The Daily Shot Brief – December 22nd, 2017

Greetings,

 

The United States: After the financial crisis, Americans with high credit scores were prioritizing credit card payments ahead of mortgage payments. Car payments remain ahead of everything else.

Source: NY Fed, h/t Paul Menestrier; Read full article

However, subprime auto debt delinquencies at non-bank lenders keep climbing. Many of these firms dipped into “deep subprime,” a decision that’s becoming costly.

Source: @markets; Read full article

 

China: Elevated interest rates point to slower credit expansion (“M2″ = broad money supply).

Source: BMI Research

 

Global Developments: Not a single large country is currently experiencing a contraction in manufacturing.

Source: @jsblokland, @Leonmwc

 

Credit: The new US tax law is starting to show up in the leveraged finance market. The limitation on deductibility of interest expenses will hurt leveraged companies whose interest payments are significant relative to their earnings. This chart shows the rising yield differential between bonds rated B and BB (single-B being more leveraged than BB).

Source: Daily Shot

Also, high-yield (HY) bonds are underperforming investment-grade (IG) debt. Here is the spread comparison.

Source: Bloomberg

 

Emerging Markets: Venezuela’s social order is rapidly deteriorating.Brazil’s sovereign credit default swap spread continues to tighten.

Source: WSJ.com, h/t Paul Menestrier; Read full article

 

Bitcoin: The number of Bitcoin-focused hedge funds is climbing.\

Source: WSJ.com, h/t Paul Menestrier; Read full article

 

Rates: Based on the global economic activity indicator (composite PMI), bond yields should be much higher (“DM” = developed markets).

Source: topdowncharts.com

 

Equity Markets: Money managers’ equity exposure is at a record high.

Source: @business; Read full article

 

Energy Markets:  Implied volatility in oil keeps tumbling. Traders expect crude to be range-bound in the near-term.

Source: The Daily Shot

 


Food for Thought: Sports and live-streaming.

Source: BMO Wealth Management

 

There will be no Daily Shot Brief from December 25th to January 1st.

 

Enjoy the holidays!


Edited by Joseph N Cohen


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Thanks to Josh Marte (@joshdigga), Matt Garrett (@MattGarrett3), Joseph Cohen (@josephncohen), Ycharts.com, S&P Global, and Moody’s Investors Service for helping with the research for the Daily Shot.

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