Commodity Trade Mantra

Posts Tagged ‘Leverage’

Here Is Why The Fed Can't Hike Rates By Even 0.25%

The US Treasury and the Federal Reserve (where Zoltan Poszar previously worked) understand and grasp the momentuous implications of even the smallest quantum of interest rate increase. What the Fed doesn’t want, is not one but one thousand LTCMs going off at exactly the same time in what is now the world’s most levered trade.

Why Using Debt To Buyback Stock Is Great And Much More

Everyone is focusing on strategy of bloating any available company with massive leverage to either buyback stock or engage in “synergy-creating” M&A, which is affectionately known as “activism.” Massive leverage is great for shareholders but a disaster waiting to happen for employees & bondholders in the future as soon as rates rise.

Why We Should Fear the REPO

The REPO market is the transmission mechanism that drives liquidity. REPO, also related to “shadow finance” is the core catalyst – the perpetual financial motion generator, the way constant leverage is conjured out of nothing on a daily basis. It drives worldwide liquidity and/or credit. It has enabled the funneling of credit into equities.

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