What We're Reading

debt (11)

Admin

Most economists surveyed by The Wall Street Journal expected Federal Reserve officials to begin winding down their $4.5 trillion portfolio of bonds and other assets this year.

Nearly 70% of business and academic economists polled in recent days expected the Fed will begin allowing the portfolio, also called the balance sheet, to shrink by allowing securities to mature without reinvesting the proceeds at some point in 2017. Of the economists who expected a shift in the Fed’s balance sheet strategy this year, the majority predicted the process would begin in December.

In last month’s survey, just 22.2% of economists expected the Fed to begin…

Read More, Comment and Share......

Admin

Business Loan Delinquencies At 2008 Levels

Energy defaults have been heavy on my mind as their Bankruptcies are expected to increase greatly in the second half of 2016.  I didn't even touch on farms and other exploding debt. Clearly I'm not alone in this concern.  It's not housing this time; it's much worse.  If rates rise, what will happen? Emphasis in bold mine.  Read on.

This could not have come at a more perfect time, with the Fed once again flip-flopping about raising rates. After appearing to wipe rate hikes off the table earlier this year, the Fed put them back on the table, perhaps as soon as June, according to the Fed minutes. A coterie of Fed heads was paraded in front of the…

Read More, Comment and Share......

Admin

The Global Economy: April 2016

The global economy has regained some composure, according to asset management firm Schroders. In their view, markets have regained a risk appetite following action by central banks, the normalization of commodity prices, and a lack of materialization for tail risks such as a U.S. recession or a Chinese hard-landing:

While volatility is indeed near its YTD low with the benchmark VIX down 32% since the start of the year, we would point out that this is potentially some calm before the storm.

Here are some upcoming waves, and we’ll see how they break:

Earnings and Buybacks: The blended earnings decline for the S&P 500 so far in 2016 Q1 is -8.9%, according to Factset.…

Read More, Comment and Share......

Admin

Debt Doesn't Go On Forever

NYSE margin debt fell again during the month of February. After the selloff in stocks that kicked off 2016, this should come as no surprise. Investors are usually forced to reduce leveraged bets during these sorts of episodes in the stock market. In fact, this forced selling can actually exacerbate the volatility. And because margin debt is only now beginning to come down from record highs, surpassing those seen at the 2000 and 2007 peak, this should be of concern to most equity investors.

To fully appreciate this risk, I prefer to look at margin debt relative to overall economic activity. When leveraged financial speculation becomes large relative to the economy, it’s usually a sign investors have become far too greedy. As Warren Buffett would say, this is usually a good time to become more…

Read More, Comment and Share......

Admin

Five Reasons To Fear Deflation

The deflation scare is back, as Jon Hilsenrath and Brian Blackstone report on the front page of The Wall Street Journal. It’s worth taking a moment to contemplate why deflation is such a bad thing. After all, falling prices sound appealing to consumers, especially compared with the alternative of higher prices.

So why worry?

Here are five…

Read More, Comment and Share......

Admin

Under the category of "duh, no shit" comes a report from the St. Louis Fed office admitting what everyone already knew.  Typical households have not recovered from the credit crisis.  In fact, they're only halfway there.  Of course showing the full truth doesn't sell newspapers (or ad space).  The typical Joe who saw his job outsourced after 20 years with a company, 401k drained and whose kid (s) have moved back home because they can't afford to live on their own any long ALSO WHILE and working TWO wonderful $7.50 an hour jobs could've told the Fed that.  Seriously, how much do they pay these guys?  Read more-

Read More, Comment and Share......

Admin

More On Why Raising Rates Matters

It's not just about big business being able to borrow and refinance debt at low (ZIRP) rates.  It also impacts home buying affordability, consumer spending, higher chargecard APRs for the little guy who can barely afford it and yes, yield for the big dogs.  From an investment standpoint, large investors will pay attention.  As an example the 10 year yield is now at 2.15.  Yesterday, it crossed the dividend yield of the S&P 500. This means it is now more profitable to buy bonds than to invest in the stock market.  An interesting perspective.  Check it out at…

Read More, Comment and Share......

Admin

Cyprus, Stress Tests And That VIX

For those who found themselves busy fertilizing their lawns and Spring cleaning this weekend, you missed a market-moving decision as Cyprus announced (quite conveniently after Fridays close) an unprecedented levy on all bank deposits of 6.75% for accounts below $100,000 euros, and 9.9% for $100,00 euros and above.  OUCH

Adding insult to injury, if you lived in Cyprus and needed cash from an ATM machine, you were out of luck as  Cypriots awoke to find bank transfers already frozen as the government prepares to seize the assets when their banks re-open on the 19th although the glimmer of hope exists the final vote…

Read More, Comment and Share......

Admin

*Lehman Moment* [a/k/a Extend & Pretend]

Originally posted by Doug Noland @ http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10543 on how *extend and pretend* are the new normal and why Greece could very well be the tip of yet another Lehman Moment.

 

Isn’t it incredible that the failure of one firm, Lehman Brothers, almost brought down the global financial system?  It is equally incredible that, less than three years later, a small country of 11 million has the world teetering on the edge of another systemic crisis.  Today’s circumstance is a sad testament both to the instability of the international Credit “system” and to the lessons left unlearned from the previous crisis.

For about 15 months now my analysis has attempted to draw parallels…

Read More, Comment and Share......

We welcome you to post a blog entry, oped or share your daily reading with us as long as it is relevant to the topic of investing and not an attempt to sell a product, proprietary strategy, platform or other service. Please provide links to any research data and if re-posting other articles, give credit where credit is due providing a back link to the original site.

300 words minimum per post. You may also sort by category or search by topic. Don't forget to comment and please "share" via Facebook, Twitter and Google+. If you have any questions, please contact us.


Only search StockBuz

Un-check to search the web

FOLLOW STOCKBUZ

__________________

This is a member-supported site. Please donate when you can to help pay the rent. Thank you!

Stay Informed. Sign up for the FREE StockBuz eNewsletter

________________

Investing involves substantial risk. All content is subject to StockBuz disclaimer.

Create Income With Option Spreads

All content on StockBuz.net is subject to disclaimer and Terms of Service
web counter
web counter