 3 grandes desafios: financieros, inflación costes CAPEX y #WFH.
Incertidumbre reflejada en las valoración de los principales propietarios: -25% YTD, y consultores ~-20% YTD.
En ambos grupos, impactando de forma desigual.
1/9
Incertidumbre reflejada en las valoración de los principales propietarios: -25% YTD, y consultores ~-20% YTD.
En ambos grupos, impactando de forma desigual.
1/9
Financieros:
- subidas tipo interés,
- incremento diferenciales: ¡suponen ¾ del coste financiero!. Percepción de riesgo sobre el sector,
- Endurecimiento condiciones: credit crunch nueva financiación & ´pinch points will be refinancing moments´ #squeeze
2/9
- subidas tipo interés,
- incremento diferenciales: ¡suponen ¾ del coste financiero!. Percepción de riesgo sobre el sector,
- Endurecimiento condiciones: credit crunch nueva financiación & ´pinch points will be refinancing moments´ #squeeze
2/9
Inflación de costes CAPEX:
- construcción nuevos edificios/reformas existentes,
- adaptación edificios para mejora eficiencia energética,
- necesidad inversión en instalaciones generación energías renovables #PV
3/9
- construcción nuevos edificios/reformas existentes,
- adaptación edificios para mejora eficiencia energética,
- necesidad inversión en instalaciones generación energías renovables #PV
3/9
Risk Management is not just about producing tons of reports that nobody wants to read in the office.
I am very angry to note that most of the #ERM/Risk Desks just produce day-end reports, which end up in the dustbin.
Risk Dept. should not be a tick the box function.
I am very angry to note that most of the #ERM/Risk Desks just produce day-end reports, which end up in the dustbin.
Risk Dept. should not be a tick the box function.
what is the point of preparing #VaR Reports, when the fund manager does not understand basic probability?
Rubbish!!
Rubbish!!
There is no point in hiring a world-class hard science PhD to do risk management work at financial institutions or elsewhere, if the board members have zero numeracy and data science skillsets, the staff in front and back offices have poor technical and academic backgrounds, etc
A select case of #Evolution and #Leftist Progression in the History of Economic Thought ->
From #Marxism to #Keynesian Economics to #MMT
#Complexity
From #Marxism to #Keynesian Economics to #MMT
#Complexity
Negative events will lead to negative outcomes :
#Bolshevik Revolution => #Intenational #Proletarianism & #Leninism
#Great #Depression -> #Keynesian Economics
#Chinese Cultural Revolution -> Gang of Four
#GFC -> Modern Monetary Theory #MMT
That is how to interpret history.
#Bolshevik Revolution => #Intenational #Proletarianism & #Leninism
#Great #Depression -> #Keynesian Economics
#Chinese Cultural Revolution -> Gang of Four
#GFC -> Modern Monetary Theory #MMT
That is how to interpret history.
Anticipating #tippingpoint is the most essential thing a gifted leader has to his credit.
All non-linear events should be studied carefully by applying #physics in social sciences, such as #Chaos #Theory and Law of #Thermodynamics.
Yes, and #Murphy's #First Law might also help.
All non-linear events should be studied carefully by applying #physics in social sciences, such as #Chaos #Theory and Law of #Thermodynamics.
Yes, and #Murphy's #First Law might also help.
Many academic institutions are kinda confused when it comes to launching new degrees such as #FinTechs, Data Sciences, Business #Analytics, Machine Learning, Ai, etc.
There does not seem to be a standardized curriculum for such programs as we see in other academic disciplines.
There does not seem to be a standardized curriculum for such programs as we see in other academic disciplines.
Just combining courses from Maths, Statistics and Computer Sciences Faculty will not give you a Data Science Degree Program.
That is the mistake that universities're making at the moment.
Highly Amateurish.
That is the mistake that universities're making at the moment.
Highly Amateurish.
Did the #Irish Central Bank provide sovereign guarantees to buyers of Irish Bank Bonds and other contractual debt liabilities classified as fixed income securities, before the #GFC struck?
The Psychology of Human Misjudgement - Charlie Munger Full Speech via @YouTube
well, if one can get around the accounting and auditing systems, you can commit fraud on a massive scale.
That is what rogue traders do!
But, financial institutions have invested big time in hiring quants who can write codes and Greek symbols which board members don't comprehend
That is what rogue traders do!
But, financial institutions have invested big time in hiring quants who can write codes and Greek symbols which board members don't comprehend
Basel I, II, III: evolution of global banking regulation via @YouTube
It was interesting to watch this discussion.
Even the participants agreed to the fact that Basel Accords are a complete exercise in futility.
What might happen tomorrow is not known even to the best minds working in the area of financial bank risk management.
Even the participants agreed to the fact that Basel Accords are a complete exercise in futility.
What might happen tomorrow is not known even to the best minds working in the area of financial bank risk management.
Being a risk management professional, I can very well understand how rogue traders can wreak havoc! the concept of having a Middle Office came into existence after the Baring fallout. Middle Office is supposed to check and re-check all transactions in real-time and at the close
Buy Vs. Sell-Side Risk Information: Time to Differentiate between “Your Risk” and “My Risk” Reports
@CFAinstitute @GARP_Risk
@CFAinstitute @GARP_Risk
Report Sample of Asset Allocation Analytics
Well, we all are accustomed to reading “Buy” and “Sell-Side” Investment Evaluation Reports prepared by Financial Research Analysts at various FIs such as Investment Companies operating in the Financial Markets.
Somebody on this forum needs to do a thread on quotes, spreads, risk-neutral probabilities, real-world probabilities, order books, market execution, limit ordering strategies, order cueing, and bid-ask spreads, etc.
Market #Microstructures are key to analyzing liquidity risks.
Market #Microstructures are key to analyzing liquidity risks.
The first thing we need to include within our risk pedagogy masterclass is how liquidity risks vary across financial markets, order books, volatility term structures, asset classes, premarket, auctions, intra-day, and private placement transactions.
Most of the students in a standard risk management program are asked to do statistics, mathematical modelling, and computer programming straight away!
All good.
But, it's important to learn the process, and product features, that leads to financial product development.
All good.
But, it's important to learn the process, and product features, that leads to financial product development.
Net thread Inshallah ->
What is the difference between the value at risk (VaR) and the conditional value at risk (CVaR)?
What is the difference between the value at risk (VaR) and the conditional value at risk (CVaR)?
Value - at - Risk is the purported worst-case loss under normal circumstances/market conditions developed using a computational technique and further specific modelling assumptions tailored as per the risk reporting requirements of a Trading / Investment Desk.
But I tend to disagree with the term WCL - (the Worst Case Loss), as mostly used by some authors in the field of FRM - Financial Risk Management.
When we talk of IR #Interest #Rate #Risks we must understand the markets in which this product operates, and the fundamental pricing, trading, and hedging dynamics of this financial #derivative asset class.
Banks normally use IR Derivatives and Structured Products for on and/or off-balance-sheet ALM Asset Liability Management and Immunization, Bond Risk Hedging, NII Risk Hedging, Arbitrage Opportunity Exploration using the treasury based fixed income desks, Rate Speculation, etc.
Of course, we have other financial market participants such as Pension Funds, Hedge Funds, Insurance Companies, and several other specialized asset management firms, that have strategies and asset allocation models, which use IR derivative for both Macro and Micro-hedging.
useful lecture for those who are interested in applying statistical knowledge to problem-solving in risk management, insurance, financial engineering, banking, and actuarial mathematics and modelling.
The biggest problem faced by the statisticians is that they over-rely on the computational characteristics of the Bell-shaped Normal Distribution Model.
