Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

2012 Markets Will be a Repeat of 2011, Favor Italian Government Bonds Over Nation's Bank Debt

Interest-Rates / Eurozone Debt Crisis Jan 13, 2012 - 01:58 AM GMT

By: Bloomberg

Interest-Rates

Best Financial Markets Analysis ArticleBoaz Weinstein, founder of Saba Capital and former co-head of credit trading at Deutsche Bank, spoke exclusively to Bloomberg TV's Stephanie Ruhle about the CDS market and outlook for 2012.

Weinstein said that "we do have a long position in Italy" and the markets this year will "be a repeat of 2011."


Weinstein on markets in 2012:

"It's really going to be more of the same. The market is so opaque right now."

"I'd much rather focus on the relationship between two related instruments, the stock of a company and the debt of the same company, than to go to sleep at night wondering what headline might shake the market up or down in a surprising way. I think 2012 is going to be a repeat of 2011. It's going to be a very challenging year for managers to find good investments."

On his relationships with banks:

"In the last three to five months there's a noticeable level of risk aversion at banks. And so if you go and ask our various counterparties to provide liquidity, they're not doing it as much. So what it means is that the rest of the investor base, funds like ourselves, when a client needs to buy or sell something we're often on the other side of that trade. The dealer, the bank, is now acting more as agent rather than as principal."

On what keeps him up at night:

"Since August I've been waking at 3:00 a.m. to look at the European markets. It's been interesting. It's not just a chore. It's not just an important thing to do...I think that Europe is going to be the major focus again for the markets in 2012, almost without a doubt."

On investing in Italian debt:

"We think Italian debt above 7% right now looks mispriced, looks attractive to us relative to the equity markets, relative to the debt of Italian banks, for example. And so we do have a long position in Italy, the sovereign."

On sovereign CDS:

"There is this open question about Greece. I think we can start by looking at the market- Greece CDS has never been more valuable. If you wanted to go and buy this CDS that some people wonder is it valuable, it's never more expensive. The market is speaking and saying actually Greek CDS has a lot of value. The real question is around the restructuring that's occurring, the PSI. Should that trigger CDS? In our view, so long as the average investor has the right to decide, it shouldn't trigger CDS and it doesn't speak negatively for the validity of the product."

On how Saba is positioned on European banks:

"It's interesting when you look at European banks compared to the sovereigns because take a bank in a country and that country's debt. Let's take Italy, for example. It is unusual that sovereign debt, because it has this technical problem that we talked about where there's too many sellers who owned it because they wanted to own riskless assets, are selling and driving the yields up. Yet the bank debt, even though it's much riskier than the sovereign debt, is trading at pretty much the same level. So if you look at history, you won't find too many examples where a country defaulted and its banks were okay, especially banks that have a lot of exposure to the sovereign."

"And so we think bank debt is unattractive compared to sovereign debt because there could be many examples and there have been in the past where bank defaults, like we had in Iceland in 2008 or even Ireland in 2011, the bank defaults, the sovereign lives on and survives. And so we think that's an interesting relationship."

On how the credit derivatives product has changed in the last ten years:

"There's been a tremendous amount of standardization in the product. So even just the contracts that every firm trades off of the same language and really making that the contract harmonious across counterparties was put in place, finally, the last peg in the ladder was 2009, the big bang protocol. And since then the product has been very standard. And of the legacy issues have really left. In addition, it's become much more liquid. So billions of notional is traded every day in the CDS market. And the bid offer spread tends to be less than it is. So the price of getting in and out is less than it is in the bond and loan market."

"And lastly, just transparency. So if we wanted to go and check a random company and see where their CDS level is-- it's really very easy. One of a dozen banks put out prices throughout the day. And so CDS often is maligned for being this opaque thing. But in the main, the credit default swap is actually a pretty simple, straightforward instrument."

On Warren Buffett saying that derivatives are weapons of mass destruction:

"Ironically, after he said that infamous line, it became known to Berkshire investors that Mr. Buffett was actually one of the largest players in the equity derivatives and credit derivatives space. And so I don't really know what he was getting at with that comment. But I think it's unambiguously true that derivatives have lower borrowing costs for corporate institutions and just the ability for banks to hedge has also allowed them to extend more credit. And so I think, on the whole, derivatives have actually played a very positive effect on the economy."

On Saba's plans for 2012:

"We'd like to just continue doing what we've done over the years, which is invest in relative value. That doesn't mean we're neutral to everything. We do have a long bias in the U.S. versus a short bias in Europe, and that's because of the fragility of the European economy. But in general, most of our returns are going to come from mis-pricings between a company's debt and equity or two year and ten year. And these are the sorts of strategies that we really spend most of our investors' capital on."

On Pershing Square's Bill Ackman calling him one of the two most important people in the credit markets space and who he believes is the other:

"In deference to Bill, who I've known for many years, he may have meant himself, which in fact it would actually be a reasonable comment because he's done very well as a credit investor. I don't know who he meant, but maybe he was joking."

On whether he's looking at the sell side to pick up talent:

"Like any fund, we're always looking for talented people. That goes without saying. But I think there are still very talented traders at banks that could work out very well in the buy side. So, yes, we are looking to grow...If you hire one, it's like shark teeth. There's another five behind it."

bloomberg.com

Copyright © 2012 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules