Credit Conditions

Tyler Durden's picture

Fed Reveals Which "Developments To Financial Stability" It Is Most Worried About

Broad equity indexes have declined significantly since July 2015, and forward price-to-earnings ratios have fallen to a level closer to their averages of the past three decades.
Leverage [among speculative-grade and unrated firms] firms has risen to historical highs, especially among those in the oil industry, a development that points to somewhat elevated risks of distress for some business borrowers.

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Another Data Point To Ignore: Dividend Cuts Have Surpassed 2008

Being "paid to wait" in high-yielding stocks last year was a death by 394 cuts. As Bloomberg reports, the number of dividend reductions far surpassed 2008, almost 100 more than at the outset of the Great Recession - a time when the implosion of Lehman caused equity markets to plummet in the later stages of the third quarter.

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2016 EPS Growth Estimates Slashed By 50% Just One Month Into The Year

We open it up to readers to determine in how many weeks will full year 2016 EPS be revised tom 4.3% as of the start of the year, to 2.2% currently, to negative, indicating at least 7 consecutive quarters of declining EPS, something not recorded even during the peak of the financial crisis. Incidentally, an earnings recession is two consecutive negative quarters of EPS: we don't know what the technical term is for seven...

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A Preview Of This Weekend's Event That Could Unleash A "Vicious Bear Market Rally"

"... if China FX reserves data is better than expected, we think a bear market rally is likely to be vicious."

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Will Tomorrow's Payrolls Print A Zero?

Crazy, right? Perhaps not. For the first time since the financial crisis credit conditions have tightened for two consecutive quarters, something which have never happened without preceding a recession. That's all well and good, however, most problematic is its extremely tight correlation to nonfarm payrolls through the cycle... and that is flashing the 'reddest' since 2009.

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Why BofA Remains A Seller Until "A Coordinated And Aggressive Global Policy Response" Emerges

And so we are back to square one, where global economic growth is so weak that the Fed's relent is back in play, corporate earnings are collapsing, where 30% of global GDP is now produced in "NIRP" nations, and where more than half the global markets remain mired in a bear market, that the only thing that can "save us" is precisely the same thing that has brought us here: coordinated, global central bank intervention.

Tyler Durden's picture

What's The Next 'Energy' Sector In Credit Markets? UBS Answers

While there may not be another 'energy' sector this cycle, our proverbial list of candidates includes lower quality high yield (ex-commodities) and commercial real estate (CRE). More broadly, the OCC's own examiners would also likely add asset-backed and auto loans to the list.

Tyler Durden's picture

The Last (Policy-Induced) Gasp Of Speculative Excess

Markets these days have every reason to question the efficacy of global monetary management. Last week saw dovish crisis management vociferation from the ECB’s Draghi. Now the BOJ adopts a crisis management stance. The week also had talk of some deal to reduce global crude supply. Meanwhile, the PBOC injected a weekly record $105 billion of new liquidity. Nonetheless, the Shanghai Composite sank 6.1% to a 13-month low. There was desperation in the air – along with a heck of a short squeeze and general market mayhem.

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Monetary Metals Brief 2016

We have made a contrarian call for a falling silver price and a rising gold to silver ratio for years. This ratio has risen a lot during this time. Are we ready to change our call yet?

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IMF Slashes Global Growth Outlook Again, Warning "Of Great Challenges" In Year Ahead

A sharper than expected downturn in China, a soaring USD, sudden bouts of global risk aversion, and escalating geopolitical tensions will conspire to make 2016 a "bumpy ride," the IMF says, on the way to cutting its forecast for global growth for the fifth time in fifteen months.

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Another Bubble Bursts

Dear Janet, it appears the US consumer (or small business) is nothing like as strong as you "believed."

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12 Reasons Why One Advisor Is Betting Treasurys, Not Stocks, Is The Investment Of 2016

According to a recent contrarian call by  Prerequisite Capital Management, the "US Treasury Bond Market is potentially set up for a substantial move higher over the next year or two." Here are the reasons why.

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2015 Year In Review - Scenic Vistas From Mount Stupid

“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey

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"The Default Cycle Is Now Unavoidable": How The 'Junk' Cancer Spread To The Entire High Yield Space

"... a default cycle in commodity-related areas at this point is unavoidable, and the only real question here is whether it stays contained to those areas or extends itself to other sectors."

Tyler Durden's picture

"The Fed Doesn't Get It" A Rate-Hike Means People "Will Be Carried Out On Stretchers"

"It is our humble belief that the consensus at the Fed does not fully understand the magnitude of the problems in corporate credit markets and the unintended consequences of their policy actions."

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