• EconMatters
    04/27/2015 - 14:18
    If the DOJ and CFTC is going to be consistent, then they have to indict the entire financial community from the CME, Exchanges, Brokers, Institutions, Investment Banks, Hedge Funds, Management Funds...

Borrowing Costs

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...

 
Tyler Durden's picture

China Floats QE Trial Balloon, PBoC May Launch LTROs





China may allow commercial banks to swap the local government bonds they purchase for cash loans from the PBoC, WSJ reports. The country's local governments are laboring under a debt load that totals 35% of GDP and much of it carries relatively high interest rates. A new program will allow localities to swap a portion of that debt for lower-yielding bonds. If China does indeed roll out an LTRO-like initiative, the banks which buy the new local government bonds would then be able to pledge them as collateral for cash from the central bank.

 
Tyler Durden's picture

The Global Liquidity Squeeze Has Begun





The entire global financial system resembles a colossal spiral of debt. Just about all economic activity involves the flow of credit in some way, and so the only way to have “economic growth” is to introduce even more debt into the system. Unfortunately, any system based on debt is going to break down eventually, and there are signs that it is starting to happen once again.

 
Tyler Durden's picture

SEC Reaches "Appropriate" Settlement With Freddie Mac Execs Who Will Pay Nothing And Receive No Punishment





Three former Freddie Mac executives who understated the amount of subprime exposure on the GSE's book by a factor of 28 came to terms with the SEC today on a settlement which imposes fees no one has to pay and "limitations on future behavior" that "will not limit [anyone] in any practical way."

 
Tyler Durden's picture

The Changing World Of Work 2: Financialization = Insecurity





The Millennial Generation, if we're to believe various polls, aspires to either make boatloads of money on Wall Street, or secure a can't-be-fired job in the government. Given the dominance of finance and an economic backdrop of rising insecurity, these are rational choices. But all those Millennials hoping to work for Goldman Sachs does raise a question: when did playing financial games become so much more profitable than producing goods and services?

 

 
EconMatters's picture

GE Resorts To Financial Engineering to Boost Stock Price





GE stock is down almost 13% over the last 7 years, and this is with record shares being taken off the market.  However, Jeff Immelt thinks he has a solution for this problem after 15 years at the helm of GE. 

 
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