Bank of America
While revised modestly higher from preliminary levels, US non-farm productivity plunged 2.2% in Q4 2015 - the biggest drop since Q1 2014. Economists are gnashing their teeth to explain this "plunging productivity paradox" - we think it is rather simple...
As A Frenzied Wall Street Buys Shale Equity Offering At A Record Pace, Exxon's CEO Has A Stark WarningSubmitted by Tyler Durden on 03/02/2016 13:23 -0400
Investors have pumped a whopping $9.2 billion in new equity into energy companies year to date, the most since Bloomberg records began in 1999. The euphoria won't last, and the equity issuance window is already closing: confirmation of this comes from none other than Exxon CEO Rex Tillerson who moments ago said that the "wave of oil equity issuances is destroying value", adding that "global economic conditions are not inspiring", that "demand won't solve it quickly" and that "we're still oversupplying the market."
Someone Isn't "Buying" This Rally: The "Smart Money" Sells For Five Consecutive Weeks As Buybacks SoarSubmitted by Tyler Durden on 03/01/2016 14:39 -0400
No matter what unleashed today's algo buying spree, one thing is clear: someone has to be buying and someone has to be selling into what, Investech yesterday explained, is the latest bear market rally. Thanks to Bank of America we know the answer to both.
"We expect the10y JGB auction on the 1st to be a new issue with a 0.1% coupon, but auction yields are likely to go into negative territory. We do not expect the bank sector to buy, and demand from dealers and foreign investors is unlikely to provide sufficient support. We expect the auction to be turbulent given investors are also unlikely to short futures and the possibility of a tail. "
If, and when, a run on physical cash begins, there will be roughly $1 dollar in physical to satisfy $10 dollars in savers' claims, a ratio which drops to 20 cents of "deliverable" cash if the $100 bill is taken out of circulation.
"Everyone (including ourselves) a "seller into strength" which means risk can squeeze higher short-term into policy events.... policy meetings increasingly seen as selling (not buying) catalyst, so selling pressure resumes if policy disappoints."
History is pretty clear. As long as earnings are deteriorating, you don’t want to be invested in stocks. As Charlie Munger once said: “I think that every time you see the word EBITDA, you should substitute the word ‘bullshit’ earnings.”
When a leading nominee for President gets something exactly right, we should applaud them for it. In this case, Donald Trump’s call to audit the Federal Reserve is dead on correct. Most Americans don’t realize this, but the Federal Reserve has far more power over the economy than anyone else does – including Barack Obama. The funny thing is that the Federal Reserve is not even part of the federal government. It is an independent private central bank that was designed by very powerful Wall Street interests a little over 100 years ago. It is at the heart of the debt-based financial system which is eating away at America like cancer, and it has no direct accountability to the American people whatsoever.
“Don’t expect a crisis response in a non-crisis environment,” Jack Lew said in an interview broadcast Wednesday with David Westin of Bloomberg Television. “This is a moment where you’ve got real economies doing better than markets think in some cases.” He added that policy makers from the world’s biggest economies are unlikely to make the kind of detailed national commitments to restore growth they did to at the height of the global financial crisis.
"Central banks around the world, reacting to the same recessionary fears, are likely to cause long rates to sink materially lower than where we are today. I see the 10-year Treasury note falling to 1 percent, perhaps even lower, before year-end. According to technical analysis, the current target bottom for the 10-year Treasury note is 28 basis points!"
In what looks like a spiteful move designed to undercut the FHA, Bank of America has partnered with Freddie Mac on a new mortgage scheme that will allow borrowers to make down payments as low as 3%. Because that's just what taxpayers need. Fannie and Freddie making more bad loans.
"Essentially, the rates market is stuck between pricing in more Fed easing or more China worries."
The Next Shoe Just Dropped: Equity NAVs Of 348 CLOs Slide Below Zero; "Market Changed Dramatically In 6 Weeks"Submitted by Tyler Durden on 02/21/2016 23:34 -0400
First it was Junk Bonds, then Investment Grade bonds, then bank loans, and now, in just six weeks, the CLO shoe has finally dropped.
The OPEX game is back in full swing and brought back hope amongst signs of bullish capitulation everywhere.... but there is plenty of bad (and even ugly) to consider.
"...in a world where corporate balance sheets are arguably the most unhealthy they have ever been (all-time high leverage in HG and HY) where companies have relied on cheap debt to fund a growth through acquisition strategy, what happens if funding is either unavailable or too expensive to make a growth through acquisition strategy make sense? Same goes for buybacks and special dividends?"