Credit Bubble Bulletin2020-05-20T17:01:05-06:00

Presented by Doug Noland

Daily Commentary

Tuesday, May 24, 2022

[Yahoo/Bloomberg] Stocks Fall as Snap Forecast Drags Tech Lower: Markets Wrap

[Reuters] Snap Inc’s profit warning sends ripples through social media stocks

[Yahoo/Bloomberg] Oil Steady as Traders Shrug Off China Efforts to Protect Economy

[Reuters] Russia launches all-out assault to encircle Ukraine troops in east

[Reuters] EU oil embargo ‘in days’ as Ukraine isolation drives Russia closer to China

[MSN/Guardian] Nato head warns over risks of close economic ties with Russia and China

[Yahoo/Bloomberg] Rising Global Food Protectionism Risks Worsening Inflation Woes

[Yahoo/Bloomberg] Lagarde Won’t Rush as ECB Consensus Shuns Half-Point Hike

[Reuters] Beijing ramps up COVID quarantines, Shanghai residents decry uneven rules

[Yahoo/Bloomberg] China Stimulus Brings Limited Help to Lockdown-Hit Consumers

[Yahoo/Bloomberg] China’s Central Bank, Regulator Urge Banks to Boost Lending

[Reuters] China’s property market woes expected to worsen in 2022

[Reuters] JPMorgan warns 10% of junk-rated emerging markets facing debt crises this year

[AP] Explainer: What’s the 4-nation Quad, where did it come from?

[Reuters] Russian and Chinese jets conducted joint patrol, Moscow says

[Reuters] Japan scrambles jets after Russian, Chinese warplanes neared airspace during Quad

[Reuters] Taiwan radio enthusiasts tune in as Chinese, U.S. warplanes crowd sensitive skies

[Bloomberg] The Next Crisis to Hit Markets May Be About Liquidity

[Bloomberg] Natural Gas Market Is Hurtling Toward Historic Winter Shortages

[Bloomberg] These Are the 33 New Measures China Is Taking to Boost Growth

[Bloomberg] China’s $16 Trillion Cash Hoard Shows Deepening Household Gloom

[Bloomberg] China’s Economic Recovery Faces New Hurdle in Rising Power Costs

[WSJ] Retailers Are Getting Pinched More Than Consumers

[WSJ] Rising Interest Rates Concern Apartment-Building Owners, Renters

[WSJ] Egypt’s Bread Crisis Awakens Old Fears of Political Unrest

[FT] America’s red-hot labour market: inflation undercuts jobs recovery

[FT] Convertible bonds drop as investors cool on once-hot tech companies

[FT] Chinese and Russian nuclear bombers fly over Sea of Japan as Biden visits Tokyo

Weekly Commentary

May 13, 2022: The Acceleration Phase

Global Bubble deflation gathered additional momentum this week. The U.S./global tech Bubble collapse accelerated. Hit by panic “runs”, the historic cryptocurrency mania is coming completely unglued. And even more historic Chinese apartment, financial and economic Bubbles continue to falter.

Whether stocks, bonds, crypto, or corporate Credit, many are keen to spot a market bottom. There were some elements of “capitulation” this week. And next week’s option expiration creates the potential for a panicked unwind of bearish hedges and attendant short squeezes. Yet we’re only in the initial phase of what will prove a lengthy and most arduous remediation process. Think secular rather than cyclical – a crisis decades in the making. I am reminded of a quote from early in the “Roaring Twenties” bursting Bubble episode: “Everyone was prepared to hold their ground. But the ground gave way.”

Once again this week, it had all the appearances of one massive global “trade” unraveling. Clearly, de-risking/deleveraging shifted into higher gear. There is seemingly no place to hide.

After beginning the week at $34,000, Bitcoin traded down to $25,488 in early-Thursday panic selling. WSJ: “Crash of TerraUSD Shakes Crypto. ‘There Was a Run on the Bank.’”

May 12 – Wall Street Journal (Alexander Osipovich and Caitlin Ostroff): “The cryptocurrency TerraUSD had one job: Maintain its value at $1 per coin. Since it launched in 2020, it had mostly done that, rarely straying more than a fraction of a penny from its intended price. That made it an island of stability, a place where traders and investors could stash their funds in between forays into the otherwise frenzied crypto market. This week TerraUSD became part of the frenzy too, slumping by more than a third on Monday and then tumbling as low as 23 cents on Wednesday. The collapse saddled investors with billions of dollars in losses. It ricocheted back into other cryptocurrencies…” (more…)

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