Best of Lex

Forget about the $1 trillion coin debate.

The most exciting wonky discussion being had right now is between Steve Randy Waldman and Paul Krugman over whether “base money” and short-term debt are perfectly substitutable or not, and what that may or may not mean for central bank policy.

We confess that we have a bit of a vested interest here because for a long time we’ve been arguing much the same point as Waldman.

That’s not to say that Krugman is necessarily wrong; he may just be taking Waldman slightly too literally.

This one paragraph, describing the nature of the curve trade that JPMorgan’s Chief Investment Office had in the Markit CDX.NA.IG.9 index by the end of January, fills us with mixed emotions. There’s a bit of “oh, they did think they were doing that?” and a bit more of “‘but why?? WHY?”.

The 17th annual Sohn conference took place last May in New York and drew a star-studded panel of fund managers to offer (a few of) their best trade ideas.

Everyone was there, from David Einhorn to John Paulson and Bill Ackman. Topics as diverse as palladium, French CDS and Argentina’s sovereign debt were discussed.

But were the trade ideas any good?