The sell-off in credit over the past week has led many investors to ask what it means for equities. Credit spread widening usually has negative implications for equity but as Goldman notes, it is critical to estimate the degree to which the equity market has already priced the weakness to determine the potential risks to equity going forward. Interestingly, Goldman finds the weakness in high yield credit was foreshadowed by weakness in the equities of high yield companies (like for like), but the weakness in Investment Grade credit spreads relative to their corresponding equities represents a new divergence suggesting meaningful downside for S&P 500 investors.
Because when your year-end bonus depends on you not seeing it coming, you don't.
"Yeah but it's junk credit... who cares! I am invested in solid megacaps and even solider FANGs - what can go wrong?" Well, this...
Tennessee Senator Bob Corker may have forgotten to disclose a few things. Like millions in hedge fund investments. And millions in real estate investments. And millions in "other" investments. He's "extremely disappointed" in someone, although it wasn't immediately clear if it was himself.
Everybody can see Janet Yellen standing naked in that corner - more like a box canyon - and it’s not a pretty sight. But the mundane truth probably is that events have finally caught up with the structural distortions of a financial world running on illusion. To everything there is a season, turn, turn, turn, and economic winter is finally upon us. All the world ‘round, people borrowed too much to buy stuff and now they’re all borrowed out and stuffed up. Welcome to the successor to the global economy: the yard sale economy, with all the previously-bought stuff going back into circulation on its way to the dump.
Confirming what we explained here, Goldman Sachs notes that the publication of a new CNY exchange rate index suggests an increased focus on broader CNY moves against other non-USDollar currencies and reinforces the likelihood of further depreciation versus the USD.
The build-up in credit or leverage in many Emerging Market economies has been an important focus for EM investors given historical episodes of credit crunches and subsequent growth slowdowns. While broadly speaking, EM stocks began to drastically underperform DM stocks at the start of QE3, Goldman summarizes in a heat map, the EM nations with greatest potential for the upcoming Fed liftoff to cause a major disruption.
A tragic example of this was seen in Italy in recent days when a pensioner committed suicide after having his life savings wiped out in a bank bail-in. A pensioner from near Rome, hanged himself after his €100,000 (£72,000; $110,000) investment in Banca Etruria bonds were wiped out in a bail-in. A suicide note was left by the pensioner criticising the bank.
"Templeton Global Bond ($100bn in total; $59bn in mutual funds) – BEN’s largest fixed income fund – has seen meaningful outflows YTD (-$7.6bn from retail; -13% annualized rate) and could persist given the deterioration in excess performance (-460bps vs. benchmark YTD)."
It's official: two of America oldest publicly traded companies will merge, with Dow and DuPoint merging as equals in a combined company that will have a $130 billion market cap and will be named DowDuPont. And while shareholders already benefited from the deal with shares of both consitutents rising by 10% in the days preceding the official announcement, the biggest loser are once again the employees: the combined company announced that as part of the $700 million in restructuring efforts, 10% of the combined company's employees will be laid off.
As 2015 draws to a close, Goldman identifies 15 straddle-buying opportunities on stocks with liquid options, reporting in December. Our studies analyzing historical earnings events show at-the-money straddles are systematically undervalued ahead of the event. Buying straddles ahead of earnings has returned 10% through early December vs. the long term average of 2%.
The U.S. establishment has been aggressively pushing against the American public’s right to private communications, i.e. encryption, ever since the terror attacks in Paris. This push continues unabated, with the latest shots fired earlier this week by FBI chief James Comey at a Senate Judiciary Committee hearing. “I don’t want to tell them how to do their business... but there are costs to being an American business."
The U.S. is now experiencing the next stage of the great reset. Two pillars were put in place on top of an already existing pillar by the central banks in order to maintain a semblance of stability after the 2008 crash. This faux stability appears to have been necessary in order to allow time for the conditioning of the masses towards greater acceptance of globalist initiatives, to ensure the debt slavery of future generations through the taxation of government generated long term debts, and to allow for internationalists to safely position their own assets. The three pillars are now being systematically removed by the same central bankers. Why? They are simply ready to carry on with the next stage of the controlled demolition of the American structure as we know it.
According to the latest set of emails released by the State Department, and first reported by the Daily Caller, Hillary intervened in a request forwarded by her son-in-law, Marc Mezvisnky, on behalf of a deep-sea mining firm, Neptune Minerals, to meet with her or other State Department officials.