Jun 29

Puerto Rico To Default On July 1 After Senate Passes Bailout Bill:

Moments ago, following the overwhelming passage of a Puerto Rico bailout bill by the US House of Representatives, Congress found itself on the edge of sending the PR debt relief Bill for the president signature, when the Senate, in a 68-32 vote, likewise passed the measure. This makes final passage of the legislation a virtual certainty as sixty votes were needed to clear the procedural hurdle, but only a majority vote is necessary on final passage.

The legislation allows Puerto Rico to restructure $70 billion in debt and establish an outside control board to steer the island’s troubled finances. President Obama supports the package, and is expected to quickly sign it. Continue reading »

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Jun 29

There Is Now A Staggering $11.7 Trillion In Negative Yielding Debt:

It was not even a month ago when we last looked at the total amount of negative yielding debt around the globe, and were shocked to find that according to Fitch, for the first time in history (obviously), there was over $10 trillion in negative yielding debt. Fast forward 4 weeks later, and the grand total is now $1.3 trillion higher, or $11.7 trillion.

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Jun 27

FYI.


Jim Rogers: Brexit Blowback “Worse Than Any Bear Market You’ve Ever Seen”

When it comes to being direct and offering up some truth, one can rest assured that Jim Rogers is a prime candidate to do both.

In an interview with Yahoo! Finance, the legendary investor had some candid and quite unnerving things to say about the global market in the aftermath of Brexit.

This is going to be worse than any bear market that you’ve seen in your lifetime. 2008 was pretty bad because of debt, well the debt all over the world is much, much higher now. Stocks in the US for instance have been going sideways for 18 months, 24 months. That’s called distribution by many people, so when you have distribution for a year and a half, it usually leads to bad things.”

If that was too upbeat, Rogers unveils his bear scenario: Continue reading »

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Jun 27

The Last Time Bonds Were Here, The Recession Started

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Jun 26

The $555 Trillion Derivatives Debt Implosion Is About to Begin

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Jun 21

Jun 16, 2016

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Jun 21

No more ‘US & UN trickery’: Bankrupt Puerto Ricans flood San Juan demanding decolonization:

Ahead of next week’s visit by the UN decolonization committee and buried in economic debt, some 500 activists with the Puerto Rico independence movement took to the streets of Old San Juan to demand freedom from US rule.

There were two purposes to the Saturday march, according to Liliana Laboy, one of the members of the Independentista Roundtable, speaking to EFE: “To insist that it’s time to start the decolonization process that will bring us independence, and to support the hearings this Monday.” Continue reading »

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Jun 21

Jun 10, 2016

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Jun 20

H/t reader squodgy:

“No volume.
No Trade.
Freefall.
Got an umbrella?”


19.06.2016

Description:

Gold and financial expert Jim Sinclair says $10 trillion in negative debt is beyond stupid. Sinclair contends, “When you make the mistake of paying for the privilege for investing in an absolute insolvent, you are in the biggest bubble in the history of finance. When this tears loose, it’s going to be the biggest tear of the fabric of our lives that we have ever experienced. There are so many things happening and starting to unravel, but nothing is bigger than paying for the privilege of investing in an insolvent.” Continue reading »

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Jun 19

junk

The Problem With Corporate Debt:

Taking Off Like a Rocket

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.

frank-modell-that-s-harvey-beston-he-s-in-junk-bonds-new-yorker-cartoon

Harvey had a good time in recent years…well, not so much between mid 2014 and early 2016, but happy days are here again!

As a brief report at Marketwatch last week (widely ignored as far as we are aware) informs us: Continue reading »

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Jun 17

Deutsche Bank: “This Chart Is Even More Appropriate To Show A Broken Financial System“:

Yesterday, DB’s credit strategist Jim Reid (whose bank just hit a new record low stock price earlier this morning), said that “If One Wanted A Simple Indicator Of A Broken Financial System, Then This Is It”, and proceeded to show the chart of the 10 Year Bund yield, which is now well in the negative territory. Today Reid, in his quest to show how broken the global “market” has become as a result of relentless central bank tinkering, and has come up with what he believes is an even better example.

This is what he said: Continue reading »

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Jun 16

Question of the Day: When Was the Last Time the Yield on German 10-Year Bonds Went Negative?:

Think back. Many readers have been trading for 10 or 20 years. A few have been trading for 30 or more years. What was it like the last time German 10-year bond yields went negative?

That is sort of a trick question. Most likely you were not alive, no matter how old you are.

As translated from Spanish, my friend Guru Huky posted the answer on his blog today: And the last time the German bond stood negative was …. surprise surprise.

German 10-Year Yield Since 1807

Hyperinflation_10YBund

Huky Comments Continue reading »

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Jun 15

10Y bund DB

Deutsche Bank: “If One Wanted A Simple Indicator Of A Broken Financial System, Then This Is It”:

If there is one bank that is more concerned than any other about global central bank unorthodoxy, it is Deutsche Bank which as we reported yesterday, saw its stock price drop to a record low yesterday. As such it is not surprising that in his overnight note, DB’s Jim Reid focuses on the “broken financial system” and highlights the one indicator that confirms just how broken the system is: the Bund Yield.

This is what he said: Continue reading »

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Jun 13

Mario-Draghi-Just-Evil

€348 Million: ECB Releases First Total Of Corporate Bond Purchases:

As part of today’s update of the ECB’s asset purchases, the central bank announced for the first time, in addition to its various other sovereign and covered-bond purchases, just how many corporate bonds it had bought in the open market under its infamous CSPP, or corporate bond buying program, which officially launched on June 3. The result: a mere €348 million in purchases on the first day in which the program was operational.

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Jun 08

H/t reader squodgy:

“Very worrying.”


germany invisible crisis

PDF: GPF-germanys-invisible-crisis

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Jun 06

Goldman Finds That China’s Debt Is Far Greater Than Anyone Thought

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Jun 03

If bondholders were angry with Puerto Rico before, they’ll surely be pissed now that there is a reasonable chance that they’ll end up with nothing at all as 1 17 member audit commission found some of the nation’s debt “unconstitutional.” In other words, the government may now just declare the bonds invalid.


Bondholders Stunned As Puerto Rico Finds $4.4 Billion In Outstanding Debt “Unconstitutional”:

After Puerto Rico defaulted on its $422 million debt payment in May, governor Padilla begged congress to step in and help out, which happened shortly thereafter when a House committee cleared legislation that provided Puerto Rico with a way forward on restructuring its debt.

20160602_padilla_0

As it turns out, on the day the House announced that it planned on taking up the Puerto Rico bill next week, a 17 member audit commission found that two debt issues worth $4.4 billion of the $72 billion in debt outstanding were unconstitutional. Continue reading »

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Jun 03

This surely will NOT end well.


Historic Milestone: Negative Yielding Debt Surpasses $10 Trillion For The First Time:

The world passed a historic milestone in the past week when according to Fitch negative-yielding government debt rose above $10 trillion for the first time, which as the FT adds envelops an increasingly large part of the financial markets “after being fuelled by central bank stimulus and a voracious investor appetite for sovereign paper.” It also means that almost a third of all global government debt now has a negative yield.

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May 31

The Fascinating Story Of How The Petrodollar Was Born And Lived In Secrecy For Over 40 Years:

For decades, the story of Saudi Arabia recycling petrodollars, i.e., funding the US deficit by buying US Treasuries with proceeds of its crude oil sales (mostly to the US), while the US sweetened the deal by providing the Saudis with military equipment and supplies, remained entirely in the conspiracy realm, with no confirmation or official statement from the US Treasury department.

Now, that particular “theory” becomes the latest fact, thanks to a fascinating story by Bloomberg which gives the background and details of secret meeting between then-US Treasury secretary William Simon and his deputy, Gerry Parsky, and members of the Saudi ruling elite, and lays out the history of how the petrodollar was born.

Here is the background: Continue reading »

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May 29

Iceland Has Offered Foreign Bondholders A “Choice”: Sell Now, Or Have Cash Impounded Indefinitely:

Iceland has had a difficult past few months politically, as its Prime Minister Sigmundur David Gunlaugsson became the first casualty of the Panama Papers.

Economically however, the story is more upbeat, as the country has rebounded since the financial crisis. The Icelandic Krona has stabilized against the Euro, the rate of change in inflation has slowed, and the country has recorded year-over-year growth in GDP each year since 2011.

20160528_iceland1

However, in a shocking turn of events, a law passed on May 22 by Iceland’s parliament is offering the foreign holders of about $2.3 billion worth of krona-denominated bonds a choice of either selling out in June at a below-market exchange rate, or have the money they receive upon maturity be impounded indefinitely in low interest bank accounts. In other words, Iceland is trying to kick out foreign investors. Continue reading »

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May 25

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May 23

China Has Quietly Bailed Out Over $220 Billion In Bad Debt In The Past 2 Months:

Today we learned that not only was China going through with its unprecedented debt-for-equity swap, but it has already equitized over $220 billion in non-performing loans. Note: these are not traditional, Chapter 11 prepacks where the debt is converted into equity and the debt holder gets the keys to the company. In this case, it is the Chinese government itself which indirectly via state-owned banks, has become the de facto owner of countless companies.

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May 21

stupid

America’s “Advanced Stupid” In 2 Stunning Charts:

This isn’t your average everyday stupid… this is ‘advanced’ stupid!

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May 21

State Of The States: New Jersey’s Problems Are Not “Mathematically Solvable”:

While the warning flags are raging in Illinois and Connecticut, JPMorgan’s Michael Cembalest states that New Jersey’s problems are “not mathematically solvable.” The stunning admission from a status-quo-sustaining bank that is “very focused on the total indebtedness of US states,” should be worrisome enough but as Cembalest explains the answer to a debt problem is not always piling up more debt – “when debt reaches a certain level, the can kicking is over and difficult decisions need to be made;” the issue is to address the root of the problem, which can be a delicate and at times politically incorrect topic.

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May 20

detroit-chitroit

Chicago Pension Liabilities Jump 168%, Understated By $11.5 Billion:

New accounting rules show Chicago has understated its pension liabilities by $11.5 billion.

At the end of 2015 the stated liability was $7.1 billion. Today it’s $18.6 billion. That’s a jump in net liabilities of 168%.

Mayor Rahm Emanuel has hopes pinned on union concessions and help from the state legislature. Neither is likely. Continue reading »

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May 19

Republicans, Democrats Agree On A Bill To Bailout Puerto Rico

Republicans, Democrats Agree On A Bill To Bailout Puerto Rico:

It turns out that Puerto Rico’s plan to default on its debt and beg congress for help is working out as planned.

After a slight delay, House Republicans have reached an agreement with the Obama administration to provide a path to restructure Puerto Rico’s $70 billion debt load. The bill would offer the island a legal out similar to bankruptcy and wouldn’t commit any federal money according to the WSJ. Continue reading »

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May 15

Dishonourable Debt: Why Borrowers Are Not Legally Bound To Repay Bank Loans

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May 09

trump cnn

Trump On Debt Renegotiation: “You Never Have To Default Because You Print The Money”:

Following Donald Trump’s Thursday comments that rising interest rates would be disastrous for the economy, saying that “we’re paying a very low interest rate. What happens if that interest rate goes up 2, 3, 4 points?” hinting that the U.S. should “renegotiate longer-term debt” with creditors and that if the economy crashes he “can make a deal”, various media outlets went to town on Trump, most notably the NYT, which took Trump to task: Continue reading »

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May 08

Albert Edwards: “Let Me Tell You How This All Ends”:

The dollar’s recent rapid slide has been accompanied by a constant backdrop of dovish cooing from the Fed. Until this week, SocGen’s Albert Edwards notes that both equity and commodity markets had embraced the weak dollar as the elixir to solve all their ills. That relief, however, has now proved fleeting as fear of weak economic activity has reasserted its influence on investors. The weak dollar, Edwards warns, should be seen as merely a shuffling of deckchairs on the Titanic before the global economy sinks below the icy waves. Continue reading »

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May 07

Showdown! In Leaked Letter IMF Tells Germany “Debt Relief For Greece Or IMF Drops Out”:

It’s showdown time.

The IMF has threatened it will pull out of the Greek bailout program unless Greece gets debt relief.

German Chancellor Angela Merkel, Austria, Finland, and the other Eurozone creditors will not like today’s development one bit.

Showdown! Continue reading »

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