Rocky Horror? Fly Like An Eagle?
At Danielle DiMartino Booth's The Corporate Bond Market, Binge Borrowing?..
So far in 2017, in the name of servicing dollar debt ($9T external) and market liquidity, King Dollar (DXY) has stepped down from 103 to 91, on a whirlwind of Euro based carry in forward swaps.
Continued contraction in global economic and monetary policy is and will continue to squeeze the leveraged. Non financial, financial, corporate, EM, all alike as Captain Crunch is an equal opportunity annoyer.
As for our corporate fiends, contraction shall continue. With little to no downward pricing latitude, the only way to maintain margin will be production cuts, layoffs shall ensue. Macy's day parade anyone?
Ah yes, the cash paradox, the more you want the less you get, and it's time warp. Slowly but surely, your lack of spending is somebody's shrinking income, economic madness takes its toll.
The event horizon and some Rocky Horror ahead, brace for impact, when? As Rigorous observations suggest, time here in the accretion disk keeps on literally slippin into the future...
Rinse, spin and repeat, and in the meantime, if you want to fly like an Eagle, play the spreads and hedge baby, hedge.
AWells1000 - "So back to asymmetric risk. If markets have priced in much of the gains that we would achieve if we are "right" then we have a good year. If we are wrong then we need to examine whether a cascade of junk bond pain would wipe out years of "being right". Hedge hard."
Rigorous - "One never knows when overvaluation of stocks comes tumbling down. Most people will lose massively next crash and I wouldn't be surprised if the market doesn't recover like after '01 and '08. It may be more like after '29. The addition of debt described in the post makes it more and more likely. Have you seen the civil unrest in Mexico? Think it can't happen here next recession and stock market crash?"
Surfgeezer - "What exactly is terrible about getting locked in new money that by definition "makes real money" with yield spread? Why is having leverage based on cash flow increasing bad?"To the former, Surfgeezer's position is sound and cogent, unfortunately, not all are in his boat. To the latter, a hint from AWells comment above, when asymmetric risk rudely slaps them and their faulty VAR model assumptions upside the head with a dose of reality.
So far in 2017, in the name of servicing dollar debt ($9T external) and market liquidity, King Dollar (DXY) has stepped down from 103 to 91, on a whirlwind of Euro based carry in forward swaps.
Continued contraction in global economic and monetary policy is and will continue to squeeze the leveraged. Non financial, financial, corporate, EM, all alike as Captain Crunch is an equal opportunity annoyer.
As for our corporate fiends, contraction shall continue. With little to no downward pricing latitude, the only way to maintain margin will be production cuts, layoffs shall ensue. Macy's day parade anyone?
Ah yes, the cash paradox, the more you want the less you get, and it's time warp. Slowly but surely, your lack of spending is somebody's shrinking income, economic madness takes its toll.
The event horizon and some Rocky Horror ahead, brace for impact, when? As Rigorous observations suggest, time here in the accretion disk keeps on literally slippin into the future...
Rinse, spin and repeat, and in the meantime, if you want to fly like an Eagle, play the spreads and hedge baby, hedge.
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