Weekly News – July 19

“kinder, gentler LMEs”, head-scratcher in Texas Two-Step case, Welcome to the Jungle Alfredo! Hawaiian Electric side-steps BK, League Tables and much, much more… ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­  

Creditor Corner

for the week ended July 19, 2024

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BREAKING NEWS

“kinder, gentler LMEs”,  head-scratcher in Texas Two-Step case, Welcome to the Jungle Alfredo! Hawaiian Electric side-steps BK, League Tables and much, much more…


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Bruce Richards on the Markets:

The Broken Clock & Less Effective Transmission Mechanism


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Tweet of the Week

looking into the crystal ball…

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“Kinder, Gentler LMEs”

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“Kinder, Gentler LMEs”

Scott Greenberg on LMEs

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In the News

Things that make you go hmmm….

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Our Take:

Former Liz Freeman client YesCare agrees to settlement of $75 million, more than double the initial $37 million overseen by former Judge Jones as mediator for the case. It does make you think…

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welcome to the jungle!

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Our Take:

Universally well-liked and deservedly so. We look forward to Hon. Perez’ sense of justice and fairness on the SDTX. Welcome Alfredo!

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RX pros be like…

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a new type of mincemeat

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hmmmm…..

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conflicts continue to play out

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Featured Content

The Broken Clock & Less Effective Transmission Mechanism


The Fed will win with a forceful hand to push inflation back to its 2% target. Yet the Fed will err on the side of caution, move slowly to make sure a lower Fed Funds does not reignite inflation. When it lowers rates later this year, the Fed would be wise to pause to access risk that monetary doesn’t cause inflation to reaccelerate. After initially lowering rates, the Fed will likely skip a meeting or two to measure the impact of its monetary stimulus. Markets are placing >90% probability that Fed will cut in September. Markets have incorrectly predicted Fed actions over the past 2+ years, but given the recent CPI, PCE and jobs softening, I expect the Fed to cut rates 1-2x in 2024, beginning in September, subject to conformational July/August data. The chart below should show lower Fed Funds and higher unemployment rate in the coming year as these two lines cross back.


“Reassessing the Effectiveness of Monetary Policy” is the title of Jerome Powell’s keynote speech at Jackson Hole in August. This is a particularly important subject matter given the Fed’s models predicted recession and the more meaningful impact it expected from its monetary actions. Fed Chair Powell should acknowledge that the following dynamics contributed to the lack of effectiveness:

1) QE continued for 1-year after inflation fist surged and 6 months after it started raising rates

2) massive government spending stimulus offset monetary policy as this added to growth, blunting the impact of higher rates

3) wealthy homeowners with record low mortgage didn’t feel the impact from higher rates

4) soaring stock market led by tech and recently fueled by AI has enabled massive broad-based wealth creation

5) higher money market rates and coupons from floating rate debt are a windfall for savers

6) excessive consumer savings plus strong wage & job growth

7) financial conditions eased when the Fed signaled they were done tightening.


Powell and the Fed will reassess, and when they reflect, they should evaluate why they took so long to tighten when everyone knew the inflation genie was out of the bottle in 2021.


A broken clock is right twice a day so despite the wide miss by economists & Fed watchers over the past two years, it looks like forecaster will finally get it right this time. If the SOFR and fixed rate forward curves are also correct, we should expect higher rates for longer as R* (real rates) remain elevated. Never say ‘never’, but ZIRP is a thing of past. Markets never expected the Fed to raise rates by 525bps, never expected Fed Funds to remain so high for so long, with the Fed pausing so long.


How do you forecast the Fed’s monetary policy impacts markets for UST, Fixed Income, Credit, Equity, PE, Growth, VC and Real Estate?


To follow Bruce’s thoughts on the markets, investing and more, follow

@bruce_markets

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“open market” purchases for the modern age…

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Purdue fall-out

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In the News

more Purdue fall-out

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Our Take:

Judge Goldblatt finds that non-debtor preliminary injunctions are allowed post-Purdue but may just be harder to get… 

NYCBA Bankruptcy Committee: Impact of Purdue Pharma

July 25, 2024

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INSOL: Singapore Meeting

August 27, 2024

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NCBJ: Annual Meeting

September 18-20, 2024

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IMN: Distressed CRE Forum

September 19, 2024

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ABI: Views from the Bench

September 24, 2024

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GRR: Restructuring in the Americas

October 15, 2024

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The views of our Contributors should not be attributed to their respective firms or the Creditor Rights Coalition. In addition, the Coalition may take positions as part of its Advocacy efforts that do not necessarily reflect the view of Contributors and should not be attributed to any Contributor.

Announcing New Data Initiative to Analyze Bankruptcy Costs

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Our Take:

The Daily Cost of BK Legal fees Are Increasing.

Are we shocked? No.

Our proprietary analysis supports anecdotal evidence that bankruptcy has gotten more expensive. We will be providing additional analysis in the future to show how other factors affects fees. We hope our database will help make bankruptcy a more efficient forum for all stakeholders.

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Implications of the Purdue Pharma case

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Recent disqualification decisions and conflicts in BK

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Where we are in the credit cycle

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