Faber News Flow

In what is sure to be a fast-moving, chaotic week, in which attention will focus on every marginal development in the war against Coronavirus (and Chinese exports thereof),  Q1 earnings will step up a notch with 88 S&P 500 companies reporting this week and Europe joining the fray with 64 companies.  In terms of the highlights to look out for, proceedings kick off today with IBM. Then tomorrow we'll hear from The Coca-Cola Company, Netflix, SAP, Philip Morris International, Lockheed Martin, Texas Instruments and BHP. On Wednesday, we'll then get AT&T and Thermo Fisher Scientific. Thursday sees releases from Intel, Eli Lilly and Company, NextEra Energy, Union Pacific, Credit Suisse and Hyundai. And finally on Friday we'll hear from Verizon Communications, Sanofi, T-Mobile and American Express. Going back to the virus epidemic and ongoing responses to the current economic depression,  Thursday is the key day this week with the EU leaders summit a potentially big event ...

Over the past month, in its quest to bailout the richest Americans and the country's financial system, the Fed has unleashed an unprecedented array of actions meant to backstop capital markets, going so far as buying investment grade, high yield bonds and even AAA-rated CLO bonds. It won't be enough. In what would mark the most draconian and widespread ratings action since the financial crisis, on Friday  Moody's warned it may cut the ratings on $22 billion of U.S. collateralized loan obligations - a fifth of all such bonds it grades - as a result of the collapse in cash flows due to the Covid-19 pandemic. The ratings agency took action on  859 bonds from 358 CLOs that package leveraged loans into securities of varying degrees of risk and return . The step - which according to  Bloomberg  affects about 19% of Moody's-rated CLOs that purchase broadly syndicated loans - comes as the underlying debt gets downgraded at a record pace. Earlier ...

Credit is the real pillar of the stock market - not oil or tech stocks. A systematic downgrade will result in forced selling and margin calls as investors (institutions) are forced to dump to chase the quality upwards. The Fed can go out to buy even junk grade bonds (eg the underlying collateral in the CLOs) but that is limited in number and does not cover the entire tranche. These products can get pretty sophisticated and the Fed will probably bail them out too in another form of giant receivership. But to do so they will have to extend and amend the program which may or may not require Congressional approval. Please also note that the Fed CANNOT (currently) buy CCC rated bonds. "recall that the expanded Term Asset-Backed Securities Loan Facility (TALF) announced by the Fed last Thursday only buys AAA-rated bonds of CLOs, which after the coming tsunami of CLO downgrades is complete, will not only collapse in nominal size but will mean that any further attempts to ...

Since it first appeared in November 2019, the novel  coronavirus  has ravaged the world — infecting nearly two million people and killing well over 100,000 as of April 13, 2020. The virus has devastated healthcare systems, economies, and the jobs of millions of Americans. With the unemployment rate already  nearing the 15% mark  — the highest level since 1940 — and the likelihood it will skyrocket even higher, it may take years to recover. Q1 2020 hedge fund letters, conferences and more According to previous research by Clever, Americans were already $14 trillion in debt before COVID-19 swept across the nation. To find out the effects of the pandemic on homeowners and renters, Clever surveyed 1000 Americans on March 31 to dig deeper into how consumers are impacted thus far. Here are some of the key ways consumers in the U.S. are being impacted by COVID-19. Breath-Holding, Water Sipping Won't Do Anything For COVID-19. Here's What To Do Instead At risk of losing their home One o...

Money manager and economist Michael Pento says the Federal Reserve has only massive money printing left to try to save the economy from the current and ongoing debt implosion.  There is going to be lots of fresh cash needed. Pento runs down a list of just few of the things the Fed will need to spend money on and says, "We all should know more than 22 million people have lost their jobs in the last four weeks alone. That's 22 million people, and the unemployment rate, according to me, is heading up to 15% to 17%.  That, my friends, is a depression.  We also have the Philly Fed (Manufacturing Index rating) come out with a -56.6. That's a minus 56.6. That's the worst ever. Empire State Manufacturing -78.2, which is the worst rating ever. Retail sales plunged in March 8.7%. That is also the worst reading ever. That's the worst plunge ever, and that's just March.  In my opinion, it will be something worse in April because all of the month will be completely shut dow...