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"It's a F##king Bloodbath" - European Banking Stocks Collapse As UK Default Risk Spikes

Traders are frantic this morning as George Osborne's calming words have done nothing to halt the carnage. From Italian bankscrashing over 25% to British banks being halted, trading at record lows, to Deutsche Bank extending its Lehman-esque trend, as one veteran stock market trader in London said, "it's a f##king bloodbath, not even Draghi can save this one." The contagion is spreading however as UK defaul risk has spiked to 3 year highs and USD liquidty needs are surging with funding markets seeing serious distress.

Developed Market Bond Yields Crash To Record Lows

In the last year, developed market bond yields have been cut in half with the last 2 days seeing a safe-haven flight that crashed yields to a new record low. With UK Gilts 10Y under 1% for the first time, Bunds crashing to record lows, Treasuries back below 1.50%, and JGBs smashed -22bps. With peripheral bond risk spiking and default risk surging, amid ratings downgrades, as Bloomberg's Mark Cudmore notes, "gilts may prove worthy of their name, offering a superficial coating of reward that masks significant threat."

Capital Flight Chaos - Safe Havens Are Tiny Markets

There's a preponderance of data that shows the world's major asset markets are dangerously overvalued. And when these asset bubbles start to burst, the 'save haven' markets that investment capital will try to flee to are ridiculously small. Investors who do not start moving their capital in advance of crisis will be forced to pay much higher prices for safety -- or may find they can't get into these haven assets at any price...

Fortunes Will Be Made & Lost When Capital Flees To Safety

There's a preponderance of data that shows the world's major asset markets are dangerously overvalued. And when these asset bubbles start to burst, the 'save haven' markets that investment capital will try to flee to are ridiculously small. Investors who do not start moving their capital in advance of crisis will be forced to pay much higher prices for safety - or may find they can't get into these haven assets at any price:

Voting Begin: Stocks Surge, Sterling Hits 2016 Highs, Futures Flirt With 2100

On the day voting for the UK referendum finally began, what started off as a trading session with a modest upward bias, promptly turned into a buying orgy in painfully illiquid markets shortly after Europe opened as an influx of buy orders pushed European stocks 2% higher, propelled by cable which was above 1.49 for the first time since December and USDJPY climbing over 1.05 in sympathy, following the release of the final Ipsos Mori poll which showed Remain at 52% to 48% for leave.

China's Petro-State "Lender Of Last Resort" Conundrum

China is increasingly becoming the petro-state lender of last resort. The primary reason for that is producer states are rapidly running out of time to prevent full scale political implosion on the back of chronic economic pressures. For all the hype around current ‘price recovery’, it means absolutely nothing for most producer states. It’s becoming painfully obvious that the prevailing geopolitical price of survival is structurally out of sync with geological costs of production.

How Many Law Schools Need To Close? (Spoiler Alert: Plenty!)

America is in the opening stages of a massive surplus of over-credentialed workers. The default setting for 50 years has been: if you want a secure upper-middle class salary, get a law degree, MBA, PhD or other graduate-level professional degree. The massive surplus is now apparent in J.D.s (law degrees) and PhDs. The writing is already on the wall...The only solution for the surplus of workers with law degrees is a massive, permanent reduction in the issuance of new law graduates.

The Problem With Corporate Debt

There are actually two problems with corporate debt. One is that there is too much of it... the other is that a lot of it appears to be going sour.

The Economy Is Not What It Seems

The last two-quarters of economic growth have been less than exciting, to say the least. However, these rather dismal quarters of growth come at a time when oil prices and gasoline prices have plummeted AND amidst one of the warmest winters in 65-plus years. Why is that important? Because falling oil and gas prices and warm weather are effective “tax credits” to consumers as they spend less on gasoline, heating oil and electricity. Combined, these “savings” account for more than $200 billion in additional spending power for the consumer. So, personal consumption expenditures should be rising, right?

"We Have Reached The Point That Keynes Warned Of In His General Theory"

"We have arguably reached the point that Keynes warned of in his General Theory where demand for money and credit to satisfy what he labeled “non-speculative” motives has been more than satisfied...  At this point it is likely central bankers are “pushing on a string,” positively affecting prices for the financial markets’ flavor of the month but doing nothing for actual economic activity."

Is Another Financial Crisis Coming: This Chart May Have The Answer

There is one chart that shows that underneath the placid surface of the S&P not all is well. The chart is the following, and demonstrates the substantial recent selloff in US bank stocks, which have been a near-flawless 'canary in the coalmine' ahead of major market inflection points, and which have successfully predicted most major crashes inthe past several decades. 

Japan: A Future Of Stagnation

Take a declining population with declining rates of productivity growth and load it up with debt, and you get a triple-whammy recipe for permanent stagnation. There are Degrowth strategies that make sense because they're designed to be sustainable, but first the systems that have been designed to fail - Keynesian stimulus policies and the banking system - must be allowed to fail.

British Default Risk Soars To 3 Year Highs As Hedging Volume Spikes

Investors are increasingly reaching for protection of various sorts ahead of next week's Brexit vote. The credit derivatives market is the latest to experience the surge as corporate CDS indices spike on extremely high volume and perhaps more troubling, UK Sovereign CDS has spiked to its highest in over 3 years as fears of devaluation or default rise...“Many viewed Brexit as unlikely enough that they didn’t have to worry about it, and now they’re panicking to some degree."