“So, if the housing market isn’t going to affect the economy, and
low interest rates are now a permanent fixture in our society, and
there is NO risk in doing anything because we can financially engineer
our way out it – then why are all these companies building up
departments betting on what could be the biggest crash the world has
ever seen? What is more evident is what isn’t being said. Banks
aren’t saying “we are gearing up just in case something bad happens.”
Quite the contrary – they are gearing up for WHEN it happens. When the turn does come, it will be unlike anything we
have ever seen before. The scale of it could be considerable because of
the size of some of these leveraged deals.” – Lance Roberts, June 2007
It is often said that no one saw the crash coming. Many did, but since it was “bearish” to discuss such things, the warnings were readily dismissed.
Of course, what came next was the worst financial crisis since the “Great Depression.” よく言われることだがだれも暴落が来るとは思っていない。多くの場合そうだった、しかそういう議論をすること自身が「弱気」だからこそ、そういう警告は無視された。当然のことながら、これから来る最悪の金融危機は「大恐慌」以来のものだ。
But that was a decade ago, the pain is a relic of history, and the
surging asset prices due to monetary policies has once again lured both
Wall Street and Main Street into the warm bath of complacency.
It should not be surprising warnings are once again falling on “deaf ears.”
The latest warning came from the Federal Reserve who identified rising sales of risky corporate debt as a top vulnerability facing the U.S. financial system in their latest financial stability report. Via WSJ:
“Officials, for the second time in six months, cited
potential risks tied to nonfinancial corporate borrowing, particularly
leveraged loans—a $1.1 trillion market that the Fed said grew by 20%
last year amid declining credit standards. They also flagged possible concerns in elevated asset prices and historically high debt owned by U.S. businesses. Monday’s report also identified potential economic shocks that could test the stability of the U.S. financial system, including
trade tensions, potential spillover effects to the U.S. from a messy
exit of Britain from the European Union and slowing economic growth
globally. Specifically, the Fed warned a downturn could expose
vulnerabilities in U.S. corporate debt markets, ‘including the rapid
growth of less-regulated private credit and a weakening of underwriting
standards for leveraged loans.’”
It has become quite commonplace to dismiss the current environment under the thesis of “this time is different.”This was also the case in 2007 where the general beliefs were exactly the same:
現在の環境を「this time is different.」として無視するのが一般的だ。この状況は２００７年とよく似ている、当時多くの人は同様に感じていた：
Low interest rates are expected to persist indefinitely into the future, 低金利がずっと続くと信じていた。
A pervasive belief that Central Banks have everything under control, and; 中央銀行がすべてを制御できると広く信じられていた；
The economy is strong and there is “no recession” in sight. 経済は強く、「景気後退など全く視野になかった」。
Remember, even though no one knew it at the time, the recessions officially started just 5-months later.
The issue of “zombie corporations,” or companies that would
be bankrupt already if not for ongoing low interest rates and loose
lending standards, is not a recent issue. Via Zerohedge:
“As Bloomberg reports, in a particularly striking sign,
the Fed said the businesses with the biggest existing debt loads are
also the ones taking on the riskiest loans. And protections that lenders include in loan documents in case borrowers default are eroding, the
U.S. central bank said in its twice-a-year financial stability report.
The Fed board voted unanimously to approve the document. ‘Credit standards for new leveraged loans appear to have deteriorated further over the past six months,’ the Fed said, adding that the loans to firms with especially high debt now exceed earlier peaks in 2007 and 2014.
‘The historically high level of business debt and the recent
concentration of debt growth among the riskiest firms could pose a risk
to those firms and, potentially, their creditors.’
Leveraged loans are routinely packaged into collateralized loan obligations, or CLOs. Investors
in those securities — including insurance companies and banks — face a
risk that strains in the underlying loans will deliver ‘unexpected
losses,’ the Fed said Monday, adding that the secondary market isn’t very liquid, “even in normal times.”
And it was the Central Bank’s largesse that led to the latest bubble. As noted by WSJ:
そしてこれは中央銀行の気前良さで膨らんだバブルだ。WSJはこう記す：
“Financial stability has remained a central focus at the Fed
because of the easy-money policies employed to nurse the economy back to
health in the years following the financial crisis. Critics have warned
that the Fed’s large bond-buying campaigns and years of near-zero
interest rates risked new bubbles.”
One of the common misconceptions in the market currently, is that the
“subprime mortgage” issue was vastly larger than what we are talking
about currently.
Not by a long shot. 決してそうではない。
Combined, there is about $1.15 trillion in outstanding U.S. leveraged loans — a record that is double the level five years ago — and, as noted, these loans increasingly are being made with less protection for lenders and investors.
Just to put this into some context, the amount of sub-prime mortgages peaked slightly above $600 billion or about 50% less than the current leveraged loan market. この状況をこういう視点で見てみよう、サブプライムローンはその絶頂期には＄６００Bを少し超えていた、これは現在のレバレッジドローン市場の５０％にも満たない。
Of course, that didn’t end so well.
当然のことながら、サブプライムローンの結末は不味いものだった。
Currently, the same explosion in low-quality debt is happening in another corner of the US debt market as well. 現在のところ、低格付け債務が前回同様に爆発的に増えており、前回と同様に米国債務市場が曲がり角に到達している。
As noted by John Mauldin:
John Mauldinに言わせるとこういう具合だ：
“In just the last 10 years, the triple-B bond market has exploded from $686 billion to $2.5 trillion—an all-time high.
「わずか過去１０年で、BBB債券市場は＄６８６Bから＄２．５Tへと爆発的に増えーー今過去最高だ。
To put that in perspective, 50% of the investment-grade bond market now sits on the lowest rung of the quality ladder.
これを見通してみると、投資適格債券市場の５０％が今や最低格付けBBBとなっている。
And there’s a reason BBB-rated debt is so plentiful. Ultra-low
interest rates have seduced companies to pile into the bond market and
corporate debt has surged to heights not seen since the global financial
crisis.”
As the Fed noted a downturn in the economy, signs of which we are
already seeing, a significant correction in the stock market, or a rise
in interest rates could quickly cause problems in the corporate bond
market. The biggest risk currently is refinancing the debt. As Frank
Holmes noted in a recent Forbes article, the outlook is rather grim.
“Through 2023, as much as $4.88 trillion of this debt is
scheduled to mature. And because of higher rates, many companies are
increasingly having difficulty making interest payments on their debt,
which is growing faster than the U.S. economy, according to the
Institute of International Finance (IIF).
“On top of that, the very fastest-growing type of debt is riskier
BBB-rated bonds — just one step up from ‘junk.’ This is literally the
junkiest corporate bond environment we’ve ever seen. Combine this with
tighter monetary policy, and it could be a recipe for trouble in the
coming months.”
「これに加えて、急激に増えている債権はBBB格付けだーー位置段階下がると「ジャンク」となる。これは文字通り紙くず企業債権だ。金融引き締め政策と重なり、今後数ヶ月で問題を引き起こすだろう。」
Let that sink in for a minute.
詳しく分析してみよう。
Over the next 5-years, more than 50% of the debt is maturing. As noted, a weaker economy, recession risk, falling asset
prices, or rising rates could well lock many corporations out of
refinancing their share of this $4.88 trillion debt. Defaults will move
significantly higher, and much of this debt will be downgraded to junk. 今後５年で債務の５０％は満期を迎える。 上にも書いたが、弱い経済、景気後退リスク、株価下落、もしくは金利上昇が多くの企業の借り換えを難しくするだろう、債務は＄４．８８Tもあるのだ。倒産が目に見えて増えるだろう、そしてこれらの債務の多くはジャンクに格下げされることだろう。
As noted by James Grant in a recent interview:
James Grantは最近のインタビューでこう述べた：
“Many companies will get into trouble if the real interest rate
on ten-year treasuries rises over 1%. These businesses are so leveraged
that they can’t cover their debt payments at levels even as humble and
as low as a 1% real interest rate on ten-year treasuries as it
translates into corporate borrowing. Just look at the growth in
the herd of listed zombies; companies whose average operating income has
fallen short of covering the average interest rate expense over three
consecutive years. As it turns out, the corporate living dead,
as a share of the broad S&P 1500 index, are close to 14%. Former
Fed-Chairman Ben Bernanke once tried to reassure everyone that the Fed
could raise rates in 15 minutes if it wanted to. Well, it turns out the
Fed cannot do that. So, it’s a brave new world we’re living in.”
Nonbank lending, an industry that played a central role
in the financial crisis, has been expanding rapidly and is still posing
risks should credit conditions deteriorate.
Often called ‘shadow banking’ — a term the industry does not
embrace — these institutions helped fuel the crisis by providing lending
to underqualified borrowers and by financing some of the exotic
investment instruments that collapsed when subprime mortgages fell
apart.
This kind of lending has absolutely exploded all over the globe since the last recession, and it has now become a $52 trillion dollar bubble. 前回の景気後退以来世界中でこの手の貸出が爆発的に増えている、今やその規模は＄５２Tのバブルに膨れ上がっている。
In the years since the crisis, global shadow banks have seen
their assets grow to $52 trillion, a 75% jump from the level in 2010,
the year after the crisis ended. The asset level is through 2017,
according to bond ratings agency DBRS, citing data from the Financial
Stability Board.
The real crisis comes when there is a “run on pensions.” With
a large number of pensioners already eligible for their pension, and a
$5 trillion dollar funding gap, the next decline in the markets will
likely spur the “fear” that benefits will be lost entirely. 本当の危機がやって来るのは「年金基金枯渇」のときだ。多くの年金受給者が年金基金に頼っている、しかしそこには＄５Tの資金不足がある、次の相場下落では年金受給が全くなくなるのではという「恐怖」に拍車を掛けるだろう。
The combined run on the system, which is grossly underfunded, at a
time when asset prices are dropping, credit is collapsing, and
shadow-banking freezes, the ensuing debacle will make 2008 look like mild recession.
It is unlikely Central Banks are prepared for, or have the monetary capacity, to substantially deal with the fallout.
“There is no way you ever emerge from eight years of free money
without a debt bubble. If it’s not a LatAm cycle, then it’s energy the
next, commercial real estate after that, a tech mania years after, and
then the mother of all of them, housing over a decade ago. This time there is a huge bubble on corporate balance sheets and a price will be paid. It’s just a matter of when, not if.”
Never before in human history have we seen so much debt. Government
debt, corporate debt, shadow-banking debt, and consumer debt are all at
record levels. Not just in the U.S., but all over the world.
If you are thinking this is a “Goldilocks economy,” “there is no recession in sight,” “Central Banks have this under control,” and that “I am just being bearish,” you would be right.
The Next Decade Will Likely Foil Most Financial Plans by Tyler Durden Tuesday, Jan 26, 2021 - 15:20 Authored by Lance Roberts via RealInvestmentAdvice.com, There are many individuals in the market today who have never been through an actual “bear market.” These events, while painful, are necessary to “reset the table” for outsized market returns in the future. Without such an event, it is highly likely the next decade will foil most financial plans. 現在の市場参加者の多くは本当の「ベアマーケット」を経験していない。こういう事が起きると、痛みを伴うが、将来の大きなリターンを可能にするために必要なちゃぶ台返しとなる。これがないと、多くのファイナンシャルプランは今後１０年ひどいことになりそうだ。 No. The March 2020 correction was not a bear market. As noted: ２０２０年３月の調整はベアマーケットと呼べるようなものではなかった。以前にも指摘したが： A bull market is when the price of the market is trending higher over a long-term period. ブル相場とは長期に渡り市場価格が上昇するものだ。 A bear market is when the previous advance breaks, and prices begin to trend lower. ベア相場とはこれまでの上昇が止まり、市場価格が下落し始めることだ。 The chart belo...
The Fed And The Treasury Have Now Merged by Tyler Durden Thu, 04/09/2020 - 14:21 Submitted by Jim Bianco of Bianco Research As I've argued, the Fed and the Treasury merged. Powell said this was the case today (from his Q&A): 私はこれまでも申し上げてきたが、すでにFEDと財務省は一体化している。Powell自身がこれに当たると今日話した（彼の Q&Aでのことだ）： These programs we are using, under the laws, we do these, as I mentioned in my remarks, with the consent of the Treasury Secretary and the fiscal backing from the congress through the Treasury. And we are doing it to provide credit to households, businesses, state and local governments. As we are directed by the Congress. We are using that fiscal backstop to absorb any losses we have. 我々FEDが今行っている一連のプログラムは、法に基づいており、それを実行している、私が注意喚起したが、 財務長官の同意を得ており、財政に関しては議会の承認も得ている。私どもは家計、ビジネス、連邦地方政府に貸付を行っている。議会の意向のもとに我々は行動している。以下ほどに損失が生じようともそれを財政的に支えている。 Our ability is limited...
