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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (8818)	7/7/2004 1:11:54 PM
From: mishedlo	Respond to of 116555

Mish to Brian Reynolds on Minyanville.... I think I asked this before but do not remember the answer. What is the best way to watch corporate bond spreads? If you have not done a post on it, could you? Couple more questions if I could. This is a chicken and egg kinda question. Do bond spreads widen because of falling equities or do equities fall because of widening corporate bond spreads? Either, both, it depends? Under what circumstances would you see us "losing" the corp market? Finally, when and how much of that debt that corporations managed to get refininanced at the junk bond market will be coming due? Are we going to face a mammoth need to refinance debt in 2005? 2006? If so do you have thoughts on the implications of that? ====================================================================== From Brian It’s tough to get a good read on corporates unless you have access to institutional fixed income trading desks. I haven’t found anything that I would rely on on the web. The WSJ and Barron’s will sometimes (or at least they used to) publish snippets of the bond indices in the bond tables. It is a chicken and egg question. I did a column in January that showed that most (but not all) equity declines are preceded by something going amiss or deteriorating in corporates. Anything could cause us to lose the corp mkt. Corp earnings, bond vol, global tension, you name it. I am more worried about stuff that comes out of left field, like the commercial paper squeeze that I wrote about in ’02. So, I tend not to overly worry about any one scenario, and concentrate on worrying generally. It is hard to put an exact number on it, but there is another bulge in corporate maturities in the years after ’06. Looks to be smaller than ’03-’04, but big enough to cause trouble if it goes badly, or to launch stock prices if it goes well. I’ve written about it a number of times, here’s an old one: minyanville.com

To: Knighty Tin who wrote (8818)	7/7/2004 1:31:48 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

UPDATE 3-Oil drops as Saudi says more OPEC oil a done deal Wednesday, July 7, 2004 3:37:35 PM reuters.com (Adds EIA comment, details, updates prices) By F. Brinley Bruton LONDON, July 7 (Reuters) - World oil prices fell on Wednesday after leading exporter Saudi Arabia said the OPEC oil cartel would go ahead with plans to increase output. But predictions from the U.S. Energy Information Administration that U.S. oil would likely stay above $35 a barrel for the rest of the year lifted prices from intra-day lows. Saudi Arabian Oil Minister Ali al-Naimi said the Organisation of the Petroleum Exporting Countries would proceed with an agreed 500,000 barrels per day (bpd) output hike in August, according to an industry newsletter. U.S. light crude <CLc1> was down 45 cents to $39.20 a barrel, up from lows of $38.95. London's Brent crude <LCOc1> fell 44 cents to $36.74, after gaining around $1 on Tuesday. Prices had hit lows of $36.51. OPEC's decision to raise output was "not up for review", the Middle East Economic Survey quoted Naimi as saying. The cartel had agreed to raise supplies by two million bpd from July and an additional 500,000 bpd from August to a total 26 million bpd. But some ministers have said the second stage of the increase would need to be confirmed at the group's next meeting in Vienna on July 21. OPEC has been pumping near capacity this year -- members boosted production by 830,000 bpd in June from May, according to a Reuters survey -- and exceeded even its higher official limits for July and August. Events in Iraq, which has the world's second-largest oil reserves, also pulled prices down. The country's crude exports were running at about 1.7 million bpd following repairs to a pipeline feeding oil terminals at Basra and Khor al-Amaya, a shipping agent told Reuters. Exports had been slashed to about one million bpd following attacks at the weekend. U.S. PREDICTI0N But the EIA's prediction that crude oil prices were set to stay relatively high supported the markets. EIA chief Guy Caruso told the U.S. Congress during a morning hearing in Washington that the agency's forecasted crude oil prices easing slightly through third quarter, but that supplies would stay under pressure. "The world market will still be tight, as world petroleum demand picks up seasonally in the fourth quarter, increasing the potential for unexpected upward price pressure (on oil) this winter," he said. Traders also still fear that exports from Russia's top producer YUKOS <YUKO.MM>, which pumps a fifth of the country's oil, may be disrupted as it has less than a day to reach a deal over a $3.4 billion tax bill and avert a potential fire sale of assets. Worries over union action in Nigeria would not give the market too much support since workers usually cannot afford to spend very much time out of work in the country, traders said. Oil major Total's <TOTF.PA> 225,000 bpd of Nigerian oil production remained shut in as the company prepared to meet labour ministry officials over union protests, a spokeswoman said. fxstreet.com