Bonds & Interest Rates

Warning: 43% of Giant Eurozone Banks in Danger

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Posted by Martin D. Weiss PH.D

on Monday, 16 October 2017 05:23

ECB"This hard data confirms our view that, among the economic superpowers, the United States continues to win the Miss Universe crown for the “least ugly.”

After eight years of the biggest bank bailouts, the most money printing, and the lowest interest rates of all time, you’d think all of the world’s largest banks would be safe by now.

They’re deemed “too big to fail” and given government shelter from financial hurricanes, right?

They’re the first to receive fresh cash when funny money is injected into the economy, right?

Their single biggest cost — the cost of borrowing short-term funds — virtually disappears when interest rates are cut to zero, right?


And indeed, that’s what helps explain why America’s large banks are in much better shape today than they were during the Great Debt Crisis of 2008. But …

43.6% of Big Eurozone Banks
Are Stuck in the Danger Zone 

Four times yearly, our separate Weiss Ratings subsidiary issues safety grades not only on thousands of U.S. banks, S&Ls and credit unions, but also on 286 large banks in 51 different countries all over the world.

Unlike Wall Street’s Big Three rating agencies (Standard & Poor’s, Moody’s and Fitch) …

We never accept payment or favors from any institution for its ratings.

We never supress publication of our ratings at a company’s request.

We never give companies a preview of their ratings prior to publication.

And we always issue the grades whether they like it or not.

This is why it’s widely recognized that only Weiss Ratings issues all its grades on all industries with no conflicts of interest.

It helps explain why The New York Times wrote Weiss was “the first to see the dangers and say so unambiguously.”

It’s why Barron’s published a feature story dedicated to Weiss Ratings with the headline “The Leader in Identifying Vulnerable Companies.

It’s also why the U.S. General Accounting Office (GAO), the U.S. Congress, the SEC, the FDIC and multiple state governments have recognized Weiss Ratings in similar ways.

Our Safety Ratings scale is clear: A means excellent safety. means good. means fair. is weak. And is very weak. A plus sign means the upper third of each grade range; a minus sign means the lower third.

Here’s the key: According to the GAO, which studied our ratings in depth, any institution with a Weiss Safety Rating of D+ or lower is “vulnerable.”

I call it “the danger zone.”



Bonds & Interest Rates

Hotel California and the Federal Reserve

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Posted by Gary Christenson - The Deviant Investor

on Thursday, 12 October 2017 06:46

hotel-californiaIn 1977 the Eagles spoke to us about “Hotel California.” Lyrics are here.

A few lines from the song …

“On a dark desert highway, cool wind in my hair…

Up ahead in the distance I saw a shimmering light…

Then I was thinking to myself this could be Heaven or this could be Hell

Welcome to the Hotel California

Some dance to remember, some dance to forget

They’re living it up at the Hotel California

We are all just prisoners here of our own device

Relax, said the night man, We are programmed to receive,

You can check out any time you like but you can never leave.”

The lines have been rewritten to fit the Federal Reserve – the hypothetical “Hotel Marriner Eccles:”



Bonds & Interest Rates

The True Danger Ahead

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Posted by The Macro Tourist

on Monday, 09 October 2017 06:57

20171003-correlated-1It’s easy for me to sit back and take pot shots at the hedge fund gurus calling for a repeat of the 2008 crash. Spouting words about markets never repeating the previous crisis is kind of cheap. If I am so sure history won’t repeat, why don’t I offer an alternative theory?

Well, at the risk of embarrassing myself, here it goes.

The biggest risk out there is not credit. It is not the monster short VIX speculative position. It is not CDX leverage.

The true DANGER AHEAD lies in the universal belief that treasuries (and other sovereign fixed income) offer a perfect hedge versus risk assets.

....continue reading HERE


Bonds & Interest Rates

Central Banks at Risk of Default?

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Posted by Martin Armstrong - Armstrong Economics

on Wednesday, 04 October 2017 05:27


ECB-European-Central-BankCentral banks do not play games with the markets but it sure feels like we are being played by someone! Earlier this year the Bank of Japan, Federal Reserve and the European Central Bank all had similar balance sheets at around $4.5 trillion.  As we know, over the past ten years all three have risen from lower levels but have seen faster expansion by the BOJ and the FED gaining pace to now catch the ECB. Foreign exchange rates are always subjected to inherent volatility that is thrown into the mix. However, given the recent extremes on all fronts, there has been uncanny similarity around end of Q1’ 2017.

Typically, a central bank balance sheet would off-set Assets against Liabilities and capital.

On the assets side would sit: –

(i) Net domestic assets, and

(ii) Foreign assets.

Liabilities would list: –

(ii) Non-monetary liabilities (Central bank securities and other), and finally

(iii) Equity Capital

(iv) Reserve money (currency in circulation and those of commercial banks)

In times of crisis it is common the central bank assumes the role of lender of last resort. Assuming the crisis was 2007/8, then it should be normal to expect the balance sheet to now shrink back to the levels of the pre-crisis era. However, we have heard many comments recently from the FED about re-normalizing their balance sheet but the BOJ and ECB are set to carrying-on for the foreseeable future



Bonds & Interest Rates

In Marketing and in Markets, Don't be the Mark!

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Posted by Gary Tanashian - NFTRH

on Monday, 25 September 2017 06:55

I have made countless posts lampooning the mainstream media and its eyeball harvesting, click baiting content. This content and especially the associated headlines (let’s recall the classic R.I.P. Bond Bull Market as Charts Say Last Gasps Have Been Taken, dated Dec. 2016 as but one example) are designed to whip up emotions, draw attention and thereby gain traffic and ad dollars (diminishing though they are these days). nftrh.com is and always will be ad-free, by the way.

So sure, the bond bull market may well have ended in the Brexit and NIRP dominated summer of anxiety (in fact I believe it did), but any good contrarian would have seen the trade setup to go bearish on bonds in the middle of that hysteria, not a half a year later when Bloomberg used Louis Yamada’s chart to make a big headline. From a post in June 2016 about the Silver/Gold ratio and the prospects for a future ‘inflation trade’ right at the height of the bond bull…

“All of this as the world sits in Treasury bonds and global NIRP garbage. Perfect. More and more it is looking like Brexit may have been an exclamation point.”


We later were compelled to do a 180° on that analysis after Trump mania drove ‘reflation’ expectations too high, aided by the likes of this sentiment setup (mark ups mine on a graphic courtesy of Sentimentrader) against bonds. This was not so surprisingly right around the time of the “R.I.P. Bond Bull Market” headline stated the obvious. Bonds have risen ever since.



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