Insanely low rates are met with a ¯\_(ツ)_/¯

MON, AUG 19, 2019

YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC

AS OF MON, AUG 19, 2019 • 12:03 ET

DJIA		26137.72
		+0.97%	+251.71

S&P 500		2923.46
		+1.20%	+34.78

NASDAQ		8010.73
		+1.45%	+114.74

EDITOR'S NOTE

(That's not a typo...it's supposed to be the "shrugging man" emoticon.)

Aren't people racing to take advantage of this historic opportunity to borrow at negative interest rates??

Uh...not exactly.

French auto parts company Valeo ain't interested. They, along with SAP and Unilever, are among the European companies whose debt trades at negative yields. Globally, including the U.S., more than $1.2 trillion of corporate debt now has yields below zero!!

(How does that work? Louis Vuitton parent LVMH, for instance, has issued negative-yielding debt this year, according to Bloomberg, meaning "the securities had a coupon of zero and investors paid more for them than the face amount.")

It makes you wonder if the cost of funds, as some like BlackRock's Rick Rieder have argued, is really the problem as Europe wobbles into a possible recession.

This news comes at the same time Denmark's negative-yielding mortgages are getting more attention as a harbinger of what's to come in more countries--perhaps even ours.

The U.S. has finally seen a modest pickup in demand for mortgages and refinancings, although our average 30-year mortgage rate remains above its 2016 lows of 3.4-3.5%. But the crash in rates this year--instead of spurring people to act quickly to borrow funds--has caused some squeamishness about the economy and an expectation that even lower rates are likely still ahead.

As D.K. wrote to me on Friday, "My wife and I were going to drop $100,000 in a kitchen redo + pool, but we will wait some. We got the wobblies from this week." And he's a loan review manager at a bank!

My husband and I, meanwhile, are aggressively paying down our mortgage despite having a super low borrowing rate. I know that doesn't make any "sense," but it still saves money in the long run and plus, we're debt averse! And so are vast swaths of other personal and corporate borrowers. Tons are still trying to reduce their debt loads--like Altice Europe, despite being one of the negative borrowers this year.

And so the European Central Bank is apparently readying a "bazooka"-like package of rate cuts and bond-buying at its meeting next month, to help stave off a downturn and deflationary spiral. Good luck to them. Because while too-tight monetary policy can definitely choke the economy, simply loosening it over and over again in the hopes of spurring growth rarely seems to help much.

Back on Wednesday. See you then!!

Kelly

Kelly Evans

KEY STORIES

The CEOs of nearly 200 companies just said shareholder value is no longer their main objective

The Business Roundtable, a group of CEOs of nearly 200 major U.S. corporations, gave a new definition of the "purpose of a corporation."

Stocks making the biggest moves premarket: Estee Lauder, Palo Alto Networks, Nvidia & more

These are the stocks posting the largest moves before the bell.

5 things to know before the stock market opens Monday

Dow to jump; Trump defends economy; Huawei hopes for US reprieve; Trump and Apple's Tim Cook meet; president ties Hong Kong protests to China trade dispute

JP Morgan: Don't buy the dip until September

J.P. Morgan says investors should remain guarded for the rest of August and wait until next month before buying stocks again.

Alarm in Texas as 23 towns hit by 'coordinated' ransomware attack

The attacks come after state and local ransomware attacks in New York, Louisiana, Maryland and Florida resulted in the loss of significant sums.

Here's what new tariffs will cost the average American household

J.P. Morgan estimates the average annual tariff cost per household will be $1,000 with the new round of Trump's tariffs.

'Everything seems like a trap now' — Cramer warns about mixed signals in the stock market

Investors should be careful not to buy or sell stocks based on last week's brief inversion of the yield curve in the bond market, CNBC's Jim Cramer warns.

GE issues more detailed response to fraud investigator

The conglomerate's head of investor relations released a more detailed statement about accounting practices under fire from Harry Markopolos.

Goldman says buy dividend stocks amid diving yields

Goldman notes that high-dividend payers are trading at their largest valuation discount in nearly 40 years.

Battle of the airport commute: CNBC tests Lyft, Uber Copter, Blade helicopter and mass transit in race to NYC's busiest airport

We tested the best way to cut the airport commute time for New Yorkers. The most expensive of the four options we reviewed, Uber Copter, was only 14 minutes faster than mass transit but cost $213.07 more.