Bonds In Conversation : Watching Asia : Many Ways To Die

In a macabre reverie, I was imagining that I would rather be eaten by a great white shark than beheaded by an ISIS executioner on Youtube with the world watching. At least I would be nourishing a shark and it probably did not kill me out of spite. Now, being devoured by an anaconda  would be much more painful and terrifying and fortunately, I stopped right there.

It has been a sea of red on the equity screens for the past week and I am finding it difficult to come to terms with it being used to seeing some blotches of green and the terribly difficult to swallow fact that the DAX and the Nikkei are both down for the year at last.

It does not feel like a shark attack as much as the strangulation of a snake this time, the slow but certain death that prisoners of the ISIS face if Obama does not save them ( without ground troops ).

DJ Commodity index at a 5 year low.

The DXY USD Index is at a 4 year high.

EUM Short MSCI Emerging Markets Proshares ticking up.

MSCI Emerging Markets ASIA INDEX  coming off its highs.

On the subject of death, there are many different ways to die, I have come to encounter in the short span of the past 2 years. Going to bed after a hard night of partying like a friend’s father and never waking up; climbing a mountain in the middle of Tibet and drifting off; succumbing to a hard fought battle with cancer; falling prey to pneumonia and negligent hospitals or; mistaking appendicitis for gastritis and losing your life.

But we all know we will die one day, just as I lost a good friend last week, and I get a sense the markets, too, have tipped into an unknown fate ahead.  Because the burning question is, WHY ARE STOCK MARKETS AT RECORD HIGHS WHEN EVERY SINGLE ECONOMY AROUND THE WORLD IS IN SOME FORM OF CENTRAL BANK LIFE SUPPORT ?

List of signs :

And we have new scandals daily. Earlier this week it was Tesco, the world’s second largest retailer, cooking their books and today we have China uncovering a USD 10 billion dollars commodity fraud in Qingdao (I am assuming that the official numbers are probably understated from the truth).

The bond market continues to bubble away, breaking new issuance records along with leveraged loans revenues, as spreads tighten away.

Global Investment Grade Issuance  Source : Dealogic

Global Investment Grade Issuance
Source : Dealogic

Global Leveraged Loans Revenues  Source : Dealogic

Global Leveraged Loans Revenues
Source : Dealogic


Developing countries now account for 39% of the global economy (source : IMF) and they are the biggest drag at the moment, although most of us are unaware of it.

EM Markets Dragging Global Trade  Source : RBS

EM Markets Dragging Global Trade
Source : RBS


We have been warned about the excessive risks ( and this week has been a taste of things to come if the ECB does not deliver a massive whopper of a QE next week which will most definitely tip us into the jaws of secular stagnation and death akin to strangulation by an anaconda.

Till then, a fund manager friend of mine  recommends nothing but the safest investment grade bonds in the 4 year tenor (because the curve is steepest there). I do not think he meant German bunds because the 3 year bund is giving -0.04% return.


This week we had more Tier 2 issues, one out of Bank of Communications and another out of Hanabank, Geely with a 5 year and China Longyuan.

Private banking in the driver’s seat for Singapore with 5 new issues in SGD space – Wing Tai 7 years, ASL Marine, Far East Horizon, Sabana Sukuk and a Guocoland 5 year.

Today we have a Singapore government 5 year bond auction, the last bond auction for the year which should see considerable demand after the massive sell down in the 5 year since July and ahead of the ECB QE details next week.

Leaving you with the prices and the joke of the week which I took off Doug Kass on

hedge fund manager Seth Klarman tells an old story about the market craze in sardine trading. One day, the sardines disappear from their traditional habitat off the Monterey, Calif., shores, the commodity traders bid the price of sardines up, and prices soar. Then, along comes a buyer who decides that he wants to treat himself to an expensive meal and actually opens up a can and starts eating. He immediately gets ill and tells the seller that the sardines were no good. The seller quickly responds, “You don’t understand. These are not eating sardines; they are trading sardines!”

USD Asian Bonds (indicative prices and apologies for the longer than usual list because I forgot to filter out the rest)



SGD 2014 Bonds (indicative pricing)


SGD 2013 Bonds (indicative pricing)