Back in 2104 oil was falling and hundreds of billions of dollars of energy junk bonds and leveraged loans looked to be at risk. Wolf Street had this to say at the time: Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next The price of oil has plunged nearly 40% since June […]
A Palpable Sense Of Panic
Based the last few days’ headlines you’d never know the world is in year 10 of a pretty good expansion. Check this out: Not terrified of a recession? These stocks hint you should be Cyclical commodities continue to weaken, gold moves in relation Italian banks on verge of new crisis on €400 million hole at […]
Yet Another Trillion-Dollar Unfunded Liability, California Wildfires Edition
Yesterday an entire California town burned down. Paridise, CA has (had) 27,000 residents and over 1,000 buildings, and now it’s pretty much gone. A fire started nearby on a windy day and within hours everything was ash and cinders. That fire and several others are still expanding across the state, threatening tens of thousands of […]
Oil And General Electric Join The Roll-Over Parade
First developing countries blew up. Then real estate topped and started to roll over. Now oil has entered what CNBC just called its “longest losing streak in three decades.” The oil rout just became a bear market for U.S. crude In a volatile turnabout, the U.S. crude benchmark fell into a bear market Thursday just […]
The Election’s Finally Over. Now Things Can Go Back To “Normal”: Rising Interest Rates, Rising Debt, Rising Volatility
As contentious as the US midterm elections were, there was never a scenario in which they mattered. Any possible configuration of Republicans and Democrats in the House and Senate would have yielded pretty much the same economy going forward: Ever-higher debt, upward trending interest rates and (through the combination of those two) rising volatility. So […]
The World’s Smartest Investors Can’t Figure Out The Markets – And That’s A Really Bad Thing
Hedge fund managers sit at the top of the financial world’s food chain. They’re generally seen as the smartest money managers, and their companies have the most flexibility to pursue new opportunities. The result is supposed to be the best possible returns – for clients who can afford the high fees. But lately things haven’t […]
New York City Joins The “Imminent Bankruptcy” Club
The “public pension crisis” is the kind of subject that’s easy to over-analyze, in part because there are so many different examples of bad behavior out there and in part because the aggregate damage these entities will do when they start blowing up is immense. But most people see pensions as essentially an accounting issue […]
Why We’re Ungovernable, Part 15: After Germany’s Merkel Comes Chaos
After a long, initially-successful run promoting European integration and mass immigration, German Chancellor Angela Merkel saw the bottom fall out of her political fortunes this year. This morning she stepped down as leader of the formerly-dominant Christian Democrat party and promised not run again when her term as Chancellor ends in 2021. What happens next […]
Here Comes The Housing Bust “Reverse Wealth Effect,” Australia Edition
For the past few years, homeowners just about everywhere have been able to finesse life’s problems by thinking “at least my house is going up.” This home equity accretion allowed them to buy stuff on credit, safe in the knowledge that even as they maxed out yet another credit card their net worth continued to […]
This Is What A Paper Gold Short Squeeze Looks Like
Huge recent imbalances in the gold futures market led many to predict that speculators (usually wrong at big turning points) would be forced to close out their historically extreme short bets. Put another way, too many traders were using gold futures contracts to bet that precious metals will go down, and when those bets are […]
Gold Is Becoming Cool Again
The sentiment shift is still subtle, but it’s both real and widespread. After a few years of being ignored and/or dismissed as basically useless, gold is cool again, attracting positive press and increasing accumulation by big investors. India, for instance, imported less gold than usual in the first part of this year but lately has […]
One More Thing To Worry About, Saudi Edition
Ah, Saudi Arabia, land of heat and contradictions. One day they’re jailing women’s rights activists for wanting to drive, the next day they’re dismembering still-living Washington Post journalists. And yet they can count the world’s capitalist democracies as friends, because today’s dysfunctional economic/geopolitical system depends on both Saudi oil and Saudi willingness to keep their […]
Last Week Was Just A Taste Of The Coming Gold Short Squeeze
The gold and silver futures markets got even more unbalanced last week, with speculators (who are usually wrong at the extremes) going as short as they’ve ever been and commercials going even more long. Here’s the gold data in chart form: These are historically huge imbalances that – if the action in the paper markets […]
Rising Interest Rates Start Popping Bubbles — The End Of This Expansion Is Now In Sight
Towards the end of economic expansions, interest rates usually start to rise as strong loan demand bumps up against central bank tightening. At first the effect on the broader economy is minimal, so consumers, companies and governments don’t let a slight uptick in financing costs interfere with their borrowing and spending. But eventually rising rates […]
Notice How Quickly Market Psychology Changed?
“How did you go bankrupt?” “Two ways. Gradually, then suddenly.” ― Ernest Hemingway, The Sun Also Rises On the surface, nothing much changed last week. The Fed, as expected, raised short-term interest rates very modestly, the US, Canada and Mexico cut a new NAFTA deal (kind of a pleasant surprise), unemployment fell again, Trump continued […]
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