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marmar

(76,985 posts)
Tue Jun 2, 2015, 08:57 PM Jun 2015

Last Two Times This Happened, Stocks Crashed


By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.

Global growth is languishing, corporate revenues too, but CEOs are trying to show they can grow their companies the quick and easy way. Cheap debt is sloshing through the system while yield-hungry investors offer their first-born to earn 5%. And this cheap debt along with vertigo-inducing stock valuations have created the largest M&A boom the US has ever seen, with May setting an all-time record.

There may be a sense of desperation among CEOs as the Fed’s cacophony evokes interest rate increases, the first since July 2006. So companies are issuing all kinds of cheap debt while they still can. Bond issuance has totaled over $100 billion per month in the US for the past four months, the longest such streak ever, according to Bank of America Merrill Lynch.

And that record issuance doesn’t account for the booming “reverse Yankee issuance,” where US corporations take advantage of the negative-yield absurdity Draghi has concocted in Europe and issue euro-denominated bonds into European markets.

“Issuers should realize that the window to lock in low long-term yields for any purpose is closing,” Hans Mikkelsen, a senior strategist at BofA, wrote in a note, according to the Financial Times. And so in May, M&A deals hit an all-time record of $243 billion.



US-M-A-record-months-May-2015-May-2007-Jan-2000The prior two record months: May 2007 ($226 billion) and January 2000 ($213 billion). Not long after those records were set, markets crashed with spectacular results. ....................(more)

http://www.nakedcapitalism.com/2015/06/wolf-richter-last-two-times-this-happened-stocks-crashed.html



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Last Two Times This Happened, Stocks Crashed (Original Post) marmar Jun 2015 OP
It's a poor student that won't even learn from experience Demeter Jun 2015 #1
It seems merger & acquisition has become the new bundled derivative... Eleanors38 Jun 2015 #2
 

Eleanors38

(18,318 posts)
2. It seems merger & acquisition has become the new bundled derivative...
Wed Jun 3, 2015, 03:13 PM
Jun 2015

a means of somehow increasing the notion of value (which is used as a synonym for "growth&quot . Bastards are having a hard time defining wealth anymore.

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