{"id":16443,"date":"2016-01-14T06:42:08","date_gmt":"2016-01-14T11:42:08","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16443"},"modified":"2016-01-14T06:42:08","modified_gmt":"2016-01-14T11:42:08","slug":"last-bubble-standing","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16443","title":{"rendered":"Last Bubble Standing"},"content":{"rendered":"

Last Bubble Standing<\/a><\/h3>\n
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EM debt bubble… emaciated, FX Carry… crucified, Crude…crushed,\u00a0 High yield bonds… burst, Chinese equities… blown, Trannies… trounced, Small Caps… slammed, Biotechs… busted, and FANGs finally FUBAR!<\/em>But there is\u00a0one big (very big) bubble left in the world that no one is talking about,<\/strong><\/em>\u00a0and a rather large liquidity-busting pin beckons…<\/p>\n

In May 2015 we first explained exactly why China was blowing its equity market bubble.\u00a0<\/strong><\/em><\/a>Simply put, with more “equity,” companies were better able to refinance\/roll (note, no interest in debt reduction or deleveraging) their record-breaking mountain of debt and avoid the systemic collapse that is utterly imminent for just a few more months\/years.<\/p>\n

Now that the equity market bubble has burst, Chinese authorities have chased investors into another bubble.<\/p>\n

In October 2015, we warned of the relative risk building in the Chinese corporate bond market<\/strong><\/a><\/em>.<\/p>\n

As the rout in Chinese stocks this year erased $5 trillion of value, investors fled for safety in the nation\u2019s red-hot corporate bond market.\u00a0They may have just moved from one bubble to another.<\/strong><\/p>\n

Into Chinese corporate bonds…<\/strong><\/p>\n

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As we detailed just two months ago,\u00a0<\/em><\/a>this historic bond bubble is paradoxical for the simple reason that China’s credit fundamentals have never been worse<\/strong>,\u00a0and as we further showed,\u00a0<\/a>as a result of the ongoing collapse in commodity prices (which today’s Chinese rate and RRR-cut will have absolutely no impact on), more than half of commodity companies can’t generate the cash required to even pay their interest, a number which drops to “only” a quarter when expanded to all industries.<\/p>\n

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“The equity rout merely reflects worries about China\u2019s economy, while a bond market crash would mean the worries have become a reality as corporate debts go unpaid,”<\/strong><\/em>\u00a0said Xia Le, the chief economist for Asia at Banco Bilbao. “A Chinese credit collapse would also likely spark a more significant selloff in emerging-market assets.”<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Last Bubble Standing EM debt bubble… emaciated, FX Carry… crucified, Crude…crushed,\u00a0 High yield bonds… burst, Chinese equities… blown, Trannies… trounced, Small Caps… slammed, Biotechs… busted, and FANGs finally FUBAR!But there is\u00a0one big (very big) bubble left in the world that no one is talking about,\u00a0and a rather large liquidity-busting pin beckons… In May 2015 we […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[3038,1719,130,4333,200,3108,9932,501,669,4318],"class_list":["post-16443","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-america","tag-bond","tag-china","tag-crude","tag-default","tag-fitch","tag-high-yield","tag-market-crash","tag-reality","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16443","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16443"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16443\/revisions"}],"predecessor-version":[{"id":16444,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16443\/revisions\/16444"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16443"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16443"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16443"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}