Tom McClellan, Art Cashin, Boockvar, And A Shocking Chart
Tom McClellan, Art Cashin, Boockvar, And A Shocking Chart from King World News
On the heels of some wild trading recently in global markets, Tom McClellan, Art Cashin, Peter Boockvar all weigh in, plus a shocking chart.
Staggering Amounts Of Business Debt
May 21 (King World News) – Peter Boockvar: There was nothing market moving in the comments last night from Jay Powell but he did spend time talking about excessive levels of corporate debt.
“The acronyms have changed a bit, ‘CLOs’ instead of ‘CDOs’, for example, but once again, we see a category of debt that is growing faster than the income of the borrowers even as lenders loosen underwriting standards. Not only is the volume of debt high, but recent growth has also been concentrated in the riskier forms of debt.”
Total Business Debt As % Of US GDP Near All-Time Highs
He’s not worried about the impact to the bank lenders because of better balance sheets but instead “the level of debt certainly could stress borrowers if the economy weakens.”
You didn’t think I’d go without commenting on this did you? So the Fed’s main function for the economy by shifting rates is to encourage borrowing when they cut and to discourage it when they hike. Now after an extraordinary run of cheap money that has resulted in record high business debt levels, Fed members (Dallas Fed President Robert Kaplan is another one that is rightly highlighting the risks) are now expressing concerns with it. What will be their response function in the next economic downturn, cut rates from what are already very low rates and then encourage even more borrowing. Tough spot, I agree…
Home Depot, a focus of mine from an informational perspective with respect to SALT cap impact, not a stock positioning standpoint, reported a better eps quarter but missed comp store sales estimates by almost half. In their press release they cited “unfavorable weather in February and significant deflation in lumber prices compared to a year ago” as the reasons for the comp miss. With respect to the influence of the SALT cap, it’s really tough to quantify and hopefully in the conference call they will give a regional viewpoint on sales so we can speculate on any impact.
Aussie Dollar Hits Lowest Level Since January 2016
The Aussie $ is falling vs the US dollar to just shy of the lowest level since January 2016 after comments from RBA Governor Philip Lowe. From an already record low level of rates at 1.5% he said: