Tue, 21st November 2017

Anirudh Sethi Report


Archives of “sheer size” Tag

China on track to overtake US in non-financial corporate debt

China is forecast to surpass the US as the world’s largest corporate debt market for non-financial companies in the next two years, according to a report from Standard & Poor’s.

The rating agency expects the debt needs of companies in China to reach upwards of $18tn by the end of 2017, accounting for a third of the forecast $53tn in new debt and refinancing needs of global companies in the next five years. Debt includes bank loans and bonds and is drawn from public information collated by S&P

 “China is poised to overtake the US, and then the US and eurozone combined,” said Jayan Dhru, senior managing director at S&P.

Based on a stronger rate of economic growth that propels debt issuance, China’s non-financial corporations could owe $13.8tn by the end of 2014, eclipsing US corporations’ outstanding debt of $13.7tn. A slower expansion of debt based on the growth of the economy would see China pass the US in 2015, said S&P.

Damn Algorithms

What more is left to say at this point other than the fact that the hedge fund computers and their damnable algorithms have destroyed the integrity of the US futures markets. The sheer size, extent, ferocity and volatility of the moves that these pestilential computers are creating have rendered these markets basically useless for what they originally came into being for, namely, risk management for commercial entities.

—I am predicting here and now that unless something is done to corral these hedge funds, the futures market is going to become useless as a risk management tool for non-speculative entities.

—Maybe we all should just go the hell to sleep and wake up in a year and see if the chart has actually gone anywhere besides up and down like a stinking yo-yo.

Sorry Europe: China’s Pockets Are…Empty

As every central banker, politician (except Chuck Schumer), and bank CEO looks towards Chinese central planners as their apparent bottomless pit of dumb money, it seems that perhaps the cupboards are bare. Reuters, via The China Post, highlights in a recent article that while there are indeed reserves, they are gainfully employed and the unwinding of those positions (in size enough to matter) to provide the cash that is so desperately needed to keep the ponzi going, will itself cause a vicious circle of negative sentiment. In fact, analysts reckon China’s armory has only about US$100 billion to spare.

Analysts suspect China’s forex may be weaker than perceived (Reuters, via The China Post)

 Europeans searching for a bazooka to blast away eurozone debt problems might well eye China’s US$3.2 trillion foreign exchange arsenal with envy, but Beijing has far less firepower available than many assume. 

Most of money in the world’s biggest store of foreign exchange reserves is prudently kept in near-cash instruments to fund import and debt service bills in the event of an unforeseen domestic emergency, or invested in long-term assets that, if sold in size to help Europe, would spark panic on global financial markets.


KS Oils-Rumoured To Have Defaulted On ICD payments
The capital based Debt circles are agog with rumours that the Rs 4000 crore Edible Oil Trader/Processor KS Oils has reneged on ICD payments to Debt Funds. While the defaults seem small in quantum, it is the sheer size of default that is keeping Debt fund managers on tenter-hook as they foresee signs of major trouble in the Oil Seeds market. The simple reason-smaller the default bigger the problems.
While the Blue Channels have been ranting about P-Note based selling by Funds operating out of Mauritius behind the 17 per cent decline today in the KS Oils stock. That selling alone might not be sufficient reason. Oil being a commodity, the trader/processors of Oil seeds always are price takers on the purchase of mustard and soya seeds for crushing as also the sale of Edible Oil to the ultimate consumer-the ladies who run the homes.
If this rumour of a debt default is true, then KSOil will harbinger the coming decline of all shady operator led managements with or without the P-Note selling, which unfortunately are will be a big knock for FMCG sector concerns.
Daal Mein Kuch kaala hai …Ya Puri Daal kaali hai ?