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junk bubble

Blatant Warning, Not Casual Dismissal

By |2016-01-27T11:46:48-05:00January 27th, 2016|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

For everything that has gone wrong over the past year or so, there was and is a benign interpretation to accompany each negative factor. Oil prices were “transitory”, longer run inflation expectations didn’t matter because “professional forecasters” remained steadfastly devoted, and no matter which market has gone highly askew it’s just “normal” worry. All of these nonthreatening rationalizations trace back [...]

A Year In Junk

By |2015-12-31T17:36:29-05:00December 31st, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

The most important outbreak or story of 2015 had to have been the junk bond reversal. It combined all the major elements of what investors and economic agents are both fearing and, at one point in the past anyway, hoping. It is the confluence of finance, “dollars”, liquidity and economics with or without recovery and the best scenario. The FOMC [...]

Self-Reinforcing

By |2015-11-09T18:29:23-05:00November 9th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

Last week’s survey data around the world was a bit more mixed than anyone would have liked, an obvious statement that yet deserves the emphasis. Europe, for instance, remains mired in a fog of zombie-like “growth” that is notable for both a distinct absence of QE’s promised impact and the related Japan-like steadiness that suggests nothing good about near and [...]

Dealers Are Still Hoarding

By |2015-11-09T16:35:01-05:00November 9th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

With the state of the “dollar” being what it is, including the devastating darkening afforded by negative swap spreads everywhere, it isn’t exactly surprising to find that primary dealers continue to hoard UST collateral. By September, dealers were reporting a net positive balance of all coupon holdings of nearly $60 billion. With everyone in the world predicting higher interest rates, [...]

The Quick Burn of Balance Sheet Capacity Is the Recovery’s Mangled End

By |2015-11-06T17:13:40-05:00November 6th, 2015|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

While the stock market had one of its best months in years, it was, like the jobs report, uncorroborated by almost everything else. The junk bond bubble, in particular, stands in sharp and stark refutation of whatever stocks might be incorporating, especially if that might be based upon assumptions of Yellen’s re-found backbone. Do or do not, corporate junk remains [...]

Seeing A Paradigm Shift Out of Meandering Prices

By |2015-10-29T13:17:43-04:00October 29th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

Written Monday Oct 26 If China and Europe provided any boost to mainline sentiment last week, everyone looks to Japan this week for perhaps disappointment, though there isn’t any good reason why. Perhaps as a fitting description of this current situation, one that I think appears more inevitable by the day and the week, the Bank of Japan apparently sits [...]

Swap Spreads Implicate Huge ‘Dollar’ Divergence

By |2015-10-09T17:41:56-04:00October 9th, 2015|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

You wouldn’t know it from stock trading or commodities, but when China reopened after its latest Golden Week holiday there was an obvious effect. Stocks have continued to surge while commodities overall have had a good week (copper up another $0.07 today, with WTI at about $50). Inside the money markets, however, China’s open was met with far less enthusiasm, [...]

Payroll Reports Sink ‘Dollar’ Further

By |2015-10-02T12:58:13-04:00October 2nd, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

The doubts about the payroll report were taken as no doubts at all in “dollar” trading. The three indications I gave yesterday in terms of representing liquidity were all pushed farther after the jobs data essentially confirmed the direction where this is all likely heading. While the yen may have been more muted, and the “shock” wearing off in later [...]

The Real Pressure On And Of ‘Inflation’

By |2015-09-25T18:05:25-04:00September 25th, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

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