• GoldCore
    09/04/2015 - 07:43
    Large pools of gold in indebted nations will be vulnerable. Pool accounts, digital gold bullion vaulting providers and depositories in the UK and the US might have their companies and assets...

Borrowing Costs

Tyler Durden's picture

If We're Going To Borrow Against The Future, Let's Borrow To Invest





We are at an important juncture as a global society: either we immediately prioritize a new trajectory focused on creating a positive, functional future or -- by continuing the consumptive, extractive, exploitative status quo -- we will default into a nasty nightmare. What will determine which future path we take is our collective narrative. It's the story we tell ourselves -- who we are, what we value.

 
Tyler Durden's picture

Companies Go All-In Before Rate Hike, Issue Record Debt In Q1





Not only did Q1 mark a record quarter for issuance, March supply also hit a record at $143 billion, tying the total put up in May of 2008. It should come as no surprise that Q1 was a banner quarter for corporate debt issuance as struggling oil producers tapped HY markets to stay afloat and companies scrambled to max out the stock-buyback-via-balance-sheet re-leveraging play before the Fed hike rates.

 
Sprout Money's picture

Here's Why Investment Banks Love The ECB’s QE Program





According to Citigroup, the revenues from trading fixed income securities has been decreasing since the end of the global financial crisis, but this trend might very well be reverted soon as investors are desperately trying to protect their assets from erosion.

 
Tyler Durden's picture

QE For The People - What Could Go Wrong?





A number of economists have proposed the implementation of what has been dubbed "QE for the people." They seem to prefer to apply the principle "When in trouble, double." Given the massive mistakes which were made by central banks from Weimar to Bernanke and the relentless attempts to use the printing press to finance governments, it probably shouldn't take much to convince people of alternatives, and not more of the same, right?

 
Tyler Durden's picture

The Bubble Machine Is Complete: Soaring Stocks Push Investors Into Bonds Whose Issuers Buy More Stocks





As JPM notes, soaring equity prices have had the effect of altering investors’ asset allocations, effectively tipping the balance towards equities even as money flows into bond funds. "The more equity prices increase, driven by either hedge funds or investors with low equity allocations, such as Japanese pension funds the higher the incentive by other investors who are already very overweight equities to buy bonds to prevent their bond allocation from falling too low."

 
Tyler Durden's picture

Treasury Collateral Shortage Crosses The Atlantic, Makes European Landfall





We're just a little over two weeks into PSPP and signs are already beginning to show that the ECB is effectively breaking the market. "The soaring cost of borrowing government bonds in secured lending markets highlights the distortions caused by the ECB's asset-purchase scheme, which analysts say could clog up Europe's financial system," Reuters notes.

 
Tyler Durden's picture

"Profound Shift In Liquidity Risk" May Imperil Market Function, New Report Says





"There's a liquidity conundrum in fixed income markets facing policy makers and investors: how it’s resolved will have long term investment implications across banks, asset managers and infrastructure players," a new report from Morgan Stanley and Oliver Wyman notes. The joint effort is an attempt to dig deep into the all important issue of credit market liquidity (or lack thereof) and determine the short term and long term implications.

 
Tyler Durden's picture

Corporate Profit Margins And Investor Consequences





"...markets can turn from tranquil to turbulent in short order. It is worth noting that in 2006 volatility was low, and companies were generating record pro?t margins, until the business cycle came to an abrupt halt due to events that many people had not anticipated. Although investor appetite for equities may remain robust in the near term, because of positive equity fundamentals and low yields in other asset classes, history shows high valuations carry inherent risk... potential ?nancial stability risks arising from leverage, compressed pricing of risk, interconnectedness, and complexity deserve further attention and analysis."

 
Tyler Durden's picture

Illiquid Corporate Bond Market Will End In "Very Unpleasant Fashion"





The hunt for yield is driving investors into riskier debt at just the wrong time. With liquidity in the corporate bond market drying up thanks to new regulations, the rush to the exit is likely to be "very unpleasant," one analyst says.

 
Tyler Durden's picture

Drowning In Liquidity But None In The Bond Market: The Spark Of The Next Financial Crisis?





What happens in the event a Fed rate hike triggers widening corporate credit spreads in a corporate bond market devoid of liquidity? Could it indeed be the case that the Fed’s highly anticipated “lift-off” will serve as the catalyst for credit market carnage? Some traders think so.

 
GoldCore's picture

Gold Surges – Fed Loses “Patience” and Signals Loose Monetary Policies to Continue





Many analysts regard this as further evidence that the Fed is caught in a bind. What is yet to be appreciated by most analysts is that it is unlikely that the massively over-leveraged and debt-saturated financial system can weather increases in interest rates.

 
EconMatters's picture

The 5 Most Crowded Trades on Wall Street: Part 3





Utilities have always been attractive yield plays for conservative investors, but natural gas prices are low and margins are not that great for the industry.

 
Tyler Durden's picture

Hilsenrath's FOMC Preview: "No More Promises, Fed Is Injecting Uncertainty Back Into The Market"





There have been countless previews of the FOMC statement at 2pm today, all of them largely worthless and regurgitating the same exact stuff. The only one that matters, as it is the only one with the explicit blessing of the Fed (see "On The New York Fed's Editorial Influence Over The WSJ") in its attempt to manage expectations: that "drafted" by Jon Hilsenrath. And if what the WSJ economist writes in "Fed to Markets: No More Promises" is accurate, then fasten your seat belts, ladies and gentlemen, because we are about to enter some turbulence. "The Federal Reserve is about to inject uncertainty back into financial markets after spending years trying to calm investors’ nerves with explicit assurances that interest rates would remain low."

 
Tyler Durden's picture

Europe's Haves & Have-Nots: Greek Bulls "Throw In The Towel... They've Gone Plain Nuts"





Things are not going well for the Greeks. Bond yields are at post-default highs, implicitly shutting them out of the capital markets; stocks are cratering; and deposit outflows continue as the cash crunch looms. Even ex-Goldman silver-lining-finder Erik Nielsen stated this weekend that he is "throwing in the towel," on Greece, adding, as Bloomberg reports, that things have gone "plain nuts" in Athens. However, things are going great for the Germans - borrowing costs have never been lower, and the stock market is at record-er highs every day, as Draghi's money-printing fiasco has succeeded in one thing (and one thing only) dividing an already fragile 'union' into ever-greater 'haves' and ever-lesser 'have-nots'.

 
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