March 24th – What we’re reading…

Insiders are buying Worst credit crisis risks averted EU may boycott China Olympics China’s Olympic nightmare

20 year fed funds rate chart

What we’re reading…

Central banks float rescue ideas S&P Flags Goldman, Lehman Buy Bank Stocks Now

Latest put/call data

Through the close on 3/19 the 60-day put/call just reached a new all-time record high level of 1.09. The chart below illustrates the 10-day and 60-day put/call data versus the S&P 500. In recent years, spikes in the 60-day put/call have occurred following major market lows. RED = 10-day put/call GREEN = 60-day put/call Black [...]

Mark to market fiaso

One has to wonder if the mark-to-market accounting method is the appropriate method to use when evaluating the balance sheets of the largest financial institutions in the world. This article offers some interesting viewpoints.

Fannie & Freddie increase mortgage liquidity

The announcement today from the Office of Federal Housing Enterprise Oversight (OFHEO) is welcomed news to the mortgage bond market. This effectively produces a $200 billion increase in demand for agency mortgage paper. For Immediate Release March 19, 2008 OFHEO, FANNIE MAE AND FREDDIE MAC ANNOUNCE INITIATIVE TO INCREASE MORTGAGE MARKET LIQUIDITY Washington, DC – [...]

The Fed’s playbook

Another interesting take on the Fed’s aggressive action.

The Demise of Bear

The Wall Street Journal has a detailed recap of events with insight into last week’s demise of Bear Stearns.

Yet another new tool added to the Fed toolkit

The Fed has been busy the past eight months improving their toolkit. Today we have the new Term Securities Lending Facility (TSLF). Press Release Release Date: March 11, 2008 For immediate release Since the coordinated actions taken in December 2007, the G-10 central banks have continued to work together closely and to consult regularly on [...]

Mark to Markit?

The Economist has an excellent article identifying flaws with mark-to-market accounting which prices securities against illiquid, small indexes such as ‘Markit’ during periods of turmoil. It remains a distinct possibility that we could have massive ‘write-ups’ down the road as this turmoil is resolved in the future. The point is, these are not operating losses. [...]

Taxable or Tax-Exempt Money Market?

A glance at the Vanguard website shows that tax-exempt money markets are once again very attractive relative to their taxable brethren. Today, the Vanguard Prime Money Market has a 7-day yield of 3.58%. The Vanguard Tax-Exempt Money Market has a 7-day yield of 3.30%. The 3.3% tax-exempt yield translates into the following tax-equivalent yields: 25% [...]

Latest Fed Funds predictions

The Cleveland Fed provides this chart updated daily.