July, 2011 Archives


El-Erian On The Current Micro-Macro Tug Of War

by Riaan Nel in News

See the following blog post from PIMCO’s El-Erian (http://www.cnbc.com/id/43785411).  I agree with all the statements made.  Indeed, Italy’s debt issue is a game changer.  I think investors need to reduce their exposure to risk assets.  One can even ask, is there currently a repricing of risk assets taking place?


The Market Is Not Expecting A Default

by Riaan Nel in News

With both Standard & Poor’s, as well as Moody’s threatening to downgrade the credit rating of the United States speculation abound as to the implications of Uncle Sam losing its AAA rating.  Treasury securities have always been the safest, and most liquid of all instruments in the global financial system.  Despite the credit rating threats and the speculation on the news channels the 10-year Treasury yield hasn’t changed much since the announcements.  Currently the bond market is ignoring the downgrade threat.  Will this continue, though, is an open question.  Currently the market believes the debt ceiling will be raised, and the US won’t default on its debt obligations.  I am optimistic that some messy, 11th hour deal will be reached to increase the debt ceiling by August 2nd.  If not, there is always the “nuclear option” – the President invoking Article 4 of the 14th Amendment of the US Constitution.

          The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing    insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

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The Financial Crisis of 2015

by Riaan Nel in Global Economy

This report was distributed by consulting firm Oliver Wyman during the World Economic Forum meeting in Davos, Switzerland, earlier this year – http://www.oliverwyman.com/ow/pdf_files/OW_EN_FS_Publ_2011_State_of_Financial_Services_2011_US_Web.pdf