Saturday, March 14, 2020
Weekly Commentary:
The Loss of Moneyness
by Doug Noland
full column here:
Portions of the
column that
interested me
are below
Ye Editor
March 13 – Financial Times (James Politi, Lauren Fedor and Courtney Weaver):
“Steven Mnuchin, the Treasury secretary, said US authorities will do ‘whatever we need to do’ to boost liquidity in financial markets and help the US economy weather the coronavirus outbreak, including action by the Federal Reserve and a deal with Democratic lawmakers for more fiscal stimulus. ‘There will be liquidity available, whatever we need to do, whatever the Fed needs to do, whatever Congress needs to do. We will provide liquidity,’ Mr Mnuchin said… Mr Mnuchin said he was in constant contact with Jay Powell, the chairman of the Federal Reserve, as well as US business leaders, about mitigating the impact of the spreading disease.”
Bitcoin collapsed 41% during the week.
For the week, palladium collapsed 37%,
platinum 17% and silver 16%.
platinum 17% and silver 16%.
The S&P500
dropped 7.6% Monday;
rallied 4.9% Tuesday;
fell 4.9% Wednesday;
sank 9.5% Thursday; and
surged 9.3% Friday.
dropped 7.6% Monday;
rallied 4.9% Tuesday;
fell 4.9% Wednesday;
sank 9.5% Thursday; and
surged 9.3% Friday.
For the
Week Ending
March 13, 2020:
STOCKS:
S&P500 fell 8.8% (down 16.1% y-t-d)
Dow Industrials sank 10.4% (down 18.8%)
Dow Utilities collapsed 14.0% (down 10.3%)
Dow Transports fell 11.4% (down 27.2%)
S&P 400 Midcaps sank 14.0% (down 25.0%)
Small cap Russell 2000 slumped 16.5% (down 27.5%).
Nasdaq100 declined 6.3% (down 8.4%)
Biotechs fell 11.5% (down 14.2%).
With gold bullion sinking $144,
the HUI gold index collapsed 31.9%
(down 32.3%).
U.K.'s FTSE collapsed 17.0%
(down 28.9%).
Japan's Nikkei sank 16.0%
(down 26.3% y-t-d).
France's CAC40 collapsed 19.9%
(down 31.1%).
German DAX fell 20.0%
(down 30.3%).
Spain's IBEX 35 lost 20.8%
(down 30.6%).
Italy's FTSE MIB sank 23.3%
(down 32.1%)
Brazil's Bovespa index dropped 15.6%
(down 28.5%),
Mexico's Bolsa declined 8.0%
(down 12.5%).
South Korea's Kospi slumped 13.2%
(down 19.4%).
India's Sensex fell 9.2%
(down 17.3%).
China's Shanghai declined 4.8%
(down 5.3%).
Turkey's Istanbul National 100 dropped 12.8%
(down 16.4%).
Russia's MICEX sank 14.8%
(down 24.0%).
U.S. BONDS:
Ten-year Treasury yields jumped 20 bps to 0.96% (down 95bps).
Long bond yields rose 25 bps to 1.54% (down 85bps).
Long bond yields rose 25 bps to 1.54% (down 85bps).
U.S. MORTGAGE RATES
Freddie Mac 30-year fixed mortgage rates
rose seven bps to 3.36% (down 95bps y-o-y).
Fifteen-year rates
slipped two bps to 2.77% (down 99bps).
Five-year hybrid ARM rates
dropped 17 bps to 3.01% (down 83bps).
Jjumbo mortgage 30-year fixed rates
up 19 bps to 3.97% (down 33bps).
FEDERAL RESERVE BANK
Federal Reserve Credit last week
surged $77.2bn to $4.222 TN,
with a 27-week gain of $500 billion.
Over the past year,
Fed Credit expanded
$290bn, or 7.4%.
M2 (narrow) "money" supply
jumped $89bn last week
to a record $15.622 TN
. "Narrow money" surged
jumped $89bn last week
to a record $15.622 TN
. "Narrow money" surged
$1.148 TN, or 7.9%,
over the past year.
Commodities Watch
Bloomberg Commodities Index
dropped 7.8% (down 19.3% y-t-d).
Spot Gold fell 8.6% to $1,530 (up 0.8%).
Silver slumped 16.0% to $14.50 (down 19.1%).
WTI crude collapsed $9.55 to $31.73 (down 48%).
Gasoline tanked 35.3% (down 47%)
Natural Gas rallied 9.4% (down 15%).
Copper declined 3.8% (down 12%).
Wheat lost 1.9% (down 9%).
Corn fell 2.7% (down 6%).
NEWS FROM LAST WEEK
March 11 – Reuters (Emma Farge):
“The World Health Organization is describing the new coronavirus as a pandemic…, adding that Italy and Iran were now in the frontline of the disease and other countries would soon join them. ‘We are deeply concerned both by the alarming levels of spread and severity and by the alarming levels of inaction. We have therefore made the assessment that COVID-19 can be characterized as a pandemic,’ WHO Director General Tedros Adhanom Ghebreyesus told a news conference…”
“The World Health Organization is describing the new coronavirus as a pandemic…, adding that Italy and Iran were now in the frontline of the disease and other countries would soon join them. ‘We are deeply concerned both by the alarming levels of spread and severity and by the alarming levels of inaction. We have therefore made the assessment that COVID-19 can be characterized as a pandemic,’ WHO Director General Tedros Adhanom Ghebreyesus told a news conference…”
March 10 – Financial Times (Miles Johnson, Davide Ghiglione, Dan Dombey and Sam Jones):
“Italy increased its emergency economic measures and suspended mortgage payments to mitigate the consequences of imposing nationwide quarantine restrictions as Europe battles to contain the largest outbreak of the novel coronavirus outside China.
Rome’s move is designed to help businesses and families weather a decision late on Monday to ban all ‘non-essential’ travel and public gatherings… The government said… it would inject €10bn into the economy…”
“Italy increased its emergency economic measures and suspended mortgage payments to mitigate the consequences of imposing nationwide quarantine restrictions as Europe battles to contain the largest outbreak of the novel coronavirus outside China.
Rome’s move is designed to help businesses and families weather a decision late on Monday to ban all ‘non-essential’ travel and public gatherings… The government said… it would inject €10bn into the economy…”
March 12 – Financial Times:
“More than 40% of EU residents are now facing life under far-reaching coronavirus-related controls as national leaders battle to limit the accelerating spread of the virus. The announcement of new restrictions in countries including Ireland, Spain, Poland and the Czech Republic on Thursday brought the number of people affected by planned or imposed measures to well over 190m, according to Financial Times analysis.”
“More than 40% of EU residents are now facing life under far-reaching coronavirus-related controls as national leaders battle to limit the accelerating spread of the virus. The announcement of new restrictions in countries including Ireland, Spain, Poland and the Czech Republic on Thursday brought the number of people affected by planned or imposed measures to well over 190m, according to Financial Times analysis.”
March 13 – Bloomberg (Tim Loh):
“About half the people who tested positive for the coronavirus on the Diamond Princess cruise ship appeared to show no symptoms, according to an estimate published Friday. Of the 634 confirmed cases aboard the ship off of the coast of Japan last month, 328 were reported to be asymptomatic, the review said.”
“About half the people who tested positive for the coronavirus on the Diamond Princess cruise ship appeared to show no symptoms, according to an estimate published Friday. Of the 634 confirmed cases aboard the ship off of the coast of Japan last month, 328 were reported to be asymptomatic, the review said.”
March 9 – Bloomberg (Elizabeth Stanton):
“Monday’s Treasuries rally produced the biggest intraday decline in 30-year yields since at least October 1998… The rate fell as much as 59 bps to a record low 0.699%, its first time trading under 1%. The next biggest drop -- 47 bps in November 2008 as U.S. stocks plunged during the financial crisis -- was from 3.905%. Of the 10 steepest intraday declines, one occurred last week and four were in 2008 or 2009. The U.K. Brexit vote in June 2016 and the Treasury’s surprise suspension of 30-year issuance on Oct. 31, 2001, caused two others.”
“Monday’s Treasuries rally produced the biggest intraday decline in 30-year yields since at least October 1998… The rate fell as much as 59 bps to a record low 0.699%, its first time trading under 1%. The next biggest drop -- 47 bps in November 2008 as U.S. stocks plunged during the financial crisis -- was from 3.905%. Of the 10 steepest intraday declines, one occurred last week and four were in 2008 or 2009. The U.K. Brexit vote in June 2016 and the Treasury’s surprise suspension of 30-year issuance on Oct. 31, 2001, caused two others.”
March 10 – Bloomberg (Sam Potter):
“The sell-off may be taking a rest but the volatility is still at work. On Tuesday, S&P 500 futures hit their trading limits after rising too fast. A day earlier, stocks fell so quickly they also triggered curbs. The raging equity swings underscore how volatility is engulfing every region and asset class at a pace unseen since the dark days of the global crisis. The Bank of America Merrill Lynch GFSI Market Risk indicator, a measure of expectations for turbulence in stocks, rates, currencies and commodities worldwide, hasn’t risen this fast since the collapse of Lehman Brothers.”
“The sell-off may be taking a rest but the volatility is still at work. On Tuesday, S&P 500 futures hit their trading limits after rising too fast. A day earlier, stocks fell so quickly they also triggered curbs. The raging equity swings underscore how volatility is engulfing every region and asset class at a pace unseen since the dark days of the global crisis. The Bank of America Merrill Lynch GFSI Market Risk indicator, a measure of expectations for turbulence in stocks, rates, currencies and commodities worldwide, hasn’t risen this fast since the collapse of Lehman Brothers.”
March 11 – Bloomberg (Sridhar Natarajan and Yalman Onaran):
“Under duress from a viral pandemic and plummeting oil prices, corporate America is facing its most severe test since the 2008 crisis. A swath of the nation’s biggest names is maxing out credit lines, grabbing cash before it can disappear. Behind the scenes, some CEOs and their finance chiefs are calling bankers this week to ask for liquidity. And throughout the day Wednesday, word leaked out on company after company pulling from existing facilities. First it was long-embattled Boeing Co. drawing down a $13.8 billion term loan, then it was travel-and-leisure empires Hilton Worldwide Holdings Inc. and Wynn Resorts Ltd. leaning harder on credit facilities totaling more than $2.5 billion. Private-equity titans Blackstone Group Inc. and Carlyle Group Inc. advised some of the businesses they control to consider similar measures to prevent potential shortfalls.”
“Under duress from a viral pandemic and plummeting oil prices, corporate America is facing its most severe test since the 2008 crisis. A swath of the nation’s biggest names is maxing out credit lines, grabbing cash before it can disappear. Behind the scenes, some CEOs and their finance chiefs are calling bankers this week to ask for liquidity. And throughout the day Wednesday, word leaked out on company after company pulling from existing facilities. First it was long-embattled Boeing Co. drawing down a $13.8 billion term loan, then it was travel-and-leisure empires Hilton Worldwide Holdings Inc. and Wynn Resorts Ltd. leaning harder on credit facilities totaling more than $2.5 billion. Private-equity titans Blackstone Group Inc. and Carlyle Group Inc. advised some of the businesses they control to consider similar measures to prevent potential shortfalls.”
March 13 – Wall Street Journal (Matt Wirz):
“Economic fallout from the novel coronavirus and collapsing oil prices are sparking steep declines in the $3.4 trillion market of corporate bonds with triple-B credit ratings, the lowest rung on the investment-grade scale. Fear that many of the bonds will be downgraded to junk status is causing an unusually steep drop in prices this month, despite the sharp rally in Treasury bonds, which typically buoys investment-grade corporate debt. Yields on an index of triple-B corporate bonds in the U.S. jumped a half-percentage point to 3.24% from Monday to Wednesday, the biggest two-day jump since at least the financial crisis…”
“Economic fallout from the novel coronavirus and collapsing oil prices are sparking steep declines in the $3.4 trillion market of corporate bonds with triple-B credit ratings, the lowest rung on the investment-grade scale. Fear that many of the bonds will be downgraded to junk status is causing an unusually steep drop in prices this month, despite the sharp rally in Treasury bonds, which typically buoys investment-grade corporate debt. Yields on an index of triple-B corporate bonds in the U.S. jumped a half-percentage point to 3.24% from Monday to Wednesday, the biggest two-day jump since at least the financial crisis…”
March 12 – CNBC (Holly Ellyatt):
“The pan-European Stoxx 600 had plummeted 11% by the close, with travel and leisure stocks sinking 12.8% following Trump’s announcement of a ban on European travel. The U.K.’s FTSE 100 lost 9.8%, France’s CAC 40 shed 12.3% and Germany’s DAX fell 12.2%. Italian stocks finished nearly 17% lower, which was also the worst single-day loss for the FTSE MIB. Trump said Wednesday that the U.S. will suspend all travel from 26 European countries to the U.S. for 30 days to curb the spread of coronavirus.”
“The pan-European Stoxx 600 had plummeted 11% by the close, with travel and leisure stocks sinking 12.8% following Trump’s announcement of a ban on European travel. The U.K.’s FTSE 100 lost 9.8%, France’s CAC 40 shed 12.3% and Germany’s DAX fell 12.2%. Italian stocks finished nearly 17% lower, which was also the worst single-day loss for the FTSE MIB. Trump said Wednesday that the U.S. will suspend all travel from 26 European countries to the U.S. for 30 days to curb the spread of coronavirus.”
March 11 – Bloomberg (Liz McCormick and Alyce Andres):
“Coronavirus-induced market mayhem has pushed so much liquidity out of U.S. Treasuries that the true value of more than $50 trillion in assets around the globe is in doubt. Yields in the world’s largest debt market have been on a mind-bending, three-week roller-coaster ride. At one point, the entire U.S. yield curve was below 1% for the first time ever. But this week rates have jumped from Monday’s all-time lows even though fear of the virus has intensified… One key gauge of Treasury liquidity -- market depth, or the ability to trade without substantially moving prices -- has plunged to levels last seen during the 2008 financial crisis, according to… JPMorgan. That liquidity shortfall, JPMorgan says, is most profound in long-term Treasuries.”
“Coronavirus-induced market mayhem has pushed so much liquidity out of U.S. Treasuries that the true value of more than $50 trillion in assets around the globe is in doubt. Yields in the world’s largest debt market have been on a mind-bending, three-week roller-coaster ride. At one point, the entire U.S. yield curve was below 1% for the first time ever. But this week rates have jumped from Monday’s all-time lows even though fear of the virus has intensified… One key gauge of Treasury liquidity -- market depth, or the ability to trade without substantially moving prices -- has plunged to levels last seen during the 2008 financial crisis, according to… JPMorgan. That liquidity shortfall, JPMorgan says, is most profound in long-term Treasuries.”
March 8 – Financial Times (Patrick McGee and Andrew Edgecliffe-Johnson):
“Shortages of components and raw materials because of the coronavirus are likely to be far worse than expected, experts warn, with most US companies unaware that they are exposed to Chinese factories idled by the outbreak. ‘I guarantee you that most organisations have some level of exposure that they are not aware of,’ said Alex Saric, chief marketing officer at Ivalua, a platform for digitalising procurement. While companies closely track their direct suppliers — the tier ones such as Foxconn that would send Apple a finished iPhone — they can be blind to their suppliers’ factories, the tier twos, and those further down the chain.”
“Shortages of components and raw materials because of the coronavirus are likely to be far worse than expected, experts warn, with most US companies unaware that they are exposed to Chinese factories idled by the outbreak. ‘I guarantee you that most organisations have some level of exposure that they are not aware of,’ said Alex Saric, chief marketing officer at Ivalua, a platform for digitalising procurement. While companies closely track their direct suppliers — the tier ones such as Foxconn that would send Apple a finished iPhone — they can be blind to their suppliers’ factories, the tier twos, and those further down the chain.”
March 12 – Reuters (Tom Wilson):
“Bitcoin plummeted on Thursday amid wild volatility in cryptocurrency markets, with traders citing a sell-off across assets as fears of the economic damage from the coronavirus pandemic take hold. The biggest cryptocurrency slumped as much as 25% during morning trading before clawing back some of its losses… Bitcoin has lost over 30% of its value in the last five days…”
“Bitcoin plummeted on Thursday amid wild volatility in cryptocurrency markets, with traders citing a sell-off across assets as fears of the economic damage from the coronavirus pandemic take hold. The biggest cryptocurrency slumped as much as 25% during morning trading before clawing back some of its losses… Bitcoin has lost over 30% of its value in the last five days…”
March 13 – CNBC (Dan Mangan and Christina Wilkie):
“President Donald Trump on Friday declared a national emergency over the coronavirus pandemic, and announced a set of specific measures aimed at stemming the effects of the outbreak… The emergency declaration will free up as much as $50 billion in financial resources to efforts by states and U.S. territories to assist Americans affected by the outbreak.”
“President Donald Trump on Friday declared a national emergency over the coronavirus pandemic, and announced a set of specific measures aimed at stemming the effects of the outbreak… The emergency declaration will free up as much as $50 billion in financial resources to efforts by states and U.S. territories to assist Americans affected by the outbreak.”
March 12 – Financial Times (Colby Smith and Brendan Greeley):
“The Federal Reserve said it would pump trillions of dollars into the financial system in a dramatic attempt to ease stresses in short-term funding and US Treasury markets that have accompanied the spread of the coronavirus. The US central bank is also making changes to its programme of Treasury purchases ‘to address highly unusual disruptions in Treasury financing markets’. For the third time in four days, the Fed’s New York arm announced on Thursday that it would increase the size of its lending in the repo market… this time by multiples of the amounts previously on offer… The Fed would now offer up at least $500bn in three-month loans, beginning immediately, with another $500bn of three-month loans on Friday. It said it would also provide a $500bn one-month loan on Friday that settles on the same day. It also said it would continue to offer $500bn of three-month loans and $500bn one-month loans on a weekly basis until April 13, on top of its ongoing programme of $175bn in overnight loans and $45bn in two-week loans twice per week.”
“The Federal Reserve said it would pump trillions of dollars into the financial system in a dramatic attempt to ease stresses in short-term funding and US Treasury markets that have accompanied the spread of the coronavirus. The US central bank is also making changes to its programme of Treasury purchases ‘to address highly unusual disruptions in Treasury financing markets’. For the third time in four days, the Fed’s New York arm announced on Thursday that it would increase the size of its lending in the repo market… this time by multiples of the amounts previously on offer… The Fed would now offer up at least $500bn in three-month loans, beginning immediately, with another $500bn of three-month loans on Friday. It said it would also provide a $500bn one-month loan on Friday that settles on the same day. It also said it would continue to offer $500bn of three-month loans and $500bn one-month loans on a weekly basis until April 13, on top of its ongoing programme of $175bn in overnight loans and $45bn in two-week loans twice per week.”
March 10 – Bloomberg (Rich Miller and Claire Boston):
“The coronavirus is threatening to expose the Achilles heel of the U.S. economy: heavily leveraged companies. As the economic expansion stretched into a record 11th year, and interest rates stayed at ultralow levels, business debt ballooned and now exceeds that of households for the first time since 1991. What’s more, the borrowing has increasingly been concentrated in riskier companies with fewer financial resources to ride out virus-driven difficulties. A wave of defaults would intensify the economic impact of the contagion. ‘It will add to recessionary pressures in the U.S.,’ says Nariman Behravesh, chief economist at consultant IHS Markit Ltd. Energy companies are especially vulnerable…”
“The coronavirus is threatening to expose the Achilles heel of the U.S. economy: heavily leveraged companies. As the economic expansion stretched into a record 11th year, and interest rates stayed at ultralow levels, business debt ballooned and now exceeds that of households for the first time since 1991. What’s more, the borrowing has increasingly been concentrated in riskier companies with fewer financial resources to ride out virus-driven difficulties. A wave of defaults would intensify the economic impact of the contagion. ‘It will add to recessionary pressures in the U.S.,’ says Nariman Behravesh, chief economist at consultant IHS Markit Ltd. Energy companies are especially vulnerable…”
March 9 – Wall Street Journal (Collin Eaton and Rebecca Elliott):
“U.S. shale drillers are poised to be among the biggest losers in the oil-price war stoked by Russia and Saudi Arabia that has sent global prices crashing. Dozens of debt-addled companies… were already facing financial difficulties even before U.S. benchmark prices plummeted 25%... Monday… Now many of the shale companies that led the U.S. to become the world’s top oil and gas producer are in a fight for survival. But unlike the 2014 price plunge, Wall Street—down on the industry due to poor returns—isn’t primed to offer a helping hand.”
“U.S. shale drillers are poised to be among the biggest losers in the oil-price war stoked by Russia and Saudi Arabia that has sent global prices crashing. Dozens of debt-addled companies… were already facing financial difficulties even before U.S. benchmark prices plummeted 25%... Monday… Now many of the shale companies that led the U.S. to become the world’s top oil and gas producer are in a fight for survival. But unlike the 2014 price plunge, Wall Street—down on the industry due to poor returns—isn’t primed to offer a helping hand.”
March 11 – Bloomberg (Leslie Josephs):
“Boeing is immediately suspending most hiring and implementing other measures to preserve cash as the rapid spread of the coronavirus roils the air travel industry, sending the manufacturer’s stock to the lowest level since mid-2017. Shares of the manufacturer plunged more than 18% — their biggest one-day percentage drop in more than four decades — to $189.08…. The company also is drawing down earlier than expected the entirety of a $13.8 billion loan it secured in January to give it a cushion to weather the turmoil. Boeing is already reeling from the damage of two fatal crashes of its 737 Max and the worldwide grounding of the planes, which hits the one-year mark on Friday.”
“Boeing is immediately suspending most hiring and implementing other measures to preserve cash as the rapid spread of the coronavirus roils the air travel industry, sending the manufacturer’s stock to the lowest level since mid-2017. Shares of the manufacturer plunged more than 18% — their biggest one-day percentage drop in more than four decades — to $189.08…. The company also is drawing down earlier than expected the entirety of a $13.8 billion loan it secured in January to give it a cushion to weather the turmoil. Boeing is already reeling from the damage of two fatal crashes of its 737 Max and the worldwide grounding of the planes, which hits the one-year mark on Friday.”
March 12 – Wall Street Journal (Nicole Friedman):
“The lowest mortgage rates on record are colliding with the prospect of an economic downturn prompted by the coronavirus outbreak, setting the stage for an unpredictable spring selling season in the housing market. Early indications suggest that rock-bottom borrowing costs may not be enough to lure many home buyers amid the current uncertainty. Economists are tamping down earlier expectations that cheap rates and a strong job market would boost the housing market in 2020 following years of sluggish growth. The National Association of Realtors had anticipated about 5.5 million sales of previously owned homes in 2020, up from 5.3 million a year in 2019 and 2018…”
“The lowest mortgage rates on record are colliding with the prospect of an economic downturn prompted by the coronavirus outbreak, setting the stage for an unpredictable spring selling season in the housing market. Early indications suggest that rock-bottom borrowing costs may not be enough to lure many home buyers amid the current uncertainty. Economists are tamping down earlier expectations that cheap rates and a strong job market would boost the housing market in 2020 following years of sluggish growth. The National Association of Realtors had anticipated about 5.5 million sales of previously owned homes in 2020, up from 5.3 million a year in 2019 and 2018…”
March 9 – Wall Street Journal (Sebastian Pellejero):
“U.S. corporations are signaling a reduced appetite for stock buybacks this year, undermining a pillar of support for stocks at a time of heightened volatility. Companies authorized around $122 billion in future buybacks through February…, marking a nearly 50% drop from the same period a year ago and representing the slowest pace in three years. Meanwhile, S&P Dow Jones Indices projects that the total amount of buybacks in the final three months of 2019 was down 18% compared with a year earlier, totaling around $183 billion. Companies repurchased around $730 billion of their own stock during 2019… Analysts are still projecting around $800 billion in buybacks this year…”
“U.S. corporations are signaling a reduced appetite for stock buybacks this year, undermining a pillar of support for stocks at a time of heightened volatility. Companies authorized around $122 billion in future buybacks through February…, marking a nearly 50% drop from the same period a year ago and representing the slowest pace in three years. Meanwhile, S&P Dow Jones Indices projects that the total amount of buybacks in the final three months of 2019 was down 18% compared with a year earlier, totaling around $183 billion. Companies repurchased around $730 billion of their own stock during 2019… Analysts are still projecting around $800 billion in buybacks this year…”
March 10 – CNBC (Diana Olick):
“Rock-bottom mortgage rates are causing a surge in mortgage refinances, so much so that the industry’s largest trade group is revising sharply higher its origination forecasts for the year. The Mortgage Bankers Association is now forecasting total mortgage originations of approximately $2.61 trillion this year — a 20.3% gain over 2019′s $2.17 trillion and a jump from last month’s forecast of $1.99 trillion.”
“Rock-bottom mortgage rates are causing a surge in mortgage refinances, so much so that the industry’s largest trade group is revising sharply higher its origination forecasts for the year. The Mortgage Bankers Association is now forecasting total mortgage originations of approximately $2.61 trillion this year — a 20.3% gain over 2019′s $2.17 trillion and a jump from last month’s forecast of $1.99 trillion.”
March 10 – Washington Post (David J. Lynch):
“The coronavirus panic could threaten a $10 trillion mountain of corporate debt, unleashing a cycle of layoffs and business spending cuts that would hit the economy just as some analysts are warning of a recession. Financial markets already are showing major signs of stress… The mammoth debt bulge includes a dramatic increase in borrowing by the lowest quality investment grade firms -- those rated just one level above ‘junk.’ More than $1 trillion in ‘leveraged loans,’ a type of risky bank lending to debt-laden companies, is a second potential flash point.”
“The coronavirus panic could threaten a $10 trillion mountain of corporate debt, unleashing a cycle of layoffs and business spending cuts that would hit the economy just as some analysts are warning of a recession. Financial markets already are showing major signs of stress… The mammoth debt bulge includes a dramatic increase in borrowing by the lowest quality investment grade firms -- those rated just one level above ‘junk.’ More than $1 trillion in ‘leveraged loans,’ a type of risky bank lending to debt-laden companies, is a second potential flash point.”
March 12 – Bloomberg (Irene Garcia Perez):
“Hundreds of high-risk companies in Europe need to repay or refinance nearly $100 billion in the coming months, a prospect that becomes more daunting by the day amid the relentless collapse in credit markets. From Germany’s Thyssenkrupp AG to Telecom Italia, around 600 European high-yield and non-rated bond borrowers have $92.5 billion bonds maturing by the end of 2021, a narrow window to get deals done. With investors running for the hills and the cost of raising funds soaring, that’s a big ask… One measure of high yield debt risk in Europe jumped to its highest level since 2012.”
“Hundreds of high-risk companies in Europe need to repay or refinance nearly $100 billion in the coming months, a prospect that becomes more daunting by the day amid the relentless collapse in credit markets. From Germany’s Thyssenkrupp AG to Telecom Italia, around 600 European high-yield and non-rated bond borrowers have $92.5 billion bonds maturing by the end of 2021, a narrow window to get deals done. With investors running for the hills and the cost of raising funds soaring, that’s a big ask… One measure of high yield debt risk in Europe jumped to its highest level since 2012.”
March 10 – Wall Street Journal (Peter Grant and Konrad Putzier):
“Hotel owners with heavy debt loads are grappling with the prospect the industry could fall into a tailspin from the spread of the coronavirus, leading to a potential uptick in defaults. The U.S. hotel industry overall had about $300 billion of mortgage debt as of the third quarter of last year, up 7.8% from a year earlier and 14.2% from two years earlier, according to… Trepp LLC. New York, Los Angeles, Las Vegas and other cities that count on foreign visitors could be especially vulnerable, analysts say. Some investors who seized on low interest rates and took out big loans could be at risk, said Neil Shah, president and chief operating officer of Hersha Hospitality Trust…”
“Hotel owners with heavy debt loads are grappling with the prospect the industry could fall into a tailspin from the spread of the coronavirus, leading to a potential uptick in defaults. The U.S. hotel industry overall had about $300 billion of mortgage debt as of the third quarter of last year, up 7.8% from a year earlier and 14.2% from two years earlier, according to… Trepp LLC. New York, Los Angeles, Las Vegas and other cities that count on foreign visitors could be especially vulnerable, analysts say. Some investors who seized on low interest rates and took out big loans could be at risk, said Neil Shah, president and chief operating officer of Hersha Hospitality Trust…”
March 12 – Associated Press (Joe McDonald):
“China’s auto sales plunged 81.7% in February from a year ago after much of the economy was shut down to fight a virus outbreak… Sales of SUVs, sedans and minivans fell to 224,000, according to the China Association of Automobile Manufacturers. Total vehicle sales, including trucks and buses, fell 79.1% to 310,000.”
“China’s auto sales plunged 81.7% in February from a year ago after much of the economy was shut down to fight a virus outbreak… Sales of SUVs, sedans and minivans fell to 224,000, according to the China Association of Automobile Manufacturers. Total vehicle sales, including trucks and buses, fell 79.1% to 310,000.”
March 6 – Reuters (Gabriel Crossley and Lusha Zhang):
“China’s exports contracted sharply in the first two months of the year, and imports declined, as the health crisis triggered by the coronavirus outbreak caused massive disruptions to business operations, global supply chains and economic activity… Overseas shipments fell 17.2% in January-February from the same period a year earlier…, marking the steepest fall since February 2019.”
“China’s exports contracted sharply in the first two months of the year, and imports declined, as the health crisis triggered by the coronavirus outbreak caused massive disruptions to business operations, global supply chains and economic activity… Overseas shipments fell 17.2% in January-February from the same period a year earlier…, marking the steepest fall since February 2019.”
March 8 – Bloomberg (Archana Chaudhary and Suvashree Ghosh):
“India, home to one of the world’s worst piles of bad debt, once again finds itself defending the stability of its financial system after the biggest bank failure in its history. The Reserve Bank of India took to Twitter on Sunday to affirm the safety of deposits in the wake of a decision to seize Yes Bank Ltd. and invite the nation’s largest lender to make a confidence-building share purchase. It also announced an unprecedented move to permanently write down Yes Bank’s 87.8 billion rupees ($1.2bn) of additional tier 1 bonds…”
“India, home to one of the world’s worst piles of bad debt, once again finds itself defending the stability of its financial system after the biggest bank failure in its history. The Reserve Bank of India took to Twitter on Sunday to affirm the safety of deposits in the wake of a decision to seize Yes Bank Ltd. and invite the nation’s largest lender to make a confidence-building share purchase. It also announced an unprecedented move to permanently write down Yes Bank’s 87.8 billion rupees ($1.2bn) of additional tier 1 bonds…”
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