There has been some turnover in the short term leadership but energy and materials are still the leading sectors: The newcomer moving up in the pack is healthcare which was at the bottom of the one month list last month. Defensive sectors had a bad month with utilities and staples bringing up the rear. Recession fears which were still prominent [...]
The mainstream view of the unemployment statistics suggest that any weakness in the US economy, manufacturing or beyond, will be temporary and shallow because employment growth remains robust. The question is not whether the statistics suggest such a trend but rather if those accounts correspond with anything real. As noted earlier this week, even the Federal Reserve’s relatively new measure [...]
The corporate junk bubble had gotten so beaten up and so dire that removal of the liquidation pressure was bound to attract bargain hunters and momentum chasers. Despite all that has happened, the lust for huge potential gains remains constant. Where that might have been more expressed upon the short side last year, with the end of the last liquidation [...]
This week's chart comes courtesy of a post from our friends at FT Alphaville. The chart is from BAML and tracks the number of high yield defaults. Default rates are actually just about normal at around 5% but the number of defaults shown in this charts is consistent with recessionary conditions in the past. The reason for that, obviously, is [...]
There was a time not all that long ago that it was great, maybe even thrilling, to be a central banker. The late 1990’s had to have been the absolute apex, but the aftermath of the Panic of 2008 resurrected some of that lost luster. Undoubtedly that was due to great confusion over what had actually occurred, and thus lost [...]
By now most people have given up on IBM. I don’t mean that they have dismissed the company as a dinosaur on its way to extinction but rather it has been pulled down from the Pantheon of bellwethers, no longer important in helping us determine the actual state of the US and global economy derived from actual results (rather than [...]
Today was the third consecutive down day or selling in eurodollar futures. The June 2018 contract settled below 98.80 for the first time in April, almost unwinding the move higher at the start of this month. Even after the selling, the eurodollar curve remains as depressed as ever, discounting an entirely different set of future circumstances than stocks or junk [...]
Goldman Sachs did not disappoint. The bank’s earnings for Q1 were a disaster slightly worse than what was already anticipated as beyond bad. There was nothing that the firm did that it can say it did well, as Goldman’s CEO admitted there was weakness or “headwinds across virtually every one of our businesses.” For eurodollar or wholesale banks, that has [...]
On April 12, Muhammadu Buhari, President of Nigeria, was in Beijing to negotiate Chinese aid for his ailing country. At home, the government faces an enormous budget deficit largely on the price of oil. The more immediate threat, however, is that Nigeria in large part due to oil prices is being squeezed by monetary shortage. The country is an import-heavy [...]
Amidst all the pearls of wisdom unleashed in mainstream economics over the past unbelievable eight years or so, it was one paragraph of common sense that had it been written and appreciated at the start of this period might have saved us all the inordinate and totally unwarranted trouble. But borrowers will only demand more credit if they have optimistic [...]
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