I could not help but think of the movie Trading Places given yesterday’s trifecta of bad news. The scene is where the President of Exchange says “Margin call, gentlemen.” To which Mortimer Duke responds, “You know perfectly well we don’t have $394 million in cash!” Then comes the hammer, “Official #2: I’m sorry, boys. [to Official #1] Put the Duke brothers’ seats on the exchange up for sale at once. Seize all assets of Duke & Duke Commodities Brokers.”
Margin call indeed with China off 20%, the Greek gotcha’ and now Puerto Rico; well, as stated, “A trifecta of bad news!” I actually am more worried about Puerto Rico than I am Greece. Greece is not well owned, but Puerto Rico is, and it is owned by many hedge funds that are now underwater on prices. For example, the 8% municipal bond due in 2035 was changing hands around 86 earlier this month. Yesterday it was bid at 68.
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