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☆ Defaults of risky high-yield corporate debt are rising at the fastest pace since the pandemic
▼ + stars: | 2023-08-30 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

The default rate for US speculative-grade debt has been rising and notched 4.2% in July. And that pace is likely to accelerate due to a higher interest rates, strategists said. But that's still below 2020's peak, which saw the default rate top 8%, according to Moody's data cited by Societe Generale. Markets have grown more concerned over corporate debt pressures as the Fed aggressively raised the cost of borrowing over the past year and a half to tame high inflation. Meanwhile, corporate debt defaults in 2023 have already surpassed last year's total, Moody's data shows.

Persons: that's Organizations: Societe Generale, Service Locations: Wall, Silicon

☆ China's economy is entering a 'structural hard landing' as growth will remain low
▼ + stars: | 2023-08-30 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

China's economy will struggle for at least the next year, TS Lombard strategists said. The research firm estimated China's growth would remain under 5% through 2024. That implies the nation's economy will slip into a "structural hard landing," strategists said. AdvertisementAdvertisementMeanwhile, turmoil in China's real estate and stock market helped wipe away recent wealth gains, which initially was thought would help economic growth once China's economy reopened. Other analysts have warned of long-term problems for China's economy, given that the nation is also slammed with high debt levels and an aging population.

Persons: TS Organizations: Service, People's Bank of China Locations: Wall, Silicon, China

☆ EU officials say sanctions against Russia have had 'hard tangible effects,' and that the country's future is bleak
▼ + stars: | 2023-08-29 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

Sanctions on Russia have had a withering effect on Moscow's economy, the European Union said. That's one of the main reasons why Russia's economic future looks "bleak," according to one official. Despite Putin's show of defiance, scholars say Russia is in a far worse state than the Kremlin has let on. The European Union imposed 11 rounds of sanctions against Russia starting shortly after it invaded Ukraine in February 2022. Russia's energy revenue tumbled 45% over the first quarter of this year after the EU oil ban took effect.

Persons: Josep Borrell, Borrell Organizations: European Union, Kremlin, Service, Union, Russia, EU, European Commission, Organization, Economic Co Locations: Russia, Wall, Silicon, Ukraine, Moscow, Europe

☆ Another inflation wave may be coming as big government spending and high energy costs push prices up, former White House economist says
▼ + stars: | 2023-08-29 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

Inflation could rebound, thanks to high energy prices and hot economic growth. "We're going to see another inflation wave that's going to be stimulated by high growth and by higher energy prices." But there are still lingering price pressures in the economy that could bring on a resurgence of hot inflation, Hassett warned. In Hassett's view, interest rates could "for sure" rise to 6%, a level unseen since December 2000 and something that most investors likely haven't priced into assets. AdvertisementAdvertisementHigher interest rates could spell trouble for stocks and the economy as financial conditions continue to tighten.

Persons: Kevin Hassett, Trump, Hassett, There's Organizations: Service, White House, of Economic, CNBC, White, Atlanta, CPI, AAA, New York Fed Locations: Wall, Silicon

☆ The Fed may have destroyed the housing market by crushing both supply and demand, top economist Mohamed El-Erian says
▼ + stars: | 2023-08-28 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

The Fed may have broken the US housing market, according to top economist Mohamed El-Erian. That's because interest rate hikes have helped drive up mortgage rates, weighing on both supply and demand. High rates have frozen the housing market over the past year by crimping both supply and demand. AdvertisementAdvertisement"When you go from record-low mortgage rates to levels that we haven't seen for almost 20 years, you've destroyed both demand and supply. That is the way you destroy the housing market," El Erian said.

Persons: Mohamed El, you've, El Erian, We've Organizations: Service, Allianz, CNBC, Mortgage News Daily, US Locations: Wall, Silicon, El

☆ 'Shark Tank' investor Kevin O'Leary warns of 'real chaos' in the coming months as high interest rates batter the US economy
▼ + stars: | 2023-08-28 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

The US economy is in for "real chaos," according to "Shark Tank" investor Kevin O'Leary. That's because high interest rates are battering commercial real estate, banking, and small businesses. O'Leary has said small businesses make up around 60% of jobs in the US economy. The famed investor pointed to high interest rates as the result of the Federal Reserve's battle to bring down inflation. High rates could particularly spell trouble for the commercial real estate sector, where there's around $1.5 trillion of debt that's set to mature within the next two to three years.

Persons: Kevin O'Leary, That's, O'Leary, Morgan Stanley, Biden Organizations: Service, Bloomberg, Citi, JPMorgan, Fox Business Locations: Wall, Silicon, America

☆ A turbulent few years for stocks has led to a boom in therapy services for stressed out traders
▼ + stars: | 2023-08-27 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +7 min

After a stressful few years for stocks, traders are flooding the offices of therapists and mental health professionals. Wall Street is seeing elevated rates of depression, anxiety, and substance abuse, psychologists told Insider. Get the inside scoop on today’s biggest stories in business, from Wall Street to Silicon Valley — delivered daily. That even applies to professional Wall Street traders, who already work grueling hours in cutthroat environments. Meanwhile, 32% of trading professionals said they had at least considered therapy or mental health services due to stress at work.

Persons: It's, Megan, it's, Goldman Sachs, Dr, Greg Kushnick, he's, Reid Daitzman, He's, Kushnick, Créde Sheehy, Kelly Organizations: Service, Wall, Oasis, Bank of America, of America, Financial, Finance, Quest Diagnostics Locations: Wall, Silicon, California, New, Connecticut

☆ US stocks close higher as traders brush off Powell's warnings of more potential rate hikes
▼ + stars: | 2023-08-25 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

US stocks rose Friday as markets brushed off Powell's warnings of more possible Fed tightening. The Fed chief said the central bank could hike interest rates further "if appropriate" to tame inflation. Investors seemed to ignore the warning, pushing to the Dow up almost 250 points during the session. Get the inside scoop on today’s biggest stories in business, from Wall Street to Silicon Valley — delivered daily. "Beyond September, markets may have to adjust the rate outlook higher, particularly if the recent run of faster than expected growth continues to play out."

Persons: Jerome Powell's, Powell, Wealth's Gary Pzegeo Organizations: Fed, Dow, Service, CIBC, Dow Jones Locations: Wall, Silicon

☆ US Stocks edge higher as traders wait for Powell's Jackson Hole speech
▼ + stars: | 2023-08-25 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

US stocks rose higher as traders waited for Powell's speech at Jackson Hole. Last year, stocks plunged after Powell warned markets of "more pain" ahead. download the app Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy PolicyAdvertisementAdvertisementUS stocks rose Friday ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Economic Symposium. Powell's speech at the same event last year sent stocks plummeting as he reiterated the central bank's committement to fighting inflation through interest rate hikes. At last year's event, stocks plunged after Powell warned markets of "more pain" ahead, as the Fed would continue to stay hawkish on inflation.

Persons: Jackson, Powell, Jerome Powell's, Riley, Art Hogan Organizations: Investors, Service, Federal, Jackson, Fed, Riley Wealth, Nasdaq Locations: Wall, Silicon

☆ The 2023 stock market rally is over as the Fed isn't easing anytime soon and a hard landing of the economy is inevitable, JPMorgan's chief stock strategist says
▼ + stars: | 2023-08-24 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

The rally in the S&P 500 is capped through the rest of the year, JPMorgan's Dubravko Lakos said. That's because there are a litany of negative factors heading into 2024 that will weigh on equities. The strength of the US economy has only postponed a coming recession, not averted one, he added. Stocks could tumble 15% even in the event of a mild downturn, JPMorgan's Marko Kolanovic predicted in a recent note. AdvertisementAdvertisementInvestors are now pricing in a 42% chance the Fed will raise rates another 25 basis-points in November.

Persons: JPMorgan's Dubravko Lakos, Dubravko Lakos, Lakos, JPMorgan's Marko Kolanovic Organizations: Service, CNBC, Investors, Bank of America, New, Fed Locations: Wall, Silicon

☆ The housing market will be stuck in a rut for a long time even if the US avoids a recession, Fannie Mae says
▼ + stars: | 2023-08-24 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

The downturn in the US housing market isn't ending anytime soon, Fannie Mae warned. That's because mortgage rates are set to stay elevated if the US avoids a recession. The government-sponsored mortgage giant highlighted the stagnant US housing market, with existing home sales down 18.9% year per-year in June, according to Fannie Mae's estimate. That slowdown has largely been spurred by high mortgage rates, which have pushed buyers and sellers out of the market. AdvertisementAdvertisementExperts say housing conditions are unlikely to improve until mortgage rates dial back to the 5% range.

Persons: Fannie Mae, Fannie Mae's Organizations: Service, Mortgage News Locations: Wall, Silicon

☆ 'Dr. Doom' Nouriel Roubini says China and the US need to dial back tensions or risk a conflict that would destroy the world economy
▼ + stars: | 2023-08-23 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

The US and China are on a collision course that threatens the world economy, Nouriel Roubini warned. The "Dr. Doom" economist pointed to growing tensions between the US and China. "If they fail to achieve a new understanding on the issues driving their current confrontation, they will eventually collide." "That would lead inexorably to a military confrontation that would destroy the world economy, and which could even escalate to an unconventional (nuclear) conflict. AdvertisementAdvertisementRoubini has repeatedly warned of catastrophe for the global economy over the past year.

Persons: Nouriel Roubini, Doom, Roubini Organizations: Service, Syndicate, Taiwan Locations: China, Wall, Silicon, China's, Taiwan

☆ China risks a debt deflation loop but could avoid a lost decade if it plays its cards right, Morgan Stanley says
▼ + stars: | 2023-08-23 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

China's economy is at risk of falling into a debt-deflation loop, according to Morgan Stanley. That's a scenario where prices fall, debt rises, while economic growth stagnates. But policymakers could avoid that future if they keep interest rates below a key level. "China's policymakers will need to act forcefully. That trifecta of obstacles means it could be possible that China's economy could do even worse than Japan did in the 90s, according to Nobel laureate Paul Krugman.

Persons: Morgan Stanley, That's, Chetan Ahya, Ahya, Paul Krugman Organizations: Service, Bank of Japan Locations: Wall, Silicon, China, Asia, Japan

☆ The surge in credit card delinquencies might be a 'harbinger' of a coming recession, Wells Fargo says
▼ + stars: | 2023-08-22 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

Credit card delinquencies are surging and could a recession signal, Wells Fargo said. Strategists at the bank pointed to credit card delinquencies surging among commercial banks. Credit card delinquencies are surging, which has typically been associated with past recessions. Meanwhile, credit card debt also notched $1 trillion for the first time in early August, according to Federal Reserve data. AdvertisementAdvertisementSurging credit card delinquencies have also been historically associated with recessions, though a downturn hasn't yet been officially declared and Wall Street forecasters are increasingly expecting a soft landing.

Persons: Wells Fargo, Wells, Moody's Organizations: Service, Federal Reserve, Wall Locations: Wall, Silicon, Wells Fargo

☆ America's exposure to an economic crisis in China is 'surprisingly small,' according to Nobel economist Paul Krugman
▼ + stars: | 2023-08-22 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

An economic crisis in China is unlikely to have major impact on the US, Paul Krugman said. A crisis could actually benefit the US by lowering inflation, according to the top economist. For one, the US has very little exposure to China's economy, both in terms of investment as well as trade. In fact, an economic crisis in China could slightly benefit the US, if reduced demand for commodities helps ease prices and inflation. But in economic terms, we seem to be looking at a potential crisis within China, not a 2008-style global event."

Persons: Paul Krugman, Krugman, Hong King, It's Organizations: Service, New York Times Locations: China, Wall, Silicon, United States, Hong, that's, Beijing, Germany, Japan

☆ Nasdaq breaks 4-day losing streak as tech shares rise ahead of key earnings
▼ + stars: | 2023-08-21 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +1 min

US stocks finished mixed on Monday as traders looked ahead to key earnings reports this week. The Nasdaq snapped a four-day losing streak as investors awaited Zoom, Nvidia, and Snowflake earnings. Markets are also expecting Fed Chair Jerome Powell to speak at Jackson Hole on Friday. Get the inside scoop on today’s biggest stories in business, from Wall Street to Silicon Valley — delivered daily. The Nasdaq snapped a four-day losing streak, with Zoom Video reporting late Monday, while Nvidia and Snowflake report on Wednesday.

Persons: Jerome Powell, Jackson, Powell Organizations: Nasdaq, Nvidia, Service, Dow Jones Locations: Wall, Silicon

☆ Stocks are still much better than bonds for generating long-term wealth, Wharton professor Jeremy Siegel says
▼ + stars: | 2023-08-21 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

There's "no way" bonds are better than stocks for long-term investors, Wharton professor Jeremy Siegel said. By the time investors have doubled their money in bonds, they've quintupled their money in stocks, he estimated. Siegel has turned more bullish on stocks and the US economy over the past year amid inflation's decline. Meanwhile, the S&P 500 is currently trading with price-to-earnings ratio of about 20, which means stocks have around a 5% yield. "By the time you've doubled your money in bonds, you've multiplied your money by five times in stocks," Siegel said in an interview with CNBC on Monday.

Persons: Wharton, Jeremy Siegel, they've, Siegel, Jay Powell Organizations: Service, Treasury, Securities, Federal Reserve, CNBC Locations: Wall, Silicon

☆ China's economic troubles are a result of the post-2008 'debt supercycle' finally coming back to bite it, Harvard economist says
▼ + stars: | 2023-08-21 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

China is being hit by a "debt supercycle" that began with the 2008 financial crisis, Kenneth Rogoff said. While Beijing has a strong record of containing economic fires, today's crisis of slowing growth and high debt is unprecedented, he added. "The debt supercycle may have lasted longer than initially expected, perhaps because of the pandemic. But it was a critical piece of the story, and now, as China's economy falters, it is the best explanation for what might come next," he later added. Trouble for China's economy could stretch on over the long-term as it faces poor growth prospects, experts have warned.

Persons: Kenneth Rogoff, Rogoff Organizations: Service, Project Syndicate, Harvard Locations: China, Wall, Silicon, –, Europe, Beijing

☆ Russia's economic woes have brought a flood of cash and sparked a real estate boom in the UAE
▼ + stars: | 2023-08-21 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

Traders in the Gulf state have ramped up business in Russian oil and gold markets, the WSJ reported. Conversely, Russians are flocking to the UAE, bringing their wealth to its economy and sparking a real estate boom. That's as sanctions and trade restrictions have weighed heavily on Russia's economy, cutting it off from billions of its foreign reserves and crimping its energy trade. Russians were the third-largest group of real estate buyers in Dubai over the last quarter, the real estate firm Betterhomes told the Journal, up from the ninth-largest group in 2021. Russia's economy meanwhile is in a state of turmoil.

Persons: Betterhomes, Putin Organizations: Traders, Service, United Arab Emirates, UAE, Wall, Yale Locations: UAE, Gulf, Wall, Silicon, Russia, Ukraine, Dubai, Poland

☆ The resilience of Russia's stock market and its economy is a complete mirage masking deeper pain, Yale researchers say
▼ + stars: | 2023-08-20 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +5 min

The functioning of Russia's stock market is an illusion, two Yale researchers told Insider. That apparently stellar performance of the Russian stock market this year is ultimately an illusion meant to mask deepening pain in the country's economy. It's a move that was intended to prop up Russia's stock market, the researchers said. "The Russian stock market performance is very misleading, It is a Roach Motel of assets," Sonnenfeld told Insider. Other experts have warned of more pain for Russia's economy as its costly war in Ukraine drags on.

Persons: Vladimir Putin, Jeffrey Sonnenfeld, Steven Tian, Ukraine haven't, that's, Tian, Sonnenfeld, Putin Organizations: Yale, Investments, Service, Yale School of Management, Putin, Levada Locations: Wall, Silicon, Moscow, Russia, Ukraine, Poland, Baltic, Russian, Armenia, Georgia, Kyrgyzstan

☆ Wharton professor Jeremy Siegel says the US won't spiral into a new bout of inflation even as economy stays hot
▼ + stars: | 2023-08-18 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

The US won't see a resurgence in inflation, according to Jeremy Siegel. That was a reflection of poor productivity in the economy, Siegel said – a trend that has since turned around:"It was the worst productivity performance in over 70 years. This year we are hiring at less than half the pace and we have two to three times the level of GDP growth. That's why we can have this tremendous GDP growth and still have the disinflationary trend." And inflation won't reaccelerate as improving productivity justifies higher wages and drives more economic output, Siegel explained.

Persons: Jeremy Siegel, Wharton, Siegel, Jay Powell, Stocks Organizations: CNBC, Service, Atlanta Fed Locations: Wall, Silicon, BlackRock

☆ The $1 trillion of high yield debt that's piled up in the last 5 years is about to have a 'day of reckoning,' Bank of America says
▼ + stars: | 2023-08-18 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

There's around $1 trillion of private debt that's headed for potential trouble, Bank of America warned. Most of that debt has been created by below-investment grade companies through high yield loans or bonds. The bank estimated around $1 trillion of high yield debt has been accumulated by companies over the past five years, which has largely been created by below-investment grade corporations. Around 25% consists of below-investment grade firms issuing risky high-yield bonds, while 35% consisted of broadly syndicated loans taken out by below-investment grade companies, the bank said. The remaining 40% was classified as private debt.

Persons: Yuri Seliger Organizations: Bank of America, Service, Moody's Investors Service Locations: Wall, Silicon

☆ 'Shark Tank' investor Kevin O'Leary says Michael Burry's bet against the S&P 500 is going to be painful, even if he's right eventually
▼ + stars: | 2023-08-17 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

Michael Burry's bet against the S&P 500 could prove to be painful, Kevin O'Leary warned. Burry made around $100 million betting on the 2008 crisis, but that was a different game, O'Leary says. The S&P 500 has 500 mega-cap companies in it in 11 sectors of the economy, real estate only being one of them. The same goes for Burry's bet against the Nasdaq 100, which is largely concentrated in tech, but has leading stocks in different areas of the sector. At the crux of the market's turmoil, the S&P 500 could plummet 57% to 1,900 and the Nasdaq could plunge 56% to 6,000, Burry predicted last year.

Persons: Michael Burry's, Kevin O'Leary, Burry, O'Leary, " O'Leary, –, Burry aren't Organizations: Service, Fox News, Nasdaq, Scion Asset Management Locations: Wall, Silicon

☆ Markets should brace for a turbulent few weeks as slow motion rate shock continues, DataTrek says
▼ + stars: | 2023-08-17 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

That's partly because the Fed is unlikely to stop its quantitative tightening regime. The Fed has reduced its balance sheet aggressively over the past year, which could weigh on stocks. As of last week, the Fed has already reduced its balance sheet around $700 billion from the first quarter of 2022, down to $8.2 trillion from $8.9 trillion. Aggressive balance sheet tightening was one of the factors that weighed heavily on stocks last year, with the S&P 500 shedding 20% to notch its worst performance since 2008. "The current slow-motion long-term rate shock has a way to go, in our view, and equity markets will struggle as it evolves.

Persons: DataTrek, Nicholas Colas, Colas Organizations: Fed, Service, Reserve, Treasury Locations: Wall, Silicon

☆ The labor market will set inflation on a 'rollercoaster' that will weigh on stocks and the economy, BlackRock says
▼ + stars: | 2023-08-14 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

The labor market is about to put inflation on a "rollercoaster," according to BlackRock strategists. "We believe this structural labor shock is poised to take over as the driver of inflation as the pandemic-driven spending mismatch unwinds." That raises the risk of a super-rare "full-employment recession," strategists said, a situation where economic activity winds down despite the labor market remaining strong. "We believe this structural labor shock is poised to take over as the driver of inflation as the pandemic-driven spending mismatch unwinds," BlackRock strategists said in a note on Monday. "We see inflation on a rollercoaster as the labor shock takes over from the spending mismatch.

Persons: That's Organizations: BlackRock, stoke, Service Locations: Wall, Silicon, BlackRock

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