A Case of Regulatory Capture: OTS deconstructed

The Office of Thrift Supervision: A case of Regulatory Capture

Created with fan fare and removed with disdain, the Office of Thrift Supervision ceased to exist after 22 years of existence. President George Bush Sr. signed the law which created the OTS  in the wake of the Savings and Loan disaster of the 80s and the failure of their previous regulator, the Federal Home Loan Bank Board (FHLB).  In typical congressional action, the OTS staff have been absorbed into the FDIC, OCC, Federal Reserve Board and FHFA.  Like OTS, FHLB didn’t actually go away until it was merged with the Office of Federal Housing Enterprise Oversight (OFHEO) to create Federal Housing Finance Agency (FHFA). The OTS represents how legislative good intentions and economic incentives led a regulator to become a slave to the industry.

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KPMG on Luxury Market in China (2010)

This is the most recent version of an older version of this report I read recently.  Implications are huge here for many firms, think Tiffany, Coach, LVMH, Ralph Lauren, and the list goes on and on.  Worth a read for anyone who covers luxury retail names and wants to know whats really going on in China.


Scribd sucks (as I’ve said since it started), so I’m just uploading the pdf directly here. Sorry for the confusion


NY Fed Primary Dealers Report – July 28, 2011

This is the latest NY Fed Primary Dealers report covering dealer position activity as of 7/20/2011.

Overall Dealer UST positions decreased vs. the previous week by 2.31bn to -29.049bn. Maturities less than 3 years decreased by 9.398bn to 12.983bn; maturities 6-11 years increased by 1.579bn to -18.167bn, while maturities greater than 11 years increased by 1.574bn to 4.287bn. TIPS: Total TIPS positions decreased by 541mn to -619mn. Dealer Corporate positions totals decreased by 1.972bn to 100.467bn. Maturities less than 1 year decreased by 1.737bn to 22.486bn while maturities greater than 1y decreased by 235mn to 77.981bn. Dealer MBS positions decreased by 3.741bn to 82.528bn. Continue reading

7 Year Auction Results

Results of today’s 7 year auction:

Yield Price Indirect % Bid To Cover Coupon
June 29 2.43 99.65 32.17 2.62 2.38
July 28 2.28 99.81 39.55 2.63 2.25

Updated August issuance calendar which will (??) change after August 2nd.

US Bond Auction Calendar, Statistics and Charts [GDocs]

And one more chart you don’t want to miss, from our colleague Dutch Book

The Best Laid Plans of Mice & Men: YOKU Summary Thesis Update

A friend sent me an email about YOKU because he’d read my previous work, and I set out to respond quickly and concisely.  However long and about 1,200 words later, I realized I’d inadvertently (basically) summarized my outlook on YOKU in a kind of stream-of-consciousness style.  With the caveat that this is neither my full nor formal analysis, I’ve decided to publish my response to that email for those of you interested in my take on YOKU.

With all that being said, here goes:

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Chart of the Evening

Before I get into this I would like to say I am exceptionally worried about the repercussions of the treasury failing to be able to make good on its payments at some point next week due entirely to political posturing. Though I would put a near zero chance on a UST missing a coupon, the willingness of payment on non-bond treasury obligations is already damaged goods and if there is not a plan in place to raise the ceiling this week, it will be an exceptionally ugly set of circumstances for everyone.

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7/27 Auction Results

Today’s 5 day CMB and 5 Year auction results are out. The full auction calendar for August will be updated tomorrow, but please note that it (probably) will change. By how much is anybody’s guess.

5 Day CMB

Yield Price Indirect % Bid To Cover Coupon
July 27 0 100 0 4.58 0

5 Year Note

Yield Price Indirect % Bid To Cover Coupon
Jun 28 1.61 99.45 37.62 2.59 1.50
July 27 1.58 99.62 36.59 2.62 1.50

Updated Auction Calendar, Statistics, Chartbook [GDocs]

7/26 Auction Results (All)

Today’s Auction Results:

4 Week

Yield Price Indirect % Bid To Cover Coupon
Jul 19 0.01 100.00 47.86 4.49 0.01
Jul 26 0.06 100.00 54.18 5.30 0.06

1 Year (52 Week)

Yield Price Indirect % Bid To Cover Coupon
Jun 28 0.20 99.80 27.39 4.15 0.20
Jul 26 0.20 99.80 29.82 4.63 0.20

2 Year

Yield Price Indirect % Bid To Cover Coupon
Jun 27 0.40 99.96 22.00 3.08 0.38
Jul 26 0.42 99.92 27.67 3.14 0.38

Updated Auction Calendar, Stats, Charts Document [GDocs]