Borrowing Costs

Tyler Durden's picture

"Nor Any Drop To Drink," Citi Maps The Liquidity Paradox





"From the BIS to BlackRock, and Jamie Dimon to Jose Vinals, everyone seems to be talking about market liquidity," Citi's Matt King writes, before taking an in-depth look at just how broken the 'markets' truly are. To summarize: no depth in the Treasury market, a duration mismatched powder keg in "long-term" mutual funds thanks to the fact that ZIRP has destroyed money market yields causing investors to find a new 'cash substitute,' and a magically shrinking repo market in the wake of new regulations ironically meant to promote stability.

 
Tyler Durden's picture

Junk Bonds "Even More Dangerous" Than Stocks, Icahn Says





"They're buying the yield and they think 'Oh, bonds are going to go up,' but when they start coming down, there's going to be a great run to the exits and at least in 2008 you had a bit of a safety net with the prop desks at banks, but now with the Volcker rule you can't even depend on that."

 
Tyler Durden's picture

Buffett Loses A Bet, Fails To Pay... Again





On a day full of exultation for The Oracle of Omaha, we could not help but see the irony of Warren Buffett losing yet another bet and not paying up...

 
Tyler Durden's picture

The US Equity Bubble Depends On Corporate Buybacks; Here's The Proof





For those who require still more proof that the rally in US equities has become inextricably linked with corporations leveraging their balance sheets to repurchase their own shares, JP Morgan is out with an in-depth look at buyback trends which strongly suggests that buyback activity is in fact responsible for driving US stocks to record highs.

 
GoldCore's picture

U.S. and UK GDP Fall Heralds Recession – ZIRP to Continue





U.S. and U.K. GDP slowed very sharply in first quarter of 2015. Latest data confirms the rapid slowdown despite stock markets booming in the UK, U.S. and globally. This highlights the major disconnect between the real economy and a financial sector intoxified by easy money.

 
Tyler Durden's picture

Failed Chinese Local Bond Offering Leads To PBOC Easing Confusion





An inauspicious start to China's local government debt swap initiative has the PBoC scrambling to determine the best way to facilitate the successful issuance of new municipal securities as several provinces have reportedly canceled or delayed offerings. Now, the question is whether Chinese LTROs will be enough, or whether outright QE will ultimately be the only option.

 
Tyler Durden's picture

How This Debt-Addicted World Could Go The Way Of The Mayans





We are paying a high price for too many elites and their ‘frivolous cravings’. Nowadays many countries’ social and political structure relies on debt-driven consumption and increasing levels of entitlements. Blame the policy-makers as the “permanent lie [has become] the only safe form of existence.”

 
Tyler Durden's picture

When QE Leads To Deflation: A Look At The "Confounding" Global Supply Glut





"The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor—a glut that presents several challenges as policy makers struggle to stoke demand," WSJ notes, suggesting yet again that QE can cause deflation when those who have access to easy money overproduce but do not witness a comparable increase in demand from those to whom the direct benefits of ultra accommodative policies do not immediately accrue.

 
Tyler Durden's picture

How The Fed Creates Zombies In One Simple Flow Chart





“Sometimes the side effects outweigh the benefits"...

 
Tyler Durden's picture

BoJ QE Exit "Out Of The Question," Former Official Says As Morgan Stanley Talks JGB Liquidity





"If the BoJ persists with its current pace of JGB purchases, then the incentive for investors to reduce their holdings any further is likely to dwindle away within the next 18–24 months, at which point liquidity may evaporate altogether," Morgan Stanley says, calling liquidity the "major theme" in the JGB market. Meanwhile, a former MoF official claims the BoJ is now in so far over its head that an exit from stimulus is "out of the question."

 
Tyler Durden's picture

The Defaults Are Coming In HY Energy, UBS Warns





"Where are the defaults?" UBS asks, referring to the highly leveraged US shale complex. "They're coming," is the answer, as current bond prices assume oil prices in the 60s and 70s. 

 
Tyler Durden's picture

Warning: This Measure Of Credit Is At Its Worst Level Since The Crisis





Despite goldilocks (to use a financial market cliche) conditions characterized by the interplay between yield-starved investors, rock-bottom borrowing costs, and companies’ propensity to leverage their balance sheet in order to inflate earnings and underwrite their stock price, at least one leading indicator is flashing red.

 
Tyler Durden's picture

BofA Is Confusing Liquidity Fueled And Secular Bull Markets





Over the past couple of years, there has been a growing chorus of individuals claiming that the financial markets have finally shaken the shackles of the secular bear market that began at the turn of the century. Bank of America is the latest to jump onto the "new secular bull market" bandwagon; but what they miss is that secular bull markets are not born of price, but rather of a set of fundamental metrics that foster sustained economic growth over long periods of time.

 
Tyler Durden's picture

European Banks Are Paid To Borrow For First Time Ever As Euribor Goes Negative





Mario Draghi said this week that the transmission channels for European Q€ were opening up and crowed how well his cunning plan was working (by well we assume he means stocks are up). Today we get the ultimate test of that 'transmission' as 3-Month EURIBOR fell below 0.00% for the first time ever (likely wreaking havoc on European derivative pricing models). In English that means banks are being paid to borrow from one another in the interbank money-markets (which sounds a lot like a 'glut' of excess cash) seemingly confirming ICMA's de Vidts fears: "We are scared about the [repo] market freezing," as the ECB is "driving without headlights in the dark." Of course this is yet another disturbing distortion on the heels of homeowners being paid to take out mortgages...

 
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