Every month I get together with Financial Repression host Gordon Long for a video conversation of the latest global macro news.
We have been doing this for several months, and periodically for years.
In the latest interview we discuss data dependent rate hikes, powerless central banks, retail sales, unions, and other topics.
Gordon Long interviews some of the best writers in the business including John Rubino, Richard Duncan, Charles Huges Smith, and others. You can find a list at Macro Analytics.
This is a 34 minute video.
Mike “Mish” Shedlock
Mish,
Why are contractors even doing business with Illinois or Chicago. I would think they would be in a cash and carry position by now. All materials and services prepaid.
I would guess it’s because they are already owed so much money that they fear not getting paid at all if they cut the state/city off. It’s a sort of sunk cost, as it were. Any new suppliers doing business there would be wise to take your advice, I would think.
Mike, please consider getting a decent microphone. Every word you said was distorted. Gordon sounded ok. I really enjoy your work.
I have an excellent microphone.
Could not get Skype to recognize it – but it worked before. Went with the mic in my video camera.
Gordon said it was recording fine so we used it.
Will get the other one to work next time.
Last month we had video problems – mo mic problem.
Will get it worked out.
Mish
Do a quick test next time. Record a minute and have Gordo stop and check. I love your stuff enough to listen but it’s torture and it will definitely diminish my ability to process mentally what I’m nearing.
Good stuff MISH.
Nice pet squirrel and bird you have out the back window!
Thanks for fixing the audio. That was painful. . Good discussion and info. Nice job. .
Walmart and Amazon, that it? Recovery here we come.
Rate hikes might actually be expansionary. All those printers excess reserves will attract higher interest, printed by the FED.
An excellent video. I’d recommend everyone watch it.
Excellent talk with Gordon.
Glad that you are not falling into the usual ‘Gold Bug’ BS.
I hope you are checking out:
https://www.armstrongeconomics.com/blog/
There is a lot of good stuff there.
Whenever there is a Credit Crisis, many (not only Libertarians) know that PAIN must be felt before a true recovery happens. As usual politicians on both the right and the left opt to ‘intervene’ to keep their status quo going for as long as possible.
The political class always seeks to keep its power and benefits as long as possible while throwing all others to the wolves. That is not new as history shows.
Today looks a lot like 1968, as it should.
The ‘markets’ can fool us as the financial media seeks to fool us.
Yup, there is no ‘safe haven’ as the politicians have greater control and can milk us like cows.
Personally I believe {BELIEVE = OPINION} that we must ‘Crash and Burn’ before true reform is possible.
I also know {KNOW = FACT BASED ON EVIDENCE} that most often the environments resulting from a ‘Crash and Burn’ are worse than that which proceeded it requiring yet another ‘Crash and Burn’ event. Again, history shows this.
This means that most investors need to be heavy in cash and look hard for real opportunities. Traders know how to hedge but most of us lack the means or the skills to profit by this. We lack not only the skills but also the time and resources to compete with the ‘big boys’. The movie “The Big Short” is instructive here as the ‘winners’ had to create the instruments they used to win. If you lack a few billion dollars, you cannot do this.
We face unknowable problems ahead, thus many are hoarding their resources creating DEFLATION. The Fed is of little help here as they are recognized as doing the wrong things for the last decade (as you said or implied).
My personal advice to you, you have heard from others, MOVE OUT OF YOUR STATE AND REGION.
Hi, Mish You mentioned the relative strength of corporate America in your audio. Are you sure? > > View Glossary Terms Print > U.S. Nonfinancial Corporates’ Record $1.84 Trillion Cash Holdings Mask A Massive $6.6 Trillion Debt Burden > 20-May-2016 > > View Analyst Contact Information Table of Contents > > S&P Global Ratings’ universe of over 2,000 rated U.S. nonfinancial corporate issuers reported holding a record $1.84 trillion in cash and short- and long-term liquid investments as of year-end 2015, a 1% increase from 2014. But the imbalance between cash and debt outstanding that we reported on last year has deteriorated: Total debt rose by roughly $850 billion to $6.6 trillion in 2015, dwarfing the cash growth of just under 1% ($17 billion). This jump in debt reflects the scant resistance borrowers faced from yield-starved investors as companies pursued acquisitions and returned cash to shareholders. > > Strip away the top 1% from the equation, and the numbers look even worse: Cash and marketable securities for the remaining 99% of issuers actually fell 6% in 2015, and these issuers held just $900 billion in cash versus $6 trillion in debt as of year-end 2015. This indicates a cash-to-debt ratio of 15%, which is a significant decline from the comparable peak of 23% in 2010 and below the trough of 16% in 2008. > > Furthermore, the divide between the haves and the have-nots continues to widen. Cash is more concentrated than ever, with the top 1% (the largest 25 cash holders) now controlling over half (51%) of the cash pile, versus 38% just five years ago. In turn, the top 1% have a cash hoard of $945 billion–more than enough to repay their outstanding debt of $620 billion. And their cash-to-debt ratio of 153% is 10x that of the remaining 99%–a disparity that is greater than both before and during the Great Recession. The build-up of cash, led by companies such as Apple Inc. , Microsoft Corp. , and Google Inc. , partly results from companies holding cash overseas to avoid taxes upon repatriation. > > Overview > Cash growth for S&P Global Ratings’ universe of rated U.S. nonfinancial corporate issuers slowed to a decade low of 1% to $1.84 trillion in 2015, but total debt outstanding jumped $850 billion to $6.6 trillion, dwarfing the meager $17 billion in overall cash growth. > The rich keeps getting richer, and the top 1% (the 25 largest cash holders) now control over half of this cash pile, an increase from just 38% five years ago. > The situation is worse for the bottom 99% because they now hold $6 trillion in debt versus just $900 billion in cash, and their cash-to-debt ratio of 15% is the lowest we’ve seen in the past decade, including the years preceding the Great Recession. > We believe credit risks are rising as the corporate credit cycle ages, and if capital markets access becomes fragmented, liquidity risk and corporate default rates could rise. > Although the companies’ overall liquidity profile looks strong, their net debt position is rising for all but the strongest issuers. Given the record levels of speculative-grade (‘BB+’ and lower) debt issuance in recent years, we believe corporate default rates could increase over the next few years, especially given diminished growth prospects in China, weak commodity and energy prices globally, and the sizable universe of lower-quality nonfinancial corporate debt outstanding. > > If the credit market tightens further, as it did earlier this year, refinancing could become difficult for speculative-grade issuers, which could introduce funding risk. As for the top 1%, we expect them to continue to engage in synthetic cash repatriation (issuing debt domestically in lieu of repatriating overseas cash, which would be taxed in U.S.) until corporate tax overhaul is implemented. Overall cash balances could increase in 2016, but we will continue to monitor the wealth distribution, and the accompanying debt, very carefully. > > Another Record Year > U.S. nonfinancial corporate cash holdings reached another record in 2015, albeit just barely. Total cash holdings rose 1%, or $17 billion, to $1.84 trillion for the companies rated by S&P Global Ratings. However, considering a 3% increase in issuer count in 2015, we view the cash growth as a decline on a comparative basis. Cash and investments to total assets declined to below 10% for the first time since 2012, but the ratio is well above the 7% area recorded before the 2008-2009 recession (see chart 1).
Have a great day Claude de Joybert
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