Blog Archives

Is Deutsche Bank The New Lehman?

Zac Returns To @KeiserReport to talk about the ‘Recall Bill’

Our Bez with @maxkeiser in Manchester yesterday!! “The Reality Party is the best party in the UK”

“I lost a lot of respect for Marc Andreessen today.”

You coming to MAX RAGE in Belfast this weekend?

Come To June 23rd Event in London: Is London Soon To Be The Crypto Capital Of The World?

‘Best in Class’: wins prestigious Interactive Media Award @rt

“In every sector of the bond market, you can find deals that make little sense.”

This makes no sense . . .

This makes no sense . . .

In every sector of the bond market, you can find deals that make little sense on a rational basis. In the tech sector, Tesla’s $2 billion convertible bond issue in February carried a coupon of 1.25% on the longer tranche and a conversion premium of 42%. By definition, the “crossover point” is the juncture at which the bonds would yield a higher overall return than the stock would be after 33 years. In other words, 26 years beyond the 7-year maturity of the bonds.

Looked at the other way, considering the notes as a debt security, their yield was below the yield on Treasury bonds of the same maturity, while this week Standard and Poor’s assigned the bonds a rating of B minus, well into junk territory and the lowest rating they could hold while being able to meet their current financial commitments. In other words, however fashionable Tesla’s cars may be, and however highly rated its equity, its convertible bonds were a thoroughly irrational investment.

[KR609] Keiser Report: Bond Bubble Burst

We discuss investors picking up nickels in front of steamrollers as both stocks and bonds soar. In the second half, Max interviews Ian Fraser, author of Shredded: Inside RBS, The Bank That Broke Britain. They discuss how the bank rigged Libor (and could go bust because of the fines and the ongoing criminal investigations), mispricing assets (with a little help from compliant regulators and complicit auditors) and kneecapping companies out of spite (just because).

Dang, The Wine Bubble Implodes (It’s China’s Fault)

(mentioned at Davos 3 yrs ago) Global market for bonds balloons to $100 trillion

Roach warns of “weaker dollar, higher interest rates, rising inflation”

The combination of product-specific funding facilities and the first round of quantitative easing sent the Fed’s balance sheet soaring to $2.3 trillion by March 2009, from its pre-crisis level of $900 billion in the summer of 2008. And the deep freeze in crisis-ravaged markets thawed.

The Fed’s mistake was to extrapolate – that is, to believe that shock therapy could not only save the patient but also foster sustained recovery. Two further rounds of QE expanded the Fed’s balance sheet by another $2.1 trillion between late 2009 and today, but yielded little in terms of jump-starting the real economy.

This becomes clear when the Fed’s liquidity injections are compared with increases in nominal GDP. From late 2008 to May 2014, the Fed’s balance sheet increased by a total of $3.4 trillion, well in excess of the $2.6 trillion increase in nominal GDP over the same period. This is hardly “Mission accomplished,” as QE supporters claim. Every dollar of QE generated only 76 cents of nominal GDP.