Tuesday links: deleveraging snowball

19Feb08

“The deleveraging snowball will eventually reach the bottom of the mountain. Banks will start to see opportunities, and borrowers will become more courageous. But it could be a long and painful wait.” (breakingviews/WSJ.com)

Banks are taking a hit on leveraged loans and low short-term interest rates are not helping. (WSJ.com, ibid)

The end of the monolines. (Market Movers)

Mismarking errors lead to huge write-off. (Alea, MarketBeat)

The PBGC has a new investment policy that includes equity investments. (NakedShorts, MarketBeat)

In volatile markets global macro hedge funds have an opportunity to outperform. (WSJ.com)

“In well-functioning markets, it should not be possible to make money from the naive strategy of simply buying winners and selling losers. Yet there is extensive evidence that momentum profits have been large and pervasive.” (Telegraph.co.uk)

Time diversification in developed and emerging markets. (SSRN.com)

Investors confuse perceived risk with actual risk. (CXO Advisory Group)

“(E)ither the credit and equity markets have been responding to very different fundamentals in the past month, or there are lags at work.” (FT Alphaville)

What say EVA about current market valuations? (Fortune.com)

“No two traders experience anxiety in the same way.” (TraderFeed)

Global 10-year government bond yields. (Bespoke Investment Group)

A look at the state of the natural gas vs. crude oil trade. (Humble Student of the Markets)

“Indeed, while many aspects of the economy are revealing marked weakness, select areas are still hanging on. We are just as likely to be in a recession — as not — as of February 19th, 2008.” (Big Picture)

TIPS-derived inflation expectations have risen roughly 50bp since the beginning of the Fed easing cycle. (Economist’s View)

“If there is any consolation to take from behavioral economics—and this impulse itself probably counts as irrational—it is that irrationality is not always altogether a bad thing.” (NewYorker.com)

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