tag:blogger.com,1999:blog-34323687.post51175958652773980..comments2024-03-29T09:14:16.561+00:00Comments on Macro Man: A defensive trade that's easy to buy intoMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-34323687.post-20139877795913809322007-06-19T18:07:00.000+01:002007-06-19T18:07:00.000+01:00Anonymous # 2, you are right that year on year co...Anonymous # 2, you are right that year on year comps for inflation data will look pretty good til late summer. Of course, as I posted a few days ago, headline CPI in the US is already up 3% year-to-date, so it's not immediately obvious to me that inflation is THAT under control! <BR/><BR/>What I am suggesting here, however, is a credit event rather than an inflation event.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-75405252253856523952007-06-19T17:54:00.000+01:002007-06-19T17:54:00.000+01:00Hmm...yes, I see that the exact verbatim text was ...Hmm...yes, I see that the exact verbatim text was posted elsewhere a few days ago. Oh, the shame of cyber-sloppy seconds! Anonymous #1, I have no problem with anyone copying or linking to material they'd seen elsewhere; all I'd ask is that you attribute it as such.<BR/><BR/>That having been said, even if this particular story in its verbatim incarnation is a generalization (I believe "composite" is the Hollywood term), I think the general theme rings true. Just about everyone I talk to involved with credit is asking the same question: when are the ratings agencies going to pull their finger out and get around to downgrading the crap?Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-22134675439485142082007-06-19T17:23:00.000+01:002007-06-19T17:23:00.000+01:00A new Anonymous showed up while I was composing. I...A new Anonymous showed up while I was composing. I refer to the first post.Charles Butlerhttps://www.blogger.com/profile/00486529931043507880noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-47250948071600604042007-06-19T17:22:00.000+01:002007-06-19T17:22:00.000+01:00That'll be the fourth time I've seen that item tod...That'll be the fourth time I've seen that item today. Anonymous, above, is the first to propose it as first hand information, however. The closest the others come is two degrees of remove from what is claimed to have been a comment seen by a poster at the "Prudent Bear", with no original hyperlink.<BR/><BR/>Does not, "I spoke to him today for an hour", sound a little forced?Charles Butlerhttps://www.blogger.com/profile/00486529931043507880noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-59285454915923491922007-06-19T17:14:00.000+01:002007-06-19T17:14:00.000+01:00but isn't the key difference between now and 2006 ...but isn't the key difference between now and 2006 that inflation will not be an issue until September/October? Thus, risky assets could easily rally becoming overbought just in time for the superstitious believers in the "October of years that end in 7" effect.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-32386339203429234142007-06-19T12:57:00.000+01:002007-06-19T12:57:00.000+01:00Remarkable story, just remarkable. The problem, o...Remarkable story, just remarkable. The problem, of course, is that in many cases the managers of CDO portfolios are also large customers of the ratings agencies in other areas. <BR/><BR/>Gee, does that sound familiar? It looks like Messrs. Grubman, Blodgett, and Quattrone have found a new spiritual home...Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-19529178797921599312007-06-19T12:23:00.000+01:002007-06-19T12:23:00.000+01:00A friend of mine works as a Portfolio Manager for ...A friend of mine works as a Portfolio Manager for a $2.2b CDO pool of subprime loans. I spoke to him today for an hour. Asked how he is doing, he says “nothing”. I ask what do you mean nothing, I hear all these stories about CDO’s and losses (Bear Stearns for example), he shrugs and says nothing will happen until the Rating agencies do something. Asked about losses, he says they are there but he doesn’t have to mark to market his portfolio until someone discovers it, or the Rating agencies force his hand. So his plan is to lie low and collect the management fees and pretend as if there are no losses. Asked about management fees, he laughs and says it’s a low 50 bips. On $2.2b, that’s a cool $10m yearly which he and his four colleagues have to split up at the end of the year. He says he has the best job in the world and says there is really no work to do every day. Just wait and hope that the rating agencies don’t downgrade his CDO pool and voila, at the end of the year, he and his partners can split the $10m spoils (minus the expenses for one Park Avenue office, and a secretary). I am amazed that no body (regulators, investors, the public) hasn’t beseeched the Rating agencies to review all the Subprime CDO’s by now given the headlines and the incredible losses hidden there.Anonymousnoreply@blogger.com