by Wolf Richter • • Comments Off on Explosive Hidden Leverage Threatens To Blow Up the Markets
We don’t know what hedge fund manager Steven Cohen will do with the money he borrowed from Goldman Sachs. We don’t even know how much it is, though it’s a lot; the personal loan is backed by his $1 billion art collection. But we know how he’ll use it: cheap leverage.
by Wolf Richter • • Comments Off on Banks And Hedge Funds Make Curious Deal On New Structured Toxic-Waste Securities
New regulations force banks to get rid of CLOs. They’re similar to subprime-mortgage-backed CDOs that blew up in 2008. But CLOs are backed by junk corporate loans, including malodorous “leveraged loans.” And they’re booming again. So the banks made a deal.
by Wolf Richter • • Comments Off on Biggest Credit Bubble in History Cracks, Trips Up The Smart Money
For years, nothing could slow the tsunami of junk debt. But suddenly, something happened, and investors in leveraged-loan mutual funds, where the crappiest junk debt accumulates, ran scared and started pulling their money out. Consequences were immediate.
by Wolf Richter • • Comments Off on The Last Two Times This Happened, The Stock Market Crashed
It happened in 2000 and in 2007. With spectacular consequences. Now, it happened again. And hidden beneath the blue-chip highs, parts of the market are already crashing.
by Wolf Richter • • Comments Off on Who Is Getting Crushed in This Bull Market?
By now, this wondrous bull market constantly gets benchmarked against the dotcom bubble. It’s different this time, we’re told, even on NPR. But the wholesale destruction of financial assets has already started, one pocket at a time.
by David Stockman • • Comments Off on Wall Street’s “Escape Velocity” Hoax
Q1 GDP growth is trending at a tepid 1.5%. But don’t worry. It’s the weather! Wall Street is predicting “escape velocity” for the fifth spring-summer in a row. Why? Because it’s already priced into the stock market!
by Wolf Richter • • Comments Off on This Chart Is A True Picture of The Bank Credit Bubble In America, Now Bigger Than The Last One (Which Blew Up)
For a while, rumor had it that banks weren’t lending, and that this was the reason the recovery has been so crummy. There was no demand for loans, and banks were too tight with their lending standards. Or so the story went.
by Wolf Richter • • Comments Off on Biggest Credit Bubble in History Runs Out Of Time
Yield investors, driven to insanity by the Fed’s interest-rate repression, hold their noses and close their eyes to scrape up even the crappiest paper just to get a little extra yield. “On the way in, there’s insatiable demand.” Alas, “it’s going to be a disaster on the way out.”
by Wolf Richter • • Comments Off on Richest 200 Moguls Made $13.9 Billion Today
Bernanke doesn’t regret any of the Fed’s actions, he said, except not explaining them to the people. They “really don’t understand why we did what we did,” he said. But there are a few people who do understand.