Illiquidity is the mood music behind the shortMcNamara's short bet is an example of investors' increasing concern over "illiquidity" in the derivative markets.
|
|
So, the illiquidity problem is plaguing more than just banks.
|
|
In principle patient investors can reap a reward from illiquidity.
|
|
And, unfortunately, the losses are usually rapid due to illiquidity.
|
|
The SEC specifically requested daily internal illiquidity calculations from Aug.
|
|
There are also potential problems with one-way traffic and illiquidity.
|
|
But an ETF that small will suffer from illiquidity and high fees.
|
|
Listed below are 13 stocks, ranked in decreasing order of illiquidity ratio.
|
|
CCPs losses often occur during — and can be induced by — widespread illiquidity.
|
|
Generally, 30 percent was considered a reasonable discount for this type of illiquidity.
|
|
So private equity is basically a wonderful asset class, but you have illiquidity.
|
|
Shop for well-priced global bonds that offer higher yields because of illiquidity risks.
|
|
Illiquidity also amplifies swings: bitcoin is four times more volatile than risky physical commodities.
|
|
"It's a market where you need to look for illiquidity and complexity," Carstairs said.
|
|
Among these are computer trading and derivative securities, illiquidity, trade and budget deficits, and overvaluation.
|
|
For starters, since these investments involve real estate, there's an element of complexity and illiquidity.
|
|
The illiquidity of the small-cap market may adversely affect the value of these investments.
|
|
Second, investors should consider income and credit strategies and liquid alternatives to reduce illiquidity and complexity premiums.
|
|
Sovereign-wealth funds, which can invest for indefinite periods, are happy to accept long-term funds' illiquidity.
|
|
The extra 3% return required on the harder-to-trade security is known as the illiquidity premium.
|
|
Ticker: JNJSector: HealthcareYear-to-date return: -7%Illiquidity ratio (12-month average): 0.8Source: Goldman Sachs Global Research
|
|
Ticker: BACSector: FinancialsYear-to-date return: -31%Illiquidity ratio (12-month average): 0.7Source: Goldman Sachs Global Research
|
|
Ticker: JPMSector: FinancialsYear-to-date return: -25%Illiquidity ratio (12-month average): 0.7Source: Goldman Sachs Global Research
|
|
The lack of transparency means it is difficult to gauge the relative liquidity, or illiquidity, of the market.
|
|
Ticker: TSector: Communication servicesYear-to-date return: -11%Illiquidity ratio (12-month average): 0.8Source: Goldman Sachs Global Research
|
|
Ticker: TSLASector: Consumer discretionaryYear-to-date return: 31%Illiquidity ratio (12-month average): 0.7Source: Goldman Sachs Global Research
|
|
Ticker: VSector: Information technologyYear-to-date return: -6%Illiquidity ratio (12-month average): 0.7Source: Goldman Sachs Global Research
|
|
Ticker: FBSector: Communication servicesYear-to-date return: -17%Illiquidity ratio (12-month average): 0.4Source: Goldman Sachs Global Research
|
|
Ticker: MSFTSector: Information technologyYear-to-date return: 1%Illiquidity ratio (12-month average): 0.3Source: Goldman Sachs Global Research
|
|
Ticker: AAPLSector: Information technologyYear-to-date return: -5%Illiquidity ratio (12-month average): 0.2Source: Goldman Sachs Global Research
|
|
Ticker: AMZNSector: Consumer discretionaryYear-to-date return: -3%Illiquidity ratio (12-month average): 0.1Source: Goldman Sachs Global Research
|
|
The third factor, "illiquidity concentration," captures how concentrated illiquid assets are in large funds with high flow sensitivity.
|
|
By contrast, such protracted periods of illiquidity are not seen ahead of policy announcements by other major central banks.
|
|
Ticker: DISSector: Communication servicesYear-to-date return: -29%Illiquidity ratio (12-month average): 0.7 Source: Goldman Sachs Global Research
|
|
Ticker: NFLXSector: Communication servicesYear-to-date return: 4%Illiquidity ratio (12-month average): 0.7%Source: Goldman Sachs Global Research
|
|
Ticker: GOOGLSector: Communication servicesYear-to-date return: -9%Illiquidity ratio (12-month average): 0.5%Source: Goldman Sachs Global Research
|
|
The Fed wants to unclog the credit spigot and eliminate illiquidity as a contributing factor to the coming slowdown.
|
|
Eventually, illiquidity will be a competitive disadvantage in fundraising that only the top firms will be able to justify.
|
|
The traditional way to overcome this illiquidity has been through trading desks at investment banks, who act as market-makers.
|
|
"In light of the aggravated illiquidity and lack of new investors ... it is impracticable to continue the trust," Rickmers said.
|
|
Even with margin compression in the private debt market, the relative illiquidity premium increases as public assets continue to tighten.
|
|
The relative handful of larger banks that failed suffered from bad loans and illiquidity, not their limited investment-banking activities.
|
|
"Illiquidity is turning into insolvency," said Rajiv Kumar, head of NITI Aayog, a government think-tank, at a recent conference.
|
|
However, the industry still has to contend with market volatility and asset class illiquidity, weak bank lending and tightening regulatory standards.
|
|
Seedrs is trying to solve the illiquidity problem by setting up a secondary market, where buyers and sellers can exchange shares.
|
|
LPs struggle to get paid in excess returns for the risk, fees and illiquidity they take on for investing in venture capital.
|
|
Such risks add to the cost of trading less liquid assets and to the illiquidity premium that investors require to hold them.
|
|
Whether the benefits of encouraging a long-term view exceed the cost of an illiquidity premium is unclear, and requires further research.
|
|
But there are almost no individuals who can take on the illiquidity of the Yale endowment because their investment objectives aren't stable enough.
|
|
"I got an appreciation for different levels of illiquidity," said Mr. Cooke, who now manages his wealth in a family office called Cooke.
|
|
"For a long time, some investors were relatively wary of private markets because of the perceived illiquidity of those asset classes," he said.
|
|
Some large sovereigns with a high tolerance for illiquidity said they planned to ramp up alternatives further, towards 50 percent in certain cases.
|
|
She said large, multigenerational families might be able to do the same, given their wealth and ability to remain comfortable with the illiquidity.
|
|
"The nature of these strategies is that the ones that have good performance probably have some measure of illiquidity in them," Sissel said.
|
|
Strategists say the Fed has to do more, and new programs may be needed to deal with the illiquidity in the Treasury market.
|
|
Such a constraint will lead managers to demand a compensation for the illiquidity associated with their inability to diversify their holdings in the firm.
|
|
Secondary markets for private equity, commercial mortgage-backed securities derivatives, leveraged loans and "passive" ETFs are all areas where analysts are worrying illiquidity exists.
|
|
One suggestion is easier access or lower minimums for venture capital and private equity funds, but illiquidity and complex fund structures complicate this option.
|
|
If the 10-year yield exceeds 3 percent next year, high-yield "junk" bonds will drop into a "black hole of illiquidity," Gundlach said.
|
|
But the materials he had showed that opacity, expenses and illiquidity among the pension fund's investments had risen significantly as its financial condition worsened.
|
|
On August 9th the bank bought fewer gilts than it had hoped, a reflection of illiquidity in long-term-debt markets and thin summer trading.
|
|
Campos Neto said on Tuesday that the bank stands ready to intervene again to address illiquidity, excessive market moves or currency weakness fueling inflation expectations.
|
|
On the surface, investors in such funds might hope to harvest a reward—an "illiquidity premium"—for locking up their money for five to ten years.
|
|
Recent gyrations in the financing markets are providing non-bank lenders a significant opportunity to leverage the market's illiquidity premium to earn compelling risk-adjusted returns.
|
|
"Doubts about the effect of central bank easing on the real economy and/or fears of illiquidity have triggered more differentiation within risky assets," Huynh said.
|
|
Vision Fund still views the prospect of illiquidity as laughable, particularly given how it remains comfortably in the black on companies like Slack and Guardant Health.
|
|
Critics of the funds say the illiquidity of commercial real estate make it an unsuitable asset for open-ended funds, to which investors are allowed instant access.
|
|
Throughout the crisis the French tended to see bank or national-debt woes as cases of illiquidity whereas the Germans usually viewed them as signs of insolvency.
|
|
The FSOC has broad authority to monitor the financial services marketplace and emerging threats, including responding to illiquidity in the bond market caused by the Volcker Rule.
|
|
The aim was to tap the "illiquidity premium" on offer for investors able to tie up capital for longer as an alternative to low-yielding government bonds.
|
|
It would not be easy, however, for China to shift the bulk of its commodity purchases to the yuan because of the currency's illiquidity in forex markets.
|
|
It came as the market wrestled with volatility and illiquidity even after the New York Federal Reserve made a massive amount of cash available to calm jitters.
|
|
The lower debt-to-cash flow and debt-to-assets measures are more meaningful than debt-to-GDP, as they better capture the risks of bankruptcy and illiquidity.
|
|
Illiquidity and insolvency in large parts of the financial system between 2007 and 2009 propagated a much worse downturn in real economic activity than any of its 10 predecessors.
|
|
In the past couple of years, as overall returns have lagged broad indexes, investors have grown increasingly concerned about exorbitant management fees, excessive secrecy and illiquidity in the arrangements.
|
|
Junk bonds will drop into a "black hole of illiquidity" if the 10-year Treasury yield exceeds 3 percent next year, DoubleLine Capital Chief Executive Jeffrey Gundlach said on Tuesday.
|
|
I'll clarify: Ninety-five percent of VCs aren't actually returning enough money to justify the risk, fees and illiquidity their investors (LPs) are taking on by investing in their funds.
|
|
Long-dated bonds are more sensitive to shifts in sentiment than shorter-dated debt, and, because of their relative illiquidity, appetite for them tends to fade during times of uncertainty.
|
|
Small beauty businesses In the beauty industry, many small salons "are a payroll away from illiquidity," said Frank Zona, who sits on the board of the International SalonSpa Business Network.
|
|
Strategists described the event, which sent the overnight Treasury general collateral rate to 9% Tuesday, as the result of a perfect storm that created a period of illiquidity in markets.
|
|
Although the relative illiquidity of these instruments accentuates such moves, they are generally considered riskier investments than regular bank bonds and this was apparent in some of their recent price movements.
|
|
"In their short history, crypto-assets have exhibited high price volatility and relative illiquidity," Woods said in a letter dated June 28 to the chief executives of banks and insurers he regulates.
|
|
But some day a combination of high valuations, illiquidity and the withdrawal of monetary stimulus by central banks will cause a problem that takes more than the Doctor's sonic screwdriver to fix.
|
|
Deutsche makes several suggestions at to what might cause one, from a debt-related crash in China, through the rise of populist political parties to the problem of illiquidity in bond markets.
|
|
The LBMA said gold had an amihud illiquidity ratio — a tool used to gauge liquidity — of 0.000018, compared to the EBA's scores of 0.059 for government bonds and 0.188 for corporate bonds.
|
|
Platinum dived nearly 27% to its weakest level since 2002, while gold fell more than 5% as investors unloaded precious metals in exchange for cash as illiquidity haunted the U.S. Treasury market.
|
|
Brian Wieser of Pivotal Research Group downgraded Yahoo's stock from "buy" to "hold" on Monday, citing illiquidity and uncertainty as the fate of the core business — and a stake in Alibaba — remain unclear.
|
|
The three other risks underpinning the test are market illiquidity, a rise in funding costs for banks, and shadow banking or entities that carry out banking-like activities involving credit or some sort.
|
|
"If the U.S. Treasury market experiences large-scale illiquidity it will be difficult for other markets to price effectively and could lead to large-scale position liquidations elsewhere," he said in a report.
|
|
The trader said he did not make an effort to trade in the bonds of both Shangrao Investment and Fujian Zhanglong Group due to illiquidity on the back of the small issue sizes.
|
|
If the U.S. Treasury market experiences large-scale illiquidity it will be difficult for other markets to price effectively and could lead to large-scale position liquidations elsewhere, he said in a report.
|
|
On the other hand, maybe Vanguard just wants to offer its wealthy investors, who are willing to accept illiquidity and relatively high fees, the option to participate in another financial market producing high returns.
|
|
"The pricing on these bonds was not evolved and, because of illiquidity, it was not popular with institutional investors," said Lakshmi Iyer, chief investment officer (debt) and head of products at Kotak Mutual Fund.
|
|
"Really it has been a dollar story today, but just the weight of the short positioning and its relative illiquidity have made sterling the outperformer along with the yen," said Nomura analyst Jordan Rochester.
|
|
"If market illiquidity continues, I will support our taking further actions to address funding needs, including activating facilities like those the Federal Reserve has used in the past," Mester said in a written statement.
|
|
Hammond provided the following chart that demonstrates the increasing "illiquidity ratio" — defined as the one-month average of the daily absolute value of returns divided by the dollars of trading volumes — in the marketplace.
|
|
Banks' sudden unwillingness to lend to each other in 2008 created a crisis of confidence leading to illiquidity and, ultimately, the collapse of Lehman Brothers and the near failure of multiple other major institutions.
|
|
At such times a lot of investors who were intent on picking up an illiquidity premium discover that they are far less patient than they had believed themselves to be back when liquidity was plentiful.
|
|
Blackstone chief Stephen Schwarzman has argued that the "liquidity drought can exacerbate, or even trigger, the next financial crisis", while the economist Nouriel Roubini has predicted that "market illiquidity will eventually trigger a bust and collapse".
|
|
The minutes showed that regulators are aware that the risk of illiquidity in the bond market had spread to non-banks, and that there was a rising sense of "distrust" between financial institutions following Baoshang's takeover.
|
|
The bank's president, Roberto Campos Neto, said the bank will intervene again to address illiquidity, excessive market moves or currency weakness fueling inflation expectations, but also stressed that the real has a free-floating exchange rate.
|
|
The problem of one-way traffic and illiquidity is already evident in the currency derivatives market, where concerns over a Brexit, as the British exit is known, first showed up and where it has been most pronounced.
|
|
Senior executives at the leading Canadian funds defend the merits of past infrastructure deals, but say they are worried prices no longer reflect the illiquidity of the assets, which cannot be sold quickly like stocks or bonds.
|
|
These fundamentals mean rhodium won't repeat its experience in 2008, when a rally ended with a collapse from $10,050 to less than $1,000 in a matter of months, but illiquidity means prices could be volatile, analysts said.
|
|
"The cost of illiquidity is very high in such situations, rendering venture capitalists virtually unable to change their minds and making it difficult for them to cash in even when the businesses they invested in are successful."
|
|
The gross domestic product numbers released on Friday showed government spending helping to prop up weak demand, but private investment growth had virtually collapsed, with a crisis in the shadow banking sector causing illiquidity in the economy.
|
|
Gross domestic product numbers released on Friday had shown government spending helping to prop up weak demand, while private investment growth had virtually collapsed, with a crisis in the shadow banking sector causing illiquidity in the economy.
|
|
In addition to these tools, RBNZ has an established role to provide liquidity in the New Zealand dollar foreign exchange market in periods of illiquidity or dysfunction, and is ready to undertake this role if required, it added.
|
|
Some of it is on trade, some of it on the government shutdown, the Federal Reserve versus Donald Trump, they are all coming to a head at a time when there is a lot of illiquidity in the market.
|
|
Spotify's valuation when it lists - expected to be within 90 days after filing - is forecast to be a few billion dollars higher than current trades as illiquidity risk tends to depress the value ahead of listing, the sources said.
|
|
Alt-asset executives think they'll be able to continue to raise funds from investors during the Trump years "due to hedge funds' ability to capture returns in varying market conditions and the closed-end model's inherent illiquidity," Preqin said.
|
|
"There's still a lot of caution in terms of leveraged loans, with people worried about illiquidity and about selling pressure from hedge funds facing redemptions," said Kevin Lyons, head of credit and fixed income for hedge funds at Aberdeen Asset Management.
|
|
The very reason it may be profitable for Coinbase to list Cardano on GDAX (illiquidity, lack of competition and fat spreads), are the reasons it may create problems for index investors unwittingly buying a high market cap asset that has insufficient price discovery.
|
|
Investors need higher returns to offset illiquidity; interest costs are high to offset the risk that comes with leverage; managers who have demonstrated the skills needed to design these arrangements and to maintain strong relationships with providers of capital demand high fees.
|
|
"There is a massive squeeze in a number of currencies, and the situation in peso is exacerbated by illiquidity and positioning, which is to say it's a crowded trade still," said Sacha Tihanyi, deputy director of emerging market strategy at TD Securities.
|
|
However, the real was down 0.2% at 4.3640 per dollar, hovering near an all-time low even as Brazil's central bank president, Roberto Campos Neto, said on Tuesday the bank stands ready to intervene again to address illiquidity, excessive market moves or currency weakness.
|
|
Almost as potent is the way the benefits of education are distributed: rich people tend to be more highly trained, and can earn higher salaries; they are also able to earn higher returns on their capital, since their wealth gives them greater tolerance for illiquidity and risk.
|
|
Recall that on Monday, Pimco warned of potential issues in the commercial real estate market, though both the Fed and Pimco appear concerned not so much about overall leverage in the system — which was a major problem as the financial-crisis unfolded — but illiquidity among investors in this space.
|
|
The reversal was as a result of new rules issued by the insurance regulator which allow banks to calculate the policy reserves at a discount rate and "illiquidity premium" to be added on top of the eight-quarter weighted average government bond yields for the discount rate, it said.
|
|
RBC, Canada's biggest lender, and other banks have taken advantage of illiquidity due to a market selloff to mark down these assets and "to trigger widespread margin calls," AG said in a request for a temporary restraining order and injunction filed in the U.S. Southern New York District Court.
|
|
Read more on illiquidity:The top strategist at $2 trillion investor JPMorgan Asset Management says the leveraged loan market is now 'deeply concerning'The collapse of the $13 billion Woodford investment fund is a taste of what a private equity liquidity crisis will look likeIf you have any tips about markets with illiquidity issues, let us know!
|
|