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Chocolate Is The New Gold: Corporate Bonds Have First Ever Negative Yield Thanks To Nestle

Tyler Durden's picture




 

You know the world has gone truly mad when... For what we believe is the first time, a Euro-denominated corporate bond yield has gone negative. Aa2-rated Swiss chocolate-maker Nestle saw its 2016 bonds close at -0.2bps yield follows the swing to negative yields among covered bonds (bank debt backed by loans) that started in September.

 

Nestle's 2016 EUR-denominated bonds closed with a -0.2bps yield...

 

As Bloomberg reports,

With the growing threat of falling prices menacing the euro-area’s fragile economy, some investors are calculating it’s worth owning Nestle bonds, even with little or no return. That’s because yields on more than $2 trillion of the developed world’s sovereign debt, including German bunds, have turned negative and the ECB charges 0.2 percent interest for cash deposits.

 

“In the same way that bunds went negative, there’s nothing, in theory, to stop short-dated corporate bond yields going slightly negative as well,” Martin said. 

 

“If investors want to park some cash, the problem with putting it in a bank or money market fund is potential negative returns, because of the negative deposit rate policy of the ECB.”

*  *  *

We leave it to Deutsche Bank to conclude:

Staying on absurdly low yields, with nine countries in Europe now having negative two-year yields, it was perhaps only a matter of time before we saw corporate euro denominated yields follow suit.

 

Maybe chocolate is the new Gold!!

 

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Wed, 02/04/2015 - 15:52 | 5744126 ZippyBananaPants
ZippyBananaPants's picture

https://www.youtube.com/watch?v=EwTZ2xpQwpA

 

I know its a horrible song, but it was the first thing that popped into my brain!

Wed, 02/04/2015 - 15:55 | 5744145 ukspreads
ukspreads's picture

Buy the chocolate dip :)

Wed, 02/04/2015 - 16:12 | 5744227 sodbuster
sodbuster's picture

Maybe chocolate is yesterdays tulip bulbs.

Wed, 02/04/2015 - 16:41 | 5744325 A Nanny Moose
A Nanny Moose's picture

....and you can eat it. So much for store of value.

Wed, 02/04/2015 - 16:47 | 5744352 centerline
centerline's picture

Store of calories.  Depending on shelf life it might have more value than fiat someday soon.

Wed, 02/04/2015 - 16:14 | 5744231 bania
bania's picture

These guys are true innovators!

Wed, 02/04/2015 - 16:13 | 5744232 SumTing Wong
SumTing Wong's picture

And fuckers didn't like gold because it gives NO dividend. Better than negative dividend, bitchez!

Wed, 02/04/2015 - 16:19 | 5744246 Sudden Debt
Sudden Debt's picture

It’s totally the wrong trade.

there are chocolat shortages developping but that’s a very long trade and when shortages come into the market of luxury, yes that’s what chocolat is, the price goes up and the number of clients goes down And alternatives become succesfull.

And than there’s that crap Americans call chocolat without cacao and that will just gain marketshare like chicory did when there where coffee shortages in the 50’s.

Wed, 02/04/2015 - 17:37 | 5744669 EuropeanBankster
EuropeanBankster's picture

deflation expectations? .. fuck.. europe just became japan!!!!

Wed, 02/04/2015 - 15:54 | 5744141 swass
swass's picture

WTF?  Pay Nestle to take your money?  Do they at least give me a glass of Qwik with that?

Wed, 02/04/2015 - 16:07 | 5744201 NoTTD
NoTTD's picture

Yes, but it is diet strawberry.

Wed, 02/04/2015 - 16:25 | 5744271 nuubee
nuubee's picture

So what I pay in negative interest... I make up in extra fat cells. Seems legit since I can use the fat as long term energy storage.

Wed, 02/04/2015 - 17:21 | 5744597 WernerHeisenberg
WernerHeisenberg's picture

I'm holding out for high yield bonds in Roshen Chocolate of Ukraine, denominated in hryvnias.  What could go wrong?

Wed, 02/04/2015 - 18:30 | 5744900 swass
swass's picture

They actually had a great chocolatier in eastern Ukraine that made a beautiful, detailed chocolate semi-automatic pistol.  One of my prized display pieces.  Wonder how the TSA let me through security.

Wed, 02/04/2015 - 15:54 | 5744142 Raoul_Luke
Raoul_Luke's picture

Or maybe it's a response to the bank "bail in" phenomenon and a fear of a return of the credit crisis.  Better to own a bond that gives you 99% of your money back than put it in the bank and maybe get clipped for 15 or 20% when the SHTF.

Wed, 02/04/2015 - 16:15 | 5744237 SumTing Wong
SumTing Wong's picture

Or you can have the Bank of Serta. Or you can have gold or silver. Or you can stock up on lead. 

Shit. The world has truly gone insane.

Wed, 02/04/2015 - 15:56 | 5744146 I am a Man I am...
I am a Man I am Forty's picture

i'll put the toll house next to any cookie out there

Wed, 02/04/2015 - 15:54 | 5744147 Hohum
Hohum's picture

Well, you know what they say:  In deflation, cash and chocolate (and nylons) are king!

Wed, 02/04/2015 - 15:56 | 5744148 researchfix
researchfix's picture

And don´t you forget ChocoChenko...

Wed, 02/04/2015 - 17:29 | 5744630 WernerHeisenberg
WernerHeisenberg's picture

His friends call him Porky.  Believe it or not, he sold the chocolate factory to the son of Yanukovych.

Wed, 02/04/2015 - 15:55 | 5744151 Vylahkinnen
Vylahkinnen's picture

If only I had invested all my money into chocolate bars. What could go wrong?

Wed, 02/04/2015 - 15:57 | 5744154 strangeglove
strangeglove's picture

I love me some OPM

Wed, 02/04/2015 - 16:07 | 5744204 NoTTD
NoTTD's picture

"OPC"

Wed, 02/04/2015 - 16:15 | 5744238 SumTing Wong
SumTing Wong's picture

"OPP"

Wed, 02/04/2015 - 15:57 | 5744156 El Vaquero
El Vaquero's picture

Wouldn't it be better to hold cash than to purchase a negative yield bond? 

Wed, 02/04/2015 - 15:59 | 5744159 LawsofPhysics
LawsofPhysics's picture

How in the fuck does a monetary system even remain relevant, much less survive this kind of capital destruction?!?!

Wed, 02/04/2015 - 16:02 | 5744184 centerline
centerline's picture

Hopium.  It's half life if pretty impressive. 

Wed, 02/04/2015 - 16:16 | 5744242 pashley1411
pashley1411's picture

Let's be more precise.   The "monetary system" still works fine for, as an example, buying a book.    But as a pricing mechanism for valuing assets, the central banker's thumb weighs heavy on the scales.

'

Wed, 02/04/2015 - 16:34 | 5744278 LawsofPhysics
LawsofPhysics's picture

Truth be told, in the spring of 2012 I had several new sewer lines run and paid the man under the table, in silver.  The velocity (of lack thereof) of the dollar is disturbing, IMO for only one reason that isn't good for anyone holding dollars or dollar-denominated debt.

Wed, 02/04/2015 - 16:45 | 5744335 ATM
ATM's picture

The old reverse Gresham's Law!

Brilliant.....

Wed, 02/04/2015 - 16:00 | 5744167 SpanishInquisition
SpanishInquisition's picture

This is because of Augustus Gloop

Wed, 02/04/2015 - 16:57 | 5744429 Goldilocks
Goldilocks's picture

You bet,
August Gloop Oompa Loompa Song
http://www.youtube.com/watch?v=cEVilNDXd0A (3:48)

Wed, 02/04/2015 - 16:00 | 5744168 Tsar Pointless
Tsar Pointless's picture

Mmm...chocolate.

Wed, 02/04/2015 - 16:05 | 5744193 Hohum
Hohum's picture

Mmm...chocolate donuts.

Wed, 02/04/2015 - 16:00 | 5744173 buzzsaw99
buzzsaw99's picture

if i short those bonds does that mean i get that sweet, sweet, -0.2bps?

Wed, 02/04/2015 - 16:44 | 5744333 serotonindumptruck
serotonindumptruck's picture

It's as if all of the Top Brass are standing around like a bunch of bullies on the playground, pointing and laughing at the Russian president.

'DUR HUR! LOOK AT THE FUCKING RETARD! DUR HUR! WE MADE A FUNNEE!"

Wed, 02/04/2015 - 17:04 | 5744477 prefan4200
prefan4200's picture

That is actually exactly what is going on, serotonindumptruck, not "as if".  You nailed it.  I would add that their laughter is very nervous insecure laughter.

Wed, 02/04/2015 - 16:00 | 5744179 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

This is fantastic. We need to get on board with negative everything.  Banks deserve a break, I would glady pay them to hold my valuable dollars. Eventhough we already have real negative interest rates, due to inflation (which we need more of btw), I would be happy with offical negative rates. 

Wed, 02/04/2015 - 16:04 | 5744189 LawsofPhysics
LawsofPhysics's picture

Yes, pay me to take out a billion dollar loan!!!!!

Fucking winning bitches!!!!!!

maybe then the Fed will get the inflation they keep looking for...   /s

Wed, 02/04/2015 - 16:05 | 5744195 Bunghole
Bunghole's picture

I knew MDB.  

You sir are no MDB.

Wed, 02/04/2015 - 16:09 | 5744214 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

MBD is a good thinker, his ideas are pretty stale though.  We need much bigger programs and much more wealth distribution.  Money velosity i much too low. Poeple should be forced to buy things to support this great Country. 

Wed, 02/04/2015 - 16:03 | 5744188 ebworthen
ebworthen's picture

So I invest $1,000 in Nestle so they can make chocolate, I pay more for the chocolate at the store than I did last year, then next year I get back $980 for my $1,000 "investment"?

I would call it reverse capitalism or advanced socialism but it's really just another sign of Banksterism.

Wed, 02/04/2015 - 16:05 | 5744194 LawsofPhysics
LawsofPhysics's picture

In any case it sure as hell suggests that inflation is already coming back and these fuckers cannot destroy capital fast enough...

Wed, 02/04/2015 - 16:11 | 5744221 buzzsaw99
buzzsaw99's picture

Actually I believe the return would be $999.80, but yes, you are correct. and to whomever said bonds are in a bubble can't ever go below par, hahahahaha!

Wed, 02/04/2015 - 16:14 | 5744222 pashley1411
pashley1411's picture

Nothing surprising about this, in theory.   A supply-demand chart would say that as the supply of money pushes against the available valuble (liquid, yield-bearing) assets, will, down the supply-demand curve, push those assets into a negatitive yield.

Its the same thing as happens in Caracas supermarkets.   You spend the currency on anything that isn't nailed down, because the purchasing power of the currency is melting away.

But if a bond has a negative yield, shouldn't that also mean, in theory, that's its value is infinite?   Why not?

Wed, 02/04/2015 - 16:15 | 5744241 buzzsaw99
buzzsaw99's picture

But if a bond has a negative yield, shouldn't that also mean, in theory, that's its value is infinite?  

No. That only works with stocks.

Why not?

It's complicated.

Wed, 02/04/2015 - 16:30 | 5744285 LawsofPhysics
LawsofPhysics's picture

yes, infinitely irrelevant. 

Wed, 02/04/2015 - 16:14 | 5744236 yogibear
yogibear's picture

Companies should stop paying dividends.

Use the money to buy back shares.

Wed, 02/04/2015 - 16:40 | 5744323 random999
random999's picture

LOL!!

Guys if you havent done it yet, its really about time to get prepared for the worst...

Wed, 02/04/2015 - 16:54 | 5744404 serotonindumptruck
serotonindumptruck's picture

By stocking up on lots of chocolate! And none of that fake shit from her-shees or nest-lee, either.

Wed, 02/04/2015 - 16:46 | 5744343 henry chucho
henry chucho's picture

And this is how the free world ends,not with a bang,or a whimper,but with a chocolate bar..

Wed, 02/04/2015 - 16:52 | 5744389 Goldilocks
Goldilocks's picture

Almond Joy & Mounds Sometimes You Feel Like a Nut 1970
http://www.youtube.com/watch?v=2oroHQsBwVA (0:34)

Wed, 02/04/2015 - 16:57 | 5744430 danster82
danster82's picture

The only way a bond can really go negative is if newley created money is buying it, meaning giant corprations like nestle and the banks are one and the same.

Wed, 02/04/2015 - 17:44 | 5744700 The_Prisoner
The_Prisoner's picture

Nestlé controls rights to most of the underground water around the World. They are as evil as Monsanto and Carlyle Group.

Wed, 02/04/2015 - 18:07 | 5744814 golden raccoon
golden raccoon's picture

Impending headline:

Nestle announces leveraged buyout of the world!

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