Despite the evidence of some recovery in the credit markets, such as the sale of some formerly-hung LBO debt (at admittedly lower prices) and the return of buyers to the structured credit market, the patient is far from healthy. An article “Is the storm over? Credit market conditions look changeable,” by Gillian Tett in the […]
Read more...Two gloomy sightings on the housing front at Bloomberg. The first was the release of wretched existing homes sales data for August, which followed a July that also showed serious deterioration. The only possible positive spin is that the rate of decline was lower in August than in July, but the August figures were an […]
Read more...The normally cheerleading Wall Street Journal, contrary to its usual form, voices considerable doubts about the near-200-point runup in the Dow yesterday: Stocks soared to a new all-time high….suggesting that investors already are shrugging off the problems that rocked global financial markets only weeks ago….. The scamper to new highs comes despite surging mortgage defaults, […]
Read more...Bill Gross. chief investment officer of bond investment giant Pimco, uses his monthly newsletter to tackle the question of whether the Fed and the Treasury really understand what they are up against. Although he reaches no definitive conconclusion, he suggests they have a bank-centric, and therefore badly outmoded, view of the world. We’ve raised this […]
Read more...The prolonged disconnect between the debt and equity markets is bizarre. Historically, credit market corrections precede equity downturns; once in a while, as in 1997-1998, they send a false positive, so equity investors feel justified in not taking every blip in the credit markets to heart. (And we aren’t the only ones to think along […]
Read more...It seems peculiar indeed that a sea change in the world economy, namely, the decline of the international funds flow generally called “global imbalances,” has gotten so little attention. “Global imbalances” refers to capital flows from high savings countries such as China, Taiwan and Japan, funding current account deficits (meaning consumption) in the US. They […]
Read more...A couple of stories confirm that, despite the peppy response of the equity markets and the return to more-or-less upbeat reporting in the financial media, the Fed’s 50 basis point cut has not restored normalcy to the sector most in need of aid, namely, the money markets. Central bankers have limited and for the most […]
Read more...As the housing numbers come in, they keep getting worse and worse. From Bloomberg: Sales of new homes in the U.S. dropped more than forecast in August and prices plunged by the most since 1970, underscoring the Federal Reserve’s concern about the broader economy. Purchases declined 8.3 percent to an annual pace of 795,000, the […]
Read more...Michael Panzner of Financial Armageddon discussed a personal finance article in the Wall Street Journal as a sign that it was becoming increasingly acceptable to use the R word: it seems that at least some in the media are coming around to the idea that an economic slowdown is on the cards…. In “When a […]
Read more...You know things are bad when famed permabear Nouriel Roubini’s forecasts turn out to have been cheery. In today’s post, he reviews his calls on housing starts and home price declines and finds them to have been too rosy. From RGE Monitor: This author is well known as one of the biggest bears about the […]
Read more...Like our own Fed governors in the run up to the FOMC meeting that produced a 50 basis point Fed funds rate cut, so too have European Central Bank been sending mixed signals on domestic versus international priorities in their interest rate policies. But their actions are the mirror image of ours. For them, member […]
Read more...By happenstance, Bloomberg has an interesting trio of prognostications for the financial markets. Admittedly, they have differing degrees of authority. Most would give the IMF considerably more credence than either Jim Rogers or Goldman. However, all three have a following with investors. Not surprisingly, Goldman’s report is upbeat, the IMF’s is cautious tending towards the […]
Read more...Some quick updates on what market prices reveal about investor expectations. First, Bloomberg tells us that Treasury note prices are trading sufficiently far below Fed funds as to predict another rate cut before year end ; Since the Fed last week lopped half a percentage point off the central bank’s target for overnight lending between […]
Read more...Despite the lift the Fed’s rate cut gave to the stock and corporate bond markets, the commercial paper market remains in distress. While CP outstandings are still falling, which is not good, particularly given this month’s maturing CP is much greater than last month’s, the level of decline is not as severe as during the […]
Read more...The Financial Times tells us that Standard & Poor’s forecasts that corporate defaults are due to rise thanks to tightening credit conditions. While S&P focused on 75 at-risk issuers with a total of $35 billion of debt outstanding, hardly an earth-shaking number, the report said more could be in store. Defaults on junk bonds could […]
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