Cardea Partners

Our Clients Aren’t ‘Muppets’

Christopher Hunt — Wed, 14 Mar 2012 15:27:58 +0000

Amazing op-ed from resigning Goldman Sachs derivatives director Greg Smith, discussing how the firm’s culture became more about taking advantage of clients as opposed to serving their best interests. Unlike derivatives desks across the spectrum, we have no “axes” to grind here, we don’t hunt elephants, and we don’t advise our clients to trade in the illiquid exotic derivatives that turned credit underwriting on its head over the past decade. Greed kills! (New York Times)

Greece Puts ISDA in the News, Swaps as Subterfuge

Christopher Hunt — Tue, 06 Mar 2012 14:27:28 +0000

Interesting articles about the challenges of over-the-counter (OTC) derivatives documentation, and how the ISDA ’standard’ language (HuffPo) used in some swaps is designed to favor one party. Also, another lesson learned from Greece: don’t use interest rate swaps and/or cross currency swaps to alter debt-to GDP ratios. (Bloomberg) Another few reasons to get independent advice on this stuff, folks.

The Mathematical Equation that caused the Banks to Crash

Rex Evans — Wed, 22 Feb 2012 18:36:08 +0000

How the Black-Scholes equation helped foster the derivatives market and contributed to the banking debacle. (The Guardian/The Observer)

Caveat Emptor on Swaps, Same As It Ever Was

Christopher Hunt — Thu, 26 Jan 2012 21:29:39 +0000

Op-ed from Barbara Roper, Consumer Federation of America, talking about how the CFTC’s final rules for swap dealer business conduct were softened to benefit swap dealers. Cardea Partners are independent representatives for anyone, public or private, entering into swaps and options contracts. And yes, even though such a representative is not mandated for trades with certain parties under certain conditions, the benefit of understanding what you are getting and the quantifiable savings realized with a swap advisor make having one the right choice. (Huffpost)

2012 Interest Rate Forecast – Cardea Partners

Christopher Hunt — Wed, 18 Jan 2012 16:51:08 +0000

Our annual take on where SIFMA, LIBORs, Treasury Yields, swap rates, and other market indices will head in the new year.

2012 Interest Rate Forecast – Cardea Partners

The Case Against LIBOR

Christopher Hunt — Wed, 23 Nov 2011 16:39:38 +0000

Interesting article from Bloomberg about the history and plight of LIBOR and the complaints that market participants have levied against the indices that set values for some $360 trillion face of financial assets around the world. Primary concern to me is the fact that perceived credit quality is tied to each bank’s offered rate. Should bank rate submissions be anonymous to the marketplace?

Why Cardea Partners Exists…

Christopher Hunt — Mon, 08 Aug 2011 20:18:00 +0000

An example of why we and other swap advisors are available in the marketplace to help clients manage interest rate exposures in a cost-effective manner. (NY Times)

Has LIBOR Lost Its Luster?

Rex Evans — Fri, 15 Jul 2011 16:34:33 +0000

Lackluster volume from banks to lend to each other has significatly reduced the demand for LIBOR which is the interbank lending rate. Less risky to use depositers money rather than borrow from other banks at the LIBOR rate. The question is what would be the alternative index. (WSJ)

Interest Rate Caps a Vehicle for Worst Case Scenarios

Rex Evans — Fri, 01 Apr 2011 00:41:30 +0000

An article in The Economist “Fat-tail attraction”, discusses hedging for worst case scenarios. Borrowers who are floating at historically low interest rates may want to consider buying disaster insurance in the form of an interest rate cap against the borrowing index. Interest rate caps can be used to hedge LIBOR, PRIME or SIFMA.

LIBOR manipulation by major banks?

Rex Evans — Mon, 28 Mar 2011 23:06:46 +0000

Most of us knew that at the height of the financial crises, there was something up with how LIBOR was being set. Many articles have since been published, but it appears the Fed is finally taking a closer look. Source WSJ 3-17-11