Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Exactly, printers are running at full speed,
We have seen this before, its just a different version
Solvency of financial institutions could be bigger threat than liquidity
in the next crisis, economist says.
October 11, 4:19 pm
In a sign of a darkening outlook for the gobal economy and financial markets, the continuing debate over whether the next major crisis is on the way is shifting into a conversation about just what type of crisis it will be.
For Neil Shearing, group chief economist at London-based Capital Economics, the bigger threat is not a liquidity crisis arising from rapidly rising interest rates and falling asset prices worldwide. Rather, it is the threat to the solvency of financial institutions, which usually requires government action, that’s more important.
The distinction matters because central banks can generally deal with liquidity crises, by providing greater access to credit and unlimited amounts of money if needed. A solvency crises, on the other hand, poses a graver threat to the economy because institutions theoretically wouldn’t be able to stay alive no matter how much help they got. While some say the 2007-2009 financial crisis and recession was primarily driven by a lack of liquidity, it also arose from a loss of investor confidence in financial firms where solvency was at risk.
Talk of whether the next financial crisis is on the way picked up steam last week, when cracks in everything from credit markets to mutual-fund flows and the implied volatility of bonds, stocks and currencies pointed to the potential for something to break. Shearing’s comments on Tuesday came on the same day that the International Monetary Fund warned the global economy is at its most vulnerable moment since the onset of the 2020 COVID crisis, and that a general lack of liquidity in markets, especially for government debt, could act as a “shock amplifier.”
Recent turmoil in the U.K. bond market, which has led to repeated interventions by the Bank of England, is “primarily a liquidity crisis,” Shearing said. “Instead, the real danger lurks in solvency crises (or the risk that liquidity crises are allowed to morph into solvency crises).”
In a nutshell, solvency trouble occurs when the value of an institution’s assets falls below that of its liabilities. On a large scale, that can ” impair the entire system of financial intermediation and credit creation, which in turn can cause a sharp contraction in the real economy,” the economist said. Ultimately, governments would be required to absorb the losses and recapitalize parts of the financial system.
To be sure, the 2007-2009 financial crisis and economic downturn has led to stricter regulation and oversight that should make commercial banks less vulnerable to solvency crises, he said. Even so, “sources of financial risk have a habit of materializing in a way that is difficult to fully anticipate in advance.”
In addition, another source of risk is the shadow banking sector, with the greatest threats being in places where assets “are illiquid and difficult to value,” Shearing wrote.
https://www.marketwatch.com/story/solvency-of-financial-institutions-could-be-bigger-threat-than-liquidity-in-next-crisis-economist-says-11665518712?siteid=rss
Indeed, I was watching too. But the BOE speak and ultimatum given today
put a shock in here as well.
The WHOLE world markets are a disaster
<-This data is what helped Wall Street tank this afternoon->
IMF/World Bank meetings in Washington, BoE chief Andrew Bailey told UK pension funds they had three days to balance their positions before the BoE exits the market. No ifs, no buts.
Wall Street tanked, and sterling plummeted.
For Asia on Wednesday, two key events underscore the challenges economies, policymakers and investors are facing.
The Bank of Korea is expected to raise interest rates by 50 basis points to a decade-high of 3.00%, its latest step to lower inflation from recent 24-year highs and lift the won from its recent 13-year low against the dollar.
'Get this done!' BoE's Bailey gives UK funds 3-day deadline to fix problems
4:45 pm
Summary
Bailey stands firm on Friday deadline for gilt purchases
Sterling slides to near two-week low vs dollar after remarks
Bank of England says will buy index-linked gilts
BoE warns of 'material risk' to financial stability
WASHINGTON/LONDON, Oct 11 (Reuters) - Bank of England Governor Andrew Bailey said on Tuesday that British pension funds and other investors hit hard by a slump in bond prices had just three days left to fix their problems before the central bank would withdraw support.
Only hours earlier, the BoE expanded its programme of daily bond purchases to include inflation-linked debt, citing a "material risk" to British financial stability and "the prospect of self-reinforcing 'fire sale' dynamics".
more https://www.reuters.com/markets/europe/bank-england-buy-inflation-linked-uk-gilts-2022-10-11/
Funding Panic Imminent? Fed quietly sends $3.1 Billion to Switzerland via Swaps
Well, in what might be the best news to shellshocked bulls after the worst September and worst Q3 in generations, in a harrowing year for markets, central banks are starting to panic. First it was the BOJ, then the BOE and now, it's Switzerland's turn.
Two weeks ago after the (first) panicked pivot by the BOE, when global markets were in freefall, we said that markets desperately needed some words of encouragement from the Fed, or failing that - and with the dollar soaring to new all time highs every day -The Fed had to make some pre-emptive announcement on USD Fx swap lines, if only to reassure global markets that amid this historic, US dollar short squeeze, at least someone can and will print as many as are needed to avoid systemic collapse.
full https://www.zerohedge.com/markets/funding-panic-imminent-fed-quietly-sends-31-billion-switzerland-swap-line
Then in late afternoon the BEARS came out and took control again!
Took it all back but about 36 points......
Nas down -115 and S&P closed RED
Three Gun Salute, the General has gone green, barely
See Ya Later, MAYBE? ~~~POOF!~~~
Marching - in -step, don't trip!
Both are exactly right/true, it's just doing the follow-thru ....
All green once again, too much risk for me to play on the see-saw
Rail strike fears renewed, .................
Sorry Pres, too much confidence and stttttttttttreching it
Could cost the economy 2 Billion a day--inflame Inflation
Nasdaq blinked, and is red again, time to chase dust bunnies or something,
anything but look at this!
~~~POOF~~~
Rising TURKEY prices to hit $6.70, 112% higher than last year...
Last month, the retail price for turkey breast hit a record high of $6.70 per pound. That’s 112 percent higher than the same time last year when it was around $3.16 per pound. The last time turkey prices were this high was in 2015.
https://www.wwlp.com/news/rising-turkey-prices-to-hit-6-70-per-pound-112-higher-than-last-year/
All Green and Dow surging, now what?
Here they go.......Knocking on green before noon
Yes they try, but then comes Slip-Slidin'-Away
El-Erian says Economy Is Starting to 'Go Through the Windshield'
Central banks are “slamming the brakes” to control inflation
Considering inflation transitory was a mistake by the Fed
El-Erian a frequent Fed critic, said “This is the most front-loaded interest-rate cycle that we have seen in a very long time, and it didn’t need to be this.” The Fed, in September, raised its benchmark federal funds rate by three-quarters of a percentage point for the third time in a row.
Video at link
https://www.bloomberg.com/news/articles/2022-10-11/el-erian-says-economy-is-starting-to-go-through-the-windshield?srnd=markets-vp
Amgen stock surges, provides nearly 80 point support to the DOW after Morgan Stanley turns bullish
(GREEN up 160+ and others red, who knows what afternoon will bring)
https://www.marketwatch.com/story/amgen-stock-surges-provides-nearly-80-point-support-to-the-dow-after-morgan-stanley-turns-bullish-01665497056?siteid=rss
Chiefs pull out a win! Wild Monday night game, and with some bad ref calls
Mahomes interrupts Kelce's post game interview (Four touchdown touches)
I need coffee and food! ~~~
Oh my, lots of Irish on my maternal side, two peas in a pod?
Robert Shiller created an index that shows investor fear of a stock market crash.
Here's what its saying now.
by Mark Hulbert 7:48 am
A sizeable majority of individual investors are worried about a possible U.S. stock market crash - and thats bullish. Thats because crash anxiety is a contrarian
indicator. It would be a bad sign if investors were confident that a crash would not occur. So we can take at least some solace from the current widespread worry about a possible crash.
We’re able to study the relationship between the stock market and crash anxiety because of a monthly survey of investors that Yale University finance professor Robert Shiller has been conducting since 2001. One question the survey asks: “What do you think is the probability of a catastrophic stock market crash in the U.S., like that of October 28, 1929, or October 19, 1987, in the next six months?”
Shiller expresses the results as the percentage of respondents who believe this probability is less than 10%. Currently, as you can see in the chart below, 22.8% of individual investors believe this probability is that low. The only other times since 2001 when this percentage got any lower was at the bottom of the 2007-2009 and 2011 bear markets. Those certainly are bullish precedents.
chart and more
https://www.marketwatch.com/story/robert-shiller-created-an-index-that-shows-investors-fear-of-a-stock-market-crash-heres-what-its-saying-now-11665470643?mod=newsviewer_click_realtime
Republicans Withdraw $1 Billion from BlackRock due to its ESG Policies
Multiple US states governed by Republicans are with drawing state funds
from BlackRock's management, as they disapprove of ESG investment polices
of the World's top asset manager, The Financial Times reports
https://www.zerohedge.com/energy/republicans-withdraw-1-billion-blackrock-due-its-esg-policies
Premarket Movers: Clearway Energy CI A, ExlService Holdings, ICL Group
With U.S. stock markets set to open in two hours, ICL Group (ICL) was up 5.4% in pre-market trading, and Ginkgo Bioworks Holdings (DNA) was up 3.5%. Amcor (AMCR), JB Hunt Transport (JBHT), and Lamb Weston Holdings (LW) were all posting gains of at least 3%. Clearway Energy Cl A (CWEN.A) and ExlService Holdings (EXLS) had posted declines, falling 9.6% and 7.5%, respectively.
Meanwhile S&P 500 futures were down 0.54%, with futures for the Dow Jones Industrial Average falling 0.43%.
The S&P 500 and the Dow were down 0.75% and 0.32%, respectively, in the most recent regular trading session. Stocks in Asia were mixed overnight, with Japan's NIKKEI 225 Index down 2.64% and China's Shanghai Composite Index up 0.19%.
U.S. stock markets open for trading at 9:30 a.m. ET. For regular updates on the trading day, visit Barron's.
F $11.36 Ford is now a sell at UBS as an oversupply looms
META $133.79 Meta Platforms target lowered to $174 from $214 at Credit Suisse
CHTR $318.30 stock price cut to $650 from $805 at Benchmark
Nissan to fully exit Russian market, expects Y100 Billion loss
Carmaker plans to transfer manufacturing unit to state entity
Alliance partner Renault made similar move months ago
https://www.bloomberg.com/news/articles/2022-10-11/nissan-to-fully-exit-russia-market-expects-100-billion-loss?srnd=markets-vp&leadSource=uverify%20wall
AZZ $39.02 swung to 2nd quarter loss on sale of infrastructure Segment
NOW $371.78 Resumed at overweight with target $460, from neutral JPM
GETY $6.27 Upgraded to buy from hold at Benchmark
Mish<> An Inflationary Quagmire of US and EU Climate Change Hypocrisy
US and EU energy policy is hypocritical, inflationary, and will do little to help the climate.
MISH 10 HOURS AGO
The Wall Street Journal squarely hits the nail with its assessment: The U.S. and its allies undermine their own interests with little environmental payoff.
Snips
https://mishtalk.com/economics/an-inflationary-quagmire-of-us-and-eu-climate-change-hypocrisy
https://www.wsj.com/articles/the-quagmire-of-climate-diplomacy-saudi-arabia-opec-oil-fossil-fuel-carbon-global-south-biden-11665431036?st=tcwceloe7iq3x06&reflink=desktopwebshare_permalink
SPNE soars on deal near 38%
Go MARIA, arguing with that female DEM DINGELL on the Fentanyl crisis
SPNE $5.57<>OFIX 18.40 Orthofix Medical to buy SeaSpine in $285M Stock deal
The Energy Crisis in Europe is so Bad Some People are Thinking of Using
Horse Poop to Heat Their Homes This Winter
Authored by Michael Snyder via The Economic Collapse Blog
http://theeconomiccollapseblog.com/the-energy-crisis-in-europe-is-so-bad-that-some-people-are-thinking-of-using-horse-poop-to-heat-their-homes-this-winter/
Europe is facing an extremely cold winter that will be filled with energy shortages, blackouts and absurdly high power bills. All across the continent, ordinary people can see what is coming, and many of them are starting to panic. Demand for wood stoves is off the charts, and many Europeans are hoarding wood and other materials to burn in their existing wood stoves during the bitterly cold months ahead.
e truly are in unprecedented territory, and things are about to start getting really crazy out there.
COLA is coming: Here's how much Social Security Benefits are likely to rise
(Then MEDICARE cost will rise)---can't win!
Retirees will have to wait a few more days to get official news about next years
Social Security's cost of living adjustments, but they are on track for an average benefit hike of $140 a month starting January, according to data published by the Federal Reserve Bank of Cleveland.
That would be an 8.7% annual hike, the biggest in more than 40 years.
According to the Social Security Administration the average monthly retirement benefit is $1,627.
We won’t know for sure until the official September inflation data have been published later this week. The Social Security Administration will use those numbers to calculate the official annual COLA.
more
https://www.marketwatch.com/story/cola-is-coming-heres-how-much-social-security-benefits-are-likely-to-rise-next-year-11665446467?mod=newsviewer_click
WSJ--U.K. crisis spills into U.S. junk debt