Interesting reads

The Deflation Monster Has Arrived

Submitted by Tyler Durden on 01/16/2016 - 12:04

The world’s grand experiment with debt has come to an end. And it’s now unraveling.

"How The Investment Grade Dominos Will Fall" - UBS Explains

Submitted by Tyler Durden on 01/16/2016 - 20:42

As a potential worst case scenario, we use the simple sum of probabilities from 2001- 2002 and the current debt stock as an example of what could happen during a protracted downturn. If this comes to fruition, we estimate fallen angel volumes over 2 years could spike to $413bn, with $117bn of 10+ fallen angel paper (again crashing into a 10+ HY market that is only $48bn in size). This is an ugly spectre that the high-grade markets would need to face in future years.

How QE Crushes The Real Economy & Why The Secular Low In Treasury Yields Lies Ahead

Submitted by Tyler Durden on 01/16/2016 - 17:20

The economy was supposed to fire on all cylinders in 2015. Sufficient time had passed for the often-mentioned lags in monetary and fiscal policy to finally work their way through the system according to many pundits inside and outside the Fed. Surely the economy would be kick-started by: three rounds of QE and forward guidance; a record Fed balance sheet; and an unprecedented increase in federal debt to $18.63 trillion in 2015, a jump of 86%. Further, stock prices had gained sufficiently over the past several years, thus the so-called wealth effect would boost consumer spending. But the economic facts of 2015 displayed no impact from these massive government experiments.