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Old 05-16-2020, 08:29 AM   #321
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The U.S. Federal Reserve warned Friday that the financial sector faces “significant” vulnerabilities due to the coronavirus pandemic, as businesses and households grapple with fragile finances for the foreseeable future.
...
Friday’s report noted the financial stresses that could build if the crisis persists, and households and businesses continue to be deprived of wages and revenue.

In short, no one from hedge funds to major banks to households would be immune from the risk they might default on debt, be forced to sell off assets, end up in bankruptcy, or see the value of assets dwindle.
...
... Fed Governor Lael Brainard ... highlighted a key worry at the central bank: that what might start as a cash crunch could spiral into something worse. Among highly indebted businesses, she said, “we will be monitoring closely for solvency stresses...which could increase the longer the Covid pandemic persists.”

Few if any parts of the economy are safe. ....

“Financial sector vulnerabilities are likely to be significant, in the near term,” the Fed said. “The strains on household and business balance sheets from the economic and financial shocks since March will likely create fragilities that last for some time.”
https://www.reuters.com/article/us-u...-idUSKBN22R34Y
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Old 05-18-2020, 05:55 AM   #322
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Originally Posted by Kenneth Rogoff :
... As an analogy, the IMF or Chapter 11 bankruptcy is very good at dealing with a couple of countries or a couple of firms at a time. But just as the hospitals can’t handle all the Covid-19 patients showing up in the same week, neither can our bankruptcy system and neither can the international financial institutions.

So there are going to be phenomenal frictions coming out of this wave of bankruptcies, defaults. It’s probably going to be, at best, a U-shaped recovery. And I don’t know how long it’s going to take us to get back to the 2019 per capita GDP. I would say, looking at it now, five years would seem like a good outcome out of this.
...
https://www.bloomberg.com/news/featu...t?srnd=premium
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Old 05-21-2020, 05:09 PM   #323
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5/21/20 - $7.085T

$103B increase. Less than half of last week's increase.
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Old 05-22-2020, 08:46 AM   #324
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The monthly tally of defaults in the U.S. leveraged loan market has hit a six-year high, data from Fitch Ratings showed, as companies are either missing payments or filing for bankruptcy because of the fallout from the coronavirus pandemic.
...
https://www.reuters.com/article/us-u...-idUSKBN22X1BD

It's the start of the Fed's worst nightmare (massive loan defaults which could cascade into bank failures):
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Old 05-28-2020, 11:24 AM   #325
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Banks are selling leveraged loans backing acquisitions at the fastest pace in months as they seek to shed risk accumulated prior to the pandemic.
...
Analysts are more gloomy on the outlook for loans compared to junk bonds, which have seen spreads tighten about 190 basis points since the Federal Reserve’s historic pledge to buy some speculative-grade debt early last month.

UBS Group AG strategists wrote last week that the global leveraged loan market is vulnerable to a sell-off as earnings weaken and defaults stack up. They expect U.S. leveraged loan spreads to revisit March wides of 825bps from the 672bps level recently seen as default risk increases.
https://www.bloomberg.com/news/artic...-clear-backlog
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Old 05-29-2020, 03:09 PM   #326
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5/28/20 - $7.145T

$60B increase over last week. Balance sheet expansion appears to be slowing down.
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Old 05-30-2020, 08:37 AM   #327
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So.... About these riots. How much money will this cost?
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Old 05-30-2020, 03:50 PM   #328
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Cops are likely making a lot of sweet overtime right now.

Insurance companies going to be paying out a lot of claims. They are probably TBTF so no worries if they end up needing a bailout.
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