When a new trade comes to the risk manager in a bank for approval, he tries to determine both the quality and the quantity of the risks inherent in the trade. If he’s not comfortable with either of the two, he may not approve it. Some of the factors that are considered are:- 1. Whether […]

Bonds – How Inflation And Interest Rates Affect Bonds Ownership of a bond is the ownership of a stream of future cash payments. Those cash payments are usually made in the form of periodic interest payments and the return ofprincipal when the bond matures. In the absence of credit risk (the risk of default), the value of that stream of […]

By Jason Van Bergen on July 23, 2010 Aside from factors such as interest rates and inflation, the exchange rate is one of the most important determinants of a country’s relative level of economic health. Exchange rates play a vital role in a country’s level of trade, which is critical to most every free market economy in the world. For this reason, […]

Le titre obligataire lié aussi appelé credit linked note (CLN) est un dérivé de crédit financé qui a recours dans son montage à un credit default swap (CDS) pour transférer un risque de crédit, mais ce en passant par un fonds commun de créances (terme anglo-saxon : special purpose vehicle ou SPV).  Cet instrument est notamment […]

Definition of ‘Index-Linked Bond’ A bond in which payment of income on the principal is related to a specific price index – often the Consumer Price Index. This feature provides protection to investors by shielding them from changes in the underlying index. The bond’s cash flows are adjusted to ensure that the holder of the […]

By Reem Heakal on December 31, 2011 A monetary policy is the means by which a central bank (also known as the “bank’s bank” or the “bank of last resort”) influences the demand, supply and, hence, price of money and credit, in order to direct a nation’s economic objectives. Following the Federal Reserve Act of 1913, the Federal Reserve […]

America’s central bank has become ever more powerful over the past century AS THE holiday season of 1913 drew near, only one thing stood between Woodrow Wilson and a long-awaited vacation on the Gulf of Mexico. Congress was still fighting over a bill to create the Federal Reserve, and Wilson had threatened to keep it […]

The rise of BlackRock In 25 years, BlackRock has become the world’s biggest investor. Is its dominance a problem? Dec 7th 2013 | From the print edition ASK conspiracy theorists who they think really runs the world, and they will probably point to global banks, such as Citigroup, Bank of America and JPMorgan Chase. Oil […]

La crise subprime ainsi que la crise financière qui s’ensuivit ont mis en évidence les problèmes de valorisation de certains produits de gré à gré dont les Collateralized Debt Obligations (CDOs). Ces derniers sont des portefeuilles intégrant des produits de dettes comme actifs et émettant des créances de “seniorité” différente sur ces actifs. On distingue […]

Predictive analytics can be an ally to CFOs who are looking for a viable tool to drive growth and manage enterprise profitability. There are several ways in which a CFO can leverage predictive-analytics solutions to manage profitability and enable corporate functions to adopt its principles. CFOs can successfully lead that charge if they know that: […]

The Fed’s Delay in Tightening of Monetary Policy Actually Means Loosening Investors have had plenty of market-moving Federal Reserve news to digest this week: Janet Yellen apparently is a shoo-in as the next Fed chief after Larry Summers dropped out of the running, while Ben Bernanke kept monetary policy on hold for now by not […]

What is gamma hedging? By Simon Gleadall, CEO of Volcube. To understand gamma hedging it is important to understand delta hedging first. Delta hedging eliminates the risk to an option owing to a change in the price of the underlying. Gamma hedging basically refers to a re-adjustment of a delta hedge. In this article we […]

  Risk on/risk off correlations are fading fast By Stephen Foley in New York If risk on/risk off is off, what’s on? It had all been so simple. Good news on US jobs? Buy equities, commodities, emerging markets, and sell bonds. New eurozone wobble? Sell equities, commodities, emerging markets, buy bonds. More ON THIS STORY […]

The Yield Curve and Predicted GDP Growth, October 2013 November 5, 2013 Covering October 5, 2013–October 18, 2013 Highlights October September August 3-month Treasury bill rate (percent) 0.08 0.02 0.05 10-year Treasury bond rate (percent) 2.66 2.64 2.73 Yield curve slope (basis points) 258 262 268 Prediction for GDP growth (percent) 1.1 0.9 Probability of […]

Cutwater Asset’s Cliff Corso expects another good year for equities. Why he likes fixed-income plays in munis and some high-yield bonds. Investors have been worrying about interest rates, which have been their good friend in recent years. But rates are poised to move higher; it’s just a question of when. And that raises tough questions, […]

Rising Rates and Your Investments What You Should Know The bond markets are extremely active, with interest rates constantly changing in response to a number of factors including changes in the supply and demand of credit, Federal Reserve policy, fiscal policy, exchange rates, economic conditions, market psychology and, above all, changes in expectations about inflation. […]

What You Should Know  Reading Bond Prices In the Newspaper Where to Look If you’re interested in buying or selling bonds, it’s a good idea to start out by comparing the prices of similar securities. Just as you would with any important purchase, such as a home or a car, checking out the current prices […]

101 Free Resources for Bond Investors April 27th, 2012 by David Waring, learnbond.com     Quick Jump Links: Bond Market Blogs Bond Market on Twitter Traditional Media Bond News Sources Bond Market Data Sources Free Bond Market Research Free Bond Market Education Books on the Bond Market Discount Bond Brokers Ratings Agencies Did we miss […]

Debt Investing Concept: Credit Curves While this post is more particular to high yield and investment grade bonds, than to distressed investing, I believe it is an important concept considering what is going on in certain pockets of the market today. A credit curve is essentially the spread over treasuries of various maturities for a single bond […]

– Opportunity in high yield still exists given attractive spreads and lower interest rate sensitivity  Fundamentals Corporate balance sheets remain healthy and supportive of the high yield market Companies continue to refinance qt lower rates and extend debt maturity profile Default rates remain around 1%, still well below historical averages (4%) Technicals Retail fund flows […]

Firms that invest in hedge funds on behalf of large institutions and wealthy individuals—an industry that got its U.S. start in Chicago more than 40 years ago—are recasting their businesses as clients unhappy with an extra layer of fees are bypassing the middlemen. In the most striking local example, Chicago-based Grosvenor Capital Management LP, a […]

I think exports from emerging economies to Europe is the key thing to watch. If the early signs of acceleration (and shrinking of the eurozone’s current account) extended into something more, then it will be a very bullish sign for EM. -Bartosz Paxlowski, Global Head of EM Strategy at BNP Paribas    

http://www.businessinsider.com/most-important-charts-in-the-world-q4-2013-10#michael-feroli-jpmorgan-8

Granted it’s a bit a cheap shot to choose USDJPY, where the forecast distribution looks more like the Manhatton skyline than a bell curve, but with the market only being right twice in the last eighteen quarters, you can’t help but fee that when governments and central banks get involved in markets, strategists should take […]

“Normally in th emiddle of an economic cycle, investment spending is 2 to 3 times GDP growth. Strong investment spending is what drives S&P 500 sales and non-financial profits. The whole debate about the S&P is about when this turns back up again.”   — David Bianco, Chief US Equity Strategist at Deutsche Bank  

Alternative Beta, in the context of risk premium oriented investing, is a concept that extends the idea of traditional passive investing into the alternative investment space. Alternative beta refers to risk premia which are available in the global capital markets beyond traditional equity or fixed income related long only investments. Generally risk premia are returns […]

Understanding the price fluctuation of bonds is probably the most confusing part of this lesson. In fact, many new investors are surprised to learn that a bond’s price changes on a daily basis, just like that of any other publicly-traded security. Up to this point, we’ve talked about bonds as if every investor holds them […]

“Be fearful when others are greedy and greedy when others are fearful.”– Warren Buffett

We believe the best way to manage money is to separate investment alpha (value-added return from active management) from beta (return from passively holding a portfolio) and then create optimal portfolios of each. At Bridgewater, we manage money for clients across most major asset classes by replicating a client benchmark and overlying the benchmark with […]

By Brigitte Yuille Short selling is another technique you can add to your trading toolbox. That is, if it fits with your risk tolerance and investing style. Short selling provides a sizable opportunity with a hefty dose of risk. We hope this tutorial has enabled you to understand whether it’s something you would like to pursue. […]

By Brigitte Yuille It’s safe to say that short sellers aren’t the most popular people on Wall Street. Many investors see short selling as “un-American” and “betting against the home team” because these sellers are perceived to seek out troubled companies. Some critics even believe that short sales are a major cause of market downturns, such as the crash […]

By Brigitte Yuille Now that we’ve introduced short selling, let’s make one thing clear: shorting is risky. Actually, we’ll rephrase that. Shorting is very, very risky. It’s not unlike running with the bulls in Spain: you can either have a great time, or you can get trampled. You can think of the outcome of a short […]

By Brigitte Yuille Suppose that, after hours of painstaking research and analysis, you decide that company XYZ is dead in the water. The stock is currently trading at $65, but you predict it will trade much lower in the coming months. In order to capitalize on the decline, you decide to short sell shares of XYZ […]

By Brigitte Yuille  Generally, the two main reasons to short are to either speculate or to hedge. Speculate When you speculate, you are watching for fluctuations in the market in order to quickly make a big profit off of a high-risk investment. Speculation has been perceived negatively because it has been likened to gambling. However, speculation involves […]

First, let’s describe what short selling means when you purchase shares of stock. In purchasing stocks, you buy a piece of ownership in the company. The buying and selling of stocks can occur with a stock broker or directly from the company. Brokers are most commonly used. They serve as an intermediary between the investor […]

By Brigitte Yuille Have you ever been absolutely sure that a stock was going to decline and wanted to profit from its regrettable demise? Have you ever wished that you could see your portfolio increase in value during abear market? Both scenarios are possible. Many investors make money on a decline in an individual stock or […]

  Mohamed A. El-Erian Mohamed A. El-Erian is CEO and co-Chief Investment Officer of the global investment company PIMCO, with approximately $2 trillion in assets under management. He previously worked at the Internation… The Fed’s Surprise and Yellen’s Challenge NEWPORT BEACH – The US Federal Reserve sparked a global – and now month-long – guessing […]

Investing, at its core, is often about identification of a pricing anomaly and, thereafter, realization of profit from its correction. The approach of some investors is to take positions and hold onto them in the belief that the market will, over time, also come to recognize the anomaly and correct the value naturally. Others, however, […]

Hedge Funds Have produced generally positive performance YTD in 2013 through May with fundamental and tactical trading managers benefiting from a more favorable macro economic backdrop and supportive market conditions. Equity  L/S Equity Long/Short managers have generated positive YTD performance through May. While monthly returns have been consistently positive, performance in recent months has been […]