Thursday , December 12 2019
Home / Tag Archives: everything bubble (page 10)

Tag Archives: everything bubble

OK, I Get it, Markets Have Gone Nuts: Junk-Bonds Are in Party Mood, Treasuries Clamor for Doom & Rate Cuts

One of them is wrong. Watch out for it to snap in an ugly manner. When the economy goes into a downturn, even a plain-vanilla recession or near-recession and not a crisis, junk bonds behave badly. This is because over-indebted companies with iffy cash flows – those are the ones that are junk rated – begin to buckle. In a downturn, they have no wiggle room; some default on their debts and file for bankruptcy, stockholders get shafted, and bondholders take big losses. Everyone knows the...

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THE WOLF STREET REPORT

How a Low Share Price Would be Fatal for Tesla, and why Musk has to pump it up, come hell or high water. Tesla shares are down 50% from last December and are back where they’d first been in September 2013. Bonds dropped to a new low on Friday, reflecting what the market thinks the probability is that Tesla will default, and what bondholders will get if it does. This poses a unique existential problem for Tesla. Enjoy reading WOLF STREET and want to support it? Using...

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My Fancy-Schmancy “Fed Hawk-o-Meter.” And the Fed Says It’ll be “Patient” with Rate Cuts, Even at “Low Inflation”

The Fed introduces a new thingy about “patient” to tamp down on the clamorers on Wall Street. For the minutes of the FOMC meeting on April 30 and May 1, my fancy-schmancy Fed Hawk-o-Meter more than retraced the spike of the prior meeting, falling 19% from 26 to 21, and is now in the lower range of the red-line zone, indicating that rate hikes are not imminent, but that a rate cut remains off the table. This was confirmed by the use of “patient approach” to cutting rates: My Fed...

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Subprime Profit-Machine Hiccups: Credit-Card Charge-Offs Rise Across Banking System

Impact felt by the real economy and the most vulnerable consumers. In the first quarter, the credit-card “charge-off” rate at the 4,650 or so smaller US commercial banks – all banks other than the largest 100 banks – ticked down to 7.37%, the sixth quarter in a row above 7%. During the peak of the Financial Crisis, the charge-off rate at these banks was above 7% only four quarters, but not in a row, topping out at 8.9%. These smaller banks have taken a lot of risk in their credit card...

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US Home Sales Drop, Drop, Drop Despite Lower Mortgage Rates. But Mortgage Applications Jump. What Gives?

Where are the foreign investors in this phenomenon? Declining home sales in the US is a phenomenon that baffles the industry, given that mortgage rates have dropped sharply from the recent peak in November, and home sales should have jumped, logically speaking. But no. Sales of existing homes – single-family houses, townhouses, condos, and co-ops – in April ticked down from March and fell 4.4% from April last year, to a seasonally adjusted annual rate of 5.19 million homes, according...

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Deutsche Bank Death Spiral Hits Historic Low. European Banks Get Re-Hammered

Just bumping along the bottom, from hopeless to hope and back to hopeless. The amazing thing with Deutsche Bank shares is this: Since 2007, so for 12 years, bottom fishers have been routinely taken out the back and shot, every time, with relentless regularity – as have big institutional investors, from Chinese conglomerates to state-owned wealth funds, that thought they were picking the bottom. A similar concept applies to European banks in general. May 2007 was the high point. And it...

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Carmageddon Sinks Tesla’s Bonds

Tesla is steeped in chaos – and chaos is absolutely the opposite what a complex manufacturing, distribution, and retail operation needs. When bonds dive, it’s a bad sign. And Tesla’s bonds dove today to new all-time lows, and the yield spiked to new highs. In August 2017, Tesla sold $1.8 billion in senior unsecured notes due in August 2025, with a coupon rate of 5.3%. The most recent transaction at the moment that I see recorded by FINRA/Morningstar this afternoon was at 82.375 cents...

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THE WOLF STREET REPORT

What the Subprime Auto-Loan Fiasco Means. Auto-loan defaults have reached the sky-high rates of the Financial Crisis but are transpiring in the strongest labor market in years. This raises some big issues. (9 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...

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Subprime Bites: Auto-Loan Delinquencies Spike to Q3 2009 Level, Despite Strongest Labor Market in Years

But what will happen to banks and automakers when the cycle turns? Serious auto-loan delinquencies – 90 days or more past due – jumped to 4.69% of outstanding auto loans and leases in the first quarter of 2019, according to New York Fed data. This put the auto-loan delinquency rate at the highest level since Q4 2010 and merely 58 basis points below the peak during the Great Recession in Q4 2010 (5.27%): These souring auto loans are going to impact banks and specialized lenders along...

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Fed Launches ‘Rate Peg Instead of QE’ Trial Balloon for Next Crisis

Wall Street hype artists and assorted QE mongers would be deeply disappointed. This came packaged into the middle of a speech by Federal Reserve Board Governor Lael Brainard, on “How Does Monetary Policy Affect Your Community?” It was under the subheading, “Some Issues to Explore.” And it would be a huge shift in how the next crisis will be handled. During the next crisis when short-term interest rates are already at zero – for the Fed, that is still the lower bound – the Fed might not...

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