Morning Reading – December 17, 2010

The Big Picture: The Bond Herd, 6% and Gold

This correlated movement suggests that the selling is coming from a reallocation of assets in large indexed global funds. They are moving monies out of the highest-grade sovereign debt bonds and into other sectors. We have now confirmed this with several large portfolios. We infer from our anecdotal evidence that there are many others doing the same thing. Their reasons for acting may be different but their actions constitute a herd mentality in this sector of high-grade sovereign debt.

The Big Picture: Uh-Oh: Facebook’s Zuckerberg is Time Man of the Year

It is somewhat fitting that a decade after Time marked the very top of the internet bubble by putting Amazon’s founder, Jeff Bezos on the cover as person of the year in December 1999, this year, they opted for Facebook’s founder as their 2010 Person of the Year.

If history holds, TIME has just marked the top in the value of Facebook — at least for the foreseeable future. The Bezos cover marked the high point in’s stock for the next 10 years.

The Big Picture: RealtyTrac: Foreclosures To Roar Back in 2011

Macro Man: Order of Service

Trichet sent an angel to a girl named Merkel. “Mangler, you have nothing to fear.”, the Angel told her, “Trichet has a surprise for you: you will give birth to a son and call him Eurobond, and he will save the Euro from all its sins”. Merkel asked how this could happen, and the Angel explained that the Berletchsconi would come upon her, by Trichet’s power, and that the baby would be called Eurobond, Son of Delors. Merkel was ready to obey. Then the angel left her.

FT Alphaville: The rise in Fed funds futures rates

FT Alphaville: The luck of Lloyds

Not good news for Lloyds Banking Group on Friday. A regulatory filing from the bank reveals that its particularly nasty case of ‘Irish exposure’ syndrome could be worsening.

FT BeyondBRICs: A carrier? What else are we missing?

Admittedly, the fact that Beijing last year approved a carrier programme was buried in one sentence of a long government report. But it was published as long ago as May and no China-watcher publicly claimed to have spotted it until the Asahi printed its scoop on Friday. A lesson there, perhaps, in how difficult it is to follow Beijing. And one with investment implications – if outsiders can miss an aircraft carrier how can they be sure about where economic policy is heading?

Calculated Risk: Moody’s Downgrades Ireland’s Credit Rating

Moody’s … cut Ireland’s credit rating by five notches to Baa1, with a negative outlook, from Aa2 and it warned further downgrades could follow.

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