Sunday , September 26 2021
Home / Global Macro Monitor / Inflation Watch: Totaled Car Prices Spiking

Inflation Watch: Totaled Car Prices Spiking

Summary:
During my EM trading days, I realized that all the juice had been squeezed from the more advanced emerging market bonds, such as Mexico, Brazil, Argentina, and Poland. So I started buying up the “exotic penny stocks,” such as Sudan distressed debt, which had been in default for years and trading with a %excerpt%.02-%excerpt%.04 bid/offer spread. Note the offer price is a 100% mark-up on the cash bid price. Today’s liquid coupon bonds trade with a bid/off differential of at most %excerpt%.125, and that’s considered expensive. We lined up a ton of buyers, mainly hedgies, who really understood the MoMo markets,, at $.04, the offer price.  I bought CHF500 million (could have been US$ as my memory is fading).  The Swiss Bank trader laughed at me when we did the trade.  Ironically, it was a Swiss

Topics:
Gregor Samsa considers the following as important:

This could be interesting, too:

James Picerno writes US Growth For Q3 Estimate Continues To Ease

James Picerno writes Macro Briefing: 24 September 2021

Gregor Samsa writes “Culture As An Asset”

Gregor Samsa writes The Inside Story Of The Ship That Broke Global Trade

During my EM trading days, I realized that all the juice had been squeezed from the more advanced emerging market bonds, such as Mexico, Brazil, Argentina, and Poland. So I started buying up the “exotic penny stocks,” such as Sudan distressed debt, which had been in default for years and trading with a $0.02-$0.04 bid/offer spread. Note the offer price is a 100% mark-up on the cash bid price. Today’s liquid coupon bonds trade with a bid/off differential of at most $0.125, and that’s considered expensive.

We lined up a ton of buyers, mainly hedgies, who really understood the MoMo markets,, at $.04, the offer price.  I bought CHF500 million (could have been US$ as my memory is fading).  The Swiss Bank trader laughed at me when we did the trade. 

Ironically, it was a Swiss based hedge fund that took almost all the floatable Sudan debt at the top, at about $.15, before the market collapsed.  I saw that trader in a NYC restaurant about six months later and asked why he was buying at $.15?

“Because we thought it was going to $.30.”     

I asked him why. He couldn’t answer.

Inflation Watch:  Totaled Car Prices Spiking

Useful Delusions

I had learned if you could get the price moving higher, a momentum market with no intrinsic value will always find a way to delude itself, retrofitting fundamental reasons to justify the rising price. Soon after I made the initial purchase of Sudan debt and the price began to ramp, there was a rumor in the market that my firm, and I personally had a United Nations mandate to buyback Sudan’s debt.

We never confirmed or denied the rumor but knew exactly what was going on.

Distressed Junk Cars

Take a look at the price of totaled cars. I just sold one for $1500. Could. Not. Believe. It.

Isn’t the supply of wrecked cars about to spike with all the cars lost to Hurricane Ida?

Though quite a bit different market, some things never change,

Even turkeys can fly in [or after] a hurricane.

Sound or look familiar? 

Inflation Watch:  Totaled Car Prices Spiking

See article here.

Inflation Watch:  Totaled Car Prices Spiking
Gregor Samsa
This site is designed as a “go to” source for traders, investors, policymakers and any interested in markets and the global economy. We provide informed opinion, timely market information, sources, and links.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.