Banks Earnings Season Starts Next Week: Remember To Breathe
Four of the United States’ largest globally systemically important banks (GSIBs) are reporting earnings this Friday, October 14th: CitigroupC -1.4%, JPMorgan ChaseJPM -0.9%, Morgan StanleyMS -0.7%, and Wells FargoWFC -0.8%. Investors, economists, and a wide range of analysts and consultants will be dissecting these banks’ earnings looking for the direction not only of banks’ financial health, but also of the American economy. Read More
U.S. Consumer Borrowing Has Reached Record Highs
American consumers are more indebted than ever. The just recently released Federal Reserve Consumer Credit-G.19 report shows that U.S. consumer credit outstanding has reached historic levels; outstanding consumer credit is now at $4.7 trillion. In August, consumer credit increased at a seasonally adjusted annual rate of 8.3 percent. The previous rise in July had been 6.%. Read More
Climate Change Risks Are Rising In Importance For The Office Of The Comptroller Of The Currency
The Office of the Comptroller of the Currency (OCC), the regulator of the US’s largest banks stated today that it is working “to better understand climate-related financial risks in the context of safety and soundness, particularly as they relate to risks at large banks.” Read More
Leveraged Loan Default Volume Has Tripled This Year
The default rate this year has been rising both in high yield loans and leveraged loans. It is not as high as it was in 2020 or certainly not what it was in 2009. Read More
An Interview With Dr. Miriam Levitt Flisser, Candidate For Congress
Bronx-raised Dr. Miriam Levitt Flisser was nominated by the Republican Party to run for congress in New York’s Congressional District 16. The recently redrawn district, is comprised of most of Westchester County, south of Interstate 287 and its four largest cities —Mount Vernon, New Rochelle, White Plains and Yonkers, as well as a section of north-central Bronx. Read More
An Interview With Congressman Jamaal Bowman, Candidate For Congress
Representative Jamaal Bowman (D-NY 16) recently won the Democratic primary in New York’s Congressional District 16 with over 57% of the vote. This district is comprised of most of Westchester County, south of Interstate 287 and its four largest cities —Mount Vernon, New Rochelle, White Plains and Yonkers, as well as a section of the north-central Bronx. Read More
U.S. Bank Regulators Should Require Robust Climate Change Risks Measurements And Disclosures From Banks
I was pleased to hear that the Federal Reserve will run a pilot program next year requiring the United States’ most globally systemically important banks (GSIBs) to run climate change scenarios Read More
Probability of Default For High Yield Bonds And Leveraged Loans Is Rising
In another sign that the U.S. economy is headed for a rough landing, leveraged loans’ and high yield bonds’ probability of default and actual defaults continue to rise. Market signals, as well as rating analysts’ and my research point to a rate of default at about 2% or even higher for 2023-2024. Read More
After A Russian Sovereign Default, Over 100 Issuers Are Likely To Follow
Not only is the Russian sovereign under significant economic pressure, so are over 100 Russian municipal, government related, corporate, and financial institution issuers. They are rated CC or C, barely above default status. Read more here.
Banks’ Exposures To Russia Are Much More Transparent Than Those Of Non-Banks
Here we are in 2022, and sadly, we are still in a situation where there is tremendous opacity in the global financial system. If it were just rich investors losing money, the vast amount of the global population would hardly lose sleep. However, when financial institutions lose money, they invariably impact unsuspecting citizens. Read more here.
Banks Investing in Russia Cannot Cloak Themselves in the ESG Mantle
Bank executives should not have it both ways. Either they are compliant with Environmental, Social and Governance (ESG) standards or they are not. Numerous internationally active banks with credit and market exposures to Russia have not announced yet if they are closing their offices. And banking personnel continue to invest in Russian stocks, bonds, and other financial assets. Read more here.
Imminent Russian Defaults will Lead to an Economic Crisis Worse than in 1998.
In just one week, Russian President Vladimir Putin has caused hundreds of deaths and wreaked havoc in the lives of millions. He has also begun the destruction of the Ukrainian and Russian economies. Making Russia a global economic pariah is a dubious achievement, and it will take years for the citizens of both countries to recover. Read more here.
The Bank of Russia is Desperately Tying to Stop a Run on the Banks
The Bank of Russia is desperately trying to prevent a run on Russian banks. Today, the Russian central bank announced that it would lower reserve requirements for banks. Central banks around the world require banks to have reserves at their central bank in order to protect them and their depositors from a bank run. Lowering reserves for Russian banks is a clear sign that Russian banks’ liquidity is decreasing. The central bank announced that the liquidity gap in the Russian banking system is now $68 billion dollars, a 27% increase in the gap in just one day. Read more here.
From Ruble to Rubble
Russian President Vladimir Putin’s brutal, unprovoked invasion of Ukraine is bringing the Russian economy to its knees. Nothing tells the world faster what investors are thinking than the world’s largest financial market, the foreign exchange market. This $7 trillion daily turnover market is incredibly sensitive to country and economic risks. The ruble was stable after Russia sent troops to the Donbas region of Ukraine on February 21 and even when it invaded Ukraine three days later. Read more here.
Thirty-Nine States Do Not Have Enough Money To Pay Their Bills
To balance the budget, as is required by law in 49 states, elected officials have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers Read More
The U.S. Leveraged Finance Market Is At A Record $3 Trillion
For the first time in history, the U.S. leveraged finance market is over $3 trillion. The vast majority of leveraged loans are covenant lite and the major issuance in high yield bonds is in the B- category. Read more here.