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A look at economics, markets, finance and the irrational human being

Why Did German Bunds Selloff and What Opportunities Are There in European Sovereign Bonds

Why did German bunds selloff so violently? When the ECB announced QE, traders attempted to front run the program. The program would buy bonds according to the capital subscription of the national central banks to the ECB. On that count, bunds would see an 18% allocation of the budget, France 14%, Italy 12% and Spain
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A Simple China Growth Model. Implications For Hard or Soft Landing

The Chinese economy generated about 10.4 trillion USD of nominal output in 2014, representing incremental nominal output of 680 billion USD, equivalent to 7.0% growth. If the Chinese economy continues to generate this same incremental nominal output of 679 billion USD this year and next, 2015 growth will be 6.54% and 2016 growth will be
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Greece. No Way Out But Exit? Example Solution From Corporate Workout.

A business cannot borrow itself into solvency. On the other hand there will be a cost of debt beyond which no business model can survive. What Greece needs to do is examine its business model to get a handle on its revenues and expenses (including unfunded liabilities), examine its balance sheet (including state owned assets)
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China. PBOC Cuts Rates. Economy Slows. Constructive For Equity Markets and Risk Assets.

The Chinese economy is clearly slowing down and the PBOC is reacting by providing stimulus to maintain a sustainable rate of growth. It needs to do this in a balanced way without undoing some of the credit market reforms that have been enacted in the last year. On Sunday, the PBOC announced a 0.25% cut
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EUR and Greece

A short EUR position has been a consensus trade for most of 2014. Recent EUR volatility and the contentious negotiations about Greece’s finances challenge the consensus. If Greece manages to stay in the Eurozone it will be by postponing its problems and continually deferring default and exit. The Euro would be weak under this scenario. Volatility
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