The swap curve gets weird

The biggest global markets for transferring risk (by far) are the interest rate (IR) risk markets.  A key relationship in these markets has recently broken down.  It is the relationship between the treasury yield curve and the swap rate curve.  It is another example of how broken the global financial system is, and it seems […]

Show us the money

During the commodity price boom from 2004-2011 BHP Billiton\’s board raised the firm\’s  dividends to unsustainable levels and now in the commodity bust it has been forced to cut dividends by 75%.  Well, so what?  A firm that experienced an unanticipated surge in cash flows paid out a large part of that cash to shareholders […]

A convergence trade: Qantas and Virgin

There is something odd about Australia\’s airline duopoly at the moment.  Over the last two years Qantas shares have risen in price by 225%, but Virgin Australia\’s shares are up a mere 25%.  It is not so unusual for two firms in the same industry to have highly divergent fortunes, but it is unusual in […]