Capital Markets

Why Manufacturing Matters

It’s not the more fickle and systemic nature of the FIRE economy that makes manufacturing particularly important. It goes well beyond that...

2007 All Over Again: "We Are Outsourcing Our Monetary Policy"

The strange, ominous concept of "outsourced monetary policy" has returned — but this time we’ve put our monetary fate in even less-stable hands. Wjat Janet doesn't seem to comprehend is that putting oneself at the mercy of financial market sentiment seems a bit risky, given that Mr. Market is a well-known manic depressive.

Frontrunning: March 31

  • Roller-coaster first quarter ends with shares, dollar under pressure (Reuters)
  • Oil prices slide as U.S. crude stocks hit record (Reuters)
  • GE Files to End Fed Oversight After Shrinking GE Capital (WSJ)
  • FDA Eases Rules for Abortion Pill, Making Access Simpler (BBG)
  • Kremlin denies report of Russia-U.S. deal on Assad's future (Reuters)
  • Thirst for Gasoline Fuels Oil Rally (WSJ)
  • Landlords in last-minute rush to beat stamp duty rises (BBG)

This (Crashing) Trend Is Not Your Friend

Despite Yellen's best efforts today to basically dismiss any and all data as irrelevant going forward in The Fed's decision-making process, we suspect all eyes (and algos) will be firmly glued to this week's payrolls' data. Will it be another record month for Obama to crow about? Will Mark Zandi do the "told you so dance" to all the trump supporters who seem less exuberant about the recovery? One look at this chart  - and the disastrous trend - and we suspect, sooner-rather-than-later, the fecal matter will be striking the rotating object in America...

The World Has 6 Options To Avoid Japan's Fate, And According To HSBC, They Are All Very Depressing

"The escape options are a mixture of the ineffectual, the limited, the risky, the foolhardy or the excessively slow. As Japan’s recent experiments have demonstrated, upping the monetary dosage alone is not enough to cure the affliction. Indeed, to the extent that monetary stimulus only encourages a further wave of risk-taking within financial markets – often outside of the mainstream banking system - it may only perpetuate unstable deflationary stagnation."

Activist Hedge Fund Starboard, Expert On Salt Content Of Pasta Water, Now Wants To Overthrow Yahoo's Board

A year and a half after Starboard proposed that the only thing Oliver Garden needs to attract new clients is to change the salt content of its pasta water, the activist fund has just unleashed a campaign seeking to overthrow the entire board of Yahoo, because the fund which clearly was a nutritional expert in late 2014, now thinks that its 1.7% in YHOO stock hodlings entitle it to the intimate knowledge of just how to "fix" Yahoo. Perhaps, the thinking goes, all it takes for people to start using Yahoo again is a new board?

The High Yield Bond 'Emperor' Has No Clothes, BofA Warns 1 In 3 Firms Face Default Threat

The market reaction from last week’s dovish FOMC statement took many by surprise, including BofAML's HY Strategy team, but as they say the High-Yield Emperor has no clothes, warning that the underlying commentary provided by Chair Yellen shows the vulnerability for high yield issuers to longer-term growth trends. Couple the deteriorating fundamentals for HY issuers with downgrades outpacing upgrades by a ratio of 3.5:1 and a worsening of global growth potential, and they believe the recent rally, though boosted by strong inflows and cash generation, will ultimately fade.

Toward A Grand New Bargain: How Donald Trump Can Clear The Field And Realign American Politics

It’s actually pretty easy. At an apt moment very soon, Trump should offer Governor Kasich the VP slot and Senator Cruz the vacant Supreme Court seat. Such a grand bargain would not only clear the primary field and quash any backroom hijacking of the nomination by the Washington GOP establishment; it would also permit each man to play his highest and best role at this great inflection point in the nation’s history.

It's Not Over Yet - Moody's Put Deutsche Bank On Review For Downgrades

In a worryingly coincidentally timed move, Moody's has put Desutche Bank on review for downgrade, citing "execution challenges" in its new strategic plan. The worrying aspect comes from the fact the timing is entirely fitting with the ratings downgrade that started the last and most painful down-leg in Lehman's collapse...

China's Latest Problem: Half A Trillion Dollars In Unpaid Bills

PBoC governor Zhou Xiaochuan is worried. The amount of debt accumulated by the country's corporate sector is "too much" and poses a "macroeconomic risk." Compounding the problem: the very same corporate sector has more than a half-trillion dollars in unpaid receivables on its books.

The New New 'Deal' - "Markets Are Too Important To Be Left To Investors"

In the same way that FDR had an existential political interest in generating inflation and preventing volatility in the US labor market, so does the US Executive branch today (regardless of what party holds the office) have an existential political interest in generating inflation and preventing volatility in the US capital markets. Transforming Wall Street into a political utility was an afterthought for FDR; today the relative importance of the labor markets and capital markets have completely switched positions. Today, the quote would be "markets are too important to be left to investors."

Largest U.S. Coal Producer Skips Interest Payment, Warns Of Bankruptcy; Stock Crashes

After a historic short squeeze which sent the stock of Peabody Energy soaring from $2.50 to $6.50 in under two weeks, things promptly reverted back to normal when the stock crashed back to earth plunging by 30% to $2.80 in the pre-market, and wiping out virtually all recent gains, after Peabody announced in its just filed 10-K, reported that it may have to join its peers Arch Coal and Alpha Natural in 11 bankruptcy protection, after it delayed $71 million in interest payment due on March 15.