What WeWork filed for bankruptcy? I'm shocked...I mean I'm not shocked that they filed for BKO, but shocked that it took this long to get to an actual bankruptcy filing. Yields rose yesterday but have reversed course early this morning and are down ~5bps to start the day. The 2Y is 4.90% and the 10Y is 4.61%. Overnight the RBA raised their policy rate by 25bp to 4.35%, their first hike since June as inflation remains stubbornly above target.
Markets continue to try to ascertain what the most recent loosening of financial conditions might mean for Fed policy. On the day ahead we'll get a ton of Fedspeak and the first of this week's Treasury auctions with $48bln of 3Y notes.
XTOD (side note, I wrote about Schrager's book here): “I recall in 2008ish, there was lots of handwringing that finance sucked up all the talent who could be doing bigger and better things. But in retrospect, the problem was really an industry that attracted and overpaid mediocre talent.” https://allisonschrager.substack.com/p/longer-means-longer?r=9w60&utm_medium=ios&utm_campaign=post
XTOD: COOK: AMERICANS MAY BE PESSIMISTIC BECAUSE THEY ARE NOT JUST LOOKING FOR SLOWER INFLATION, BUT FOR PRICES TO RETURN TO WHERE THEY WERE BEFORE THE PANDEMIC
XTOD: "the economy sucks because, where workers gained leverage, their employers tended to push the cost of that leverage onto customers, which intensified a vicious cycle of service workers and customers getting mad at each other"
is my most compact explanation of any "bad vibes"
XTOD (FYI - someone needs to tell Blanchard what it means to post a short summary): 1. My views on the implications of higher long rates for fiscal policy and debt trajectories. https://shorturl.at/gntAF Here is a short summary. 2. Interest rates at the long end have increased by more than can be explained by the fight against inflation. (I shall freely admit that I did not expect it). It is hard to think that, for example, the 5year/5year rate should be very much affected by the current Fed tightening. 3. Bond investors may well be wrong. Long real rates may decrease; we saw a hint of this last week. But for ministers of finance needing to finance their current borrowing, the rates are what they are, and they have clear implications for fiscal policy and the evolution of debt. 4. With (r-g) close to zero, what happens to debt GDP ratio depends on the sign of the primary balance. So long as the government runs a primary deficit, the debt ratio increases. Only by returning to primary balance does the debt ratio stabilize, although at a higher level. 5. Today, most advanced countries are running primary deficits. Eliminating them cold turkey would likely be catastrophic, as it would lead to serious recessions, and likely lead to the rise of populist parties. Thus, the plan must be to do it slowly, but steadily and credibly. 6. The implication is that, even with the most responsible policies in play, debt ratios will increase for some time. This is not catastrophic. The evidence suggests that countries and markets can live with higher, but stable, debt. 7. What would be catastrophic however would be to let debt ratios explode, i.e. to let primary deficits continue forever (If (r-g) becomes substantially negative again, then the constraint will be less tight, and the plan can be adjusted). 8. I worry that the new European fiscal rules, focused on debt reductions, may be too tight. Leading some countries to breach them and destroying the rules' credibility, or to satisfy them at the cost of reduced activity and insufficient defense and green investment 9. I worry that the US, which has a more substantial challenge, with large primary deficits, a higher (r-g) than most others, and a dysfunctional budget process, may not be prepared to do what is needed.
XTOD: Miss having baseball to watch? Do yourself a favor and catch the fabulous Yogi Berra doc, “It Ain’t Over,” now that it’s on Netflix It’s funny, heartwarming and real. But it’s also an important reminder of what a great player Yogi was.
XTOD: Apes, we are aware of the eye-related issues that affected some of the attendees of ApeFest and have been proactively reaching out to individuals since yesterday to try and find the potential root causes. Based on our estimates, we believe that much less than 1% of those attending and working the event had these symptoms. While nearly everyone has indicated their symptoms have improved, we encourage anybody who feels them to seek medical attention just in case.
XTOD: Defined-maturity bond funds are surging in popularity as investors seek to lock in higher yields
XTOD: Heard through the grapevine One of the largest commercial mortgage brokers in the country was raided over the weekend Fraud was found in loans they'd sent to Fannie Mae
This could now trigger a chain reaction of buybacks and less liquidity among Fannie lenders
XTOD: Aswath Damodaran: "I have often said, we read too much and think too little. I don't have that problem. I have lots of time. ... an idle mind is often where you get your best connections of ideas. Your best thinking is done when you have nothing in your mind per se that you have to get done. The advantage of not having a to-do list on most days is I get more done when I have not to-do list than when I do."
https://x.com/jbarro/status/1721559705477071261?s=20
https://x.com/DeItaone/status/1721569837984387483?s=20
https://x.com/vebaccount/status/1721632588916297895?s=20
https://x.com/jaysonst/status/1720243662808908198?s=20
https://x.com/BoredApeYC/status/1721477899264643192?s=20
https://x.com/ojblanchard1/status/1721609450958487682?s=20
https://x.com/DallasAptGP/status/1721664682044342576?s=20
https://x.com/NeckarValue/status/1721617253941019097?s=20
No comments:
Post a Comment