“You are in a position to make 20 percent to 30 percent on your position in the fund. Why wouldn’t you buy in at Libor-plus to leverage that up?”
In any other case debt/EBITDA at or higher than 10x - certainly 15x - in a world in which cash flows are rapidly deteriorating would be an excuse for bondholders to take to the hills. But when you have such leverage ratios as 83x one can only quietly stand back, find a place behind which to hide, and hunker down ahead of the coming explosion.
17 months after the "Umbrella Revolution", the streets of Hong Kong have once again turned chaotic on the first day of the Chinese New Year...
The US Treasury yield curve has plunged further today (2s10s -5bps at 107bps) breaking to its flattest since January 2008. The curve has been flattening since The Fed began to taper QE3 and as financials begin to catch down to that ugly reality, one wonders just what The Fed can do about this...
Following Madeleine Albright's ugly statements, it is very clear from today's outbursts from Bill Clinton that Hillary is growing more and more desperate as Bernie Sanders' bumbling socialism trumps a lying, cheating, crony capitalist... "Vicious trolling," Clinton dubbed apparent Sanders' comments made towards female Clinton supporters, "that are literally too profane often - not to mention sexist - to repeat."
But it was a "great" jobs report, right?
In the USA, that economy has bled out like a hapless bystander with a sucking chest wound for the last eight years. Despite all the patriotic sanctimony on view at the Superbowl, the nation appears to be visibly cracking up, along with the fantasy of a permanent global economy. None of the desperate work-arounds since 2008 have worked around the predicaments of our time.
"Albert Edwards sees the possibility of a 75% decline from the peak if all his fears were to manifest themselves. Now many view this as an incredible and somewhat outlandish forecast, yet it is not that unreasonable in our view.... These types of declines would leave indices down rough 60-65% from peak, and would send leverage ratios skyrocketing."
We're gonna need more "whatever it takes"...
The utility sector has broken out of a well defined downtrend on a relative basis versus the S&P 500... And based on past occurrences when we have witnessed relative breakouts of some variation (e.g., 2000, 2007), this is not necessarily a positive development for stocks overall.
BTFD? Deutsche Bank stock crashed over 11% today (the most since July 2009) to its lowest since January 2009 record lows. We have detailed at length why this is a major systemic problem and we wonder how anyone can view this chart and not question their full faith in central planners engineering of the 'recovery'. Nothing is fixed and it's starting to become very obvious!
USDJPY has tested down to 115.00 this morning as the blowback from Kuroda's "Peter Pan" policy move into NIRP continues to ripple through the world's largest carry trade. Most troubling is last week's jawboning of "no limits" made the situation worse as desperation was clear, erasing all of USDJPY's gains since it unleashed QQE2 after The Fed ended QE3.