Borrowing Costs

Groundhog Day Trading: Stocks Slide As Oil Plunge Returns; BP Suffers Biggest Loss On Record

It certainly does feel like groundhog day today because while last week's near record oil surge is long forgotten, and one can debate the impact the result of last night's Iowa primary which saw Trump disappoint to an ascendant Ted Cruz while Hillary and Bernie were practically tied, one thing is certain: today's continued decline in crude, which has seen Brent and WTI both tumble by over 3% has once again pushed global stocks and US equity futures lower, offsetting the euphoria from last night's earnings beat by Google which made Alphabet the largest company in the world by market cap.

"Time To Panic"? Nigeria Begs World Bank For Massive Loan As Dollar Reserves Dry Up

Having urged "don't panic" just 4 short months ago, it appears Nigeria just did just that as the global dollar short squeeze forces the eight-month-old government of President Muhammadu Buhari to beg The World Bank and African Development Bank for $3.5bn in emergency loans to help fund a $15bn deficit in a budget heavy on public spending amid collapsing oil revenues. Just as we warned in December, the dollar shortage has arrived, perhaps now is time to panic after all.

...Until The Bubble Bursts

Critics of today’s fiat currency/fractional reserve banking world have (for what seems like forever) made the common sense point that when debt rises faster than cash flow, bad things are bound to happen. In every cycle since 1980 this has been dismissed by the vast majority who benefit from inflating bubbles - until the bubble bursts. And here we go again.

Why Junk Bonds Will Sink Stocks

After the white-knuckle sell-off of global equities that was finally punctuated by a rally late last week, everyone wants to know: Was this the bottom for stocks? And now Moody’s weighs in with an unwelcome warning... "it’s hard to imagine why the equity market will steady if the US high-yield bond spread remains wider than 800 basis point."

"If You're Not Confused, You Don't Understand Things Very Well"

If you believe the global economy is doing great and stocks are cheap, stop reading now; this post is not for you. We promise to write one for you at some point when stocks are cheap and the global economy is breathing well on its own - we just don’t know when that will be. But if you believe that stocks are expensive - even after the recent sell-off - and that a global economic time bomb is ticking because of unprecedented intervention by governments and central banks, then keep reading.

Recession Signs - 2008 & Now

Is the economy “nowhere near recession?” Maybe. Maybe not. But the charts above look extremely similar to where we were at this point in late 2007 and early 2008. Could this time be “different?” Sure. But historically speaking, it never has been.

 

China Promises To Keep Intervening To "Look After" Stock Market "Investors", Hurt "Speculators"

In the most blatant and open admission of direct manipulation, China's Vice President Li told a room full of Davosian elites that China is willing to keep intervening in the stock market to make sure that a few speculators don’t benefit at the expense of regular investors. Following last night's largest liquidty injection in over 3 years (and subsequent plunge in Chinese stocks), it appears the Chinese economic/market "bucket" has more holes than the intervention 'hose pipe' can handle.

For Emerging Markets, It Is Now Worse Than The Asian Financial Crisis

"It’s Black Wednesday for emerging markets," one strategist warned and Thursday is not looking any better, as SocGen's Berg warns "The rout in emerging markets could continue for some time, especially as the major global central banks have exhausted their ammunition in recent years, making it unlikely that they will rescue global markets this time around." In fact, as Bloomberg reports, this year's EM turmoil is already worse than in the same period in 1998's Asian financial crisis (and EM FX is even worse).

"How The Investment Grade Dominos Will Fall" - UBS Explains

As a potential worst case scenario, we use the simple sum of probabilities from 2001- 2002 and the current debt stock as an example of what could happen during a protracted downturn. If this comes to fruition, we estimate fallen angel volumes over 2 years could spike to $413bn, with $117bn of 10+ fallen angel paper (again crashing into a 10+ HY market that is only $48bn in size). This is an ugly spectre that the high-grade markets would need to face in future years.

S&P Enters The Latest European Scandal: Downgrades Poland From A- To BBB+

As so often happens, whenever there is a political spat in Europe, the rating agencies are quickly involved (thing S&P and Moody's downgrades and upgrades of Greece depending on how well the vassal nation is "behaving"), and moments ago S&P downgraded Poland from A- to BBB+ outlook negative, precisely due to Poland's new media law which has been the topic of so much consternation over the past week. In other words, S&P is now nothing more than a lackey for Brussels, threatening to send Polish yields higher if Poland does not fall in line.

Global Markets Slide, US Futures Wipe Out Overnight Gains In Volatile Session

European shares tumbled, wiping out gains from a two-day rally, Asian stocks slid and the cost of insuring corporate debt rose as investor concern over global growth prospects resurfaced. U.S. equity-index futures pared gains of as much as 0.9 percent. Government bonds rose, with yields falling to records in Japan and China amid anxiety over the world economy. U.S. crude prices stabilized after dropping below $30 a barrel on Tuesday to touch the lowest since 2003 as Iran moved closer to boosting exports.

Order Book For Biggest Bond Sale Ever Takes Shape: Over $100BN In Orders For $40BN AB InBev Offering

While the market for corporate bond issuance has been relatively quiet among the recent broader market turbulence, in a few hours a historic new bond is about to price and be sold to investors. Earlier today, Anheuser-Busch InBev NV, the acquiror in the second largest M&A deal of 2015 valued at $117 billion and just shy of Pfizer's massive $160 billion merger with Allergan, started offering bonds that will back its takeover of SABMiller Plc in a sale that according to Bloomberg will stretch into Europe and is set to become the biggest corporate-debt offering on record.