Moody’s: Brazil is Junk; Credit Metrics Have Deteriorated Materially

Whatever happened to BRIC? I hope FANG doesn’t go by the wayside, like this BRIC concept. I realize some of you want to believe the savage will one day drop the spear in exchange for a briefcase. Truth is, he’d just be a savage with a briefcase.

Moody’s cut Brazil’s credit rating to junk. The economy is undergoing its worst recession in a century. Petrobras is likely to reorganize its $150 billion debt burden. Naked, poor, forked, fucked, radish.

Brazil’s credit metrics have deteriorated “materially” in the past few months and will worsen over the next three years, according to the ratings company, which also cited the negative impact of political gridlock on the government’s efforts to close a budget deficit and undertake structural reforms. The cut — Brazil’s third in as many months from major ratings companies — adds pressure on Rousseff to win lawmakers’ support for measures to raise taxes and reduce spending as she fights off efforts to impeach her.

“Even though it wasn’t a surprise, it still sends a negative signal to investors,” said Arnaud Masset, an analyst at Swissquote Bank SA in Gland, Switzerland. “Unfortunately, Brazil’s outlook remains very cloudy as the market expects more from lawmakers than minor reforms.”

“Macroeconomic and fiscal developments over the next two to three years are expected to produce a materially weaker credit profile,” Moody’s said. “The negative outlook contemplates the risks of further deterioration to Brazil’s credit profile emanating from macroeconomic shocks, deeper political dysfunction or the need to support government-related entities.”

This is only the opening salvo in a sequence of events that is going to force you to write memoirs about this period in time. Get your popped corn ready.

In his very brief, but always great, 8:55am skit with triple chinned Joe Kernen, Jim Cramer begged viewers to remember how extraordinary cheap oil is for large segments of the economy, like airlines, eateries, and asshole retailers. He did, however, mention the deleterious effects it imposes on banks and basic resources.

Being the dick that I am, I ventured off into Exodus to count the market capitalization of these minor parts of our economy, the one’s affected by the commodity collapse (basic resources, financials and industrials).

It amounted to $11 trillion.

Joker.

Fed’s Lacker has joined Fed’s George, and apparently Fed’s Yellen, to form an axis of evil–hell bent on exacting the wholesale destruction of global trade, and especially the U.S. jobs market. Just last week, there were 1 or 2 Fed heads who sounded reasonable, highlighting the fact that the market has been in vapor-lock mode for the better part of 8 weeks–alluding to the idea of chilling the fuck out on interest rate hikes.

These fucking clowns.

But not Fed’s Lacker. He’s from Virginia, at the heart of the southern confederacy, and he wants to punish you yankee banker bastards for having it so damned good all these years gone by.

Lacker said estimates of the economy’s so-called natural real rate of interest, the rate when economists think there will be normal economic growth rates and stable inflation, is at or just above zero.

“This perspective would bolster the case for raising the federal funds rate target,” Lacker, who is not a voting member on the Fed’s rate-setting committee this year but participates in its discussions, said in prepared remarks for a university gathering in Baltimore.

Lacker’s speech followed comments by Kansas City Fed President Esther George on Tuesday that the Fed should consider raising rates at its March 15-16 meeting.

George and Lacker are among the Fed policymakers who most urge an active fight against future high inflation, or “hawks” in central banking parlance.

He furthered, a recession is not something worth taking seriously. As such, it would be wise to destabilize the US economy by prematurely hiking interest rates, into a maelstrom of capital cross-currents and looming oil debt reorganization, which may very well run well into the hundreds of billions of dollars.

The deflationary vortex is here. Board the ark (TLT). NASDAQ futures are down 51.

Fears of Great Britain leaving the conglomeration of broken shards called the EU are heightening this morning, which is pressing the pound sterling to 7 year lows. This is fear mongering at its best. If there’s one thing the world is exceptionally good at, it is this.

Options traders are paying the most to protect against price swings in six months’ time compared with historical volatility since Lehman Brothers Holdings Inc. collapsed during the 2008 credit crisis. Twenty-nine out of 34 economists in a Bloomberg survey said the pound will drop to $1.35 or below within a week if the U.K. votes to leave the European Union — levels last seen in 1985.

Broken elevator cable trading has resumed, world wide. S&P futures are lower by 16 handles. Over in Europe, investors are flummoxed with losses, scaling up to 2.7%, graciously accepted by the Empire of Spain.

Gold and bonds are rallying. Moreover, in Switzerland, negative bond yields persist in every duration, up to 20yrs, which will soon be dragged down under zero. Most importantly, rumors are already making way around trading desks that BREXIT will pave the way for a GREXIT, which will have a profound effect on EU banks. Once the warmer climes come, migration out of the middle east will swarm Europe, especially Greece. There will be considerable pressure applied to an already weak Greek economy, who might decide to make a clean break of it, especially after Great Britain broke precedent and left the EU, providing that should happen.

Portuguese-German spreads are at 318bps.

You can’t get more evil than cancer causing powder, used for babies and small children. Naturally, some older people use it too. And, apparently so, it fucking causes cancer, of the ovarian varietal.

Johnson & Johnson was ordered by a Missouri state jury to pay $72 million of damages to the family of a woman whose death from ovarian cancer was linked to her use of the company’s talc-based Baby Powder and Shower to Shower for several decades.

In a verdict announced late Monday night, jurors in the circuit court of St. Louis awarded the family of Jacqueline Fox $10 million of actual damages and $62 million of punitive damages, according to the family’s lawyers and court records.

Guess who owns the brand who makes this shower to shower cancer talc shit?

You guessed it: VALEANT PHARMA. They must’ve gotten it real cheap, after JNJ found out it caused fucking cancer.

Out of nowhere, European markets have started to tank again, led by German markets–who are, inexorably, being placed into the sausage machine.

As such, US futures have doubled its losses to 88.

The Japanese currency fluctuates 1-2% in any given day versus the dollar and Bloomberg’s army of 2,400 journalists don’t bother to even broach the subject. However, the Chinese yuan dropping for a fourth consecutive day, to the tumultuous tune of 0.23%, is headline news of the extreme varietal.

Why?

The yuan fell 0.08 percent to 6.5319 a dollar as of 10:24 a.m. in Shanghai, according to China Foreign Exchange Trade System prices. It dropped to 6.5326 earlier, the weakest level since Feb. 15, and has lost 0.23 percent in a four-day streak. The central bank cut the reference rate by 0.04 percent to 6.5302 following a 0.17 percent reduction on Tuesday.

“Sentiment hasn’t fully recovered, and there’s still depreciation pressure in the long run considering China’s fundamentals and capital outflows,” said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp. “The PBOC will likely keep the yuan stable against a basket, leading to greater two-way volatility of the currency against the dollar, before the G-20.”

In fairness to the media establishment, the purposeful devaluation of the Chinese currency has been something of a trend for the better part of 2016, as the Chinese economy struggles to grow at the required rate to keep their people from storming the palace with their pitched forks.

World markets are falling again, with the NIKKEI off by 0.8% and the Hang Seng down by 1.7%. Crude oil is down 2.3%; hence, U.S. futures are down by 42.

JP Morgan chief, Jamie Dimon, said in a conference call today that he’d buy JP Morgan all day at $48, suggesting it was good for an annual 13% rate of return. He boasted about his companies performance and staying power, in an effort to firm up investor sentiment. Dimon recently reported a purchase of JPM, equal to one year’s salary or $26 million. He was bored.

JPM is down 14%, year to date.

What will all of you fatties do when a bag of sugar fetches for $100? With El Nino (is it me, or is every year plagued with El Nino?) rampaging throughout the Latin world and Brazil, stupidly, using sugar to produce ethanol, the price of sugar rampaged higher today, after ISO data suggests the doom for sugar lovers is not over, but only just now beginning.

“A statistical deficit is clearly supportive for world prices,” the ISO said. All other things being equal, prices “can be expected to trend generally higher in the remaining months of 2015/16.”

El Nino has already hurt plantings in Brazil the largest sugar grower, as well as India and Thailand, spurring price gains in the final months of 2015. But further heavy rainfall in Brazil has prompted forecasters to revise their numbers. Rabobank International said Tuesday it now expects a bigger deficit than the 4.7 million tons it previously saw. Last week, INTL FCStoneraised its deficit forecast to 7 million tons. Recent heavy rains in Sao Paulo province may delay the harvest that starts in April, according to MDA Weather Services.

The ISO data “reiterates that El Nino is not over — we still don’t have the final tallies on Thai and Indian crops,” Michael McDougall, a senior director at Societe Generale in New York, said by telephone. “Pressure is increasing as we move forward, things are getting tight.”

Raw-sugar futures for May delivery soared 8.9 percent to settle at 13.90 cents a pound by 1:04 p.m. on ICE Futures U.S. in New York, the biggest one-day gain for the most-active contract since at least March 1993. In London, white sugar for May delivery jumped 6.1 percent to $395.90 a ton on ICE Futures Europe.

It’s not just adverse weather that’s supporting prices. Brazilian mills are making more ethanol from sugar cane to meet surging domestic demand for the biofuel, adding extra pressure on sugar supplies.

The sugar ETF, SGG, is up 26% over the past 6 months.

This is the sort of shit I have to deal with, parsing through video clips of crazy men giving fucking trophies to global giants for having a great quarterly conference call.

We get it, Cramer. Home Depot is the best company ever conceptualized, readily assisting general contractors to rip off unsuspecting home owners with their shoddy work. Frankly, I don’t know why I even bothered to post this drivel, other than the indelible fact that many of you have a vested interest in hearing about Home Depot.