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After a 40 day hiatus in December and part of January when not a single high yield bond was sold due to “market conditions”, the longest such stretch since 2008…

… the junk bond market is on fire again, with CommScope Holding in the market with the largest U.S. high-yield bond sale in more than a year, the latest sign that the recent rebound in prices is enticing more issuers.

The wireless network provider, through its CommScope Finance LLC unit, is set to borrow $3 billion to help fund its acquisition of Arris International, according to a filing Monday, Bloomberg reports. The proceeds of three series of notes, which are expected to price next week, follow a $3.869 billion term loan offering last week to help back the $7.4 billion deal.

According to Bloomberg, at $3 billion, this would be the largest junk bond sale since Avantor’s $3.5 billion offering in Sept. 2017. It’s the latest example of a thawing junk-debt market, where collapsing spreads and plunging yields have led to a flood of issuance in both junk and IG, after weeks of hiatus.

As shown in the chart above, high-yield spreads have narrowed 100 basis points since the start of the year as issuance-starved investors came out in force for new supply and risk sentiment soared, thanks to the recent sharp rebound in stocks ever since Steven Mnuchin summoned the plunge protection team.

Courtesy of Bloomberg, here are some other deals in the junk-bond and leveraged-loan markets this week:

• Colfax Corp. is in the market with another large deal at $1 billion for its acquisition of DJO Global Inc. from Blackstone
• Dun & Bradstreet’s $1.35 billion sale is expected to price later this week, in what would be the first CCC rated offering since November. It’s also borrowing $2.63 billion in term loans for acquisition purposes
• Studio City is expected to price a $425 million bond offering to help fund a tender offer
• In leveraged loans, BrightSpring Health and PF Chang’s are holding lender meetings Monday

And yet, not every corner of the junk bond market is enjoying the recent renaissance. As we reported late last week, capital raising by mostly-junk rated US oil exploration and production companies remains frozen after falling sharply following the decline in crude prices that began last October, pointing to cutbacks in capital spending budgets and a continuing slowdown in activity.

As the FT reported recently, companies in the sector have not held a single bond sale since the start of November, according to Dealogic, while share sales have also slowed. The data suggest that after a record-breaking boom in US oil output in 2018, growth will be weaker this year.

Ken Monaghan, co-head of high yield at fund manager Amundi Pioneer said the rise in exploration and production companies’ debt yields had put off potential borrowers, with spreads over US Treasury bonds climbing from 3.9 to 7.5% at their peak before settling back to about 5.9% this year.

“No one wanted to issue debt unless they had to,” Mr Monaghan said. “At the peak, they would have been looking at yields of about 10.25 per cent. That’s awfully expensive.”

Speaking on a panel at the World Economic Forum in Davos on Wednesday, Vicki Hollub, Occidental Petroleum’s chief executive, said US shale oil companies were being forced to react to an investor push for more spending discipline. “Not as much money is going to be pouring into the Permian basin,” she said.

Still, should the market fail to retest recent lows in the near-term, investor demand for yield of any kind will mean that such trivial considerations as deteriorating E&P fundamentals won’t be able to hold back the investing horde for too long, and it’s only a matter of time before investors storm back to take advantage of the surging HY spread between Energy names and the broader corporate sector.

Then again, should junk E&P names fail to regain market access, it will soon turn very ugly for the shale patch.

Speaking on a panel at the World Economic Forum in Davos last Wednesday, Vicki Hollub, Occidental Petroleum’s chief executive, said US shale oil companies were being forced to react to an investor push for more spending discipline. “Not as much money is going to be pouring into the Permian basin,” she said, suggesting that all else equal, and should oil prices fail to rise from current levels, the US oil production miracle will soon go into reverse.

via ZeroHedge News http://bit.ly/2B55enl Tyler Durden

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Last week President Trump announced that the United States would no longer recognize Nicholas Maduro as president of Venezuela and would recognize the head of its national assembly, Jose Guaido, as president instead. US thus openly backs regime change. But what has long been a dream of the neocons may well turn out to be a nightmare for President Trump.

Why did Trump declare that the Venezuelan president was no longer the president? According to the State Department, the Administration was acting to help enforce the Venezuelan constitution. If only they were so eager to enforce our own Constitution!

It’s ironic that a president who has spent the first two years in office fighting charges that a foreign country meddled in the US elections would turn around and not only meddle in foreign elections but actually demand the right to name a foreign country’s president! How would we react if the Chinese and Russians decided that President Trump was not upholding the US Constitution and recognized Speaker Nancy Pelosi as US president instead?

“I think it’s going to be very difficult [to oust Venezuela President Nicolás Maduro]. I don’t think he’s going to walk away easily, and I think it’s going to end up in violence and could have a civil war. Some countries are lining up with him, but we’ve been antagonizing and threatening him and decide that we are going to install a president for them. And I would think even the people that might not like Maduro shouldn’t like us settling the dispute. It’s internal; they should settle it. And I think it’s rather ironic for our government to say that they want to take care of Venezuela because they’re not democratic, and we have to take care of it by, you know, the authoritarian approach of us installing a president and having a coup and threatening them with military violence because they’re not democratic enough. I would hardly say that our position is very democratic.”

Even those who would like to see a change of government in Venezuela should reject any notion that the change must be “helped” by the United States. According to press reports, Vice President Mike Pence was so involved in internal Venezuelan affairs that he actually urged Guaido to name himself president and promised US support. This is not only foolish, it is very dangerous. A Venezuelan civil war would result in mass death and even more economic misery!

Regime change has long been US policy for Venezuela. The US has been conducting economic warfare practically since Maduro’s predecessor, Hugo Chavez, was first elected in 1998. The goal of US sanctions and other economic measures against Venezuela (and other countries in Washington’s crosshairs) is to make life so miserable for average citizens that they rise up and overthrow their leaders. But of course once they do so they must replace those leaders with someone approved by Washington. Remember after the “Arab Spring” in Egypt when the people did rise up and overthrow their leader, but they then elected the “wrong” candidate. The army moved in and deposed the elected president and replaced him with a Washington-approved politician. Then-Secretary of State John Kerry called it “restoring democracy.”

It is tragically comical that President Trump has named convicted criminal Elliot Abrams as his point person to “restore democracy” in Venezuela. Abrams played a key role in the Iran-Contra affair and went on to be one of the chief architects of the disastrous US invasion of Iraq in 2003. His role in helping promote the horrible violence in Latin America in the 1980s should disqualify him from ever holding public office again.

Instead of this ham-fisted coup d’etat, a better policy for Venezuela these past 20 years would have been engagement and trade. If we truly believe in the superiority of a free market system we must also believe that we can only lead by example, not by forcing our system on others.

Just four months ago President Trump said at the UN: “I honor the right of every nation in this room to pursue its own customs, beliefs, and traditions. The United States will not tell you how to live or work or worship. We only ask that you honor our sovereignty in return.” Sadly it seems that these were merely empty words. We know from Iraq, Libya, Syria, etc. that this will not end well for President Trump. Or for the United States. We must leave Venezuela alone!

via ZeroHedge News http://bit.ly/2BbTFef Tyler Durden

Minutes after Pulte Homes’ CEO warning that 2019 will be a “challenging year” for homebuilders, Case-Shiller reports its 20-City Composite price index rose just 4.68% YoY in November (dramatically below the 4.89% expected and the 5.02% October print).

This is the weakest home price growth since January 2015…

All 20 cities in the index showed year-over-year gains, led by a 12 percent increase in Las Vegas and 8.1 percent advance in Phoenix.

The weakest gains were in Washington, Chicago, and San Diego. New York also had a subdued increase, at 3.5 percent.

The data further underscore a slowdown in the housing market, along with figures showing sales cooled throughout 2018 as mortgage rates increased, compounding the problem of affordability for many potential buyers already facing steep property prices and scarce supplies.

“Price increases are being dampened by declining sales of existing homes and weaker affordability,” David Blitzer, chairman of the S&P index committee, said in a statement.

“Housing market conditions are mixed while analysts’ comments express concerns that housing is weakening and could affect the broader economy.”

Finally, as Bloomberg notes, housing will likely weigh on US growth for the first time since 2012. Residential investment has added a few tenths of a percent to economic growth each year since 2012. The latest GDP data indicate the sector subtracted from growth in the first three quarters of this year. Poor performance in 4Q implies the sector’s growth for 2018 remains in negative territory.

 

via ZeroHedge News http://bit.ly/2UojfUD Tyler Durden

That didn’t take long.

The pound surged on Tuesday morning, sending it close to $1.32, following reports that Prime Minister Theresa May is expected to throw her support behind the Malthouse plan, a sign that May is finally willing to do whatever it takes to win over the support of the DUP after the party was reluctant to back her plan to support the Brady Amendment, which would have called for replacing the backstop with an “alternative arrangement.”

In a statement Tuesday morning, May said Parliament must unite behind one of the amendments to send a massage to the EU about “what we want on Brexit.” “Today we have the chance to show the EU what it takes for a deal.”

“I want to go back to Brussels with the clearest possible mandate to secure a deal that this House can support,”  May said.

If a Valentine’s Day meaningful vote on May’s deal fails, May promised to bring a vote on the amended deal the next day, according to Bloomberg, which highlighted the dominant theme from May’s remarks.

“Clearest possible message to Brussels” is rapidly emerging as May’s preferred catchphrase in this statement.

Here’s the statement on the DUP announcing its support for the Malthouse plan.

Full statement from Arlene Foster pic.twitter.com/jhbCAC7buG

— Harry Yorke (@HarryYorke1) January 29, 2019

The Malthouse plan, proposed by Tory Kit Malthouse, calls for renegotiation of the backstop, plus a Brexit-transition extension and a paid-for “standstill” period if backstop negotiations fail

In other news, the Cooper amendment, which calls for a delayed Brexit, has been selected for a vote, along with a handful of other amendments.

via ZeroHedge News http://bit.ly/2UsisCa Tyler Durden

Colombia is downplaying Monday’s incident in which US national security advisor John Bolton perhaps inadvertently flashed the contents a yellow notepad he was holding during a White House press briefing to reveal handwritten text “5,000 troops to Colombia,” which was picked up by photographers. The words were seen scribbled behind “Afghanistan – welcome the talks” in apparent notes made while previously discussing White House foreign policy and national security. 

Colombian Foreign Minister Carlos Holmes dismissed the possibility of any impending joint action with its close ally the US, saying in a brief address late Monday that he does not know the “importance and reason” for Bolton’s note. Holmes further said noting that his country will only act “politically and diplomatically” to restore order in neighboring Venezuela and will attempt to ensure new elections are held.

Bogota has recently joined the United States in backing National Assembly opposition leader Juan Guaido as the legitimate “Interim President” of Venezuela and is seen in close coordination with Washington. The South American country shares a 1,370 mile border land border with Venezuela and has long been accused by the Nicolas Maduro government of harboring militants engaged in coup and assassination plots against him. Any significant US military intervention in South America would likely have Colombia involved at the very least as an important logistical and staging hub. 

So this notepad that National Security Advisor John Bolton was holding today at the White House briefing on Venezuela says:

“Afghanistan -> Welcome the Talks. 5,000 troops to Colombia.”

If confirmed this would be a pretty terrible OPSEC breach.https://t.co/KS0Issfvps pic.twitter.com/IOrSprG567

— Rao Komar (@RaoKomar747) January 28, 2019

Concerning Bolton’s “leaked” notepad contents, there remains the possibility that having clearly written words on a mostly blank pad indicating that disengagement from Afghanistan equals ramping up engagement and intervention in South America is actually intentional signalling to both enemies and allies alike. It could have been a ploy to let Maduro know the White House means business and he better step aside and announce new elections “within eight days” according to prior EU demands. 

When asked following the briefing by eagle-eyed reporters who caught a glimpse of the notepad’s contents about the “5,000 troops to Colombia” memo, the White House spokesperson responded, “As the President has said, all options are on the table.”

At this point, I’m thinking he did this on purpose. https://t.co/YA2jA0XBZl

— Tom Nichols (@RadioFreeTom) January 28, 2019

During Monday’s comments, Bolton confirmed that President Trump is “leaving open the possibility of a U.S. military intervention to protect opposition leader Juan Guaidó, members of the nation’s assembly and American diplomatic personnel,” according to NBC. 

“The president has made it clear that all options are on the table,” Bolton told reporters while holding the yellow notepad. “We also today call on the Venezuelan military and security forces to accept the peaceful, democratic and constitutional transfer of power,” Bolton said.

But should the White House actually order thousands of troops to the region amidst the ongoing crisis, especially to Caracas’ nemesis Colombia, it would constitute an alarming escalation which would result in anything but “a peaceful transition”. 

via ZeroHedge News http://bit.ly/2MEGMOj Tyler Durden

With the US reportedly preparing to formally request the extradition of Huawei CFO Meng Wanzhou following a series of indictments against Meng and the telecoms giant that her father founded, her lawyers are stepping up their rhetoric, accusing the US of “hostage-taking” and using Meng as a political “pawn”.

According to Reuters, Meng’s lawyer said Tuesday that the Huawei’s CFO “should not be a hostage” to Sino-US relations. The remarks come ahead of trade talks between President Trump and a coterie of his senior trade officials, with Chinese Vice Premier Liu He leading a delegation on the Chinese side.

Her lawyer Reid Weingarten, partner at Steptoe & Johnson, pointed to “complex” Sino-U.S. relations. “Our client, Sabrina Meng, should not be a pawn or a hostage in this relationship. Ms. Meng is an ethical and honorable businesswoman who has never spent a second of her life plotting to violate any U.S. law, including the Iranian sanctions.” Huawei said it had sought to discuss the charges with U.S. authorities “but the request was rejected without explanation.” It said it “denies that it or its subsidiary or affiliate have committed any of the asserted violations” and “is not aware of any wrongdoing by Ms. Meng.” China’s foreign ministry urged the United States drop the arrest warrant and end “unreasonable suppression” of Chinese companies. Spokesman Geng Shuang also said China had issued stern representations to both Canada and the United States after the U.S. formally issued its extradition request for Meng.

Now that the charges have been filed, Canadian authorities have 30 days to decide whether they will proceed with the request and refer the case to the Supreme Court in British Columbia, where a hearing will be held. The whole process could take weeks or months.

Despite US officials’ insistence that the charges against Huawei are “wholly separate” and won’t impact the trade talks, Reuters reported that it’s almost inevitable that the US’s efforts against Huawei will factor into Beijing’s calculus. And given President Trump’s claim that he would be willing to intervene in the case if it means striking a trade deal with China, Beijing may expect that he might make good on this promise.

Acting Attorney General Matthew Whitaker said on Monday that the alleged criminal activity at Huawei “goes back at least 10 years and goes all the way to the top of the company.” Meng has been accused of misleading banks about the relationship between Huawei and a subsidiary that sought to sell goods in Iran.

via ZeroHedge News http://bit.ly/2WqQFDU Tyler Durden

Angry Democrats are planning to boycott Starbucks if former CEO Howard Schultz runs for president. The 65-year-old billionaire has said that he may run as an independent – a move which could peel votes away from whoever wins the Democratic nomination to face President Trump. 

Putting it bluntly was a heckler at a New York Barnes & Noble, who told Schultz: “Don’t help elect Trump, you egotistical, billionaire asshole.”

Here’s the video. A heckler shouts at Howard Schultz during an event in New York: “Don’t help elect Trump, you egotistical, billionaire asshole.” Via CNN pic.twitter.com/oabwfNnsmp

— Kyle Griffin (@kylegriffin1) January 29, 2019

Fellow billionaire Michael Bloomberg warned Schultz not to run as an independent, writing on Monday that he had to make the same decision in 2008 when he was considering running for office. 

“I faced exactly the same decision now facing others who are considering it,” said Bloomberg. “The data was very clear and very consistent. Given the strong pull of partisanship and the realities of the electoral college system, there is no way an independent can win.“

“In 2020, the great likelihood is that an independent would just split the anti-Trump vote and end up re-electing the President. That’s a risk I refused to run in 2016 and we can’t afford to run it now,” Bloomberg added. “We must remain united, and we must not allow any candidate to divide or fracture us. The stakes couldn’t be higher.“

Schultz, on the other hand, thinks that there are enough moderate voters on both sides of the aisle who are sick of the status quo and will rally behind him. 

“I believe that lifelong Democrats and lifelong Republicans are looking for a home,” Schultz told Axios on Sunday night – acknowledging that a vote-splitting campaign “is going to create hate, anger, disenfranchisement from friends, from Democrats.”

Neera Tanden, president of the Center for American Progress, called for a Starbucks boycott if Schultz enters the race, tweeting: “Vanity projects that help destroy democracy are disgusting. If he enters the race, I will start a Starbucks boycott because I’m not giving a penny that will end up in the election coffers of a guy who will help Trump win.”

Vanity projects that help destroy democracy are disgusting. If he enters the race, I will start a Starbucks boycott because I’m not giving a penny that will end up in the election coffers of a guy who will help Trump win. https://t.co/epUYVrcEg8

— Neera Tanden (@neeratanden) January 26, 2019

Other prominent Democrats have shared the anti-Schultz sentiment:  

“I have a concern that, if he did run, that, essentially, it would provide Donald Trump with his best hope of getting reelected,” 2020 hopeful Julián Castro told CNN’s State of the Union on Sunday. “I would suggest to Mr. Schultz to truly think about the negative impact that that might make.”

During his Monday interview at Barnes & Noble, Schultz said that he wouldn’t “do anything” to help Trump win again, however he says he believes he would win if he runs. 

Q: Would you drop out if polls showed you would help Trump win?

Schultz: “If I decide to run for pres as an independent, I will believe, and I will have the conviction and courage to believe, that I will win…I certainly will not do anything to put DT back in the Oval Office.”

— Alexis Levinson (@alexis_levinson) January 29, 2019

The former Starbucks head blasted Trump in a Sunday “60 Minutes” interview – saying he isn’t fit to serve as president, and that both Democrats and Republicans are “consistently not doing what is necessary on behalf of the American people.”

In response to the interview, Trump tweeted on Monday: “Howard Schultz doesn’t have the “guts” to run for President! Watched him on @60Minutes last night and I agree with him that he is not the “smartest person.” Besides, America already has that! I only hope that Starbucks is still paying me their rent in Trump Tower!”

Howard Schultz doesn’t have the “guts” to run for President! Watched him on @60Minutes last night and I agree with him that he is not the “smartest person.” Besides, America already has that! I only hope that Starbucks is still paying me their rent in Trump Tower!

— Donald J. Trump (@realDonaldTrump) January 28, 2019

Schultz’s retort? Nada. 

“I’m not going to respond to that. It’s childish. I’m not trying to win the Twitter primary” he said. 

Schultz, worth $3.4 billion, owns 33 million shares of Starbucks as of June 26, 2018. He stepped down as executive chairman and board member last June after joining the company in 1982, and is now chairman emeritus. 

Watch Schultz’s entire hour-long interview below: 

via ZeroHedge News http://bit.ly/2DGElry Tyler Durden