Junk Energy-Bond Costs Soar as Crude Drags
Global Economy Down - (www.bloomberg.com) The
cost for U.S. junk-rated energy companies to borrow in the bond market exceeded
20 percent for the first time ever after Goldman Sachs Group Inc. said oil may
drop below $20 a barrel.
The difference between the price of holding high-yield debt sold by
energy companies and ultra-safe Treasuries widened to record levels, according
to Bank of America Merrill Lynch indexes. The move was part of a global rout
that has seen stocks tumble toward a bear market and
volatility rise amid fears of a worldwide economic slowdown. Crude could drop
“into the teens,” from about $30 on Tuesday, before supply and demand are
brought back into balance, according to Goldman Sachs.
Europe's
'doom-loop' returns as credit markets seize up - (www.telegraph.co.uk) Marc
Ostwald, a credit expert at ADM, said the ominous new development is that bank
stress has suddenly begun to drive up yields in the former crisis states of
southern Europe. "The doom-loop is rearing its ugly head again," he
said, referring to the vicious cycle in 2011 and 2012 when eurozone banks and
states engulfed in each other in a destructive vortex.'' ... [The ECB] cannot
usefully cut interest rates any deeper into negative territory since the
current level of -0.3pc is already burning up the "net interest margin' of
lenders and eroding bank profits. "How much further can the ECB go before
it becomes outright harmful?" he asked.
US investors getting burned on Greek bank bets - (www.cnbc.com) Renowned
fund managers who invested hundreds of millions of dollars in the troubled
Greek banks are trapped in uncertainty caused by the political developments in Greece and global financial turmoil. John
Paulson, Prem Watsa, Wilbur L. Ross and other funds, such as Brookfield
Capital Partners, Capital Research & Management, Mackenzie Cundill,
Schroder Investment Management and Wellington Management are among those who
invested more than 10 billion euros ($11.3 billion) of capital in the Greek
banking system over the past couple of years.
It’s
Official: Cash is Now Public Enemy Number One - (www.wolfstreet.com) Terrorists are no longer public enemy number
one. Nor are drug lords, people traffickers, arms dealers, cyber terrorists, or
any other unsavory do-badder. Today, the biggest threat to global peace and
security is physical cash, a means of exchange that has flourished for over
4,000 years but which now stands accused of being the world’s biggest enabler
of criminality. The latest person to publicly highlight the deadly threat posed
by cash is Peter Sands, the former CEO of the British bank Standard Chartered,
who just published a report for Harvard Kennedy School of
Government imploring central banks around the world to stop issuing
high-denomination notes and bills. They include the €500 note, the $100 bill,
the CHF1,000 note and the £50 note.
Treasury
Yield Curve Plunges To Flattest Since 2007, Financials Follow – (www.zerohedge.com) For
the first time since 2007, the spread between 2Y and 10Y US treasury yields has
to 100bps. While not inverted, which the status quo maintains means there cannot be
a recession, the bond market is flashing ominous signs for both the economy and
the US financial system...
Oil Tumbles on Ample Supply With Volatility Near Seven-Year High - (www.bloomberg.com)
How the Bank Debt That Everyone Is Talking About Works: Q&A - (www.bloomberg.com)
Mexico Peso Tumbles After Government Signals Spending Cuts Loom - (www.bloomberg.com)
As Oil Prices Plummet, Mounting Debt Catches Up With U.S. Producers - (www.nytimes.com)
Founding members say European Union is in bad shape - (www.reuters.com)
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