Global Economy

How Low Can Bond Yields Go? Lower

How low can bond yields go? Every day seems to provide fresh evidence that we really don’t know. But whatever your answer, between the gravitational pull of central bank debt purchases and a slowing global economy, the reality is: probably lower.

Big Names Are Bailing

The list of heavy hitters who are saying bad things about this world and its financial markets - while acting aggressively on their pessimism - is growing to alarming proportions.

Paul Singer Joins Icahn, Soros; Warns "It's A Very Dangerous Time To Be In The Market", Buys Gold

"The cure for the crisis — for the debt crisis, the financial crisis — has been deemed by the developed world governments to be more debt. There has not been a deleveraging. And after seven and a half years and counting of this mix of policies, at the moment we’re either in a stage of stagnation or rollover, possibly in the early stages of a global recession. So I think it’s a very dangerous time in the financial markets."

Nothing Lasts Forever

As the man who perhaps best rode the coat-tails of an ever-increasing wave of American credit expansion exceptionalism (only to come undone in recent times as that game ends), it is no surprise that Warren Buffett explained in February that "for 240 years it’s been a terrible mistake to bet against America, and now is no time to start." We don't mean to rain on his parade too much, but the following charts suggest "nothing lasts forever" and time is ticking...

About Those Carbon Emissions

Ever since the discussions on how to address "manmade global warming" started to gain traction in the 1990s trillions of dollars have been spent on infrastructure, subsidies, R&D, regulations, trading schemes and even political organizations with the explicit intent of reducing greenhouse gas emissions. Alas, the world has changed considerably since the 1990s. Rather than diminishing, carbon emissions have actually increased by a great deal. Developing countries as a whole are now the #1 emitter. And many OECD (mostly developed) countries are trying to manage very difficult fiscal positions. In fact, the only thing that seems to have remained constant is the strategy on how to reduce emissions globally.

An Everyman's Guide To Understanding Cryptocurrencies

When an asset rises by almost 30% in a few weeks, it tends to attract attention. Recently, that asset was bitcoin (BTC). Are these cryptocurrencies mere fads? Or are they potentially game-changing alternatives to the conventional currencies such as the U.S. dollar, Chinese RMB, Japanese yen or European Union euro? There’s no lack of skeptics and critics of bitcoin and other cryptocurrencies; yet despite concerns about security, criminal use and volatility, cryptocurrencies have proliferated at a dizzying pace. So what are those who can't follow the technical arguments supposed to make of all this?

Goldman Warns Of "Upward Shock" To Rates, Hints At Trillions In Losses

According to Goldman, here is the unpleasant choice facing the world: continue slowly sinking into a deflationary singularity, coupled with ever greater systemic leverage which makes escape from the ZIRP/NIRP trap impossible as social unrest builds up and ultimately spills over into the streets, or unleash an inflationary impulse, one which crushes countless debt holders, leads to trillions in losses, and requires yet another consolidated bailout.... oh, and also more social unrest.

Morgan Stanley Asked Analysts How Companies Were "Exceeding Estimates", The Answer Is Disturbing

According to a survey by Morgan Stanley, analysts responded that if firms exceed expectations to the upside, it was typically due to lower costs than higher revenues. Said otherwise, companies are not generating the top-line growth necessary to beat even the lowest of analyst expectations, and have focused on driving cost out in order to meet the street's expectations. After all, if the numbers miss, executives don't get as much out of those options and RSUs, and we can't be having that.

Global Stocks Sharply Lower As Bond Yields Hit New Record Lows; Oil Slides Below $50

Global stocks, U.S. index futures are sharply lower pressured by fears of another day of record low bond yields, as investors start to worry about numerous risk catalysts in the coming weeks, from the Brexit vote to Fed meeting. The Dollar spot index rose for the second day in a row, pushing commodities lower for their first two-day decline since May 24, while WTI has dipped back under $50.

Pity Poor China: There's No Easy Fix To The S-Curve

This decline is inevitable in fast-expanding economies that depended on export growth and investment booms. Everything that worked so well for 30 years is only making the economy more precarious.

And An Even Louder Warning From Goldman: The "Yellen Call" Is Back And Will Limit Further Market Upside

With financial conditions having significantly recovered, it is reasonable to expect that the Yellen call will soon be back in the money following the June FOMC meeting. We believe June is largely off the table given the weakness of Friday’s employment report and the UK referendum on its EU membership in June. But we think the July meeting is live, without our US Economics team seeing a 40% probability of a second hike. With equity markets posting new highs this week, we think the ‘Yellen call’ is on track to move back into the money in 2016H2.