Bloomberg – Zombies Will Die Rising rates will inflict some Darwinistic pressure on weaker borrowers. Undead companies that have been kept alive by the artificial life-support systems introduced by the world’s central banks after the financial crisis may soon meet their unmakers. In its most recent annual report, the Bank for International Settlements calculated that zombie… Continue reading Zombies Covered in Oil
Summary Gary Cohn is now the favorite to replace Yellen. Comment As the chart above shows, bettors are taking the Politico story below seriously. Volume on the contract betting that Gary Cohn would be the next Fed chief exploded yesterday. He is now the front-runner. Also, note that Yellen’s odds have not traded above… Continue reading Gary Cohn Now The Favorite To Be The Next Fed Chief
Bloomberg – Pool of Negative-Yield Debt Shrinks Rapidly as Bond Market Turns Central bankers’ signals of a coming end to the era of unprecedented stimulus are helping shrink the pile of debt with negative yields, which is now the smallest since just after the Bank of Japan went sub-zero. The selloff in global bonds that… Continue reading Negative Yielding Debt
OPEN Webcast – Bond Rout?! Nah, Not Yet In this webinar, Ben Breitholtz looks at his post titled Bond Rout?! Nah, Not Yet. Summary: Transitions from dovish to hawkish central bank rhetoric and economic growth are main ingredients for a bond rout. The growing chorus of central banks discussing tightening are raising… Continue reading Bond Rout?! Nah, Not Yet Webcast
The Federal Reserve – Lael Brainard: Cross-Border Spillovers of Balance Sheet Normalization Let me conclude by returning to the policy choices facing central banks. The Federal Reserve chose to remove accommodation initially through increases in the federal funds rate. In light of recent policy moves, I consider normalization of the federal funds rate to be well… Continue reading Reversing QE
Summary Bettors think like the markets, yesterday’s political news does not appear to be a game changer. Comment Yesterday’s intraday market movements were dominated by political talk, as noted in the story below. This volatility did not last as the market recovered by the end of the day. The chart… Continue reading Politics & Markets
Bloomberg Business – Your Guide to the Bank of Canada’s Bellwether Rate Decision The prospect of central bank tightening has triggered a selloff in government bond markets over the last two weeks, with yields on 10-year Treasury notes jumping to as high as 2.39 percent, from as low as 2.10 percent in mid-June. In Canada, two-year… Continue reading Canada Likely To Raise Rates Today
Bloomberg Gadfly – Lisa Abramowicz: Winds Shift for Emerging-Market Debt Emerging-market debt funds had a phenomenal first half of 2017, with record inflows and solid returns. But the ebullience is running out of steam and that sentiment will most likely deteriorate even further in the weeks to come. Comment As we said in a post yesterday:… Continue reading Emerging Market Debt
Bloomberg Business – Death of the Mall Is Fodder for ETFs Shorting Retail A trio of new ETFs proposed by ProShare Advisors LLC take positions against retailers that are most likely to suffer from the dominance of internet shopping, “bricks and mortar” companies that rely on a physical store to sell their wares, regulatory filings show. Two of… Continue reading More On Brick and Mortar vs E-Commerce ETFs
MarketWatch – Caroline Baum: The Fed’s Janet Yellen could use some target practice Central bank policy makers don’t seem to have a strategy for hitting their inflation goal Any reader of the Fed’s post-meeting statement and subsequently released minutes can’t help but notice the array of explanations attached to this chronic undershoot. The decline in oil prices… Continue reading Targeting Inflation
J.P. Morgan – Guide To The Markets The Financial Times – How far is too far for US stocks? JPMorgan Asset Management’s newly published guide to the third quarter has been considering this theme, and it stops short of calling time on the rally. “While we remain positive on the outlook for US equities, valuations are… Continue reading J.P. Morgan Looks At The Markets In Chart Form
Bloomberg Gadfly – The Two-by-Four Link to Stock Volatility The reason for the stock market’s vanishing volatility may not be what many people think. It may have more to do with local community boards or town reps than the Federal Reserve. Volatility, which has slumped this year, has been a big topic of discussion among market participants, and… Continue reading Searching For Volatility