In a disappointingly familiar (and entirely unsurprising) case of deja vu, SEC Chair Mary Jo White raised the specter of Wall Street taking advantage of greedy mom-and-pop investors once again. Having crashed 21% in the last three weeks alone, sudden weakness in recent IPOs raises questions about the issuance process, as Bloomberg reports, White warned investors that "you have to make sure you don’t have some very aggressive promoters taking advantage of that climate." As big investors mark-down their lofty valuations, it will be the average joe, pumped and dumped by CNBC and its ilk, that end up the biggest losers in this all too real show.
Supermajors Shell and Italian Eni could be facing the loss of one of the biggest offshore oil exploration blocks in Nigeria, putting an estimated 9 billion barrels of crude oil at risk.
Europe’s biggest lender HSBC will no longer provide mortgages to some Chinese nationals who buy real estate in the United States, a policy change that comes as Beijing is battling to stem a swelling crowd of citizens trying to get money out of China. However, ass HSBC closes the door, the panicking Bank of Canada scrapped its C$1.25 million cap on mortgages to borrowers with no local credit history (to tap into surging demand for financing from wealthy immigrant buyers).
As the great and the good gathered in Davos to ponder the next big thing, the pummeling of global equity markets brought key assumptions into question. Yet, their collective heads stayed buried in the snow with regard to the big ideas from years past, namely, the three grand economic experiments launched by the U.S., Japan and China following the Global Financial Crisis. By clinging to unrealistic growth expectations, the economic establishment has effectively bet everything on the success of these grand experiments, and the risk of losing that bet is rising inexorably.
Much predictably fatuous comment has been devoted to the fact that, to the extent that the US is facing any difficulties at all outside the oil patch, at present these ‘only’ affect manufacturing - a sector which , as any fool knows, accounts for a mere 12% of GDP. To acquire a feel for the error in this argument, we must look beyond the final-use fixation of the GDP arithmetic and cast our gaze instead at wider measures of activity. The charts presented here are an attempt at achieving such an overview...
According to the head of financial markets research Asia Pacific at Rabobank, Michael Every, not only has China not begun to delever at all, but since McKinsey's update, its debt has risen by another 70% of GDP! According to Every, China's 2015 debt-to-GDP might be as high as 346%, and while that is in line with wealthier developed economies but is “vastly higher” than any EM peer.
Moments ago we got the answer to our concerns after yesterday's poor % Year auction, when not only was today's "belly of the curve" auction not a "poor showing" at all, it may have been the strongest auction on record: pricing at 1.759% this was stopped 2.2bps through the 1.781% When Issued, perhaps a record in terms of concession, or lack thereof.
The mother's milk of stock market returns is turning increasingly sour...
Donald Trump "won't be bothering" with Thursday's GOP debate thanks to the fact that Fox's Megyn Kelly is among the event's moderators, but he will be hosting his own "special" event in the same city at the same time, setting up a ratings battle with the network. Meanwhile, Ted Cruz has challenged the bellicose billinoaire to a one-on-one showdown worth $1.5 million for veterans charities.
Over the past 7 years, we as well as others (if not those who believe in magic money trees, or managing other people's money while blogging) have repeatedly said that when it comes to "market" returns, look no further than the size of the Fed's balance sheet - the single best indictor of where the S&P500 is headed to next. That is precisely what DB's Jim Reid did overnight.
Sweden, grappling with allegations of a police coverup related to an alleged wave of sexual assaults at a music festival and the violent death of a 22-year-old asylum center worker at the hands of a young migrant, will move to deport some 80,000 refugees this year. That's nearly half of the record 163,000 people who entered the country in 2015.
Residents in Sebring, Ohio, can commiserate with those in Flint, Michigan, considering their water supply has also been contaminated with lead that “exceeds the action level,” according to the state’s EPA. Like Flint, the case of Sebring - involving some 8,100 water customers in Sebring, Beloit, Maple Ridge, and parts of Smith Township - already has the appearance of criminal negligence and a possible cover-up.