Ok, first of all, I appreciate the restraint, but the Euro is in major trouble, and its "salvation" is probably even worse. As soon as Greece "clears", Spain, Portugal or one of the others will tank. So its a dollar world for the long-short term. Actually, I think its probably be a dollar world for the long-long term: you're a portfolio manager for a multi-billion investment fund/pension whatever, you decide that the U.S. economy is fucked-who wants to be in Treasuries? So you take your lowest risk portion of your portfolio and put it in. Oh,oh, where do you put it? (thinking going on here) In short, if you actually believe in a doomsday scenario, or anything like it, you want to have your U.S. position. Trading is trading, but portfolio managers of global invested multi-billion funds need to preserve capital over the long term, so don't get caught too short. Hard U.S. assets, low leverage.
Charles Cecil
Opin Partners, LLC
2/26/2010
Virtually all players in the CRE industry, securities and banking sectors agree that we need the CMBS market to return to functionality as soon as possible (even the politicians want this).
The CMBS market cannot recover its value to the world until the uncertainties that now exist are cleared up, and litigation between the parties is the most certain way to achieve this. Factors that are pushing for a litigation between Special Servicers and CMBS bond holders of different seniority (tranches) include steadily increasing mortgage loan delinquencies that show no sign of lessening, the huge dollar volume of CMBS loans ($770 billion) , PSA agreements that put Special Servicers in an untenable position with respect to conflicts of interest that they are supposed to ignore (read as in "law suit"), B piece owners who are also Special Servicers who have an obligation to THEIR investors and will be inclined to argue that obligation as superior to that owed other more senior bond holders, Senior bondholders who believe that their position is being injured by delays in foreclosure and sale that may benefit the Special Servicer and/or B bond holders and the always murky question of what liability the Special Servicer may have to mezzanine lenders who argue that the actions of the Special Servicer that benefit the Special Servicer are damaging to the mezzanine lender.
The sooner these issues are cleaned up, the sooner we can see the revival of the CMBS market and the CRE market that relys on it for liquidity, now more than ever.
The CMBS market cannot recover its value to the world until the uncertainties that now exist are cleared up, and litigation between the parties is the most certain way to achieve this. Factors that are pushing for a litigation between Special Servicers and CMBS bond holders of different seniority (tranches) include steadily increasing mortgage loan delinquencies that show no sign of lessening, the huge dollar volume of CMBS loans ($770 billion) , PSA agreements that put Special Servicers in an untenable position with respect to conflicts of interest that they are supposed to ignore (read as in "law suit"), B piece owners who are also Special Servicers who have an obligation to THEIR investors and will be inclined to argue that obligation as superior to that owed other more senior bond holders, Senior bondholders who believe that their position is being injured by delays in foreclosure and sale that may benefit the Special Servicer and/or B bond holders and the always murky question of what liability the Special Servicer may have to mezzanine lenders who argue that the actions of the Special Servicer that benefit the Special Servicer are damaging to the mezzanine lender.
The sooner these issues are cleaned up, the sooner we can see the revival of the CMBS market and the CRE market that relys on it for liquidity, now more than ever.
2/20/2010
China is selling down US Treasuries exposure?
China is selling down US Treasuries exposure?
Charles Cecil
Opin Partners, LLC
- China's real position is best seen through the sum of their "visible" actions and HK
and UK actions: net position is increased, especially if viewed on a six month
average or over the post-crisis period.
- My sources in major continental banks are looking for the Euro to stabilize around 114
- China definitely needs the US to remain stable and will do whatever it can to prevent
a dollar flight. I mean, who else have they got that they
can actually rely on politically and economically (to the extent that we want to
separate the two!).
- So, $3 trillion or if you like, $7 trillion of US T is maturing in the near term, it
is useful here to think like a portfolio manager for a major
institutional investor: am I seriously suggesting that I am going to move my exposure
from US T to say... what? I mean, I have to balance
my risk globally right? If I move out of US T, I have to look at the country risk
weighting and what the implication for the globe's economies
if the US really does experience a major blow out. Net, net, I have to conclude that
apart from hard ownership (with very low leverage) of
commodity resources (and I don't mean through publicly traded securities), I want the
US exposure as the US remains the most vibrant
hothouse for creating wealth without political risk. Really, how many of you global
portfolio managers would be ready to move your
exposure from US T to the big growth engines of India, Brazil or China? No, you are
going to reallocate from some less appetizing
countries such as Russia, Italy, Spain or UK (oh wait, what's happening to
currencies?)
Charles Cecil
Opin Partners, LLC
- China's real position is best seen through the sum of their "visible" actions and HK
and UK actions: net position is increased, especially if viewed on a six month
average or over the post-crisis period.
- My sources in major continental banks are looking for the Euro to stabilize around 114
- China definitely needs the US to remain stable and will do whatever it can to prevent
a dollar flight. I mean, who else have they got that they
can actually rely on politically and economically (to the extent that we want to
separate the two!).
- So, $3 trillion or if you like, $7 trillion of US T is maturing in the near term, it
is useful here to think like a portfolio manager for a major
institutional investor: am I seriously suggesting that I am going to move my exposure
from US T to say... what? I mean, I have to balance
my risk globally right? If I move out of US T, I have to look at the country risk
weighting and what the implication for the globe's economies
if the US really does experience a major blow out. Net, net, I have to conclude that
apart from hard ownership (with very low leverage) of
commodity resources (and I don't mean through publicly traded securities), I want the
US exposure as the US remains the most vibrant
hothouse for creating wealth without political risk. Really, how many of you global
portfolio managers would be ready to move your
exposure from US T to the big growth engines of India, Brazil or China? No, you are
going to reallocate from some less appetizing
countries such as Russia, Italy, Spain or UK (oh wait, what's happening to
currencies?)
2/05/2010
U.S. Sovereign Default? Looks Like They've Solved the Social Security Problem
I have not heard "Social Security" since the day before the Presidential election so I guess Obama & team must have figured out how to fund the obligations. Well, maybe not, they've been awfully busy with the Iraq and Afganistan wars, Iran, the banks, housing, unemployment, education, health care, losing Senate and House seats, managing awkward press about relationships with Goldman Sachs and its past and present senior members, allegations of strong-arm tactics associated with bailouts and questions of inappropriate management of significant information regarding the Merrill Lynch-Bank of America deal, China's new found power, and a few other things. Consider the impact of all of the above on the U.S.' "ability to pay" when we are faced with a relatively slow growth economy and bruised consumers-can we just raise taxes to pay for all this? Probably not enough without killing the goose altogether. Then, the inflatorama is not as perfect a solution as many would like us to think as ultimately there is a limit to the money printing solution. So, it is worth noting that today, one of the bond credit rating agencies raised a flag about the U.S.' bond rating.
Subscribe to:
Posts (Atom)
