A lot of (financial) love …
Brazil's reserves increased by about a billion dollars yesterday. I guess we know how many carry-trading hedge funds spent Valentine's day.
home > think tank > center for geoeconomic studies > brad setser: follow the money > A lot of (financial) love …
Brazil's reserves increased by about a billion dollars yesterday. I guess we know how many carry-trading hedge funds spent Valentine's day.
Copyright 2008 by the Council on Foreign Relations. All Rights Reserved.
Just to change the subject, Did you read that Chrysler, bought for 36 billion by Daimler, may now be worth less than 0? That’s a lot of dark matter…
technically, i think only the fact Daimler isn’t getting any profits out of Chrysler counts as dark matter; this is more a case of, to use Daniel Gros’ phrase, of foreign investment in the US disappearing down a black hole …
but it certainly helps the NIIP. If only all US mortgage debt held abroad would disappear so easily …
back to brazil
Setser -
Any idea how much of the subprime MBS market is held by CLO’s?
Private Capital Flight from US Economy (ie. see attached article). On a side note, the PBoC has just issued new regulations restricting US dollar inflows into the Chinese banking system. Inflows of US Dollars of $50,000 or more will have to obtain formal written approval by the PBoC. The Chinese aren’t going to be financing the coming military strike on Iran this April.
- Dave C.
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Capital flows to US reverse in December to outflow of $11B
Last Update: 9:00 AM ET Feb 15, 2007
http://www.marketwatch.com/news/story/capital-flows-us-reverse-december/story.aspx?guid=%7B183D40AF%2D6B15%2D4164%2D98EC%2D586DAC4B819E%7D
WASHINGTON (MarketWatch) - Monthly capital flows to the United States reversed in December to the first outflow in a year-and-a-half, the Treasury Department reported Thursday. Monthly capital flows reversed to an outflow of $11 billion in December compared to an inflow of $70.5 billion in November. In December, private investors sold $42.5 billion of securities. This was offset by $31.5 billion in purchases by official institutions. Net long-term capital inflows, meanwhile, fell to $15.6 billion in December from $84.9 billion in November. This is the lowest inflow since January 2002.
Brad, please note that US$ 750 million from the US$ 1 billion you mentioned came from the settlement of the 20Y sovereign issuance denominated in BRL announced last week.
Luciano — thx. so actual intervention fell from $0.5b a day (monday/ tuesday) to $0.25b?
Gamma. no clue. (re: CLOs).
Gamma- of the lower rated tranches of subprime MBS, I would reckon the only buyers are CLOs. The scary thing is that they don’t have to mark to market, unless the ratings agencies begin to get serious about downgrades. Then we could see the next bid at 50 very quickly.
Re Brazil- I wonder if inflows backed off today given the yen’s resurgance last night.
“Monthly capital flows to the United States reversed in December to the first outflow in a year-and-a-half, the Treasury Department reported Thursday.”
Does this mean that our printing presses are in overdrive to makeup the shortfall? Nothing could surprise me anymore.
The most precise way to calculate the daily amount of interventions is by the monetary base data, published every Wednesday. Until Feb. 7, the average daily amount was around US$ 400b. Also bear in mind that FX trades in Brazil are settled in D+2, so there is a lag in the int’l reserves data.
luciano — many thanks.