T’was the week before Christmas and all through the bond market, the corporate undead breathed raspily. (That went downhill fast). The sometimes dark and dramatic story of 2020’s financial goings is going sugarplums as we head in to the holidays.
Zombie Companies Dancing in my Head:
As December gives way to a bright shiny things, we see (in the in the 3-bar chart), vigorous penchant for purchase from the Bank of Canada. As noted, the Bank’s cash-creating bond-buying bananarama has a “too much” line, and we are getting close it. This could leave us under the financial hood without a wrench – when it comes to building a long-term interest rate policy, maple leaf style
Some of these things are kind’a the same: Now, rub your eyes for a minute and find the connection between these two graphs.
In short, the cheap rates (and central banks that don’t know any boundaries) created a massive issuance of corporate borrowing. The blue bars on the second chart suggest this was good for 2020’s healthy-but-hurting companies, but it won’t work miracles on what the industry refers to as its zombies when rates go back up.
Also connected to those charts?
Am I the only one who got a letter from the city threatening a massive property tax increase this year? Who said there’s no inflation?
And, speaking of no boundaries, in the Global Insights piece, we look closer at what’s behind the Fed’s thinking, the fiscal stimulus that’s coming into view, and what this all means for investors. Ho-ho-hold on there cowboy!
Regional developments: The Canadian market set to end 2020 on positive note; A pullback in U.S. stocks in the offing? ECB delays dividend normalization for EU banks; MSCI removes Chinese stocks from indexes.
Have a look for more here: Global Insight Weekly
“Time Does all the Heavy Lifting:”
You know what they say about looking backwards and 20-20… Well, there’s a story image in this 4-minute retrospective video. What if some unfortunate guy who fell in to a drunken coma at his December 2019 new year’s eve party, and woke up this morning? Global Equity Investor Insights - December 2020
Enjoy your week! It’s almost time for me to gird myself up for my annual trip to the mall.
A very Merry Christmas, and a happy, prosperous, and most of all, healthy 2021 for you all.