One does not have to be financial wizard to to know that a firm which has to borrow more than it can generate from core operations is not a sustainable business model, and yet today's CFOs, pundits and central bankers do not. But more are starting to pay attention as the corporate debt pile hits epic proportions. As Bloomberg writes this morning, when it also issued a stark warning about the next source of credit contagion, while "consumers were the Achilles’ heel of the U.S. economy in the run-up to the last recession. This time, companies may play that role."
Yasuhiro Sato, president of Mizuho, Japan's second-largest bank by assets, said Abe's framing of the sales tax delay would determine whether it sparked concerns about the government's credibility regarding its plans for fiscal consolidation. "The worst scenario is [the government] will just announce a delay in the tax increase. That could send a message that Abenomics has failed or Japan is heading for a fiscal danger zone and then it will harm Japanese government bonds' credit ratings."
With California finally mattering in an election season, it might be the final state primary before the Democratic race for president is set in stone. Regardless, recent developments have made one thing astoundingly clear: Donald Trump will almost surely defeat Hillary Clinton in a head to head matchup - and that’s why a vote for Hillary Clinton is a vote for Donald Trump.
The risk of a default chain reaction is looming over the $3.6 trillion market for wealth management products in China. WMPs, which traditionally funneled money from Chinese individuals into assets from corporate bonds to stocks and derivatives, are now increasingly investing in each other.
Having been debate-shunned by Hillary "ain't got time for that" Clinton, Vermont Sen. Bernie Sanders agreed Wednesday night to debate presumptive Republican nominee Donald Trump. Sanders, who was "disturbed but not surprised" that Hillary backed out of the California debate (ironic as Sanders is surging in polls ahead of the June 7th primary) enthusiastically tweeted "Game On" in response to Trump's agreement on Jimmy Kimmel Live to debate the Democrat contender, noting "it would have such high ratings." Imagine the protests outside of that event.
Today we find an even more striking example of just how broken the global bond market has become thanks to the ECB because as Reuters writes, Bayer could receive financing from none other than the European Central Bank to help fund its takeover of the world's largest seed company, US-based Monsanto, according to the terms of the ECB's bond-buying program.
For the bank with the tens of trillions in derivatives, being seen as an increasingly more distressed counterparty was not good news and explains why the CEO took the unexpected step of having to defend his firm following the downgrade. "We are very disappointed," Cryan said in an interview on the sidelines of the Institute of International Finance’s conference in Madrid. "We have enough capital to repay all of our debt four-times over."
"As SOE restructuring progresses, it will also become more apparent that Chinese banks need to be rescued. We estimate that the total losses in the banking sector could reach CNY8 trillion, equivalent to more than 60% of commercial banks’ capital, 50% of fiscal revenues and 12% of GDP."
Shortly after the market close, the rating agency decided to pile some more pain on the misery that has befallen Germany's largest lender (who just today admitted it had rigged stocks in addition to seeing yet another MBS probe unveiled against it), when it downgraded the bank's credit ratings across the board as follows: Senior debt to Baa2, or just two notches above junk, Long term deposits to A3 and counterparty risk assessment to A3.
Today we learned that not only was China going through with its unprecedented debt-for-equity swap, but it has already equitized over $220 billion in non-performing loans. Note: these are not traditional, Chapter 11 prepacks where the debt is converted into equity and the debt holder gets the keys to the company. In this case, it is the Chinese government itself which indirectly via state-owned banks, has become the de facto owner of countless companies.
ABC, Fox News, and Rasmussen now have polls suggesting Donald Trump leads Hillary Clinton nationally and for the first time during this campaign RealClearPolitics 'tracker' has Trump with a 0.2pt lead - the unofficial "death cross" of Clinton's campaign as Wayne Allyn Root right remarks "Hillary is sinking faster than the Titanic." Voters are putting their money where their polls are too as bookies odds of a Hillary victory in November are tumbling.
It has become clear that there is a shift away from the expensive, all-in-one, type of financial solutions for real-time traders, passive investors, and those tangentially interested in financial market information.