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corporate debt

Why Chinese Authorities Are Freaking Out

By |2018-11-09T12:03:43-05:00November 9th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s always a fine line for authorities. There are times when avoiding intervention is more effective than intervention. That’s particularly true when the efficacy of whatever proposed policy is in doubt. If you don’t know for sure that it will work, maybe don’t do it. There are often grave risks associated with plunging forward recklessly. In other words, officials can [...]

Baselines Matter Eventually

By |2017-03-20T16:31:40-04:00March 20th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In a stroke of immensely fortuitous timing, India’s largest automaker Tata Motors was able to raise funds by selling bonds on offshore markets. Faced with an increasing cash crunch and unable to finance working capital needs via strictly Indian banks, the company turned to Singapore. On May 10, 2013, Tata raised S$ 350 million (Singapore dollars) Regulation S bonds paying [...]

The Financial Side of Hell

By |2016-07-06T16:57:00-04:00July 6th, 2016|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Back in September, the IMF issued a generic warning about EM corporate debt. The organization had estimated that total borrowing had exploded, from about $4 trillion in 2004 to $18 trillion in 2014; and perhaps even more than that. Concerns over such bloat typically focus offshore, and not without good reason. However, that understates the true degree of risk since [...]

Bubble Cycle Inefficiency And Valuations

By |2016-03-15T17:32:57-04:00March 15th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

Last week the Federal Reserve updated its quarterly Financial Accounts of the United States Z1 (formerly Flow of Funds) meaning that we can recheck valuation levels of the stock bubble from alternate points of view (data). The most common valuation given by the report is Tobin’s Q which compares the estimated value of corporate equities (liability) to nonfinancial corporate business [...]

Things Everybody Knows…

By |2015-11-28T19:45:17-05:00November 28th, 2015|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

It ain't so much the things we don't know that get us into trouble. It's the things we know that just ain't so.   Mark Twain Mark Twain probably wasn't thinking of investors when he wrote those words, but truer ones have rarely been written. Investors routinely become overconfident in their assessment of economic and market conditions. They assume that [...]

The Calm Before The Storm?

By |2015-10-18T19:06:38-04:00October 18th, 2015|Bonds, Commodities, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Stocks rallied again last week, up a bit less than 1% as weak economic data pushed out - again - expectations for the first Fed rate hike to March of next year. I suspect this won't be the last week that sees that time line extended although whether that translates to higher stock prices is more questionable. In looking through [...]

Not My Euphoria

By |2015-05-28T11:26:54-04:00May 28th, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

In its 84th Annual Report released last June, the Bank for International Settlements departed from usual central bankish conventions and decried the growing departure from market discipline and even reality. The BIS even used the loaded term “euphoric” to describe what it saw as risk market prices no longer affected by fundamental economic conditions. As the Financial Times noted then, [...]

Aiming Now At the ‘Dollar’

By |2015-04-21T16:13:07-04:00April 21st, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

With the PBOC’s apparent schizophrenia on display it is unsurprising that there would be another default. I don’t find any coincidence between the timing of that announcement, in Hong Kong, and the fact that the PBOC both “tightened” and “loosened” in the past few days. They have been pretty consistent about that going back to the initiation of “reform” in [...]

More Than $2 Trillion In Corporate Bonds ‘Disappear’

By |2014-11-12T18:29:56-05:00November 12th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

I have not yet commented on the huge revisions in corporate debt to this point (the revisions were released on September 18 with the regular update to the Z1 Financial Accounts of the United States, formerly Flow of Funds) because there was so very little information surrounding the changes. I had hoped by now somebody somewhere with a better perspective [...]

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