It’s incredible, in a way, because right from the start he’s got everything on his side. There are the media write-ups which all say the exact same thing, calling this an exact science being practiced by the wisest, most considerate stewards. The legend we’ve been raised with. Lore and scholarship (I repeat myself). Most of all, everyone. When everyone says [...]
What a difference a year makes. As 2017 finished up, the Federal Reserve was widely seen as turning “hawkish.” Inflation in the US, many believed, was about to be unleashed by a blistering labor market so tight we’ve not seen anything like it in decades. The central bank would be forced into a quickened pace of “rate hikes” attempting to [...]
If the road to Hell is paved with good intentions, in economic terms the paving is done by zombies. We’ve all heard of the convention regarding Japanification. In desperation trying to avoid a worse fate, many of Japan’s tortured financial institutions were left open and operating so as to not force losses too much at a time. Rather than allow [...]
One of the consequences of last year’s junk bond blowup was, unsurprisingly, a dramatic decline in high yield gross issuance. The numbers were pretty stark. According to SIFMA, high yield gross issuance in Q1 was 60% less than Q1 2015, following Q4 which was 47% below Q4 2014. As the market has come back since March, for all sorts of [...]
You almost have to marvel at the resilience shown in leveraged loan pricing over the past nearly month. Prior to the Fed’s rate decision on December 16, the leveraged loan market, as with the rest of the junk bubble, was sinking fast and furiously. Since then, however, despite great financial turmoil all over the world, and even in the places [...]
In its December 2015 policy statement, the one that raised the federal funds target corridor, the FOMC changed the language surrounding its inflation stance. They still projected the 2%, of course, but were now indicating that they were more certain than ever about it. In many ways they had to shift the wording because of the actions; the prior passage [...]
There are a few correlations that I find particularly compelling. The first is Chinese RMB (or CNY) next to WTI crude oil, as both are proxies in their own way of multi-dimensional crosscurrents between global “dollar” finance and real economy function. Since March, that correlation has come into renewed and tight focus. In the past few days, the CNY has [...]
The Fed’s industrial production series also includes estimates on total motor vehicle assemblies. Auto sales in general have been one of the only bright spots in the economy, especially since the 2012 slowdown (even though it has been boosted artificially via credit far, far more than income gains). Given that trend, it is still difficult to assess whether activity in [...]
If there is a shift in the credit scheme of the junk bond bubble of late, the reduced volume in issuance would suggest why. While issuance, including high yield and leveraged loans, has been volatile the past few years it had never been so persistently beaten down as it is now. In other words, there had been “slow” periods in [...]
This belongs with the last post on the highly “disturbed dollar” but I felt it deserved its own separate piece to feature downstream of funding. Given the liquidity backdrop describing a broad range of extraordinarily disconcerting prices and liquidity rates, the selloff picking up pace in junk is anticipated. Even still, the nature of the crash and that it is [...]
Stay In Touch