Category Archives: Investment outlook

Democrats and Republicans Pedal to the Metal in Debt Ceiling/Shutdown Game of Chicken

You know it’s bad when Grover Norquist is playing elder statesman.

David Dayen: Mysterious Study Backs Financial Adviser Thieves Who Want To Keep Bilking Small Investors

At the risk of self-promotion, allow me to point you in the direction of a piece by me running today in The New Republic. It’s about a proposed update to the Department of Labor’s fiduciary rule, and how the financial services industry, along with members of both parties, are working to stop it. An excerpt:

Wolf Richter: Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth

When Blackstone’s global head of private equity, Joseph Baratta, said Thursday night that “we” were “in the middle of an epic credit bubble,” the likes of which he hadn’t seen in his career, he knew whereof he spoke.

Junk bond issuance hit an all-time record of $47.6 billion in September, edging out the prior record, set in September last year, of $46.8 billion, according to S&P Capital IQ/LCD. Year to date, issuance amounted to $255 billion, blowing away last year’s volume for this period of $243 billion. The year 2012, already in a bubble, set an all-time record with $346 billion. This year, if the Fed keeps the money flowing and forgets about that taper business, junk bond issuance will beat that record handily.

Will the Fed Ever Taper?

Overnight market action shows that nobody really has a clue about the Fed taper any longer.

All Eyes on the Fed Taper

By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness

It’s all about the FOMC meeting at 04:00 AEST tomorrow morning and to be honest nothing else really matters. Ben Bernanke speaks 30 minutes later at 04:30 AEST and the chairman’s speech will also be highly watched, potentially increasing volatility across the board.

Has the Shale Bubble Already Burst?

Just like the famous Gold Rushes of the 19th century, US shale gas development is turning out to be a limited and regional market opportunity. Across the Atlantic, the high financial and human costs to fracking also mean that Europe should forget any fantasies about repeating the US shale boom.

Many US shale companies that have been beating the drums of shale “revolution” are now facing oil and gas well depletion. In February 2013 the US Energy Information Administration (EIA) warned that “diminishing returns to scale and the depletion of high productivity sweet spots are expected to eventually slow the rate of growth in tight oil production”. It was a cautious but intriguing statement.

Mr. Market is Having Another Fit Over the Fed’s Taper

Asian markets got off to an only mildly down start, so I busied myself on a post that took some concentration, along with some nagging tech matters. As I’m about to turn in, it appears that Asian markets decayed during the trading day and Europe is off to a wobbly start.

Wolf Richter: Cisco CEO Reports Record Sales And “Lumpy” Demand, Just Like In November 2007, A Month Before Stocks Began To Crash

As Wolf Richter argues, Cisco has been a harbinger of market turns, and he describes an earnings call which struck him as eerily similar to another inflection point, that of fall 2007.

Is an Oil Shock Brewing?

The oil price jumped to an eighteen month high last night. Can we expect this trend to continue?

The Fed (Sort of) Speaks, but is the Bond Market Really Listening?

Yves here. As has become typical of late, the markets reacted sharply to the release of the FOMC minutes on Wednesday and Bernanke’s remarks later. For a really good effort at parsing the minutes, see Fedwatcher Tim Duy. The one clear conclusion was how unclear the minutes were:

Aging Demographics to Crunch Global Growth

Yves here. I don’t mean to make an object lesson of the author of this piece, van Onselen, since the point he is making, about demographics as a driver of growth, is valid from the vantage point he is taking (that of investment time horizons, which by nature are comparatively short).

But this perspective is simultaneously frustrating to contend with.

How Much Are the NSA and CIA Front Running Markets?

Given what has already been revealed about the NSA’s data gathering, if you were a clever trader and had access to this information, how would you mine it? How would you go about finding patterns or events to exploit?

Lee Adler: The Big Four Central Banks Muddy The Same Sea Of Liquidity, And Then There’s China

The world’s major central banks are now working at cross purposes, creating massive crosscurrents that are making life extremely difficult for investors. This isn’t likely to end soon. In fact, conditions should get worse.

The BIS Loses Its Mind, Advocates Kicking Citizens and the Bond Markets Even Harder

If anyone doubted that Ben Benanke’s “we’re convinced the economy is getting better, so take your lumps” press conference after the FOMC statement last week was awfully reminiscent of 1937, the newly-released Bank of International Settlements annual report is tantamount to a kick to the groin. And to change metaphors, if the Fed’s sudden hawkish posture is playing Russian roulette with the real economy, the BIS just voted loudly for putting a couple more bullets in the cylinder.

Monday DataDive: Fedspook, May Reports on Consumer Prices, New Home Construction, and Existing Home Sales

By RJS, a rural swamp denizen from Northeast Ohio, and a long-time commenter at Naked Capitalism. Originally published at MarketWatch 666.

Lambert here: rjs does what he does every weekend: Covers the most important economic releases from the previous week. Thanks, readers, for your feedback on formatting from last week; I hope you see some improvements. Don’t hesitate to make more suggestions. Also, the FRED geekery is fun.

Fedspook

The financial news of the week came as a result of the two day meeting of the Fed’s Open Market Committee, which really produced no news on its own. The statement barely changed from the statement issued after the last meeting, and Bernanke’s responses to questions at his press conference after the meeting (pdf transcript) were pretty much a reiteration of his statements in testimony before the Joint Economic Committee of Congress roughly 4 weeks earlier, i.e, that the economy was improving and they would soon be starting to taper off the from the $85 billion a month they’ve been injecting into the financial system, mostly by buying mortgage backed securities and reinvesting the interest proceeds of the Treasury bonds and MBS that they already hold on their balance sheet. However, market players must have not believed the first iterations, because as soon as the statement was released and Bernanke began to confirm what he’s already said previously, financial markets started heading south, and by the time the planet had spun once on its axis, prices in every market around the world & for most every asset class were down by 2% or more.