Guest Post by Macro Story. The equity markets are getting no credit, literally and figuratively. For months now we have discussed the warning signs being flashed by credit and although unheeded by equity they continue to this day.
Perhaps it is because credit markets are perceived as complicated black boxes not worth the time to analyze. The reality is they are not that complicated. Most importantly though without credit you have no economic growth and without growth you have no expanding corporate profits.
Central banks can do all they want to control short term rates but without the participation of credit markets their efforts are futile at promoting economic expansion. So on that note below is an update to some key credit metrics and what they are telling us.
Non Financial Commercial Paper
Used for short term financing needs like inventory and accounts receivable rates continue to move lower. There is simply no demand for commercial paper it appears.
European markets are threading water in no trend market. While we have focused on EFSF votes out of Slovakia lately, we seem to forget some of the spreads still widening. What is going on in France. Is France the next casualty?