Sunday , August 25 2019
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Tag Archives: everything bubble

Suddenly Leveraged Loan Issuance Gets Rough

Fifth deal croaked in August. Moody’s has a cow over Ancestry.com’s deal. Deals had to be sweetened to find buyers. Retail investors bail out. Despite the Fed’s warnings over the years about leveraged loans – including in its Financial Stability Report and in the minutes of its July meeting – the leveraged loan market has only gotten bigger and riskier and has ballooned to $1.3 trillion globally by a narrow definition, or to $3.2 trillion by a broader definition. But first signs are...

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Repo Market Problems & Ballooning Inventories of Treasuries at Primary Dealers Make it into the Fed’s Minutes. My Fancy-Schmancy “Fed Hawk-o-Meter” Jumps

Fed Warns about “Elevated” Asset Prices and High Business Leverage. My fancy-schmancy Fed Hawk-o-Meter, which analyzes the minutes of the Fed’s meetings for tell-tale signs of how the Fed sees the economy, jumped 5 points for the meeting on July 30-31, indicating that a further rate cut – even a cut of just a quarter percentage point – was not set in stone during the meeting: The Fed Hawk-o-Meter counts how often “strong,” “strongly,” and “stronger” appear in the minutes to describe...

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THE WOLF STREET REPORT: How Negative Interest Rates Screw Up the Economy

Now they’re clamoring for the NIRP absurdity in the US. How will this end? (11 minutes) Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate “beer money.” I appreciate it immensely. Click on the beer mug to find out how: Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

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US National Debt Spiked $363 billion in Two Weeks, $1 Trillion in 12 months. But Who Bought This Pile of Treasury Securities?

Nope, the Fed dumped. But there was huge demand elsewhere. The US Gross National Debt has jumped by $363 billion in the two weeks since President Trump signed the law that suspended the debt ceiling. This surge pushed the total debt to $22.39 trillion. That’s up by $1.01 trillion from 12 months ago. And these are the good times. Watch this debt balloon during an economic downturn! Whoopee!  Note the technical term at the top right of the chart: The question, “Who the heck is buying...

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Fuel for the Next Mortgage Bust?

Cash-out refi hype is back full-blast. And for the first time since early 2006, people are doing it in large numbers. This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT: For a moment this morning, I thought I was back in 2005 or early 2006, when I listened to a dazzling radio show, hyping cash-out refinancing of your mortgage. The show was funded by a shadow-bank specializing in mortgage lending. They were promoting their efficient service, that didn’t involve...

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Subprime Auto Loans Blow Up, Delinquencies at 2009 Level, Biggest 12-Month Surge Since 2010

But these are the good times. Automakers are not amused. The auto industry depends on subprime-rated customers that make up over 21% of total loan originations. Without these customers, the wheels would come off the industry. And tightening up lending standards to reduce risks would cause serious damage to the undercarriage. Subprime lending is very profitable – until the loans blow up – because interest rates can be high. But those subprime auto loans are blowing up at rates not seen...

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How Can a Company Lose $5.2 Billion on $3.2 Billion in Revenue? Uber Shows How

And rideshare revenue is stagnating. Uber’s losses have been legendary for years, ever since they were being leaked to the public while it was still a privately held company. But this takes the cake. Uber reported this evening that it had lost $5.24 billion in the quarter through June 30. The thing is, Uber reported revenues of only $3.2 billion. In other words, its net loss exceeded revenue by $2 billion. That takes some doing. Its $5.24 billion loss came on top of its $878 million...

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Is the Everything Bubble Ripe Yet?

Suddenly – I mean the signs had been everywhere for a long time and “suddenly” doesn’t really apply – the whole house of cards came tumbling down. This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT: I just listened to a friend of mine, telling me how he now feels comfortable with his investing skills and his strategies after two years of studying the markets. He retired two years ago, and that’s when for the first time in his life he started paying attention to...

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The State of the American Debt Slaves, Q2 2019

The bifurcation among consumers. Consumer credit – auto loans, student loans, and revolving credit such as credit card balances and personal loans, but not housing-related debt such as mortgages and HELOCs – grew 5.4%, or by $208 billion, in the second quarter compared to a year ago, to a new record of $4.06 trillion (not seasonally adjusted), according to the Federal Reserve this afternoon. This 5.4% year-over-year gain was the strongest such gain in two years. The quarterly gain from...

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Financial World Gone Nuts: $15 Trillion Negative Yielding Debt

12 countries with negative 10-year yields. A race to hell. Every day brings new indications that the financial world is going from already nuts to even nuttier. According to Bloomberg, the total amount of bonds outstanding globally that are trading with a negative yield exceed for the first time $15 trillion. This includes government and corporate debt, and also some euro junk bonds that have joined the elite group (click to enlarge): A chart like this, of markets and central banks...

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