On August 8, 2011
Congratulations Standard and Poor's. You have created an enormous buying opportunity for anyone who cares to take notice. As a matter of fact, the yield on US T-Bills declined today as investors flocked to US securities in search of a safe haven investment, whether it be AA+ or AAA or AAAAAAAAAAA, doesnt really mean anything as far as this blog is concerned. I would buy more deep in the money leaps (jan13 or later) on WFT, POT, PM, MO, XOM, CVX. I own call options on WFT and POT.
In light of Standard and Poor's recent rise to fiscal responsibility, I would like to formally request a copy of all bonds and securities rated since the year 2005. In this report, I am specifically interested in cash flows for mortgage backed securities originated between 2005 and 2007, the payoff date of the security, the interest payments expected to be received by the investor, the actual interest received by the investor and of course the correspond 'official' rating.
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/31/AR2010083106192.html
On August 2, 2011
Moody's has posted an 'Outlook Negative' on the US credit rating (<http://finance.yahoo.com/news/Moodys-backs-US-tripleA-apf-2668047537.html?x=0&sec=topStories&pos=main&asset=&ccode=>). I must think that too much austerity as the US is coming out of a recession is certainly not a good thing for the economy. At the same time, we need tax increases to close the deficit. The lawmakers did the right thing and got the debt deal done. Wasn't too good. Wasn't too bad. Good enough. Let us move on.
I like how Moody's/Standard and Poor's are all of a sudden the steward of fiscal responsibility. In Michael Lewis' book The Big Short, he notes that anybody who doesn't get a job at a big investment shop has to settle for a job at Standard and Poor's, Moody's or Fitch. He also points out that those betting against the housing market found plenty of ammunition in the pay to play scheme concocted in so called AAA ratings. We should not forget that in the not too distant past a AAA rating was assigned to every subprime security in the TBA market.
The purpose of ratings agencies is to provide an opinion on the collateral that backs the debt of a corporate or government entity. Typically, ratings agencies (and analyst opinions) are simply following the lead of bond investors in the market. They provide a reactionary opinion based on what has already happened based on bond yield spreads. Since the subprime debacle, the agencies attempt to get out in front of credit problems of the US or European governments. They are simply translating what the bond markets are saying into plain English.
We should acknowledge the agencies in their plight to make themselves whole to the stewards of credit and simply ignore them when it comes to economic policy. As they say, let the money do the talking; Bond yields will speak for themselves. Even better, perhaps the ratings agencies should make statistics available on opaque securities that earn their stamp of approval, reference expected cash flows, debt percentages, and verify collateral to weed out fraudulent entities.
Congratulations Standard and Poor's. You have created an enormous buying opportunity for anyone who cares to take notice. As a matter of fact, the yield on US T-Bills declined today as investors flocked to US securities in search of a safe haven investment, whether it be AA+ or AAA or AAAAAAAAAAA, doesnt really mean anything as far as this blog is concerned. I would buy more deep in the money leaps (jan13 or later) on WFT, POT, PM, MO, XOM, CVX. I own call options on WFT and POT.
In light of Standard and Poor's recent rise to fiscal responsibility, I would like to formally request a copy of all bonds and securities rated since the year 2005. In this report, I am specifically interested in cash flows for mortgage backed securities originated between 2005 and 2007, the payoff date of the security, the interest payments expected to be received by the investor, the actual interest received by the investor and of course the correspond 'official' rating.
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/31/AR2010083106192.html
On August 2, 2011
Moody's has posted an 'Outlook Negative' on the US credit rating (<http://finance.yahoo.com/news/Moodys-backs-US-tripleA-apf-2668047537.html?x=0&sec=topStories&pos=main&asset=&ccode=>). I must think that too much austerity as the US is coming out of a recession is certainly not a good thing for the economy. At the same time, we need tax increases to close the deficit. The lawmakers did the right thing and got the debt deal done. Wasn't too good. Wasn't too bad. Good enough. Let us move on.
I like how Moody's/Standard and Poor's are all of a sudden the steward of fiscal responsibility. In Michael Lewis' book The Big Short, he notes that anybody who doesn't get a job at a big investment shop has to settle for a job at Standard and Poor's, Moody's or Fitch. He also points out that those betting against the housing market found plenty of ammunition in the pay to play scheme concocted in so called AAA ratings. We should not forget that in the not too distant past a AAA rating was assigned to every subprime security in the TBA market.
The purpose of ratings agencies is to provide an opinion on the collateral that backs the debt of a corporate or government entity. Typically, ratings agencies (and analyst opinions) are simply following the lead of bond investors in the market. They provide a reactionary opinion based on what has already happened based on bond yield spreads. Since the subprime debacle, the agencies attempt to get out in front of credit problems of the US or European governments. They are simply translating what the bond markets are saying into plain English.
We should acknowledge the agencies in their plight to make themselves whole to the stewards of credit and simply ignore them when it comes to economic policy. As they say, let the money do the talking; Bond yields will speak for themselves. Even better, perhaps the ratings agencies should make statistics available on opaque securities that earn their stamp of approval, reference expected cash flows, debt percentages, and verify collateral to weed out fraudulent entities.
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