ERCOT Margin Call

ERCOT is a “just-in-time” energy market without a capacity market and missing the ability to “call” adjacent systems or ready-to-go capacity to cover supply shortages. And so, – surprise, surprise – market clearing prices can get rather spikey when confronted by high demand and limited capacity. As reported by Zero Hedge: https://www.zerohedge.com/commodities/texas-grid-operator-warns-defaults-credit-crisis-develops The Texas energyContinue reading “ERCOT Margin Call”

Red Ponzi Debt Market

Investor confidence in China Fortune Land Development Co. Ltd. is tumbling as concerns grow about its debt repayment abilities just as Beijing steps up efforts to cut risk in the real estate sector. The mid-sized developer’s dollar bonds fell to record lows earlier Tuesday, with some rebounding but a note due 2024 still down at 49.8 centsContinue reading “Red Ponzi Debt Market”

Office Apocalypse

As reported in Bloomberg, new leases in the fourth quarter dropped 64% YoY to 4.6 million square feet. Average asking rents for the highest-quality offices fell 8.6% to $90.42 a square foot, a decline that doesn’t capture concessions such as free months or tenant-improvement allowances. And, as the graph above indicates, this may just beContinue reading “Office Apocalypse”

Sublease inventory in top US markets now exceeding levels of the Dot Com bust and the Great Financial Crisis.

Office spaces could be down 10 to 15% even after the economy recovers, adding that rents in top markets such as New York and San Francisco will continue to experience declines in 2021.  CRE crisis unfolding. Let me guess what follows – “bailouts ahead.” https://www.zerohedge.com/markets/companies-dump-office-space-inventory-swells

Escape from New York

NYC commercial real estate on increasingly shaky ground? Well, as Kathy Wylde (Partnership for New York City) told Bloomberg: “All the banks, insurance companies, and hedge funds are considering options.” NYC office space available for rent are now at levels not seen since 2003. Where is everyone going? Florida for starters. Just like Goldman. AsContinue reading “Escape from New York”

Canary in the Mine: Car Wreck Portends November Retail Crash

November dive followed by a return to the rolling-over trend. Christophe Barraud: confirms my view that, at best, 4Q GDP growth will slow dramatically compared to 3Q while another GDP contraction still looks possible at this stage. The fact is the rapid spread of Covid-19 will force more states to implement restrictive measures before quarter-end.Continue reading “Canary in the Mine: Car Wreck Portends November Retail Crash”

John Tuld: “If you’re first out the door, that’s not called panicking.”

“Margin Call” is a 2011 film that follows the key people at an investment bank, over a 24-hour period, during the early stages of the financial crisis. Written and directed by J.C. Chandor, we learn from the firm’s CEO, “John Tuld” (played by Jeremy Irons) that successfully running a banking business can come down toContinue reading “John Tuld: “If you’re first out the door, that’s not called panicking.””

Zombie Apocalypse

With interest rates at subatomic levels, “zombie” companies continue to defy the laws of physics. As discussed in ZH below, “it started in December 2017, when the IMF published a blog discussing the “Walking Debt: China’s Zombies” (a topic we first covered in October 2015 in “More Than Half Of China’s Commodity Companies Can’t PayContinue reading “Zombie Apocalypse”

Red Ponzi Defaults

Like Red Ponzi issues? Like cliff diving? Catching falling knives? As WSJ reported in their story, it’s been a lot of “unwelcome surprises” for those who believe Red Ponzi financial statements (too funny – there are such people). Sort of like those who believe there is no voter fraud. Yongcheng Coal & Electricity Holding GroupContinue reading “Red Ponzi Defaults”