??? do you mean too many people are going into tech, as opposed more lower paid jobs? tech compensation is high because there’s crazy demand for man-hours. virtually all the streaming platforms for anything require staffing 24/7, and then there’s development on top of it.
what are we looking at?
The problem is that if you make the sign $25/hr, then all the existing employees will want a raise. So you aren’t just paying X dollars for the new employee, you are paying that going rate to everyone.
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Unsustainable?
Well, fuck.
Credit default swaps. Have you seen/read The Big Short?
Vaguely aware of what credit default swaps are but i have no idea how to read the spread or what it means.
I’m not 100% sure I’m reading it right but it appears their market value is going up significantly right now.
Negative EBITDA is fine as long as you are Changing The Way We Think About X.
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He already deleted this. I’m sure he’ll nuke his account again soon, only to come back to brag when in reality he wasn’t short much of anything.
If the market matches an 08 decline, SPY goes to 205 - it’s at 357 now. That isn’t a number that’s given any real credence right now other than maybe LG. I obviously have no idea how low we go but it’s pretty safe to say that the market cannot return to recent highs or even prevent itself from falling further without some serious engagement from the Feds.
If you had told me on 1/1 the market would be down 25% on the year I would have guessed unemployment was nearing double digits
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What do the blue dots represent?
You would? Why?
The unemployment rate and the stock market have been inversely correlated for a while. I’m not sure why someone couldn’t hold the reasonable expectation that a stock market crash would align to an increase in unemployment.
There are reasons this old “rule of thumb” doesn’t apply in 2022. I think reason 1 is that people need to adjust their expectations of US unemployment rates to account for the tsunami of boomers leaving the workforce. Reason 2 (or maybe reason 1B) is that the pandemic was such as shock to the economy that things will by topsy turvy willy nilly for a while.
I am not a real expert on this but the general idea is that CDS info is expressed as basis point spreads (see the column with the blue font) and larger spreads indicate a higher price to insure against the default of the borrower. In the 2008 financial crisis the CDS spreads blew out to 200+ bps on major US banks, indicating that the market was charging very high prices to insure against bank defaults. When that happens it locks up the credit market because many lenders won’t (or can’t legally) lend money to borrows with a default risk that high.
The relevance of the blue dots I think is just that they are all tracking well to the right (i.e. above) the “average” spreads indicating by the red dots. It’s not a good sign when the credit market is showing that it is riskier “than average” to loan money to just about everyone (except Switzerland and Israel, apparently).
Isn’t it always riskier than average when interest rates are above average?
Wouldn’t risk be directly correlated to interest rates?
Also, low rates increase the sensitivity of asset prices to changes in interest rates, so short-term economic good news can have an overall negative effect on prices because the increase in rates is so large it outweighs the benefit of the good news. And vice versa.
I think CDS spreads and corporate interest rates are correlated, but it’s not because one causes the other to go up. It’s more that both measure corporate credit risk in different ways. CDS spreads are the price of default insurance, corporate bond yield spreads (the excess lending rate charged to corporations above what governments are charged) are a “penalty” that corporations pay in their borrowing costs to compensate the lender for the extra risk of default. If corporate default risk is high (for any underlying reason) then both CDS spreads and corporate bond yields will be high. Both CDS spreads and corporate bond yields jumped in fall 2008 for example.
2008 was quite different.
I’m just saying that default rates will naturally be higher when interest rates are higher as the payments that are made are higher due to interest.