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"If..."

If the world’s economies were really out of intensive care, why would ultra-radical monetary policies like helicopter money be increasingly debated at the highest level of governments? Also, how come 70% of Americans believe the US economy is on the wrong course? And why do almost half of US citizens admit they couldn’t come up with $400 to meet an unexpected need? Yes, I know why ask why? And it is what is, and a bunch of other clichés. But this isn’t normal, it isn’t healthy, and - at least in the opinion of this author—it isn’t going to end well.

The Energy Junk Bond Default Rate Just Hit An All Time High

Following this weekend's bankruptcies of Ultra Petroleum and Midstate Petroleum which added $3.1 billion to the mushrooming high-yield energy bond default volume tally, in addition to the $1.5 billion of credit facility defaults, the energy high-yield default has soared to a record 13% rate, surpassing the 9.7% mark set in 1999, according to Fitch Ratings.

"Debt Is The Cause, Not The Cure"- Why $19 Trillion In Debt 'Is' A Problem

Debt, if used for productive investments, can be a solution to stimulating economic growth in the short-term. However, in the U.S., debt has been squandered on increases in social welfare programs and debt service which has an effective negative return on investment. Therefore, the larger the balance of debt becomes, the more economically destructive it is by diverting an ever growing amount of dollars away from productive investments to service payments. The relevance of debt growth versus economic growth is all too evident as shown below...

Atlantic City Avoids First NJ Municipal Default Since Great Depression, Makes $1.8 Million Bond Payment

It is only Puerto Rico who will be on the default docket today because in the last possible minute, Atlantic City's mayor Don Guardian announced that his city had made the required $1.8 million in interest payments due May 1, averting what would have been New Jersey’s first municipal default since the Great Depression as state lawmakers bicker over how to assist the troubled gaming hub.

Frontrunning: May 2

  • Puerto Rico Development Bank Won’t Make Most of a Debt Payment Monday (WSJ)
  • Why the jump in futures? Tokyo slide keeps mood downbeat (Reuters)
  • Indiana to test Donald Trump’s staying power with evangelicals (Reuters)
  • Gold Rallies Above $1,300 for First Time Since January 2015 (BBG)
  • This Tech Bubble Is Bursting (WSJ)

Still Looks Like A Trap

“If the weather forecast suggests it might rain, wouldn’t you carry an umbrella?

Consensus Forming: China Heading Back Into Financial Crisis

China’s historic post-2009 debt binge flew largely under the radar - fooling most observers into thinking the global economy was recovering rather than just re-leveraging. Now Beijing is back at it, borrowing over $1 trillion in this year’s first quarter, buying up commodities and creating the illusion of global growth. But this time the scam hasn’t gone unnoticed. Reporters, editors and money managers seem, at last, to be catching on. So think of today’s relative calm as the eye of yet another storm, and what’s coming as a return to the hyper-leveraged new normal.

Germany's Third Largest Party Adopts Anti-Islam Manifesto: Says "Muslims Are Not Welcome In Germany"

One week after Austria was shocked by the news that its right-wing, anti-immigrant Freedom Party, had swept the competition, gathering over 35% of the vote and leaving the other five candidates far behind, Europe's anti-immigrant juggernaut just added to its momentum when neighboring Germany's populist AfD party adopted an anti-Islam policy on Sunday in a manifesto that also demands curbs to immigration according to AFP. The biggest surprise however, is that the three year-old party is now also Germany's third strongest party.

"A 2015-like Market Crash In Chinese Commodities Is Inevitable"

Is Everyone Wrong On The "Causation" Of The Commodity Bubble? While it appeared 'retail' was responsible for the panic-buying chaotic volume surge in Chinese commodities, Axiom Capital Management's Gordon L Johnson points out that in fact... China Bank Special Interest Vehicles' "Bold" Commodity Speculation Is The Real Budding Black Swan

The Enabler & The Lifeline: Diamond Resorts & Quorum FCU

Diamond has a good thing going with Quorum: they get access to ample credit, especially for those applicants with weaker credit profiles. From a Diamond investor's perspective, it would be a shame if anything changed. The post credit-crisis strategy of focusing on esoteric lending opportunities like VOI (as well as taxi medallions, hearing aids and fertility treatments) to generate revenues and membership has run into both a broader slowdown in the consumer credit cycle as well as more specific problems, like an increasingly worried regulator.