Ripley's believe it or not world continues. Earlier today, Hong Kong's Hang Seng market entered a bull market, rising 20% from its February lows, just as Hong Kong retail sales plunged 20.6%, the bigest drop since 1999 and then moments ago, in a move that pushed the Chinese Yuan stronger at least initially, S&P revised its Chinese outlook to negative, saying the economic rebalancing is likely to proceed more slowly than had expected over next 5 years and warning about China's debt load.
After years of QE (quantitative easing), ZIRP (zero-interest-rate policy), NIRP (negative-interest-rate policy), and Abenomics (Japanese prime minister Shinz? Abe’s stimulus-focused economic policies) – which is to say, all the standard deviations of modern central banking – older Japanese people must now break the law... to get “free board and lodging behind bars.” Is this what is coming to the U.S.? “Yes,” is the safe answer. Japan has been ahead of us on this entire trip.
Dear Mayor Emanuel, it may be about time to get on the phone with Detroit and ask for pointers on how to efficiently navigate the bankruptcy process...
Very simply, if you borrow too much money life gets harder and the things that used to work stop working. For a country, lower interest rates no longer induce businesses and individuals to borrow and spend, and government deficits no longer translate directly into more full-time private sector jobs. Growth slows, voters get mad, politics gets crazy, and generally bad times ensue. The only question is why this is a surprise to the people whose choices brought us to the edge of the abyss.
There's trouble brewing in the leveraged loan market as cracks continue to show in post-crisis CLOs. As we reported late last month, the number of CLO 2.0 deals’ equity tranches currently having NAV below zero has risen to 453. Given that, we weren't terribly surprised to learn that 6 CLO 2.0s are failing their interest diversion tests and another 20 are within a point of hitting their triggers.
Slowly but surely Canadian oil and gas failures are starting to become a daily reality; failures such as that of Canadian junior oil and gas producer Terra Energy Corp which yesterday said it shut down production, ceased operations and announced the resignation of directors and officers on Monday, after its lender, Canadian Western Bank, demanded full repayment of its debt.
When judged against the BoJ, the ECB probably still has a ways to go before hitting the limits of central banker insanity and so, we think it's entirely possible that Draghi moves into HY next. But the reasons to believe the ECB will take the plunge into non-IG corporate credit go beyond the “MOAR is always better” line. As BofAML’s Barnaby Martin explains, the EU corporate sector’s penchant for bond buybacks may ultimately force Draghi further down the ratings ladder lest the ECB should end up entangled in tender offers or else find itself without enough debt to monetize.
- Brussels Rocked by Deadly Attacks With Blasts at Airport, Subway (BBG)
- Death count climbs in Brussels blasts (Reuters)
- Europe on High Alert After Blasts in Belgium (WSJ)
- Brussels Phone Users Urged to Text Not Call as Networks Jammed (BBG)
- U.S. Embassy Urges Citizens in Brussels to Shelter in Place (BBG)
- Oil prices swept lower after Brussels blasts spook investors (Reuters)
This morning's Brussels suicide attacks have led to risk-off sentiment across European asset classes, with Bunds higher and equities firmly in the red, although if the Paris terrorist attacks of November are any indication, today's tragic events may be just the catalyst the S&P500 needs to surge back to all time highs. FX markets have also been dominated by events in Brussels, with USD and JPY strengthening, while EUR and GBP softening throughout the European morning.
"Pfandbriefe", or "It Wasn't Me!": Why Nobody Realizes That Germany Is the Biggest Systemic Risk in the EUSubmitted by Reggie Middleton on 03/22/2016 06:41 -0400
Again, if it smells like a crash, walks like a crash and looks like a crash, why believe anybody who says it's not a crash?
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...
Stock markets are said to “discount the future.” Maybe they see something we don’t. Or maybe they are simply preparing for a more spectacular day of reckoning by drawing more mom-and-pop investors into deeper water; as always, we wait to find out.
As if the historic collapse of Valeant and his hedge fund crashing by 26% YTD was not enough, moments ago S&P added insult to injury when it warned it may downgrade Pershing Square, because "Pershing Square Holdings' net asset value has dropped substantially, largely because of a precipitous decline in the market value of Valeant Pharmaceuticals" and "as a result, Pershing Square's debt-to-total assets ratio increased to above 20% as of March 15, 2016, from 15% at the end of October 2015. We are placing our 'BBB' issuer credit and senior unsecured debt ratings on the company on CreditWatch with negative implications."
"I think it's enough," Trump says about the primetime debates.
With Trump preparing to steamroll the competition in today's all important primaries, where a victory in Florida is now all but assured and only a Kasich challenge in Ohio can potentially spoil the day for the Donald - if Trump wins Florida and Ohio, it's over - earlier today he got some more good news to propell him even further: for the first time Trump has the support of a majority of Republican primary voters nationwide, scoring an all time high of 53% in support at the national level.