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Credit Suisse Is "Worried" These Two Charts May Abort The Fed Hiking Cycle

Tyler Durden's picture




 

Despite the bloodbath in corporate credit markets, talking heads remain cognitively dissonant as to the reality lurking under the surface of this colossal leap in cost of funds for every firm. However, Credit Suisse is "worried" about the implications of these two disheartening charts expose, suggesting a default environment that might abort the Fed hiking cycle - which in this case is not a market-reassuring outcome.

As Credit Suisse's William Porter explains, the percentage of North American companies losing money on an LTM basis in Q3 rose to a cycle high, while the ratio in Europe stayed stable, at the low end of its recent range.

The burden of this is the correlation with the default rate. Moody's 2016 forecast is 3.8% but the relationship with this ratio now suggests something much higher, and we watch that outcome as a risk. Arguably the only market remotely priced to a much higher default rate as an outcome is US rates.

 

This is not a forecast, but an observation and a watching point. With the ECB now apparently less friendly as we examine below, we become more cautious ahead of the presumed Fed hike on 16 December, particularly in terms of total return dynamics.

Ironically, if defaults were to rise to anything like the degree this analysis suggests, it might abort the Fed hiking cycle which is a source of concern for the credit market. But we would hardly take this as a reassuring outcome.

There is a theme at present that credit is leading other markets, and is predicting "recession." We are worried...

 

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Sun, 12/13/2015 - 21:05 | 6919604 Hugh G Rection
Hugh G Rection's picture

Rothschilds did 9/11 #nothacked

Mossad caught on 9/11 with truck bombs (google Israeli truck bombs)

 

Unreacted super thermite found in the dust and peer reviewed in Bentham Open Physics Journal

 

Neocon think tank PNAC stated a need for "Catalyzing catastrophic event" 1 year before 9/11

 

Bibi Netanyahu said 9/11 attacks "very good for Israel"

 

Suck a fart out of my ass Zionists.

Sun, 12/13/2015 - 21:13 | 6919635 El Oregonian
El Oregonian's picture

Pharisees love the notion of the law, and find it appropriate that you live by it, yet distain to apply it to themselves, because they cannot possibly live by that very same law.

For none is righteous, no not one.

Sun, 12/13/2015 - 21:18 | 6919672 Hugh G Rection
Hugh G Rection's picture

Yes, they like their slaves to be constrained by rules that do not apply to them.

Sun, 12/13/2015 - 21:17 | 6919664 Hugh G Rection
Hugh G Rection's picture

Who bought AP and Reuters?  Who owns Hollywood?  Who controls the "alternative media"?  Who owns the central banks of the world?  Who did Lord Balfour promise Palestine to?  Who built the Knesset and the Israeli Supreme Court? 

 

Downvote away you sad, ignorant, goy monkeys.

 

Sun, 12/13/2015 - 22:10 | 6919884 Hugh G Rection
Hugh G Rection's picture

No debate, just downvotes?

 

Fucking pussies.

Mon, 12/14/2015 - 01:30 | 6920477 nscholten
nscholten's picture

People are waking up.  They are also destabalizing Europe, again.

https://www.youtube.com/watch?v=bm34sj65MkA

Mon, 12/14/2015 - 07:06 | 6920740 Bopper09
Bopper09's picture

Looking for attention, are we? 

Who's a big boy?  Yes, you're a big boy.

https://www.youtube.com/watch?v=Zu6KXj-vtl8

Sun, 12/13/2015 - 21:06 | 6919606 Cognitive Dissonance
Cognitive Dissonance's picture

It seems Sunday night is Fed rate hike hedge night. Suddenly a done deal ain't so done.

Sun, 12/13/2015 - 21:07 | 6919611 scintillator9
scintillator9's picture

What happens when something priced in is not priced in?

Sun, 12/13/2015 - 21:42 | 6919745 Cognitive Dissonance
Cognitive Dissonance's picture

Panic? Mrs Cog has promised me she'll let me know when to panic.

<What's that you said honey? The market is manic?>

Sun, 12/13/2015 - 21:08 | 6919612 Dead Canary
Dead Canary's picture

One of my friends from AA (and an Obama supporter) asked me a couple of weeks ago if I thought the Fed should increase interest rates. He was of the opinion (garnered from CNN no doubt) that this would save the economy.
I gave a good answer, which like all goods answers, is something he didn't want to hear.
"I heard a saying the other day that goes like this. If politicians can get people asking the wrong questions, the answers don't really matter"
What do you mean, he said.
Politicians are good at presenting people with two opposing questions to debate around the water cooler. If people have two things to debate,  they NEVER ask a third question.
The question we should be asking is this. We have been told the economy has been in a recovery for the last seven years. If we were in a true recovery, the interest rates would already be normal. Or at the least 3 or 4 percent. And here we are debating whether a lousy quarter point is going to save the country.
Wrong question.
He was quite for a long time.

Sun, 12/13/2015 - 21:20 | 6919681 knukles
knukles's picture

If we were in a normal cycle, we'd have been well through the recovery phase and dealing with a hotter cum aging part of the expansion phase.
So, exactamundo.  There is no "7 Years of Recovery" unless it's a Brad Pitt movie set in Tibetostan where Angela Jollie collateralizes her ex-titties in exchange for a bucket of yak paste.

Amazing, no? 

Now they're afraid to raise rates because they'll wind up back at zero.... which is exactly what they wanted to do anyhow, is to raise rates so that they could lower them later if it all turned brown, sticky and smelly.
WTF is Wrong With These People?

Sun, 12/13/2015 - 23:30 | 6920193 Nobody For President
Nobody For President's picture

WTF is wrong with these people? Easy knuks,

The Federal Reserve employs over 300 PhD economists...

Sun, 12/13/2015 - 21:08 | 6919613 ENTP
ENTP's picture

The. Fed. Cannot. Normalize.  It's too late.

Sun, 12/13/2015 - 22:03 | 6919835 Cognitive Dissonance
Cognitive Dissonance's picture

They never could. Once they went to zero and then started QE4EVA the possibility for a significant rate increase evaporated. It has been all talk and no walk ever since.

Mon, 12/14/2015 - 10:15 | 6921133 kralizec
kralizec's picture

The Fed aka the darkest Black Comedy of them all.

Mon, 12/14/2015 - 10:18 | 6921146 TruthHunter
TruthHunter's picture

Fed. Cannot. Normalize.

  5 decades beyond normal...

The Gold standard provided a littlle restraint.

Sun, 12/13/2015 - 21:09 | 6919621 order66
order66's picture

It doesn't matter what they do now. Sgt Hulka with the big toe is going to plant it in our ass.

Sun, 12/13/2015 - 21:10 | 6919625 InnVestuhrr
InnVestuhrr's picture

It will impossible for the FED to rate hike out of the ZIRP black hole that the FED created - they may start, but they will not be able to finish. Great opportunity to profit in capital gains from treasuries again.

Sun, 12/13/2015 - 21:21 | 6919690 knukles
knukles's picture

By Jove, He's Got It!
Watch out, we're on the global express to Negative Interest Rates!

Sun, 12/13/2015 - 21:12 | 6919639 holdbuysell
holdbuysell's picture

Probably nothing. Worry warts. /s

Sun, 12/13/2015 - 21:21 | 6919686 PutinLover
PutinLover's picture

Every time I see one of these scary charts or read one of these frightening articles, my heart goes all pitter-patter, racing wildly and arrhythmically.  I start hyperventilating and pacing the floor.  By the end of the evening I'm under the table, opening another can of Mountain House rations and shaking like a fucking leaf.

What do you veterans on here recommend for this condition? 

Sun, 12/13/2015 - 21:42 | 6919764 YHC-FTSE
YHC-FTSE's picture

Whatever you've got can't be fixed with a few posts on a forum mate.

Preppers are calm and collected because we've already planned for almost all contingencies. You ain't one of them.

Mon, 12/14/2015 - 04:29 | 6920658 Tall Tom
Tall Tom's picture

His name was AmerikanPatriot amongst many others.

 

Tyler has booted him before.

 

He is a troll.

Sun, 12/13/2015 - 23:34 | 6920202 Nobody For President
Nobody For President's picture

GlenLivet 12, one ounce at a time, neat, until the condition passses.

A separate glass of branch water allowed, but don't mix the two.

Works for me.

Sun, 12/13/2015 - 21:32 | 6919729 YHC-FTSE
YHC-FTSE's picture

CS has one of the best nest of analysts on the planet. I mean it. They probably read ZH comments all the time. :)

How many times have they aborted the rate hike now? I lost count. They might even try a little hike and then use the resulting shitstorm to implement QE-extra large tampontm to absorb all the blood in the markets. The thing about sociopaths/psychopaths (I rarely make the distinction) is they have a tendency to go apeshit when their lies are exposed and this is a BIG one. I reckon they'd rather start WWIII than expose themselves to the scrutiny of the public after their untenable positions are revealed. They have no choice but to continue QE. End of story.

(From DSM-5, Diagnostic and Statistical Manual of Mental Disorders, 5th Edition)

  1. Regularly breaks or flouts the law
  2. Constantly lies and deceives others
  3. Is impulsive and doesn’t plan ahead
  4. Can be prone to fighting and aggressiveness
  5. Has little regard for the safety of others
  6. Irresponsible, can’t meet financial obligations
  7. Doesn’t feel remorse or guilt

Describes the nutjobs in government to a T.

Sun, 12/13/2015 - 22:32 | 6919976 Yen Cross
Yen Cross's picture

 Why audit the FED, when you have "popular agreement"?

 The Fed. is toast/

Mon, 12/14/2015 - 00:18 | 6920327 FedFunnyMoney
FedFunnyMoney's picture

Within 6 months we will be in NIRP.

Mon, 12/14/2015 - 01:54 | 6920513 glenlloyd
glenlloyd's picture

I would tend to agree, maybe sooner.

The thing that really worries me is this incessant call for banning cash....

Mon, 12/14/2015 - 05:44 | 6920712 hxc
hxc's picture

Cashless society + NIRP = slavery to nwo banker-politicians

Mon, 12/14/2015 - 01:06 | 6920421 Yen Cross
Yen Cross's picture

 The Fed is going to lift rates, and use dovish language, next week.

 

Mon, 12/14/2015 - 01:45 | 6920500 g'kar
g&#039;kar's picture

"Credit Suisse Is "Worried" These Two Charts May Abort The Fed Hiking Cycle"

 

hiking cycle? i must have blacked out (very raycyst) for the last 7 years

Mon, 12/14/2015 - 03:43 | 6920628 jcdenton
jcdenton's picture

Why should all the rest of us have some concern for -- Credit Suisse? Why should CS be concerned the rest of us should be all concerned about -- Credit Suisse?

 

“Chaselet” was an intelligence operation involving Swiss banks (particularly Credit Suisse) that were re-activating what should have been “dead” bank credit instruments… like Letters of Credit. For example, a Letter of Credit from Chase Manhattan might have been drawn down – or may not have been drawn but served as collateral on another credit. Wanta’s investigation involved Credit Suisse, Union Bank of Switzerland and other banks recycling the Letters of Credit from banks around the world – reactivating what should have been dead notes. What was being done was a criminal act.

 

https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp

Go to WANTA-Book.pdf

Begin at page 104. Extrapolate under your own cognizance ..

Mon, 12/14/2015 - 08:01 | 6920792 matagorda
matagorda's picture

In the brave new world of really junky junk bonds, you don't default, you just pic 'n toggle.  It's all good!

Do NOT follow this link or you will be banned from the site!