'When
All Of A Sudden The Most Liquid Market Out There Isn't Liquid, It's Worrisome' – (www.businessinsider.com) US
fund firms are taking extra measures to make sure they don't get stuck holding
hard-to-sell bonds in the event that fixed income markets see a massive race to
the exits when interest rates start to rise. Over the past few months a growing
number of asset managers, including Neuberger Berman, Natixis Global
Management, and T. Rowe Price have been testing their funds against various
market scenarios, building cushions of cash, shorter-duration bonds, and other
liquid securities, and regularly discussing risks with their boards. The
concern is this: As the Federal Reserve begins to raise rates, which many
expect will begin to happen next year, investors will rush to sell bonds as
their value drops in a rising interest rate environment. Historically Wall
Street banks have been the buyers of these bonds, but regulations and capital
requirements imposed since the financial crisis have forced these firms to
slash their inventories. "I look around and ask, 'At the end of the day
how easy would it be to sell what I own?', and the answer is it is much more
challenging," said Jason Brady, a fixed income portfolio manager at Sante
Fe, New Mexico-based Thornburg Investment Management, which has $70 billion in
assets under management, $17 billion of which is in fixed income.
Loan
‘Guarantee Chains’ in China Prove Flimsy - (online.wsj.com) When
a fabric company called Jiangyin Xueyuan Textile Co. collapsed, the troubles
soon cascaded through other firms in this mill town. A machinery maker, paper
producer, manufacturer of faux-wood flooring and textile maker had one thing in
common. They had promised, in the event of default, to repay the loans taken on
by Xueyuan. Court documents say the fabric company can’t pay what it owes. With China’s economic growth
flagging,
businesses such as Xueyuan are foundering. And these chains of guarantees, in
which companies back loans to other firms, are causing pain for the wider
Chinese economy. The central bank cut benchmark lending and
deposit rates on
Friday to reduce financing costs for companies and help revive growth. Places
like Jiangyin, in the prosperous Yangtze River delta, have been a point of
concern for the government.
Auto Loan Delinquencies Surge 18% Among Young Americans - (www.zerohedge.com) Auto loan delinquency rates jumped nearly 13% in the last year, according to a new report by Transunion, withyoung (under-30) Americans seeing a 17.8% surge in 60+ day delinquency rates, as auto loan debt rose for the 14th straight quarter to $17,352. While these are notable rises, the overall levels remain low for now, but subprime-loan-delinquencies rose notably to 5.31%. However, in a somewhat stunningly blinkered conclusion, Transunion's Peter Terek notes "the uptick in delinquency reflects a healthy and thriving auto finance industry where credit is more broadly available to all consumers." So delinquencies are great news...
The
Last Time Gas Prices Fell This Far ... - (www.businessinsider.com) The
last time gas prices fell this far, this fast, we were in a recession. Or
actually, closer to a depression. According to a tweet sent out this
afternoon by Bespoke Investment Group, the average price of gas in the US
hasn't risen in 60 days. This is the second longest streak in a decade,
and the longest since an 87-day streak in late 2008. In late 2008, you may
recall, the economy was reeling from the Lehman Brothers bankruptcy and the
bursting of the housing bubble, with the stock market in the midst of a huge
sell off and the economy plunging into a recession that would last through most
of 2009. This year's decline in the price of gas comes as crude oil has fallen
about 30% since its highs in June as a glut of supply comes to the global
market and concerns abound about a global economic slowdown. Later this week,
OPEC is set to hold its annual meeting, with some on Wall Street expecting the
cartel to announce a production cut this year to reduce global supply and
bolster prices. Here's the chart of gas prices over the last three years.
[Eavis] New York Fed Is Criticized on Oversight - (www.nytimes.com) The government agency that watches over Wall Street came in for repeated rounds of criticism on Friday at a Senate hearing into its regulatory track record. Many of the senators at the hearing were expected to be critical of the Federal Reserve Bank of New York, after recent reports cast doubt on the agency’s ability to rein in large banks. William C. Dudley, the president of the New York Fed, defended the agency, but Senator Elizabeth Warren, Democrat of Massachusetts, at one point told him, “You need to fix it, Mr. Dudley, or we need to get someone who will.” The president of the New York Fed is not chosen by Congress. And much of the stern questioning could be seen as the sort of grandstanding that plays well with those who want to limit Wall Street’s power or were harmed in the financial crisis of 2008. Even so, it will be hard for the Fed to ignore the anger directed at Mr. Dudley. The New York Fed is the public’s first line of defense against Wall Street’s excesses and abuses, and the discontent in Congress could build if more evidence emerges that suggests the New York Fed is not tough enough with the large banks it oversees.
Some
fund managers see oil falling to $60 without OPEC cut - (www.reuters.com)
SNB Pressure Builds as Libor Approaches Zero: Chart of the Day - (www.bloomberg.com)
SNB Pressure Builds as Libor Approaches Zero: Chart of the Day - (www.bloomberg.com)
Video
streaming service Aereo files for bankruptcy - (www.reuters.com)
The Downside of the Boom - (www.nytimes.com)
The Downside of the Boom - (www.nytimes.com)
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