Here is todays news

Gold reached $4000 an ounce, US stocks sold off, and the lack of a resolution to the US government shutdown, now heading into its eighth day, may be just the excuse the market needs for a pullback. Tech and consumer staples led the market lower. The Vix climbed to its highest level in a month. The US dollar basket is higher again, reminding everyone that when sentiment turns cautious, investors still turn to the USD. 10-year US Treasuries, whose yield at one point in mid-June was closer to 5% than 4%, are now just over 4.1% today, all indicating that speculators are becoming a little risk-averse. The collapse of First Brands and Tricolour Holdings may also be contributing to the recent “risk off” mood, as it once again raises Investors’ concerns about subprime consumer debt.

First Brands, a company I must admit I had never heard of until today, filed for bankruptcy protection over the weekend. The company used short-term funding arrangements to provide it with liquidity without significantly increasing its debt on the balance sheet. Still, their size and opacity ultimately hastened its demise, leaving creditors exposed to billions of dollars in losses. Tricolour’s lending was funded through securitisation, which involves repackaging individual loans into bonds that are sold to investors. I think we heard of that before.

Other types of debt also appear to be somewhat unstable. The consumer seems to have limited cash, as more than 12% of credit-card balances are over 90 days overdue, well above the 2020 peak and nearing 2010’s 13.7%. Often, the risks to equity markets first surface in the credit markets, hidden in plain sight. A period of back to reality is no bad thing.

Later today, we get the minutes of the Fed meeting. It will be interesting to see if the release changes expectations on US interest rates in the coming months, unlikely is my bet.

The holiday season is always a time to catch up on books. One that was kindly given to me, knowing my love of football, called “How to Win the Premier League” by Ian Graham. Ian Graham is the founder of the sports advisory business Ludonautics, developing statistical tools for predicting football matches and analysing player performance. His work is also widely used in the transfer market to value players. It provides valuable insights into how clubs like Brighton and Brentford can acquire players for modest sums, sell them to those with deeper pockets, and still survive in the Premier League. It also gives insights into tactics employed by clubs—an excellent read.