• Tim Knight from...
    02/06/2016 - 00:25
    What we must remember is this: we are in a bear market, and the risk of a countertrend rally is present, but confined. The opportunity on the downside movement dwarfs the risk of a push higher, as...

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Meanwhile, Brazil's Currency Just Plunged To An All-Time Low...





The negative feedback look between Brazil's political and economic crises is serving to make each day worse than the last. Tuesday was no exception...

 
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Moody's Downgrades France, Blames "Political Constraints", Sees No Material Reduction In Debt Burden





Citing "continuing weakness in the medium-term growth outlook," Moody's has downgraded France:

*FRANCE CUT TO Aa2 FROM Aa1 BY MOODY'S, OUTLOOK TO STABLE

Apearing to blame The EU's "institutional and political constraints," Moody's expects French growth to be at most 1.5% and does not expect the debt burden to be materially reduced this decade.

 
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Glencore's "Doomsday" Plan Disappoints As CDS Resumes Rise; Question Emerges: "What Happens If Company Fails"





Some have started to ask: what happens if Glencore were to fail? Well, since Glencore is not just a miner, but probably the world's largest commodity trading desk, and is a key commodity counterparty for everyone, the answer is simple: Lehman... only this time in the commodity space.

 
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"Liar Loans" Are Back! 2008 Here We Come





Liar loans are back from the dead which means that if you look under the hood, you might just have a shoddy credit or two hiding in the collateral pool of your triple-A mortgage-backed paper. Meanwhile, in a further sign that we've learned nothing since the crisis, non-Agency RMBS is set to stage a comeback.

 
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"We've Run Out Of Buyers" - Half Of Homes In New York Are Now Losing Value





"What happens in any bull asset bubble such as what we've seen is you run out of buyers. It's hard to get deals done if the bottom third can't get a mortgage."

 
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Policy Confusion Reigns As China Caps Muni Debt, Uncaps Bank Debt, And Bad Loans Soar





In the latest example of Beijing attempting to deleverage and re-leverage all at once, China has lifted a cap on loan-to-deposit ratios for banks while simultaneously capping local government debt issuance for 2015. Meanwhile, bad loans are still on the rise at China's "big four" banks, underscoring the extent to which China's economy is rapidly deteriorating and drawing a line under the risk the PBoC is running by forcing banks to lend into an extraordinarily uncertain environment.

 
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Turkish Lira Plunges To Record Low As Coalition Talks Break Down





It appears efforts to form a coalition has failed as local nes report both the AKP and CHP will make separate statements from their party HQs.

 
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Just As Brazil Hits Rock Bottom, Things Are About To Get Even Worse





For anyone who might have missed it, Brazil is in trouble. "Macro imbalances in Brazil are large, the worst in almost a decade. The fiscal deficit at -8.1% of GDP is also at its widest in more than 20 years, with the combined twin deficits now tracking at a disquieting 12.5% of GDP. Brazil stands at a crossroads – both roads involve currency depreciation."

 
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"We Have A Civil War": Inside Turkey's Descent Into Political, Social, And Economic Chaos





"There's a saying, 'if there's peace, it will start from Cizre, and if there's war, it will start from here as well.' And we can say we have a civil war in Turkey."

 
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"Debt Is A Fickle Witch"





Debt is a fickle witch. When left to its own devices, which it has been for nearly seven years with interest rates at the zero bound, it tends to get into trouble. Unchecked credit initially seeps, and eventually finds itself fracked, into the dark, dank nooks and crannies of the fixed income markets whose infrastructures and borrowers are ill-suited to handle the capacity. Consider the two flashiest badges of wealth in America - cars and homes...

 
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Violent Government Buying Spree Sends Chinese Stocks Soaring At Close Of Trading; Yellen On Deck





On a day when market participants will care about only one thing - how hawkish (or dovish) the FOMC sounds at 2:00 pm (no Yellen press conference today) - Chinese stocks provided the usual dramatic sideshow and traded unchanged or modestly negative for most of the day despite the latest $100 billion injection, the close of trading on Wednesday was a mirror image of what happened in the last hour on Monday, as various Chinese "plunge-protection" mechanism went into a furious buying frenzy and government-backed funds rushed to buy anything that trades in the last 60 minutes of trading in what may be the most glaring example of banging the close yet.

 
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Pension Shocker: Plans Face $2 Trillion Shortfall, Moody's Says





"Moody’s, which in 2013 began using a lower rate than governments do to calculate future liabilities, has estimated that the 25 largest U.S. public pensions alone have $2 trillion less than they need", Bloomberg reports.

 
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"Everybody Benefits By Avoiding Defaults": Citi Explains How To Goalseek Student Loan ABS Ratings





Moody's and Fitch are taking a hard look at student loan-backed ABS and they don't necessarily like what they see. Fortunately, Citi has some pointers on how the ratings agencies might go about avoiding downgrades.

 
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Frontrunning: July 10





  • Fed Chair Yellen To Speak As Global Tensions Rise (WSJ)
  • Greek PM Tsipras seeks party backing after abrupt concessions (Reuters)
  • France Hails Greek Aid Proposals as Germany Reserves Judgment (BBG)
  • Greek PM says does not have mandate to exit eurozone (Reuters)
  • France Intercedes on Greece’s Behalf to Try to Hold Eurozone Together (WSJ)
  • Frozen Funds, Fleeing Tourists: Greek Startups Feel the Pinch (BBG)
  • Doubts Simmer Despite China’s Gain (WSJ)
 
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