The Perfect Hedge; Emerging Markets Bonds; Fiscal Cliff

April 11, 2012


“Name me a large country that has gone out of a serious recession by printing money and show me who hasn’t had inflation. It’s just, it’s an oxymoron. " ~ Julian Robertson 

"The only perfect hedge is in a Japanese garden." ~ unknown 

Jang Myung-jin said the upcoming North Korean launch was a ‘peaceful program to develop the economy and raising the standard of living of the people.’ ~ funny. A grain of truth is involved: the North Korean strategy is to make threats, then shake down the US for a payoff.


"…the CDS market moves ahead of the bond market in terms of price discovery." $USDX $CDS ~ historysquared

Repo Market Leads Market Volatility, says Research ~ historysquared

Percent of people living on $1.25 per day fell from 52% of the global population in 1981 to 22% in 2008 ~ city-journalinflation has eaten how much? 


Already with one of the highest incarceration rates in the world, we can look at more US federal statutes as the cause: WSJ image

Obama’s Fantasy Budget Suggests Tax Hike Surprise Bloomberg ~ We could see a radical Obama in his final term and the fiscal cliff will be the topic of discussion in the second half.

Changes pushed up CDS spreads on certain munis wider by as much as 25 to 40 basis points, says Citi


Emerging markets bonds buoyed by the carry trade. These flows are fickle.


Prospects of European Disunion as Credible Alternatives Presented ~ HistorySquared

Mish: A few days ago, Spain said they would guarantee all local government debt, hence the rise in yields. 

57% of Spain’s budget goes to pensions, unemployment benefits, and interest rate payments ~ all of which are getting worse by the day 

Brazil’s Rousseff tells Obama of ‘currency war’ worries. $EEM $EWZ ~ yahoo news

Japan deploys interceptors in response to North Korean missile test ~ ChinaDaily


RMB no longer pricing in appreciation. Those buying dim sum junk bonds as a speculative play on the RMB are likely to be disappointed.


‘If China follows a similar path to Japan, Korea, and Taiwan, growth in metals demand will fall, whilst energy and grains will stay strong.’  ~ WSJ

China’s bank regulator has warned lenders they will be "severely punished" for charging excessive fees ~ WSJ

Chinese food imports rise with domestic consumption, iron ore import growth falling $VALE $BHP $RIO $FCX ~ historysquared

Maybe we should be as concerned about what’s left of Hong Kong’s independence.


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