iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,419 Blog Posts

US Petrol Banks Routed; CLO Issuance Collapses into Worst December Since 1931

This is the worst December since 1931. Xmas has literally been canceled.

 

These bastardized ETFs whose assets are wholly illiquid are getting flayed. Do you see this nonsense below? This is an illusion, a trick that makes holders think their investment is liquid. The leveraged loans or CLOs behind this nonsense has a 1 mo settlement, on average.

CLO activity has collapsed. Hence, banks are getting hammered.

Aside from a collapse in issuance, fund flows out of these products are at record levels.

How big is this market? YUGE. $1.1 trillion. See Zerohedge for more coverage.

Oil is getting ravaged on a daily basis, indicative of of a rapidly slowing China. It makes sense, trade war and all. But the ramifications are far reaching, especially since we’re a god damned net producer of oil now.

Observe US petrol-banks, like CFR, LBC, and TCBI, with loan portfolios rich with oil getting ax murdered.

Because of the debt associated with oil and the size of the exposure ( ~$2 trillion), the high yield market is in blow up mode.

We’re in a negative feedback loop, both lovely and resplendent with vampires. In order to get out of it, we need a nice news event and strong reversal on aggressive volume. Perhaps the government shutdown on the 21st of December will provide us with such an inverse occasion.

Good night.

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16 comments

  1. numbersgame

    Nice post…except as I said before, it is a positive feedback loop with a negative input (ducks and hides)

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  2. irma vep

    Red horizontal bar chart is interesting. How much of it is group think? I’ll have to knead that around in my brain and make some tangential yet not too far fetched comparisons.

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  3. it is showtime

    CHRISTMAS IS CANCELLED

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  4. frog

    If this is such a big deal, why hasn’t the Fed noticed it?

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    • Lyndon Keltner

      Very fine central bank sarcasm if it’s a 2007 reference.

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      • numbersgame

        (T)he impact on the broader economy and financial markets of the problems in the _____ market seems likely to be contained.

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        • Lyndon Keltner

          The best Ivy League hubris from none other than Bernanke in August 2007: “We’re not worried about the subprime problem; it’s at the most a $100 billion problem.”

          In a strange way, it’s reminiscent of Nixon telling John Dean about coming up a million bucks to bury the Watergate “problem” wasn’t a problem.

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  5. heaterman

    They have to raise rates because they know another “unwind” is coming.
    Hence the need to get a little room under the rates so they have at least some ammunition with which to fight/lower when the time comes.

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    • Lyndon Keltner

      Right, and they did the same shit from 2003 to 2006 too. Didn’t seem to work all that well with said accumulated ammo, did it?

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      • s.k.

        They don’t know shit. That’s your first mistake; thinking the Fed knows anything.

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  6. numbersgame

    In other news, why don’t you read about our next President:
    https://en.wikipedia.org/wiki/Biden

    Polled groups that rate him favorably
    – Democrats
    – Independants (+21 points <—–)
    – Men
    – Women
    – White men
    – White women
    – African Americans
    – Hispanics
    – Whites with a college degree
    – Whites without a college degree
    – Aged 18-34
    – Aged 35-49
    – Aged 50-64
    – Aged 65+

    Polled groups that rate him unfavoarably
    – Republicans

    https://poll.qu.edu/national/release-detail?ReleaseID=2591

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    • Lyndon Keltner

      He will need Obama’s endorsement and much more to get thru the southern primaries. Like most blacks I know, I’m for Harris simply because of her electability. She can afford to lose the white vote by 20 points and still do better than Obama in 2012.

      Tammy Duckworth is my favorite dark horse. Look her up.

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      • numbersgame

        Well, yes, the Dems could always choose to run a candidate with a smaller chance of winning in the main event. That’s the choice they made in 2016.

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    • ferd

      Any armchair pol, including Biden, who couldn’t muster the balls to oppose the Iraq invasion back when it mattered, is disqualified. And you should add Libya, Syria, and Yemen to the list of slaughters he supported. Duckworth on the other hand, while wrong on Iraq, at least put her OWN body on the line.

      Tulsi Gabbard, another female war vet, has impressed me with her willingness to question false flags and MSM-generated hysteria…as when every freakin’ news reader in our nation was calling for retaliation against Assad for a chemical weapons attack the never happened. That took balls. Check her out.

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      • Lyndon Keltner

        Gabbard is a Hindu, which makes her attitude towards wars more genuine. I like that about her a lot–but many voters probably don’t.

        At any rate, I look forward to having a president candidate of Asian descent (Harris, Duckworth, and Gabbard). Asians are the fastest growing racial demo and they loathe the GOP just as much as the Latinos/Hispanics do.

        So far I’m very pleased to have Trump cement their disgust towards the Republicans.

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