The lack of issuance and supply over the last almost year or so, that’s what makes the TIC data so fascinating. And relevant, if for other reasons, too. CLO issuance, according to a bunch of sources, peaked back last June. Remember that whole “recession scare” with the yield curve last summer? It wasn’t just a scare, at least not in [...]
There’s trouble brewing in a particular sector of the corporate bond market. It’s not really new trouble, merely the continuation of doubts and angst that have existed for more than a year already. What’s different now is that it is finally causing more open disruptions, and thus sparking our interest as to what it might mean well beyond this specific [...]
The TIC data for December 2018 starts out well enough, exactly the way it should. The headline says foreigners sold a record amount of US$ assets in that month. Anyone paying attention during it would be the opposite of shocked. Everyone sold anything they could in December. It follows from the idea of dollar shortage. However, then you start asking [...]
Capitalism has always featured feedback mechanisms. They never were perfect, as nothing is going to ever be. Instead, market discipline was always a messy affair as it more often throughout history included periods of undisciplined behavior followed closely by mass exodus, crash, and then depression. Economists after 1929 thought of themselves as a replacement mechanism for self-correction. Regulators had until [...]
Economics in the orthodox version has it entirely backwards. If that wasn’t apparent in the last cycle, it is becoming far more so once again. This descent into math is not limited to econometrics, as it says a lot about the state of popular perception more generally. Computer models and statistics are given the moniker of “science” which is wielded [...]
The deletion of “dollar” capacity in money dealing globally is not just a theoretical impugning upon asset prices alone. Corporate debt issuance has been obviously provoked to an increasingly smaller state. The numbers are starting to become serious, which may account for at least part of the economic misfortune that the Fed desperately wants the world to ignore. Where swap [...]
I think it worth noting one more reason Yellen was out front yesterday. Not only is liquidity suffering still globally but that is having an immensely negative effect on asset prices, especially at the bubble points. The S&P/LSTA Leveraged Loan 100 had not been updated since last Friday, which suggested (to me) continued pricing difficulties in leveraged loans. The combination [...]
As stocks selloff today, so too does the junk bubble. I think the implication traces back to the Asian “dollar” and the unsteady state of wholesale finance in that part of the eurodollar system (while contemplating the potential for mitosis to have occurred there at some point in the recent past, likely 2012). Junk prices not only remain depressed but [...]
Since the corporate bond bubble has added more than a half year since I last updated its size potential, it is worth reviewing given the lack of enthusiasm in that space post-August 24. Even before that “dollar” run clocked China and the rest of the world, the corporate bubble was being dented by the larger “dollar” trend dating back to [...]
The economic pattern we have seen since early 2012 is quite unique. Historically speaking, recessions involve a rather short preparatory phase where the slowdown is first noticeable. Then, there is a sharp drop in income, output and any other indication. Typically, that recession pattern was followed by an equally sharp rise in income, output and nearly every other indication; that [...]
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