patrick.net

jojo says

It IS indirectly pegged to the 10year. Gsr is correct.

Please tell me what school gave you a degree in finance. I don't believe it.

jojo says

It IS indirectly pegged to the 10year. Gsr is correct.

Holy crap.

If it is pegged, then explain why this is not a straight line:

http://research.stlouisfed.org/fred2/graph/?g=tqt&dbeta=1

Maybe you don't know the definition of the word "pegged."

jojo says

It IS indirectly pegged to the 10year. Gsr is correct

OK--please define exactly what "indirectly pegged" means.

jojo says

@bgamall

The honest answer is that no one knows. We have never in human history had a financial superstructure like this. My best guess is we experience something like Japan has for the last 20 years (we are already almost 10 years in and it seems similar to Japan after their crash in the early 90s). If a large bank fails and the trillions of dollars of derivatives, which net out to a far smaller value, become unhinged because a counter party collapses then we could see a depression.

@jojo Interesting. This does mirror the 1920s in many ways, also imperial France before the revolution. Thoughts on the above parallels?

tatupu70 says

The honest answer is that no one knows.

I think Tatupoo needs something he can relate to more in his day-to-day line of work. Poo, think of 'indirectly pegged' like if you mistakenly put the 'For Sale' sign in the backyard instead of the front yard. Sure, you are directly putting up the sign, but you have 'indirectly pegged' it in the wrong location.

RentingForHalfTheCost says

tatupu70 says

The honest answer is that no one knows.

I think Tatupoo needs something he can relate to more in his day-to-day line of work. Poo, think of 'indirectly pegged' like if you mistakenly put the 'For Sale' sign in the backyard instead of the front yard. Sure, you are directly putting up the sign, but you have 'indirectly pegged' it in the wrong location.

Please don't misquote me. That was jojo's post, not mine.

jojo says

tatupu70 says

OK--please define exactly what "indirectly pegged" means.

Read this:

jojo says

10-Year Treasury Note and Rate

http://useconomy.about.com/od/fiscalpolicydefinitions/p/10-Year-Treasury.htm

That doesn't answer my question. Can you not define the term that you used?

jojo says

and this:

How Bond Market Pricing Works

http://www.investopedia.com/articles/bonds/07/pricing_conventions.asp

Are you having trouble finding the definition? I would think that you could readily define it in your own words without having to link to anything.

jojo says

Figure it out yourself. I've already given you the links and all the info is there. I'm not your teacher.

So, in other words, you can't define your own terms. Because they are BS. Got it.

jojo says

I'm not going to waste my time explaining to you how the treasury yield curve works.

That's good. Becuase I didn't ask you how the treasury yield curve works. And that's because I already know.

I have a very specific question. What does "indirectly pegged" mean?

jojo says

Indirectly pegged means this:

"The 10-year Treasury note rate is the yield, or rate of return, you get for investing in this note. The rate is important because it is the benchmark rate that guides almost all other interest rates"

lol--are you kidding me? You have a degree in finance?

jojo says

Indirectly pegged means this:
"The 10-year Treasury note rate is the
yield, or rate of return, you get for investing in this note. The rate is
important because it is the benchmark rate that guides almost all other interest
rates"

"Indirectly pegged" = "guides almost all other interest rates." Got it.

While we are playing this game, from now on, when I say "Austrian,", I really mean "factually blind economically illiterate Fed cultist."

Just so we are clear.

tatupu70 says

You have a degree in finance?

"I have a degree in Finance" means "I got a C in algebra and Ron Paul really got me excited about Austrian economics, so I have been to mises.org."

jojo says

I can't help it if none of you understand how the treasury curve works

Now you are pissing me off, dipshit.

If you can explain to me the differnce between this:

http://research.stlouisfed.org/fred2/graph/?g=tqt&dbeta=1

Which is the exact relationship you are talking about - and is certainly not constant.

And this:

http://research.stlouisfed.org/fred2/graph/?g=tsc&dbeta=1

Which shows something that was ACTUALLY pegged from mid 1995 through 2004.

It has absolutely nothing to do with the yield curve.

There are many factors that affect corporate bond prices. Risk, alternative investment opportunities, time (the yield curve you talk about), and yes, the risk free rate (commonly accepted as the 10 year in general, but not for a 3 month corporate debt offering, as an example, why? Because the yield curve is not constant either.)

Something that is a "factor" in something else does not mean it is pegged, directly or indirectly. If something is Pegged it is a constant relationship, 1:1, it does not change. Corporate debt rates vs. the 10 year is a floating spread, as I have quite plainly shown.

jojo says

Hmmm.. that's funny because this phrase is used quite a bit. Just do a google search.

Here is an economics textbook that uses the phrase "indirectly pegged".

Macroeconomics: A Modern Approach

OK-I take it back. You can use that term in a comletely different vein that what you proposed. The text is saying that if you peg currency A to currency B which is pegged to gold, then, in effect, you indirectly pegged currency A to gold.

That's not what you are saying though

control point says

Indirectly pegged" = "guides almost all other interest rates." Got it.

While we are playing this game, from now on, when I say "Austrian,", I really mean "factually blind economically illiterate Fed cultist."

Just so we are clear.

This is about facts. It has nothing to do with economic policy. Stop fooling yourself.

>>Rates are low largely because corporate rates are pegged to the benchmark 10-year Treasury yield, which has dropped to around 2 percent from more than 3.5 percent in early 2011.

http://www.nytimes.com/2012/03/08/business/low-rates-entice-companies-to-borrow.html?pagewanted=all

http://marketrealist.com/2014/03/low-interest-rates-sparked-record-debt-issuance/
>>
n order to help the economy recover, the U.S. Federal Reserve has followed an accommodative monetary policy since 2008. This has included keeping the Fed funds rate between 0% and 0.25% and monthly bond purchases of longer-term Treasuries (TLT) and agency-backed securities (MBB), with the intention of keeping interest rates low, to spur growth in investments and GDP, creating jobs as well as helping Fed achieve its long-term inflation goal of 2%. However, the excess liquidity in the market may have had some unintended consequences.

Companies have taken advantage of low interest rates to refinance costlier debt, fund mergers and acquisitions, and increase returns for shareholders by increasing dividends and share-buybacks. The S& P 100 Buyback Index, which monitors 100 stocks with the highest buyback ratios, increased 45% in 2013, shadowing the performance of the S&P 500 Index (SPY), which increased by 28%.

Lower interest rates have led to record corporate bond issuances and fund flows in fixed income ETFs (BND).

There are many people on PatNet I'd rather not meet in person, particularly the ultra-conservative trolls. They scare me.

Dan8267 says

There are many people on PatNet I'd rather not meet in person, particularly the ultra-conservative trolls. They scare me.

Me too. Some of the peasants I can only imagine how below me it would be to associate with.

Should we invite REALTORs to the PatNet Convention?

What if they show up uninvited?

Robber Baron Elite Scum says

Should we invite REALTORs to the PatNet Convention?

What if they show up uninvited?

ApocalypseFuck will take care of them.

http://www.youtube.com/embed/AVQ8byG2mY8

Everybody, show up in wedding dresses made of Realtor pelts.

Here's another scenario.

One of the pilots kills the other, then inputs a course track that will take the plane out to sea until it runs out of fuel. Then kills himself.

It's nighttime, passengers are asleep. They wake up and wonder why they don't see land. Pound on the door, maybe even break in. Too late, out of fuel!

Chilling.

Reportedly, the turn was already programmed into the computer prior to takeoff, which is consistent with this accident theory.

gsr says

This is about facts. It has nothing to do with economic policy. Stop fooling
yourself.

>>Rates are low largely because corporate rates are pegged to the
benchmark 10-year Treasury yield, which has dropped to around 2 percent from
more than 3.5 percent in early 2011.

http://www.nytimes.com/2012/03/08/business/low-rates-entice-companies-to-borrow.html?pagewanted=all

This is one of the silliest arguments I have had on pnet, and that is saying something.

I have shown that corporate debt (and jojo even confirmed it with his related chart) clearly floats vs. the 10 year.

His argument that "pegged" means it can trade in a range, and as time increases, the range may increase as well, is ridiculous.

I could us this definition of "pegged" to argue that Unilever (UN) is pegged to the dollar, in a range of 36 to 43. After all, over the last year that is the range it has been trading in. Ah, but but someone would say, what about if you look back further? Well going back 3 years you have to increase the range to 32 to 43. No further: 5 years? Ok fine, 18 to 43. And so on and so on.

You could say anything is pegged to anything else, if you chose a time period small enough or a range large enough. AAPL is pegged to gold, the range is .01 ounces to .5 ounces per share.

It is silly.

And citing a NYT article where the author also incorrectly uses the term is hardly proof. As I said, the Yuan was pegged to the dollar for years - if you look at a chart of the exchange rate between the currencies, it is a straight line, from the time the peg was put on until it was removed about 7 years later.

jojo says

How To Read A Bond Quote:
"Bond Quotes Expressed As A Spread Against
Treasuries Professional traders of corporate bonds often talk about price in
terms of the difference between the bond’s yield and the yield of a treasury
with a comparable maturity. If a professional trader is offering a corporate
bond to another trader at “+175” and the yield of the comparable treasury is
2.00%, the yield on the corporate bond would be 3.75%.

If it is pegged, then it is ALWAYS +175. The fact that it is a quote at all and changes is proof that it floats: res ipsa loquitor.

jojo says

To fix (a price)

Good lord.

So what is the range that corporates are FIXED to Treasuries? No need to supply a chart: how many basis points from X(low) to Y(high) will corporates ALWAYS trade within the corresponding treasury?

"Priced off" does not equal "fixed."

FOR....FUCKS....SAKE....

Vicente says

2 radar stations in Malaysia evidently tracked this thing but did nothing. I'm curious to hear what story they told their bosses.

Were you expecting them to admit to being asleep at the helm?

If it's on internet it doesn't mean it's true.

curious2 says

Reportedly, the turn was already programmed into the computer prior to takeoff, which is consistent with this accident theory.

I'm thinking they're with Amelia Earhart, which means she's fine, and they're pretty much living the life, harvesting coconuts for food; we know this to be a sustainable diet thanks to the research performed on Gilligan's Island.

I saw this last night, and so far this fire theory seems more plausible than a lot of the tin-foil hat stuff:

http://www.wired.com/autopia/2014/03/mh370-electrical-fire/

The 45,000 feet reading still seems like a red herring. This has always seemed to me to be an amateur theory based on lay (i.e. extremely poor) understanding of flight. We haven't had that number confirmed yet (especially given the characteristics of the plane at the time), and the radar could have easily calculated wrong -- primary radar isn't always the best for altitude, especially when its as far away as it was. Even 35,000 feet or 41,000 feet are sufficient to knock the passengers unconscious in a very reasonable amount of time, so it seems like a silly rationalization. And we still don't have a good explanation for how a 777 would still be flying for several hours after a 40,000 fps dive.

The fire theory still has its problems -- i.e. it magically knocked out only non-essential systems while incapacitating the pilots, but it's closer than the Tom Clancy stuff.

Just like PCs are losing market share to tablets, mortgages are down in favor of all-cash.

For every one person that needs a mortgage, there are twenty Chinese ready to overbid with an all-cash offer. And even in the worst case, there are over a billion of them... all you need is one.

control point says

"Priced off" does not equal "fixed."

FOR....FUCKS....SAKE....

So? What is your beef actually?
You think corporate bond yields are low due to some other reason, and the Fed has no effect in influencing it?
Why do you think corporate debt level is at historic high?

Buyers are gone, so are the sellers with the dream of buyers for their overpriced shacks.

exfatguy says

there are twenty Chinese ready to overbid with an all-cash offer. And even in the worst case, there are over a billion of them... all you need is one.

Yeah, there is no way to stop the tsunami of Chinese billionaires willing to bet in our market. After all it is our money anyways.

gsr says

So? What is your beef actually?
You think corporate bond yields are low
due to some other reason, and the Fed has no effect in influencing it?
Why do
you think corporate debt level is at historic high?

No..No..

My beef is you both claimed that corporate debt is "pegged" to the 10 year treasury. It is not "pegged."

Corporate debt floats vs. treasuries. A market determines a price for treasuries, a market determines a price for corporate debt. Are they related? Of course, everything is related to the risk-free rate of return.

In Finance, "pegged" means something. The Cayman Dollar is pegged to the US dollar. The Krone is pegged to the Euro. The Venezuelan Bolivar is pegged to the US dollar.

That is all.

I hate it when i'm right....

Checks are being carried out on the background of all of those aboard the plane. Mr Hussein said that checks have been received for all the foreigners except those from Ukraine and Russia - which account for three passengers - and that nothing suspicious has turned up so far.

http://www.independent.co.uk/news/world/asia/missing-malaysia-airlines-flight-mh370-investigators-trying-to-restore-deleted-data-from-flight-simulator-in-pilots-home-9202234.html

SoftShell says

Russian hijacking to take heat off the crimia land grab..

corntrollio says

The fire theory still has its problems -- i.e. it magically knocked out only non-essential systems while incapacitating the pilots, but it's closer than the Tom Clancy stuff.

http://www.wired.com/autopia/2014/03/mh370-electrical-fire/

This pilot says they could have shut down systems to try to isolate the cause of a fire. He says this was actually found to have been done in another fire incident. So the transponder would have been deliberately shut off, but not for nefarious purposes. The climb to 45,000 feet might have been a last-ditch attempt to starve the fire of oxygen. Also interesting is that he suggests the crew could have been incapacitated and the plane just continued flying on the same course until it ran out of fuel, which would account for why it was still tracked hours later. I have no way to judge if this is a reasonable theory, but it seems to make sense.