Business

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

A number of people have argued over the past few days that Hurricane Harvey will NOT boost the US housing market. As if any such argument would or should be required. Hurricane Irma will not provide any such boost either. News about the ‘resurrection’ of New Orleans post-Katrina has pretty much dried up, but we know scores of people there never returned, in most cases because they couldn’t afford to.

One day after Bitcoin crashed on a massive surge in volume, following a report in China's Caixin website that Chinese authorities plan to shut local Bitcoin exchanges....

... there is still far more confusion than clarity about what is really going on in China: so far there has been no official statement from either the PBOC or China's financial regulator, confirming or denying the report, which spooked millions of Chinese bitcoin (and ethereum and litecoin) holders into dumping their digital currencies. As a reminder, this is the gist of the Caixin report:

While credit spreads are broadly-speaking unmoved by recent chaos, signals are emerging that investors are starting to get worried about the $7.2 trillion U.S. investment-grade bond market.

Bloomberg's Lisa Abramowicz points out that bond buyers are starting to show some signs of unease, with traders are increasingly turning to derivatives to hedge against potential losses.

This is a marked shift from earlier in the year, when many bond investors seemed unwilling to give up any returns for such protection.

Even before Harvey and Irma were set to punish Texas and Florida, erasing at least 0.4% GDP from Q3 GDP according to BofA and costing hundreds of billions in damages (contrary to the best broken window fallacy, the lost invested capital more than offsets the "flow" benefits from new spending, which is why the US does not bomb itself every time there is a recession to "stimulate growth"), things were turning south for the US economy, so much so that according to the latest Deutsche Bank model, which looks at economic data that still has to incorporate the Irma/Harvey effects,

After Hartford Mayor Luke Bronin had warned Thursday that the capital of the wealthiest state in the US could be broke in as little as two months, city officials scheduled a conference call with bondholders to begin restructuring talks, according to Bloomberg.