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julesies
1114490.  Mon Jan 26, 2015 9:37 am Reply with quote

Hell money

 
Ian Dunn
1114986.  Wed Jan 28, 2015 11:07 am Reply with quote

Apple has so much excess money - $142bn (£93.5bn) - that it could afford to buy the whole of Lithuania three times over.

Source: BBC

 
suze
1114996.  Wed Jan 28, 2015 11:59 am Reply with quote

Why would you want three Lithuanias when you could have one Bangladesh instead?

Probably best if no one answers that ...

 
14-11-2014
1117588.  Tue Feb 10, 2015 5:24 am Reply with quote

Q: Who, i.e. not what, is investing money in Greek Government bonds?

A: Possibly you, possibly without being aware of it. Many investment funds have
bought Greek bonds. If it works, then the performance of the fund will have
outperformed competitors, so the popularity of the fund and the income of the
fund management should increase. If it doesn't work, then you should hardly
notice the loss.

Here's a random example of a high-income bond fund, owner of a few Greek
Government bonds. Or some popular hedgefund, trying to be special by lending
your money to goverments that are or were in trouble. The top 10 of their bond
portfolio, a percentage of their assets, per country: Italy 5,52% (4 bonds),
Portugal 5,37% (3), Spain 1,11% (1), Ireland 1,02% (1), Greece 0,75% (1).


Last edited by 14-11-2014 on Tue Feb 10, 2015 6:07 am; edited 4 times in total

 
14-11-2014
1117605.  Tue Feb 10, 2015 6:03 am Reply with quote

Q: What's the credit rating of Germany?

K: any possible rating and outlook, like AAA or AA+ with a stable outlook.

A (unverified in the specific case of Germany): none.

Germany has no credit rating. Credit rating agencies may have looked at German bonds,
but not because Germany hired those agencies to rate their bonds. So e.g. Moody's may
have a credit rating for German bonds, but Germany has no credit rating for their bonds.

Countries like Germany don't need a credit rating, so Germany has no credit rating.

 
14-11-2014
1117695.  Tue Feb 10, 2015 10:42 am Reply with quote

Q: Why can it be expensive and hard for the (virtual) richest city in Greece to borrow
money now?

A: Because the credit rating of the city cannot be better than the credit rating of the
country. If the credit rating of the city is AAA and the credit rating of the country is B,
then the credit rating of the city will be B too. In theory the country can, for example,
introduce a social Rich Lower Governments Tax. Nevertheless it can be an attractive
investment. Your risk is the city's AAA, but you'll receive the country's B interest rate.

 
suze
1117713.  Tue Feb 10, 2015 12:12 pm Reply with quote

I'd be surprised if Germany has never paid for a credit rating, but I don't immediately have the information to prove or disprove.

One wealthy nation which certainly hasn't is the United Arab Emirates. The official line of the Emirati government is that their country has a negative national debt and does not borrow*, and hence has no need of a credit rating. To what extent you believe that line is up to you; there is not the same transparency in their national accounting as in the major western nations.



* The UAE has never issued government bonds. It passed a law last year giving it the power to do so, but as yet hasn't done it. Some of the individual Emirates which make up the UAE do issue bonds.

 
14-11-2014
1117739.  Tue Feb 10, 2015 1:48 pm Reply with quote

suze wrote:
I'd be surprised if Germany has never paid for a credit rating, but I don't
immediately have the information to prove or disprove.


I didn't say never. In the 80s and 90s the Netherlands refused to apply for a credit
rating. The Dutch State believed that their credit ratings, copying German monetary
policies ASAP, would be too good to need a judgement of rating agencies.

Later during the 90s the rating agencies started publishing unsolicited ratings.
That's how it still works, despite of the recent unsolicited downgrade.

The first Google-hit w.r.t. Germany:

Quote:
Standard & Poor's is placing its 'AAA' long-term unsolicited sovereign
credit rating on the Federal Republic of Germany


So apparently Germany has no credit rating too. German bonds do have a credit
rating, but this credit rating is unsolicited.

suze wrote:
negative national debt


Definitions do matter indeed. AFAIK Italy has a problem (debt of the country), or
Italy perhaps has no problem (debt of the country and debts of Italian citizens).

 
14-11-2014
1118074.  Thu Feb 12, 2015 7:50 am Reply with quote

Last year wrote:
Federal Reserve Chairwoman Janet Yellen, speaking in front of
Congress Tuesday, said the valuation of small-cap biotech stocks
are "substantially stretched."


Last Tuesday: IPO of SAFOR (Euronext Paris) €2.55.
Last Wednesday: highest price of €10.78, +322.75%.

An asset bubble, or asset price inflation. Shares with a low price, a limited number
of issued shares, and Friday's biotech IPO was "substantially stretched" too. During
the first two days over 36.9% of all outstanding shares of SAFOR were traded.

The name Safe Orthopaedics may suggest that it's biotech, but actually it's classified
as medical equipment. Apparently the size of the ICB subsector biotechnology is also
substantially stretched. The price range of the IPO was €2.55-€3.45.


Last edited by 14-11-2014 on Sat Feb 14, 2015 5:59 am; edited 1 time in total

 
14-11-2014
1118489.  Sat Feb 14, 2015 5:41 am Reply with quote

14-11-2014 wrote:

Quote:
Standard & Poor's is placing its 'AAA' long-term unsolicited sovereign
credit rating on the Federal Republic of Germany


bloomberg.com wrote:
Austria loses AAA badge as slow bank repair inflates debt


Reality check: Fitch, one of the remaining AAA badges, (finally) downgrades Austria.

Austria has no Fitch credit rating. Fitch's Austrian ratings are all unsolicited, so Austria
cannot lose it. Of course Germany was used to add surprise to the fact that Germany
has no credit rating, but it will also be hard to find a credit rating of the UK.

A restaurant may lose an unsolicited Michelin star which they never owned, but a
difference is that people don't assume that restaurants have at least one star. People
do assume that countries have a credit rating, and that all favourable credit ratings
are solicited.

I'm disagreeing with this abstract. I'd say that not all favourable ratings are solicited.
Unsolicited Greek bonds ratings would have been favourable, while a solicited rating
could have resulted in a rather expensive downgrade of a solicited rating of Greece.

 
14-11-2014
1118501.  Sat Feb 14, 2015 6:23 am Reply with quote

14-11-2014 wrote:
Last year wrote:
Federal Reserve Chairwoman Janet Yellen, speaking in front of
Congress Tuesday, said the valuation of small-cap biotech stocks
are "substantially stretched."


Last Tuesday: IPO of SAFOR (Euronext Paris) €2.55.
Last Wednesday: highest price of €10.78, +322.75%.


Also last week (Euronext Paris, biotech): POXEL. IPO €6.66.
Highest price €17.74, +166.37%.

This does support the point of view of the Federal Reserve, because SAFOR (+323%,
current market value €84 mln.) is a smaller small-cap than POXEL (+166%, current
market value €234 mln., more supply).

BOTHE is last week's exception, with a maximum gain of just +80.63%. BOTHE's
current market value is €145 mln. The underperformance of BOTHE can be
explained by its listing in Brussels (smaller main market, less demand) and Paris.

The Fed is still right, including the small-cap restriction. It's a bubble, due to
excessive buying. If you want to join the party, as long as such a party will last,
then you'll have to buy first too.

 
14-11-2014
1121130.  Fri Feb 27, 2015 4:54 pm Reply with quote



Czech 200 Koruna banknote. The pointy bit is Naarden-Vesting, the Netherlands.
Jan Amos Comenius never lived in Naarden, and nobody knows for sure why he
was burried in Naarden. He died in Amsterdam in 1670, but you can find one of
the Comenius musea and the Comenius Mausoleum in Naarden. The pointy bit
was constructed between 1673 and 1685.

 
14-11-2014
1123042.  Wed Mar 11, 2015 7:42 am Reply with quote

Let's try to predict a French bubble before it will actually happen: Ose Pharma

Report of the Fed wrote:
Valuation metrics in some sectors do appear substantially stretched–particularly those for smaller firms in the social media and biotechnology industries


Other new listings (BOTHE, POXEL, SAFOR) gained ~100% in a month. It can be interesting, but not quite interesting, because a short-term initial gain of ~50-300% is not unlikely, while it's likely that the value of an invested €100 still will be ~€100 after a few days. Do expect that this Initial Public Offering (IPO) will be overwritten.

 
'yorz
1123064.  Wed Mar 11, 2015 9:55 am Reply with quote

Re that Totnes pound: when I crossed the Mediterranean aboard the m.s. Espresso Livorno in 1977, I bought some food and was given weird home-made bank notes in exchange. I had no idea how or why, but since I was very frugal I didn't think to spend that money and ended up Haifa with rather useless money. I did spend it on the way back, mind.

 
14-11-2014
1123244.  Thu Mar 12, 2015 7:46 am Reply with quote

A rolling turbo (RBS/BNP Paribas: Turbo/Booster, Commerzbank: Speeders, ING: Sprinters) are complicated financial derivates, which are popular in several countries, including Germany

In a way a rolling turbo is an unattractive, deep-in-the-money option hidden behind a commercial, smart disguise. Most buyers don't understand less complicated options nor this financial derivate.

Wikipedia wrote:
ts lifetime is usually not time-limited

This is just one of the assumed magic properties of such a structured product. It's true that the lifetime isn't known, but the lifteime is limited. The issuer has hidden the strike, which will be adjusted frequently (monthly, dividends, corporate actions) of the hidden, unattractive option.

Issuers have to publish the strike, but the strike is excluded from the name of the product. They've also hidden the word strike. The strike of such a structured product is called the Financing Level. The strike of an option is fixed, but the hidden strike of a rolling turbo is a variable.

Wikipedia wrote:
Unlike financial derivatives that are forced to terminate after severe exchange rate fluctuations, the risk of a catastrophic loss is smaller

Yet another assumed magic property. A loss will be less than 100% of the investment, but what's catastrophic? Besides that this Stop Loss mainly protects the issuer. It's a safety margin.

Disadvantages of the product typically aren't mentioned at all. The Stop Loss Level (excluding all costs, to be paid by the buyer) can stop a loss indeed, but it's also the end of the product.

If options are a complicated product, then a rolling turbo is a complicated product on top of another complicated product. Deep-in-the-money options are unattractive, but a rolling turbo is quite popular. Buyers of the product often don't even understand options, but they think they do understand this structured product. A rolling turbo is a very smart, award-winning product, because it hides a lot of disadvantages of unattractive options. Mainly by reversing properties or by using new words. The hidden, variable Financing Level of a rolling turbo is the published, fixed strike of an option. Most buyers think it's an easy product with magic properties. Actually it's a smart, commercial, volatile, rather expensive, complicated structured product, with hidden disadvantages of both options and the product itself.

 

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