Credit Default Swaps and Equity Prices: The Itraxx CDS Index Market

In this paper we provide some early evidence of a link between the iTraxx credit default swap (CDS) index market and the stock market. To our knowledge this is the first paper studying this relationship. Knowledge about the link between stock prices, stock return volatilities and CDS spreads is important not only for risk managers using credit default swaps for hedging purposes, but also to anyone trying to profit from arbitrage possibilities in the CDS market. For a sample of European sectoral iTraxx CDS indexes, a correlation study reveals a tendency for iTraxx CDS spreads to narrow when stock prices rise and vice versa. Furthermore, there is some evidence of firm-specific information being embedded into stock prices before it is embedded into CDS spreads. Stock price volatility is also found to be significantly correlated with CDS spreads and the spreads are found to increase (decrease) with increasing (decreasing) stock price volatilities. Finally, we find significant positive autocorrelation in the iTraxx market.credit default swap index; stock market index; stock return volatility

Forecasting environmental responses to restoration of rivers used as log floatways : an interdisciplinary challenge

Log floating in the 19th to mid 20th centuries has profoundly changed the environmental conditions in many northern river systems of the world. Regulation of flow by dams, straightening and narrowing of channels by various piers and wing dams, and homogenization of bed structure are some of the major impacts. As a result, the conditions for many riverine organisms have been altered. Removing physical constructions and returning boulders to the channels can potentially restore conditions for these organisms. Here we describe the history of log driving, review its impact on physical and biological conditions and processes, and predict the responses to restoration. Reviewing the literature on comparable restoration efforts and building upon this knowledge, using boreal Swedish rivers as an example, we address the last point. We hypothesize that restoration measures will make rivers wider and more sinuous, and provide rougher bottoms, thus improving land-water interactions and increasing the retention capacity of water, sediment, organic matter and nutrients. The geomorphic and hydraulic/hydrologic alterations are supposed to favor production, diversity, migration and reproduction of riparian and aquatic organisms. The response rates are likely to vary according to the types of processes and organisms. Some habitat components, such as beds of very large boulders and bedrock outcrops, and availability of sediment and large woody debris are believed to be extremely difficult to restore. Monitoring and evaluation at several scales are needed to test our predictions