Friday, August 14, 2020

Weekly Commentary: Safe Haven Treasuries Not So Safe

A “sloppy” auction saw 30-year Treasury yields surge 21 bps this week to 1.45%, an almost seven-week closing high.  Ten-year Treasury yields jumped 14 bps to 0.71%, while benchmark MBS yields rose 17 bps to 1.38%.  But how about in dollars?  The iShares 20+ Year Treasury Bond ETF (TLT) lost 3.9% for the week.  Is a so-called “safe haven” losing almost 4% in a single week really a safe haven?  Sure, Treasury yields could decline more from current historically low levels.  But this week confirmed the risk versus reward calculus for owning Treasury bonds these days is unattractive.

Corporate bonds somewhat outperformed but posted losses for the week nonetheless.  The iShares Investment Grade Corporate Bond ETF (LQD) fell 2.4%, and the iShares High Yield Corporate Bond ETF (HYG) declined 1.3%.  We’ll see if this week’s reversal leads to any slowdown in the wall of “money” flooding into bond funds.

Perhaps of more consequence, the spectacular EM bond (price) “melt-up” came to a rather abrupt halt this week.  Brazil’s 10-year (real) yields surged 51 bps to 7.27% - trading this week to the highest yields since April.  Local currency Eastern European bonds were under notable pressure, with yields surging 30 bps in Romania, 16 bps in Hungary and 11 bps in Czech Republic. India’s 10-year yields rose 11 bps to 5.95% - the high since May.

Dollar-denominated EM yields abruptly reversed higher as well. Brazil’s 10-year yields surged 25 bps to 3.61%, with Mexico’s yields up 23 bps to 2.93%, Russian yields up 10 bps to 2.16%, and Indonesian yields up 10 bps to 2.12%.

Rising yields were a global phenomenon.  European – “core” and “periphery” -  yields surged higher, led by nine bps increases in German (negative 0.42%) and French (negative 0.13%) 10-year yields.  Greek yields rose 12 bps (1.13%), and Italian yields gained six bps (0.99%).  Portuguese (0.37%) and Spanish (0.36%) yields both rose eight bps. UK yields rose 10 bps to 0.24%.

Japanese JGB yields rose four bps to 0.45%, matching the highest yields since March. Yields rose eight bps in Singapore to 0.88% and seven bps in Australia to 0.93%.   

At $6.911 TN, the Fed’s balance sheet is little changed over the past three months.  Granted, Fed Credit is up $3.167 TN, or 85%, over the past year.  But perhaps Fed liquidity effects have begun to wane somewhat. Meanwhile, there’s absolutely no end in sight for the unprecedented supply of new fixed-income securities (Treasuries and corporates).  

August 14 – Bloomberg (Brian Smith): “With dealers calling for $30bn to price along with an already robust visible pipeline, 2020 U.S. investment-grade new issue volume is set to break 2017’s FY volume record early next week. High-grade new issue supply is up 76% YoY and less than $10bn away from breaking the new issue volume record of $1.333trl set in 2017. What started as a defensive cash grab - buoyed by the Fed’s backstop - has morphed into an opportunity to refinance, pre-fund or even add incremental debt.”

August 12 – Bloomberg (Max Reyes and Gowri Gurumurthy): “Junk-rated companies have borrowed $274.8 billion in 2020, exceeding the sum of cash raised during all of last year… The record comes after the high-yield market saw the best returns since 2011 in July, attracting hefty inflows as investors continue to hunt for yield…”

Along with never-ending supply, perhaps bond markets are also beginning to sense fledging inflation risk.  July CPI and PPI readings both posted upside surprises.  At 0.6%, consumer prices doubled estimates – and have quickly reversed the negative CPI prints from March and April.  July producer prices also doubled estimates at 0.6%, posting the strongest monthly gain since October 2018.

Data out of China were also concerning.  Challenging the bullish recovery narrative, July Retail Sales were down 1.1% (versus estimates of a small increase).  This put year-to-date sales 9.9% below comparable 2019.  July auto sales were up 16.4% for the month, though year-to-date sales were still down 12.7%.  July airline passenger numbers were 34.1% below July 2019.  Also noteworthy, July lending and money supply growth came in below estimates.

China’s Aggregate Financing expanded a weaker-than-expected $243 billion during July.  This was down from June’s $494 billion.  Year-to-date (seven months), Aggregate Financing expanded a record $3.240 TN.  This was 42% ahead of growth from 2019 ($2.29 TN) and 70% above the comparable 2018 expansion ($1.91 TN).  Over the past year, Aggregate Financing expanded $4.633 TN, or 12.9%. It’s worth noting bonds are the fastest expanding components within Aggregate Financing.  Outstanding Corporate Bonds were up 21.1% y-o-y, with Government Bonds rising 16.5%.

Bank Loans expanded $142 billion, down from June’s $261 billion.  This was about 20% below forecasts and 6% below July 2019.  It was also the weakest lending since February.  Yet year-to-date Bank Loan growth of $1.882 TN ran 22% ahead of comparable 2019 (25% above comparable 2018).  Bank Loans were up 13.0 year-over-year ($2.76 TN), with two-year growth of 27.2% and five-year growth of 84.1%.

Consumer Loans expanded a weaker-than-expected $109 billion, down from June’s $141 billion.  Yet July Consumer Loan growth was 48% ahead of net lending from July 2019.  Consumer Loans were up 14.3% year-over-year, 33% in two years, 58% in three years and 135% in five.

August 14 – Bloomberg: “After receiving dozens of phone calls and text messages from banks touting cheap, unsecured and easy-to-get consumer loans, Eric Zhang visited one of China’s largest lenders in June and borrowed 400,000 yuan ($57,600) at an interest rate of 4%. But there was a catch -- he had to sign a letter promising the money wouldn’t be invested in property or stocks. That didn’t stop Zhang. A few days later, he’d found a merchant who helped him make a fake purchase and move the cash to his brokerage account. ‘I don’t think the bank can track the money and identify its real use,’ said Zhang, who works at a… private equity firm. ‘It’s a great trade for me,’ he said, after seeing his fresh stock investments surge 6% in one month.”

Bank lending to corporations (“Non-Financial Corporations”) dropped to $38 billion from June’s $133 billion – the weakest expansion since October’s $18 billion.  July is typically slow for corporate lending.  Corporate bond issuance dropped from June’s $49 billion to $34 billion, also the weakest expansion since October. 

August 11 – South China Morning Post (Georgina Lee): “Chinese banks’ net profits dropped a combined 24% during the second quarter, compared with a year earlier as banks grappled with bad loans caused by the coronavirus pandemic. The industry’s net profit stood at 426.7 billion yuan (US$61.4bn), down from 559 billion yuan during the same period a year ago. Profits were 29% down from the 600 billion yuan recorded in the first quarter… The fall in second-quarter profitability was sharper than expected, said some analysts, caused mainly by banks making higher provisions for loan losses. The industry’s loan loss ratio rose to 3.54%, up 0.04 percentage points from the first quarter. The non-performing loan (NPL) ratio for the industry rose to a 10-year high, at 1.94%, up from 1.91% at the end of the first quarter.”

China’s M2 money supply declined $136 billion during July, the first contraction since October.  This followed June’s staggering $500 billion M2 surge.  M2 expanded $2.00 TN year-to-date (seven months), or 11.7% annualized.  M2 was up $2.965 TN year-over-year, or 10.7%. M2 was up 19.7% in two years, 30.5% in three and 57% over five years.

Beijing is in a tricky spot –  a quite tenuous balancing act.  While there are fears of waning domestic and international demand, speculative market Bubbles (stocks and apartments) are a major cause for concern. With system Credit (“Aggregate Financing”) up an unprecedented $4.6 TN over the past year, China’s Bubble Economy and Market Structures have turned only more unwieldy. July’s data support the view of a cautious Chinese consumer bereft of pre-COVID confidence.  

And speaking of confidence… Booming markets have assumed endless on-demand U.S. fiscal and monetary stimulus.  And this might actually hold true – in crisis environments.  When markets are flying, politics make quite a resurgence.  And there are reasons Fed officials have become such strong proponents of fiscal stimulus:  at this point they appreciate monetary stimulus comes with major risks, certainly including more destabilizing Bubble excess and worsening inequality.  Along with pivotal elections (with all the potential for fiasco) only about 80 days away, market fun and games are officially on borrowed time.

For the Week:

The S&P500 added 0.6% (up 4.4% y-t-d), and the Dow gained 1.8% (down 2.1%). The Utilities fell 2.6% (down 6.0%). The Banks rose 2.0% (down 30.4%), and the Broker/Dealers gained 1.8% (up 1.7%). The Transports surged 3.6% (up 0.5%). The S&P 400 Midcaps increased 0.6% (down 5.5%), and the small cap Russell 2000 gained 0.6% (down 5.4%). The Nasdaq100 added 0.2% (up 27.8%). The Semiconductors advanced 1.0% (up 19.0%). The Biotechs fell 2.2% (up 9.6%). With bullion dropping $90, the HUI gold index sank 5.8% (up 36.5%).

Three-month Treasury bill rates ended the week at 0.0875%. Two-year government yields increased two bps to 0.145% (down 142bps y-t-d). Five-year T-note yields rose six bps to 0.295% (down 140bps). Ten-year Treasury yields jumped 14 bps to 0.71% (down 121bps). Long bond yields surged 21 bps to 1.45% (down 94bps). Benchmark Fannie Mae MBS yields rose 17 bps to 1.38% (down 133bps).

Greek 10-year yields jumped 12 bps to 1.13% (down 31bps y-t-d). Ten-year Portuguese yields rose 8 bps to 0.37% (down 7bps). Italian 10-year yields gained six bps to 0.99% (down 43bps). Spain's 10-year yields rose eight bps to 0.36% (down 11bps). German bund yields jumped nine bps to negative 0.42% (down 24bps). French yields rose nine bps to negative 0.13% (down 25bps). The French to German 10-year bond spread little changed at 29 bps. U.K. 10-year gilt yields jumped 10 bps to 0.24% (down 58bps). U.K.'s FTSE equities index advanced 1.0% (down 19.3%).

Japan's Nikkei Equities Index surged 4.3% (down 1.6% y-t-d). Japanese 10-year "JGB" yields rose four bps to 0.05% (up 6bps y-t-d). France's CAC40 gained 1.5% (down 17.0%). The German DAX equities index rose 1.8% (down 2.6%). Spain's IBEX 35 equities index jumped 2.9% (down 25.1%). Italy's FTSE MIB index rose 2.6% (down 14.8%). EM equities were mixed. Brazil's Bovespa index declined 1.4% (down 12.4%), while Mexico's Bolsa rallied 2.5% (down 10.6%). South Korea's Kospi index gained 2.4% (up 9.5%). India's Sensex equities index slipped 0.4% (down 8.2%). China's Shanghai Exchange added 0.2% (up 10.2%). Turkey's Borsa Istanbul National 100 index recovered 2.2% (down 5.6%). Russia's MICEX equities index jumped 3.0% (up 0.5%).

Investment-grade bond funds saw inflows of $6.482 billion, and junk bond funds posted positive flows of $1.542 billion (from Lipper).

Freddie Mac 30-year fixed mortgage rates jumped eight bps to 2.96% (down 64bps y-o-y). Fifteen-year rates added two bps to 2.46% (down 61bps). Five-year hybrid ARM rates declined were unchanged at 2.90% (down 45bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up five bps to 3.17% (down 89bps).

Federal Reserve Credit last week gained $8.9bn to $6.911 TN, with a 49-week gain of $3.189 TN. Over the past year, Fed Credit expanded $3.167 TN, or 85%. Fed Credit inflated $4.100 Trillion, or 146%, over the past 405 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt billion last week declined $0.8bn to $3.408 TN. "Custody holdings" were down $60bn, or 1.7%, y-o-y.

M2 (narrow) "money" supply declined $26.6bn last week to $18.260 TN, with an unprecedented 23-week gain of $2.752 TN. "Narrow money" surged $3.337 TN, or 22.4%, over the past year. For the week, Currency increased $7.2bn. Total Checkable Deposits surged $120.5bn, while Savings Deposits sank $144.8bn. Small Time Deposits fell $10.2bn. Retail Money Funds added $0.6bn.

Total money market fund assets fell $20.8bn to $4.555 TN. Total money funds surged $1.200 TN y-o-y, or 35.8%.

Total Commercial Paper declined $8.9bn to $1.010 TN. CP was down $125bn, or 11.0% year-over-year.

Currency Watch:

For the week, the U.S. dollar index declined 0.4% to 93.096 (down 3.5% y-t-d). For the week on the upside, the Mexican peso increased 1.8%, the Norwegian krone 1.7%, South African 1.4%, Canadian dollar 0.9%, Swedish krone 0.7%, euro 0.5%, Swiss franc 0.4%, Brazilian real 0.4%, British pound 0.3%, Australian dollar 0.2%, and Singapore dollar 0.1%. For the week on the downside, the  New Zealand dollar declined 1.0% and the Japanese yen 0.6%. The Chinese renminbi increased 0.25% versus the dollar this week (up 0.19% y-t-d).

Commodities Watch:

August 11 – Wall Street Journal (Kirk Maltais): “The raw ingredients for goods including chocolate and clothes have rebounded after their pandemic-fueled declines, lifted by supply constraints and investors’ bets that a recovering economy will boost consumer demand. Cocoa, coffee and other soft commodities trading on the Intercontinental Exchange have bounced back from their lows earlier this year and now number among the world’s best-performing major assets. In the past month alone, cocoa futures have risen 15% to $2,448 a metric ton and coffee futures have climbed 14% to $1.11 a pound. Cotton and sugar futures have also surged in recent months and are up 11% and 20%, respectively, since May 1.”

The Bloomberg Commodities Index increased 0.5% (down 12.5% y-t-d). Spot Gold fell 4.4% to $1,945 (up 28.1%). Silver dropped 4.7% to $26.258 (up 46.5%). WTI crude gained 79 cents to $42.01 (down 31%). Gasoline rallied 3.1% (down 26%), and Natural Gas jumped 5.3% (up 8%). Copper jumped 3.2% (up 3%). Wheat rose 2.8% (down 9%). Corn surged 5.4% (down 13%).

Coronavirus Watch:

August 11 – Associated Press (Mark Stevenson, Nicky Forster and Michelle R. Smith): “It took six months for the world to reach 10 million confirmed cases of the coronavirus. It took just over six weeks for that number to double. The worldwide count of known COVID-19 infections climbed past 20 million on Monday, with more than half of them from just three countries: the U.S., India and Brazil… The average number of new cases per day in the U.S. has declined in recent weeks but is still running high at over 54,000, versus almost 59,000 in India and nearly 44,000 in Brazil.”

August 13 – Bloomberg (Bibhudatta Pradhan and Ragini Saxena): “Several Indian ministers in Prime Minister Narendra Modi’s cabinet have tested positive for Covid-19 in the past few days, underscoring the spread of the virus in the world’s second most populous nation. Five ministers including Modi’s key aide and minister for internal security Amit Shah have contracted the virus which has infected nearly 2.4 million Indians. The south Asian nation has the highest death toll after U.S., Brazil and Mexico. Some of the ministers, including Shah, are in hospitals while others are recovering at home.”

Market Instability Watch:

August 12 – Associated Press (Stan Choe, Alex Veiga and Christopher Rugaber): “The stock market is not the economy. Rarely has that adage been as clear as it is now. An amazing, monthslong rally means the S&P 500 is roughly back to where it was before the coronavirus slammed the U.S, even though millions of workers are still getting unemployment benefits and businesses continue to shutter across the country. The S&P 500… ended Wednesday at 3,380.35 after briefly topping its closing record of 3,386.15 set on Feb. 19. It’s erased nearly all of the 34% plunge from February into March… The U.S. and global economies have shown some improvements since the spring, when business lockdowns were widespread, but they are nowhere close to fully healed… Many industries, such as airlines, hotels and dining, could take years to recover from the damage. The Federal Reserve and the U.S. government get a lot of the credit for the rally after pouring trillions of dollars into the economy.”

August 13 – Financial Times (Colby Smith): “The US government faced lacklustre demand for its latest record auction of long-dated Treasury bonds, marking one of its first mis-steps in funding historic spending packages passed by US legislators since March. On Thursday, the Treasury department struggled to offload $26bn of 30-year bonds at record-low interest rates. Instead, the bonds were sold at a yield of 1.4%, more than 0.02 percentage points above market expectations at the time of the auction deadline. Investors submitted bids for 2.14 times the amount on offer, the lowest bid-to-cover ratio for 30-year bonds since July 2019…”

August 12 – Financial Times (Mamta Badkar and Eric Platt): “Small and medium-sized US companies suffered a complete wipeout in profits in the second quarter because of the Covid-19 crisis, in sharp contrast to large multinationals that emerged from the most intense phase of the pandemic in better shape. As the earnings season draws to a close, companies within the Russell 2000 stock index — the small-cap benchmark — have reported an aggregate loss of $1.1bn, compared to profits of almost $18bn a year earlier… Meantime, the much bigger companies within the benchmark S&P 500 index have posted a 34% aggregate drop in earnings, to $233bn.”

August 10 – CNBC (Kate Rooney): “Robinhood joined the rest of brokerage industry by publishing monthly trading data... The start-up trounced them all — at least by one metric. Robinhood saw 4.3 million daily average revenue trades, or DARTS, in June… This is the first time the start-up has shared monthly totals. Robinhood’s debut total was higher than all of the major incumbent brokerage firms, and more than E-Trade and Charles Schwab combined.”

August 10 – Blooomberg (Paula Seligson and Gowri Gurumurthy): “Ball Corp. sold $1.3 billion of junk bonds at record-low yields amid a rally triggered by the Federal Reserve’s historic support for the market and heavy inflows into funds that buy the risky debt. The aluminum packaging company priced the 10-year notes at a 2.875% yield… That’s the lowest-ever for a U.S. junk bond with a maturity of five years or longer… The debt deal comes amid a surge in issuance from high-yield borrowers seeking to cut interest expense on existing debt as yields approach unprecedented lows of 4.95%. They closed Friday at 5.31%.”

August 9 – Bloomberg (David Gaffen): “Goldman Sachs Group Inc. predicted a deeper depreciation for the Turkish currency and warned that ‘with August illiquidity ahead of us, risks of another discontinuous move in local assets are rising.’”

Global Bubble Watch:

August 7 – Financial Times (Joe Rennison): “Central bankers have spent years warning of the perils of excess corporate debt. But their solution to this year’s coronavirus storm in financial markets has led to even more of it. It is the Catch-22 of post-2008 policymaking, and of now post-pandemic policymaking, too. To stave off a debt crisis, monetary policymakers create conditions that allow companies to borrow even more, increasing the potential severity of the next crisis. No central banker wants to encourage excessive borrowing but, equally, no central banker wants to stand by while companies default, increasing unemployment and throttling economic growth. ‘The chosen solution to a debt crisis is more debt,’ said Hans Mikkelsen, a credit strategist at Bank of America. ‘There is no escaping it. You cannot cut it back unless you can create a tremendous amount of economic growth to offset it. There is nothing the central banks can do.’”

August 12 – CNBC (Saheli Roy Choudhury): “As Latin America continues to battle the coronavirus outbreak, some economies in the region could see a ‘record-breaking contraction’ not seen since World War II, according to… Goldman Sachs.  Latin America and the Caribbean have become a new global epicenter of the pandemic, and the United Nations warned several countries in the region are ‘now among those with the highest per capita infection rates worldwide.’ Countries like Brazil, Mexico, Peru, Colombia and Chile are among the ten worst-affected, according to data from Johns Hopkins University. More than 100,000 people have died from Covid-19 in Brazil alone.”

August 12 – Financial Times (Delphine Strauss): “The UK economy suffered a bigger slump than any other major European economy in the second quarter, shrinking by a fifth and falling into its deepest recession on record. Official data… showed that gross domestic product fell more than 20% quarter on quarter, with widespread contractions across all sectors.”

August 13 – Reuters (Joseph Sipalan): “Malaysia’s economy shrank by 17.1% in the second quarter from a year earlier, its worst contraction in over two decades, as strict coronavirus measures at home and abroad slammed consumer spending and exports… The downturn was far worse than the 10.0% decline forecast…”

August 8 – Reuters (David Gaffen): “The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter, and slashed production rates as the coronavirus pandemic caused a drastic fall in fuel prices and demand. The dramatic reductions in asset valuations and decline in output show the depth of the pain in the second quarter.”

Trump Administration Watch:

August 12 – Reuters (Steve Holland and Susan Heavey): “President Donald Trump accused congressional Democrats… of not wanting to negotiate over a U.S. coronavirus aid package because he was refusing to go along with ‘ridiculous’ spending requests unrelated to the pandemic. Trump’s comments came after top Republican and Democratic negotiators traded blame for a five-day lapse in talks over relief legislation.”

August 8 – Financial Times (Emma Newburger and Jacob Pramuk): “President Donald Trump… signed a series of executive orders expanding coronavirus economic relief to Americans struggling during the pandemic. The president’s four orders extend unemployment benefits, provide a payroll tax holiday, defer student loan payments through 2020 and extend the federal protections from evictions. Trump’s orders will quickly face a legal challenge, as continuing the programs would require federal funding, which Congress controls.”

August 10 – Wall Street Journal (Eric Morath): “The federal government spent nearly $250 billion on extra $600-a-week unemployment benefits from early April to the end of July… Workers who permanently lost their jobs, were furloughed or had their hours cut were able to tap $600 in federal unemployment benefits on top of the amount they qualified for from the state, under a relief law Congress passed and President Trump signed in March. The benefits expired on July 31. Mr. Trump on Saturday signed an executive order that would replace the larger payments with $300 a week in enhanced unemployment benefits, and called on states to provide another $100 a week.”

August 11 – Reuters (Susan Heavey): “U.S. President Donald Trump… said his relationship with Chinese President Xi Jinping has frayed in the wake of the novel coronavirus pandemic and that he has not spoken to his Chinese counterpart in a long time. ‘I used to have a very good relationship with him… I had a great relationship with President Xi. I like him, but I don’t feel the same way now.’”

August 10 – Financial Times (Demetri Sevastopulo): “When US secretary of state Mike Pompeo last month declared in a speech that China was intent on ‘hegemony’, it was yet another sign of how much has changed since Donald Trump wrote in a tweet in March about his ‘respect’ for president Xi Jinping. As the pandemic has devastated the US economy, imperilling his re-election, Mr Trump has ditched his reluctance to taking a harsher stance on Beijing, as he increasingly blames the Chinese government for what he calls the ‘China virus’.  His decision to make China a bogeyman in the 2020 US presidential race has opened the door for security hawks to push policies to clamp down on threats from Beijing that Mr Trump previously ignored. But some officials privately say that they are also racing to enact tough policies in case Mr Trump ends up losing to Joe Biden in November.”

August 10 – Bloomberg (Alexandre Tanzi): “President Donald Trump’s decision to extend a student-loan freeze will take away a financial risk for tens of millions of U.S. households, who now won’t have to resume paying back about $1.2 trillion of debt until at least 2021. The measure, one of four executive actions Trump took on Aug. 8, keeps both repayments and the accumulation of interest on hold through the end of this year.”

August 7 – Wall Street Journal (Bob Davis): “The Trump administration’s cascade of actions taken against Beijing represent a new chapter in U.S.-China relations, one marked by increasing confrontation and few efforts to de-escalate the tensions. Business leaders, scholars and others involved in U.S.-China relations say that while the administration’s moves clearly have an electoral component—the president is campaigning on being tough on China—they go well beyond the 2020 election. Previous confrontations between the two nations have been limited as they sought to put business and economic relations first. But U.S. business no longer has the sway it once had in getting Beijing and Washington to back off.”

August 10 – Reuters (Jeff Mason, Andrea Shalal and Alexandra Alper): “U.S. Treasury Secretary Steven Mnuchin… said companies from China and other countries that do not comply with accounting standards will be delisted from U.S. stock exchanges as of the end of 2021. Mnuchin and other officials recommended the move to the U.S. Securities and Exchange Commission last week to ensure that Chinese firms are held to the same standards as U.S. companies, prompting China to call for frank dialogue.”

U.S. Bubble Watch:

August 12 – Reuters (David Lawder): “The U.S. federal budget deficit fell to $63 billion in July, half the amount of a year earlier and down from $864 billion in June, as a delayed July 15 tax payment deadline boosted revenues and coronavirus aid outlays shrank sharply… The July deficit brought the fiscal year-to-date deficit to $2.81 trillion, compared to $867 billion for the comparable period of 2019 and doubling the 2009 full-year record deficit of $1.4 trillion.”

August 12 – Reuters (Lucia Mutikani): “U.S. consumer prices increased more than expected in July, but high unemployment is likely to keep inflation under control, allowing the Federal Reserve to continue pumping money into the economy… The… consumer price index rose 0.6% last month after rebounding 0.6% in June. In the 12 months through July, the CPI accelerated 1.0% after climbing 0.6% in June. Economists… had forecast the CPI rising 0.3% in July…”

August 11 – Reuters (Lucia Mutikani): “U.S. producer prices rebounded more than expected in July, but the overall trend in producer inflation remained subdued amid signs the economy’s recovery from the COVID-19 recession was faltering. The… producer price index for final demand increased 0.6% last month after falling 0.2% in June. In the 12 months through July, the PPI dropped 0.4% after declining 0.8% in June.”

August 13 – CNBC (Jeff Cox): “First-time claims for unemployment insurance last week fell below 1 million for the first time since March 21 in a sign that the labor market is continuing its recovery from the coronavirus pandemic. The total claims of 963,000 for the week ended Aug. 8 was well below the estimate of 1.1 million from economists… That represented a decline of 228,000 from the previous week’s total.”

August 12 – CNBC (Diana Olick): “Two straight weeks of record low mortgage rates brought consumers back to their lenders, but rates may now be reversing course… Mortgage applications to purchase a home rose 2% for the week and were a strong 22% higher than the same week one year ago.”

August 10 – Bloomberg (Reade Pickert and Katia Dmitrieva): “The pandemic-induced downturn initially had hints of being the sharpest but shortest U.S. recession on record. Now there are increasing signs of economic scarring that resemble past slumps. Beneath a headline number showing a better-than-expected gain in July jobs, the government’s employment report contained indications of underlying weakness. Payrolls remain 13 million below pre-pandemic levels and the number of people out of work for 15 weeks or longer more than doubled from the prior month, to 8 million.”

August 11 – Bloomberg (Madeleine Ngo): “Big companies are going bankrupt at a record pace, but that’s only part of the carnage. By some accounts, small businesses are disappearing by the thousands amid the Covid-19 pandemic, and the drag on the economy from these failures could be huge. This wave of silent failures goes uncounted in part because real-time data on small business is notoriously scarce, and because owners of small firms often have no debt, and thus no need for bankruptcy court.”

August 13 – Bloomberg (Sally Bakewell): “Unprecedented government stimulus has allowed more companies to borrow at lower rates than ever before. Yet amid the credit boom, smaller firms that power America’s economic engine are often being shut out, hamstringing the recovery just as it begins. The Federal Reserve’s pledge to use its near limitless balance sheet to buy corporate bonds has aided stricken airlines, oil drillers and hotels. It’s also helped companies from Alphabet Inc. and Inc. to Visa Inc. and Chevron Corp. access some of the cheapest financing ever seen. All told, firms have sold about $1.9 trillion of investment-grade debt, junk bonds and leveraged loans this year… But for companies not large enough to tap fixed-income markets, the outlook is much more dire. Banks are tightening conditions on loans to smaller firms at a pace not seen since the financial crisis, while many direct lenders that have traditionally focused on the middle market are pulling back or turning to bigger deals instead.”

August 9 – CNBC (Annie Nova): “Amid one of the worst downturns in U.S. history, nearly 80% of credit card holders say they’re worried they won’t be able to continue making even the minimum payments on their debt.  The figure comes from a survey by, which found millennial card holders (91%) are most at risk of missing payments. Meanwhile, 1 in 4 people say the pandemic has pushed them to take on more credit card debt.  Most of the relief measures delivered to Americans in the first stimulus package have dried up, even as the coronavirus pandemic shows no sign of abating.”

August 12 – Wall Street Journal (Kate Davidson and David Harrison): “Spending cuts by state and local governments grappling with the coronavirus pandemic pose a headwind to the U.S. economic recovery as lawmakers consider how much federal aid to provide. State and local governments reduced spending at a 5.6% annual rate in the second quarter as they laid off workers and pulled back on services to offset plunging tax revenues. More cuts are on the way. Moody’s Analytics estimates that without additional federal aid, state and local budget shortfalls will total roughly $500 billion over the next two fiscal years. That would shave more than 3 percentage points off U.S. gross domestic product and cost more than 4 million jobs, said Dan White, head of fiscal policy research at Moody’s.”

August 13 – Wall Street Journal (Scott Calvert): “Most U.S. cities say continuing economic damage from the coronavirus pandemic will leave them in worse financial shape in the coming year than they were earlier in the crisis, raising the odds of deeper municipal layoffs and service reductions… Nearly 90% of the 485 cities polled by the advocacy group National League of Cities said they will have a harder time meeting the needs of their communities in fiscal 2021 than in the prior fiscal year, the highest share since the depths of the 2007-09 recession. In 2019, just 24% of finance officers reported that their city was less able to meet fiscal needs, compared with the previous year… Municipal budget officials on average anticipate that general fund revenues for fiscal year 2021 will come in 13% below 2020 levels…”

August 10 – Associated Press (Geoff Mulvihill): “State and local government officials across the U.S. have been on edge for months about how to keep basic services running while covering rising costs related to the coronavirus outbreak as tax revenue plummeted. It’s now clear that anxiety will last a lot longer. Congressional talks over another coronavirus relief package have failed, with no immediate prospects for a restart. The negotiation meltdown raises the prospect of more layoffs and furloughs of government workers and cuts to health care, social services, infrastructure and other core programs. Lack of money to boost school safety measures also will make it harder for districts to send kids back to the classroom.”

August 9 – Wall Street Journal (Janet Adamy): “The economic hit of the coronavirus pandemic is emerging as particularly bad for millennials, born between 1981 and 1996, who as a group hadn’t recovered from the experience of entering the workforce during the previous financial crisis. For this cohort, already indebted and a step behind on the career ladder, this second pummeling could keep them from accruing the wealth of older generations.”

August 11 – Bloomberg (Eliza Ronalds-Hannon): “Frackers are failing by the dozens, spurring an unusual problem for their suppliers: What to do with thousands of tons of sand parked in hopper cars on America’s railroads. A case in point is Covia Holdings Corp., which received a lecture from Judge David Jones at a bankruptcy hearing last month about the obligation to safely dispose of more than 4,000 leased rail cars, each carrying about 100 tons of superfine frac sand. Most of it is now worse than worthless -- almost no one wants the mineral, and Covia is burning cash on rail car leases, maintenance and storage costs…”

August 12 – Bloomberg (Oshrat Carmiel): “Manhattan apartment rents plunged last month by the most in nearly nine years. That’s only one sign of weakness for the borough’s leasing market. By almost every measure, the news is dismal for landlords, who are trying to keep units filled amid a global pandemic that’s sparked an urban exodus. July’s vacancy rate climbed to a record of 4.33%, according to… Miller Samuel Inc. and Douglas Elliman Real Estate. There were 13,117 apartments listed for rent at the end of the month, the most in data going back to 2006.”

August 10 – Wall Street Journal (Karen Langley): “Shares of home builders have been on a tear since the stock market bottomed in late March… The S&P 500’s home-building subindustry index… is up 23% this year and closed Monday at its first record in 15 years.”

August 8 – Reuters (Jonathan Stempel): “Berkshire Hathaway… announced a $9.8 billion writedown and 10,000 job losses at its Precision Castparts aircraft parts unit, as the coronavirus pandemic caused widespread pain at Warren Buffett’s conglomerate.”

Fixed Income Watch:

August 12 – Bloomberg (Joanna Ossinger): “The standoff in Washington over the flow of stimulus money to state and local municipal governments is adding more risk to U.S. credit markets, according to Morgan Stanley… State and local government budgets have been severely damaged by the Covid-19 pandemic due to lost tax revenue and rapidly rising expenses, and that may have ramifications for investors, Morgan Stanley Wealth Management strategists Scott Helfstein and Monica Guerra wrote… ‘Though municipal budgets are strained, muni bond yields have reached historic lows due to constructive seasonals and risk-off sentiment… Failure to secure aid for state and local governments presents downside risk for bonds of low credit quality at a time when investors are willing to move down the credit curve.’”

August 9 – Bloomberg (Christopher Maloney): “A deluge of supply has inundated the agency mortgage-bond market this year, as a plunge in lending rates triggered a wave of homeowner refinancings. But there are signs that relief may be forthcoming. Gross supply as of the end of June has already reached $1.2 trillion, a torrid pace considering the last decade has averaged $1.3 trillion per annum… Federal Reserve policy… has certainly been a contributing factor. The Fed has bought mortgages at a blistering pace. Between March 16 and the end of June, the bank added almost $788 billion to its balance sheet. As total gross supply from March through June was $905 billion, this helped sector spreads tighten back to levels seen before the pandemic.”

August 11 – Wall Street Journal (Cezary Podkul): “Thousands of commercial-mortgage borrowers have been struggling to meet payments on their loans in the midst of the coronavirus pandemic. But there might be another reason so many are falling behind: aggressive lending practices that overstated borrowers’ ability to repay. A study of $650 billion of commercial mortgages originated from 2013 to 2019 found that even during normal economic times, the mortgaged properties’ net income often falls short of the amount underwritten by lenders. The underwritten amount should be a conservative estimate of how much a property earns. Instead, the actual net income trails underwritten net income by 5% or more in 28% of the loans, according to the study of nearly 40,000 loans by two finance academics at the University of Texas…”

August 11 – Reuters (Yoruk Bahceli): “Universities… have gone on a borrowing spree in the bond markets this year that outpaces a rise in companies’ bond sales… Bond issuance by universities is only a tiny part of the global bond market, but sales by universities worldwide are more than double full-year 2019 levels at $11.4 billion in the year to date, Dealogic data shows. In comparison, global debt issuance by companies is at around 75% of 2019 volumes, based on Dealogic data.”

China Watch:

August 10 – Bloomberg: “China said it will sanction 11 Americans in retaliation for similar measures imposed by the U.S…, but the list doesn’t include any members of the Trump administration. Those sanctioned include Senators Marco Rubio, Ted Cruz, Tom Cotton and Pat Toomey…”

August 10 – Wall Street Journal (John Lyons and Joyu Wang): “China’s campaign to quash dissent in Hong Kong accelerated with the arrest of pro-democracy media baron Jimmy Lai, sending an ominous signal about the future of a free press and the new limits on those challenging Beijing’s tightening grip on the former British colony. Mr. Lai was among 10 swept up Monday, including Agnes Chow, a 23-year-old politician who is well known for helping to lead pro-democracy protests, in the latest move by authorities to enforce a new national security law imposed by the mainland on Hong Kong.”

August 11 – Reuters (Yoruk Bahceli): “New bank lending in China fell more than expected in July from the previous month, but broad credit and liquidity growth quickened as the central bank sought to support a gradual economic recovery. Chinese banks extended 992.7 billion yuan ($142.82bn) in new yuan loans in July, down sharply from 1.81 trillion yuan in June and falling short of analysts’ expectations… Household loans, mostly mortgages, fell to 757.8 billion yuan in July from 978.8 billion yuan in June, while corporate loans dipped to 264.5 billion yuan from 927.8 billion yuan.”

August 12 – Reuters (Cheng Leng, Lusha Zhang and Ryan Woo): “China’s banking industry is expected to dispose 3.4 trillion yuan ($489.91bn) of bad loans in 2020 to contain financial risks in an economy weakened by COVID-19, the official Xinhua News Agency reported. ‘The sector will further step up bad loan disposals in 2021, as some of the problems will be exposed next year due to delayed loan payments,’ Xinhua quoted Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC)…” 

August 12 – Wall Street Journal (Lingling Wei): “For decades, Chinese leaders embraced foreign investments and exports to power China’s economy. Now, with the world in recession and U.S.-China tensions deepening, President Xi Jinping is laying out a major initiative to accelerate China’s shift toward more reliance on its domestic economy. The new policy is gaining urgency as Chinese companies… face increasing resistance in foreign markets, Chinese officials say. In a series of speeches to senior government officials since May, Mr. Xi has trotted out the new strategy, translated as ‘domestic circulation,’ prioritizing domestic consumption, markets and companies as China’s main growth drivers. Investments and technologies from overseas, though still desirable, would play more of a supporting role.”

August 11 – Bloomberg: “First the pandemic and now floods are slashing the spending power of Chinese households this year, as stagnant incomes and rising costs undermine the strength of the domestic recovery. That trend may also be worsening China’s already severe income inequality… The median disposable income -- about $1000 per quarter -- actually fell as the virus lockdowns hit, and the fact that it’s recovering slower than the mean likely indicates a widening gap with wealthy Chinese. On top of that, food prices are rising faster as the pandemic has slowed imports and flooding in central China damaged food crops and transport links.”

August 11 – Reuters (Yilei Sun and Brenda Goh): “China’s auto sales in July climbed 16.4% from a year earlier, the fourth consecutive month of gains as the world’s biggest vehicle market comes off lows hit during the country’s coronavirus lockdown. Sales rose to 2.11 million vehicles in July but are still down 12.7% for the year to date at 12.37 million vehicles…”

August 12 – Reuters (Stella Qiu and Brenda Goh): “China’s aviation regulator said… that passenger numbers in July fell 34.1% from a year earlier. That marked a recovery from a year-on-year decline of 42.4% in June.”

August 9 – Financial Times (Sun Yu): “Chinese rating agencies have upgraded a record number of local government bond issuers even as fiscal income plunged after the coronavirus outbreak, in a move analysts say could lead to a wave of defaults. The corporate credit ratings of 100 local government financing vehicles, the main lenders behind China’s infrastructure building boom, have been raised since January, according to Wind… This marks a sharp rise, with just 17 reporting a rise in the previous ten years combined. The shift comes despite local governments reporting a 7.9% drop in revenues in the six months ending in June. Rating agencies attributed the stronger credit score to LGFVs’ solid financial performance at the end last year and discounted the pandemic because it was unclear what long-term effect it would have on the economy.”

August 14 – Reuters (Ryan Woo and Liangping Gao): “Not yet 30, Beijing office worker Li thought she was already on her way up China’s private property ladder with two apartments bought and rented out. Then came the new coronavirus, jobless tenants leaving town and a rent falloff. She’s one of millions of Chinese landlords who have bought apartments to let in a highway to the country’s growing middle class, many now facing a first slump in rental income… Rents in 20 major cities fell 2.33% in July from the same month year earlier, according to property data provider Zhuge House Hunter - the fourth consecutive month of decline in a market that’s been buoyant for years.”

August 12 – Reuters (Samuel Shen, Cheng Leng and Ryan Woo): “It’s not a good sign for any economy when debt collectors are booming and in China right now, the industry is on a hiring spree. Whole Scene Asset Management, a debt recovery firm based in the southern province of Hunan, plans to double staff numbers to 400 people this year as it expands into new cities. ‘Debt collection companies have been mushrooming,’ said company founder Zhang Haiyan. ‘And with bad loans growing this year, everyone is adding new hands.’”

August 13 – Bloomberg: “China’s multi-year clampdown on its peer-to-peer lending industry has whittled the number to just 29 platforms, down from about 6,000 at its peak… The crackdown, which is likely to be completed at the end of this year, has left investors with more than 800 billion yuan ($115bn) in unpaid debt from failed platforms…”

August 12 – Financial Times (Christian Shepherd, Wang Xueqiao and Thomas Hale): “Beijing is on alert for flooding as China struggles with a series of severe weather events that are driving up food prices and threatening its economic recovery from coronavirus. The Beijing municipal government, worried over a repeat of 2012 when flash floods killed about 80 people — some of whom drowned in their cars in underpasses, has shut parks, advised residents to avoid unnecessary travel and cancelled flights from its Daxing airport.”

EM Watch:

August 13 – Bloomberg (Cagan Koc and Constantine Courcoulas): “Turkey’s central bank offered the nation’s lenders funding through a more expensive channel in the latest effort to reverse declines in the lira without raising its key interest rate. Policy makers… conducted a 20 billion-lira ($2.7bn) one-month repo auction through what they call the conventional method. The average simple rate for lenders that received funding was 10.96%, 271 bps higher than the central bank’s benchmark.”

August 12 – Bloomberg (Selcuk Gokoluk and Asli Kandemir): “President Recep Tayyip Erdogan says Turkey’s banks are ‘doing fine.’ But as the lira spirals ever lower, debt investors are taking a less sanguine view. The bonds of three Turkish lenders are trading at distressed levels, which shows the deteriorating opinion of investors on the ability of the companies to repay their obligations, even though the banks remain profitable and highly capitalized. That’s the same number of firms as serial-defaulter Argentina…”

Europe Watch:

August 10 – Financial Times (Mehreen Khan and Tommy Stubbington): “The EU’s plan to issue €750bn of bonds to fund its Covid-19 recovery poses no immediate threat to the bloc’s credit rating, according to the biggest agencies, despite big divisions between member states on how to pay the money back. The EU’s 27 governments agreed in July a landmark response to the coronavirus crisis by empowering the European Commission to raise €750bn of debt and to hand the proceeds to stricken economies in the form of loans and grants. The deal included a promise to explore new sources of income — such as a European digital tax or levy on carbon imports — to pay back the EU’s biggest ever exercise in joint borrowing. But governments are divided over the levies.”

Leveraged Speculation Watch:

August 9 – Wall Street Journal (Simon Constable): “The stock-market volatility in the first half of 2020 should have been a near-perfect period for ‘long-short’ mutual funds and exchange-traded funds to make a killing. Unfortunately, less than one in three such funds made money for investors during this tumultuous period.”

Geopolitical Watch:

August 12 – Reuters (Robert Muller): “China’s global economic power makes the communist country in some ways a more difficult foe to counter than the Soviet Union during the Cold War, U.S. Secretary of State Mike Pompeo said on a visit to the Czech Republic… Pompeo called on countries around Europe to rally against the Chinese Communist Party (CCP), which he said leverages its economic might to exert its influence around the world. ‘What’s happening now isn’t Cold War 2.0,’ Pompeo said in a speech to the Czech Senate. ‘The challenge of resisting the CCP threat is in some ways much more difficult.’ ‘The CCP is already enmeshed in our economies, in our politics, in our societies in ways the Soviet Union never was.’”

August 11 – Financial Times (Kathrin Hille): “US health secretary Alex Azar has raised the possibility of a trade deal with Taiwan during a historic visit to the country this week in remarks that are likely to trigger protests from Beijing. Wrapping up the three-day trip…, during which he met President Tsai Ing-wen, her national security adviser and foreign and health ministers, Mr Azar said his talks had touched upon a ‘bilateral trade arrangement’. ‘The purpose of my visit is to highlight the deep partnership and friendship between Taiwan and the US,’ Mr Azar said…”

August 13 – Financial Times (Kathrin Hille): “China’s military said… it conducted exercises near Taiwan ‘to safeguard national sovereignty’ in the face of rising US diplomatic exchanges with Taipei, underlining mounting tensions in the region. The comments came a day after Alex Azar, US health secretary, became the most senior Washington cabinet official to visit Taiwan since 1979 and marked a rare example of Beijing giving a political reason for a military exercise. ‘Recently, certain large countries are incessantly making negative moves regarding the Taiwan issue and sending wrong signals to the ‘Taiwan independence’ forces, seriously threatening peace and stability in the Taiwan Strait,’ Colonel Zhang Chunhui, spokesman of the People’s Liberation Army’s Eastern Theatre Command, said…”

August 12 – Reuters (Yimou Lee and Ben Blanchard): “Taiwan unveiled a T$42.1 billion ($1.4bn) increase for next year’s planned defence spending…, as China announced details of its latest combat drills near the democratic island. China has stepped up its military activity near Taiwan, which it regards as a breakaway province. On Monday, Taiwan said Chinese fighters briefly crossed the sensitive median line of the Taiwan Strait, the same day U.S. health chief Alex Azar met President Tsai Ing-wen in Taipei. China had denounced Azar’s trip.”

August 10 – Reuters (Yimou Lee): “U.S. Health Secretary Alex Azar attacked China’s response to the coronavirus pandemic… and said that if such an outbreak had emerged in Taiwan or the United States it could have been ‘snuffed out easily’… ‘The Chinese Communist Party had the chance to warn the world and work with the world on battling the virus. But they chose not to, and the costs of that choice mount higher every day,’ Azar said in Taipei…”

August 11 – Reuters (Doina Chiacu): “U.S. Secretary of State Mike Pompeo said… he was ‘deeply troubled’ by reports of the arrest of Hong Kong media tycoon Jimmy Lai ‘under Hong Kong’s draconian National Security Law.’ …‘Further proof that the CCP (Chinese Communist Party) has eviscerated Hong Kong’s freedoms and eroded the rights of its people,’ Pompeo said… Separately, White House national security adviser Robert O’Brien said…: ‘We are deeply troubled by the arrest of Jimmy Lai.’”

August 11 – Financial Times (Christian Shepherd and Xinning Liu): “When Chinese diplomats began spreading conspiracy theories in March suggesting that the US army had brought coronavirus to China, the claims looked set to derail an already acrimonious relationship between Beijing and Washington. But in recent weeks, despite rounds of US sanctions…, Beijing has struck a more conciliatory note. ‘China is always ready to work with the United States,’ Zhao Lijian, Chinese foreign ministry spokesperson and a previous proponent of theories linking the US military to the outbreak of Covid-19 in Wuhan, told reporters…”

August 8 – Financial Times (Michael Stott): “Home to almost half of the world’s new cases of coronavirus, Latin America is a long way from winning the war against Covid-19. But there is already one victor in the region: China. Beijing has moved swiftly in Latin America to donate medical equipment and supplies, offer technical help and express solidarity. Its ambassadors have flooded social media with messaging about Chinese co-operation and solidarity, eclipsing the US, the region’s traditional power. Wang Yi, China’s foreign minister, capped Beijing’s efforts with a virtual video conference for his Latin American and Caribbean counterparts last week, offering $1bn in loans to help buy a Chinese-made vaccine once it becomes available and calling for closer relations with the region, a key supplier of food and metals, post-pandemic.”

August 13 – Reuters (Sally Bakewell): “A sharp escalation in tensions with the United States has stoked fears in China of a deepening financial war that could result in it being shut out of the global dollar system - a devastating prospect once considered far-fetched but now not impossible. Chinese officials and economists have in recent months been unusually public in discussing worst-case scenarios under which China is blocked from dollar settlements, or Washington freezes or confiscates a portion of China’s huge U.S. debt holdings. Those concerns have galvanised some in Beijing to revive calls to bolster the yuan’s global clout as it looks to decrease reliance on the greenback. Some economists even float the idea of settling exports of China-made COVID-19 vaccines in yuan, and are looking to bypass dollar settlement with a digital version of the currency.”

August 11 – Bloomberg (Debby Wu): “A key supplier to Apple Inc. and a dozen other tech giants plans to split its supply chain between the Chinese market and the U.S., declaring that China’s time as factory to the world is finished because of the trade war. Hon Hai Precision Industry Co. Chairman Young Liu said it’s gradually adding more capacity outside of China, the main base of production for gadgets from iPhones to Dell desktops and Nintendo Switches. The proportion outside the country is now at 30%, up from 25% last June. That ratio will rise as the company -- known also as Foxconn -- moves more manufacturing to Southeast Asia and other regions to avoid escalating tariffs…”

August 8 – Financial Times (Joe Rennison): “Companies could shift a quarter of their global product sourcing to new countries in the next five years, according to a new study which warns that rising threats to supply chains are taking a heavy toll on profits.  Goods worth $2.9tn-$4.6tn, or 16-26 per cent of global exports in 2018, are in play, the McKinsey Global Institute estimates... Cost considerations and government pressures to become more self-reliant could see more than half of pharmaceutical and apparel production move to new countries, it adds.”

August 14 – Reuters (Daren Butler): “A Greek and a Turkish warship were involved in a mild collision on Wednesday during a standoff in the eastern Mediterranean, in what a Greek defence source called an accident but Ankara described as a provocation.”

August 13 – Financial Times: “Tensions between Nato allies France and Turkey have sharply intensified after Paris deployed naval vessels to the eastern Mediterranean in support of Greece, which is embroiled in a confrontation with Ankara over oil and gas exploration in disputed waters off Cyprus. Kyriakos Mitsotakis, Greece’s prime minister, warned… of ‘the risk of an accident with so many military assets gathered in an enclosed space [the eastern Mediterranean]’. The spark that ignited the latest flare-up was Turkey’s decision to pursue its claim to possible offshore oil and gas reserves by sending the survey ship Oruc Reis into disputed waters -accompanied by Turkish warships — on an exploration mission.”

Friday Evening Links

[Reuters] S&P 500 ends almost flat as record remains elusive

[Reuters] Trump says ready to move on coronavirus aid, blames Democrats for holdup

[CNBC] Coronavirus live updates: NY to allow bowling alleys and museums to reopen; California tops 600,000 cases

[Yahoo/Bloomberg] Berkshire Makes a Bet on Gold Market That Buffett Once Mocked

[Reuters] 'Canary in the coal mine': Greenland ice has shrunk beyond return, study finds

[Bloomberg] High-Priced S&P 500 Stumbles on the Brink of Making History

[FT] Europe’s ‘last dictator’ in a brutal fight for survival