Dislocation Watch: Getting Run Over on Third Avenue

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Trouble in High Yield Bonds Begins to Spread

It has become clear now that the troubles in the oil patch and the junk bond market are beginning to spread beyond their source – just as we have always argued would eventually happen. Readers are probably aware that today was an abysmal day for “risk assets”. A variety of triggers can be discerned for this: the Chinese yuan fell to a new low for the move; the Fed’s planned rate hike is just days away; the selling in junk bonds has begun to become “disorderly”.

 

288205Photo credit: ORF

 

Recently we said that JNK looked like it may be close to a short term low (we essentially thought it might bounce for a few days or weeks before resuming its downtrend). We were obviously wrong. Instead it was close to what is beginning to look like some sort of mini crash wave:

 

1-_JNK-weeklyJNK (unadjusted price chart), weekly: the selling is accelerating amid a panicky surge in trading volume – click to enlarge.

 

To be sure, such a big move lower on vastly expanding volume after what has already been an extended decline often does manage to establish a short to medium term low. There are however exceptions to this “rule” – namely when something important breaks in the system and a sudden general rush toward liquidity begins.

As we have often stressed, we see the corporate bond market, and especially its junk component, as the major Achilles heel of the echo bubble. One of its characteristics is that there are many instruments, such as ETFs and assorted bond funds, the prices of which are keying off these bonds and which are at least superficially far more liquid than their underlying assets. This has created the potential for a huge dislocation. Continue reading

Address at the Cambridge Union, 26 OCT 2015 – full video

Submitted by Yanis Varoufakis  –  The Yanis Varoufakis Blog

On 26th October 2015 I had the pleasure of addressing the Cambridge Union on the theme: THE EURO CRISIS THROUGH THE LENS OF THE CAMBRIDGE TRADITION. The Union has just posted a video of the event. Also, click below for an audio version andhere for a video of my talk at the Oxford Union, delivered only three days previously.

Fedpocalypse Now?

Submitted by James Howard Kunstler  –  www.kunstler.com

If ever such a thing was, the stage is set this Monday and Tuesday for a rush to the exits in financial markets as the world prepares for the US central bank to take one baby step out of the corner it’s in. Everybody can see Janet Yellen standing naked in that corner — more like a box canyon — and it’s not a pretty sight. Despite her well-broadcasted insistence that the economic skies are blue, storm clouds scud through every realm and quarter. Equities barfed nearly four percent just last week, credit is crumbling (nobody wants to lend), junk bonds are tanking (as defaults loom), currencies all around the world are crashing, hedge funds can’t give investors their money back, “liquidity” is AWOL (no buyers for janky securities), commodities are in freefall, oil is going so deep into the sub-basement of value that the industry may never recover, international trade is evaporating, the president is doing everything possible in Syria to start World War Three, and the monster called globalism is lying in its coffin with a stake pointed over its heart.

Folks who didn’t go to cash a month ago must be hyperventilating today.

But the mundane truth probably is that events have finally caught up with the structural distortions of a financial world running on illusion. To everything there is a season, turn, turn, turn, and economic winter is finally upon us. All the world ‘round, people borrowed too much to buy stuff and now they’re all borrowed out and stuffed up. Welcome to the successor to the global economy: the yard sale economy, with all the previously-bought stuff going back into circulation on its way to the dump. Continue reading

Fed, ECB “Monetary Insanity” Is “Frightening” – GoldCore on Keiser Report – GoldCore on Keiser Report

Submitted by Mark O’Byrne  –  GoldCore

Max Keiser interviewed GoldCore Research Director, Mark O’Byrne last week and the video was released on Saturday.

Key points and topics covered:

– “Monetary insanity” of ECB and Fed is “frightening”
– “Absolutely nothing has been learned” since financial crisis
– “Financial hypocrisy on a grand scale”
– Ireland was vassal of Bank of England and now ECB
– Ireland needs to get “financial and monetary independence”
– Huge demand for gold and yet prices manipulated lower
– Real unemployment is U.S. probably 15-20%
– Dollar may rally in short term but vulnerable in long term
– Russia, China may monetise gold as geopolitical weapon
– Gold and silver are “hedges for you in local currency terms”

You can watch video here

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• The New American Dream Is To Have A Job (FT)
• The End Of The Bubble Finance Era (Stockman)
• “It’s An Epic Bloodbath” : The 2015 Junk Bond Heatmap (ZH)
• The Coincidences Are Just Too Eerie: The Last Time CCC Yields Were Here (ZH)
• Yuan Declines to Four-Year Low as New Index Signals Weakness (BBG)
• Oil Sinks to Lowest in Almost 7 Years as Iran Vows More Supply (BBG)
• How Low Can Oil Prices Go? (Guardian)
• World Markets In Fragile Mood As Yellen Prepares To Push The Button (Guardian)
• Fed Officials Worry Interest Rates Will Go Up, Only to Come Back Down (WSJ)
• The China Metal Exchange At Center Of Investment Scandal (Reuters)
• China Local Officials Admit To Faking Economic Figures (CD)
• Who’s Profiting From $1.2 Trillion of US Federal Student Loans? (BBG)
• Ecuador Signs Deal With Sweden For Assange Questioning (Reuters)
• Vulture Funds Price Greek Nonperforming Loans At Very Low Rates (Kath.)
• Tsipras Expects Protest As Greece Agrees To Further Privatisations (Guardian)
• Athens Wants To Turn Bailout Loans’ Floating Rates Into Fixed (Kath.)
• Greece Seeks Help With Migrants As Tensions Rise (Kath.)
• Angela Merkel Wants To ‘Drastically Reduce’ Refugee Arrivals In Germany (Reuters)
• EU Border Force Plan Faces Resistance From Governments (Reuters)