Ratings Agencies

Sovereign Credit Is Deteriorating At A Record Pace

Culminating with the tipping of the UK's numerous real estate fund "dominoes" and the subsequent fallout in the wake Brexit, Fitch has been on a ratings-slashing spree, having cut the credit ratings on 14 nations so far in 2016, most recently that of the United Kingdom - a record downgrade pace for the rating agency.

Not Even Death Will Help You With Student Loans

"I felt so comfortable because it was the State of New Jersey. It's the state, my government, trying to help me out and achieve my American dream. It turns out they were the worst ones"

Frontrunning: May 25

  • Oil nudges $50 a barrel as investors bet on shrinking overhang (Reuters)
  • From hinterland to wonderland: China's 'teapot' refinery boomtowns (Reuters)
  • Peter Thiel Has Been Secretly Funding Hulk Hogan's Lawsuits Against Gawker (Forbes)
  • China Wants to Set Prices for the World's Commodities (BBG)
  • Big Banks Ladle On the Risk (WSJ)
  • China Said to Plan Asking U.S. on Timing of Fed Rate Hike (BBG)

Zimbabwe To Print Its Own US Dollars Amid Severe Cash Shortage

Zimbabwe is set to print its own version of the US dollar, as an ailing economy fuels a severe cash shortage in the southern African nation. John Mangudya, Zimbabwe’s central bank governor, said Thursday the so-called bond notes will be backed by $200 million in support from the Africa Export-Import Bank. The specially designed dollar notes will come in denominations of two, five, 10 and 20. They will also have the same value as their U.S. dollar equivalents. The bond notes are an extension of so-called bond coins of one, five, 10 and 25 cents which the central bank introduced in 2014 and are pegged to the value of the U.S. dollar.

 

The Chilling Ways The Current Global Economy Echoes The 1930s Depression Era

The imbalances that low rates and elasticity produce may “return us to the modern-day equivalent of the divisive competitive devaluations of the interwar years; and, ultimately, [trigger] an epoch-defining seismic rupture in policy regimes, back to an era of trade and financial protectionism and, possibly, stagnation combined with inflation.”

Spain's Election Quagmire: What Wall Street Thinks

Don't look now, but Brussels’ preferred Spanish PM is about to be ousted by a coalition of leftist parties, and that, in turn, suggests that the idea of fiscal retrenchment will be thrown out, along with anything that even looks like austerity. That could trigger a showdown between Madrid and Brussels over Spain’s intention to adhere to EU deficit targets.

Visualizing Brazil's Economic Decline In One "Straight-Line" Chart

From EM darling to depression, it's been a rough ride for the "B" in BRICS. As we kick off 2016, analysts are growing increasingly concerned that Brazil's economic downturn could well be deeper and longer than anyone expected. The market's collapsing expectations are summarized in one stunning chart.

The Great Disconnect Is Palpable

Taken together with the rather steep drop in US industrial production, the risks of a full-blown and perhaps severe recession have undoubtedly grown. Unlike what the FOMC is trying to project via the federal funds rate, a rate that isn’t being fully complemented, either, at this point, visible economic risk is not just rising it is exploding.

Market Shudders As Brazil Risks "Succumbing To Fiscal Populism" With New FinMin

Brazil has a new finance minister and the market is not happy. As BofAML puts it, "the focus turns now to the direction of the fiscal policy under the new FinMin, which should affect the recovery in confidence and thus growth. With mounting downside risks to growth that heavily weigh on the government’s revenues and the ongoing challenges in passing fiscal measures in Congress, tangible results over statements will now be needed to improve expectations over primary fiscal results ahead."