At what rate could you borrow? A question of LIBOR.

At the moment the spread between the high and the low fixing banks still stand at around 11bps. This shows how banks continue to just pay lip service to the definition if LIBOR. Result is that the rate remains lower than it ought to be expected if banks use this as a PR exercise to artificially manage expectations instead to reflecting their true cost of borrowing in this market condition. If you believe the numbers published, we should all go long the French banks...

Eric Tan,
London

Complacency?

This week, we received a stark reminder that regardless of how a) Europe-Sovereign agreements have been agreed, b) Corporate profits are beating expectations, c) US debt ceiling extension approved….

We cannot ignore the US economy. If US economy slumps, the world's economy slumps.
The US is by far the world's largest economy and it's most important.

This message have been hammered home with last Friday's GDP numbers and yesterday's ISM numbers.
Given trading desks are short-staffed due to summer holidays and trading volumes are thin, we should not forget that the last major corrections all happened in the summer of 2007, 2008, 2009 and 2010.

Now, that's for thoughts…

Eric Tan,
London