If in 2008 subprime mortage loans blown up the world, more and more shale oil debt might blow up the current banking sector in US.
— GregTheAnalyst (@Analyst_G) March 10, 2020
The coronavirus is threatening to expose the Achilles heel of the U.S. economy: heavily leveraged companies. As the economic expansion stretched into a record 11th year, and interest rates stayed at ultralow levels, business debt ballooned and now exceeds that of households for the first time since 1991.
As political leaders grapple with how to address the economic fallout, success may ultimately come down to one factor: the American consumer.
Also from DataTrek:
Retail investors are buying on the way down pic.twitter.com/yb4qwqhBWF
— Luke Kawa (@LJKawa) March 10, 2020
1. The first domino sparks defaults on junk debt. 2. Spreads widen more.3. Share buybacks fueled by cheap debt halt. 4. End result – nothing to stop crashes like 2018.
— Matthew Wright (@Wrightlawfirm1) March 10, 2020
In the most glaring non-confirmation of this technical bounce in equities, high yield spreads have continued to blowout a further 18 bps today to 650 bps. Last time they were here, on June 27th 2016, the S&P 500 was sitting at 2,000. Word to the wise. pic.twitter.com/0G3HEph5nM
— David Rosenberg (@EconguyRosie) March 10, 2020
While you all focused on stocks.
HOLY MOLY HIGH-YIELD MUNIS pic.twitter.com/UldzzsR7y0
— Brian Chappatta (@BChappatta) March 9, 2020
FED PERFORMS OVERNIGHT OPERATION: $123.625B
FED PERFORMS 14 DAY OPERATION: $45B, $48B OVERSUBSCRIBED!
TOTAL REPOS PERFORMED: $168.625B
TOTAL REPO DEMANDED: $216.625B!
TOTAL OVERSUBSCRIBED: $48B!
— Brad Huston (@BradHuston) March 10, 2020
Only $216 BILLION needed overnight t.co/hY0f0BrWyy
— willem middelkoop (@wmiddelkoop) March 10, 2020
— jeroen blokland (@jsblokland) March 10, 2020
SUSPENDING SHARE REPURCHASES
DELAYING $500M OF VOLUNTARY PENSION FUNDING
DEFERRING $500M IN CAPITAL EXPENDITURES
Where is the rah rah buybacks crowd now????
— Michael Lebowitz, CFA (@michaellebowitz) March 10, 2020