On Saturday, 19 June, China signalled the end of its currency peg which fixed the CNY at 6.83 to the USD and said it would gradually make the its currency more flexible. The CNY appreciated to 6.80 on Monday. A stronger CNY it was hoped would: Address the trade imbalances between the US and China.

Hedged.biz has downgraded Fitch, Moody’s and Standard and Poors from AAA directly to junk. For downgrading (upgrading)  issuers only after price discovery has occurred and being reactive rather than proactive. For downgrading (upgrading) issuers only after bad (good) stuff has happened and been priced in. Downgrading BP over a month after their rig in the

We are not rewarded to bolster the base of the pyramid but to reach for the stars. Too often intermediate levels are built upon a deck of cards. Where the potential to build highest lies, most effort is directed there, often in disregard of the frailty of the supporting levels below. The engineer knows that

With the acceleration of globalization in the last 20 years up until 2008 sector risk has risen relative to country risk. The classic example is in Europe where a stock like RWE starts trading less like a German stock and more like a European utility stock. With the credit crisis of 2008 came a number

Prior to the adoption of the EUR, European equity markets were segmented by country. Since the adoption of the EUR, however, European equity markets became segmented by sector, as the funding costs between countries converged. With the recent rise of country risk and the divergence of funding costs, Europe is trading by country segmentation again.