"It's going to be a blood bath. Volume is down for everything except Treasuries and Munis. These guys aren't making money and soon they'll be out of their jobs," he said.
He is sitting in Grand Central's Oyster bar. It's an annual ritual for him: welcoming in September with a frenzy of shell fish and wine.
Typically he invites along a few friends and treats them to a discourse on the state of Wall Street.
"It's a one-two blow for fixed income. The derivatives are being commoditized and put on exchanges. Swoosh. Now you don't need half the people you employ to trade and track those. And volume on corporates and agency paper is way down."
The numbers from SIFMA bear him out. Year to date, the average daily trading volume in US corporate debt is down 2% compared to last year.
Trading in Fannie Mae and Freddie Mac debt is down 7%. Trading in mortgage-backed securities sponsored by Fannie and Freddie is down 13%. And the year to date numbers only tell part of the story. And the part it leaves out is how thin trading became over the summer.
More Here..
Can somebody explain what Fixed Income is, in relationship to this article? I always thought of fixed income as someone on social security.
ReplyDelete4:16 this will give you an idea: Here.
ReplyDelete*
ReplyDeleteMunicipal Bonds
*
Government Sponsored Enterprises
*
Retail Note Programs
*
Fixed Rate Capital Securities
*
Certificates of Deposit
*
Corporate Bond
*
Mortgage Backed Securities
*
Asset Backed Securities
*
Build America Bonds
*
High Yield Bonds
*
U.S. Treasuries
Short Term Instruments
*
Certificates of Deposit
*
Commercial Paper
*
Discount Notes
Thanks!
ReplyDeleteAnonymous talks of social security payments from government as being fixed income, this is not a fixed income derived from productive labor.
ReplyDeleteMillions are losing their jobs as they are no longer profitable for capital and their once seemingly secure even fixed incomes are disapearing .
All that is once solid and fixed melts into air!
EA., lists in contrast ,as fixed incomes, the interest and dividends from investment of money as capital ,titles to a share in the distribution of the profits of future material wealth production.
These "fixed incomes" are often valued and sold, as multiples of their earnings in comparison to that can be got at the average interest rate.
E.G. shares valued at a price earnings ratio P/E .
A house as collateral, may be valued in the same way, as a guaranteed good source of rent incomes ,or a source of interest/usury payment incomes ,on a mortgage.
But ,secondly in an inflationary money printing environment a “fixed income”, in real non inflated devalued currency value ,is not so “fixed” at all.
In times of economic crisis, these valuations and returns ,P/E, Rents etc are often shown to be based on mere speculative future expectations ,that will now clearly not be realized and the current valuations are therefore only pure fictional, hopefuly valued.
In a theoretical “pure capitalism” the market then ,in a cleansing crisis denies fresh credit supply ,or rollover refinancing of mortgage credit at the old interest rates.
This destroys these unrealistic fictional value levels in such as housing,bonds , or shares market values.
Share and housing values fall and there may be a rush from the markets to government bonds as a hopefully secure refuge from the market turmoil.
The bailouts and socialization of losses by government prevents the operation of the markets cleansing function.
However, as Pre-crisis the US had become de-industrialized services based economy ,whose GD”P” was driven 72% by consumption of wealth ,and a great deal of that consumption
Government and private ,was fueled by foreign credit supply ,mere socialization of past losses and replacement of capital for the banksters by government, is only an attempt to pay out on past losses .
This does not assure actual future profitability but only pays out on past losses.
“Stimulus” of the economy, by distributing counterfeit value paper dollars, can keep the economy ticking over somewhat .But “confidence” in getting real value profits back on any foreign investment of capital from a country whose bankers ,SEC and government engaged in outright “AAA” fraud, is lacking.
Therefore foreign credit supply ,demanding at least an international average in real profits as even “fixed incomes” , necessary for restarting the Great Ponzi economy is in short supply.
After all they are wary, there appears to be no ‘fixed incomes” in real value incomes available in the US as money is wildly printed to create inflation ,Treasury buys its own bonds as assets like houses lose their value and insecurity reigns.
The dollar hegemony in world trade and finance has reached its credit limits.
its bad there not likely there. When yu see them holding banners its sad, americans deserve better. Why shouldnt they, We the people not they the people. Police states where? All I see is quintesece, friendly smiles, working family. There is no need for exadgeration. sensualizing it to make others think it. Thats why news on tv is more profesional. Even so you produce Good material on this site.
ReplyDelete- Sam
The republicans want all tax money to fund their wars but claim we cant afford healthcare. we spend more money in Iraq and Afghanastan then we do on our own elderly people.
ReplyDeleteFire the GOP!
A lot of the items on the fixed income listed by Economic Analyst are things that people either have no faith in (like Municipal bonds--with all those cities going bankrupt) or feel it's not even worth parking your money there (regular savings accounts and short-term CDs that pay tiny interest). That's why I still believe in owning actual objects of value. I've been buying up reasonably priced jewelry at flea markets and that makes me feel more secure than gambling in the stock market.
ReplyDeleteshear size of amounts to be invested..somewhere, carry's it's own risks comex default? Muni defaults? Corporate bonds?
ReplyDeleteI suppose these are considered liquid but due to size and today's robomarkets not sure any could exit positions of size that quickly. consider stocks flash crashes, why couldn't muni, corpbonds fall quickly(not flashcrash quick but in just days ..or less)just takes an announcement from some state saying they are delaying bond payment and seeking to negotiate new terms, just as country's did. iceland, dubia, they say greece is next.
anyway it's a product of their own making, with HFT running the stockmarket no wonder trading volume is down. a sign of a sick and broken system