While there were certainly concerning bits of evidence piling up regarding the longer-term fate of U.S. stocks, the most important factors in the immediate-term – such as the ongoing confirmation of new highs by the NYSE Advance-Decline Line – continued to support the bull market. That may be starting to change...
Fearing an acceleration in deposit outflows from Greek banks, PM Alexis Tsipras suggested on Wednesday that a deal between Athens and creditors was imminent when in fact he had no evidence to support the contention. Greek officials now promise their optimism "is not just words."
- No change in Greek debt talks after another day of spin (Reuters)
- G-7 Weighs In on Greece as Government Told to Be Serious (BBG)
- FIFA Faces Mounting Pressure From Sponsors as Visa Threatens to End Deal (WSJ)
- U.S. hopes Chinese island-building will spur Asian response (Reuters)
- Japan Inc.’s $104 Billion Investor Payout Set to Surge (BBG)
- Russia masses heavy firepower on border with Ukraine (Reuters)
- China Says Its Most-Wanted Fugitive Is in U.S. Custody (BBG)
It's Official: Avago Buys Broadcom In $37 Billion Deal, Thousands In Employee Layoff "Synergies" ImminentSubmitted by Tyler Durden on 05/28/2015 - 07:11
As the WSJ reported yesterday when it sent the semiconductor space soaring, moments ago Avago (21x EV/EBITDA) confirmed it would buy Broadcom (19x EV/EBITDA) for $37 billion. The reason for the deal: as the WSJ noted yesterday, "growth has been hard to come by for Broadcom, a 24-year-old company that makes communications chips for tablets and smartphones, and supplies the Internet links for cable-television and telecommunications devices." Or, in other words, only a delusional, yield-chasing bond holder would be willing to fund (with other people's money) the 18.9x Broadcom EV/EBITDA take out price and just like in the oil and E&P space, when organic growth dries out, there is always zero cost debt to extend the dream a little longer.
Courtesy of central planning, virtually every single capital market has become an illiquid penny stock, with wild swings from one extreme to the other, the latest example of this being the Shanghai Composite, which after soaring 10% in the past ten days, crashed 6.5% overnight tumbling 321 points to 4620 after it briefly rose just shy of 5000. This was the biggest drop since January 19 when the Composite dropped 7.7% only to blast higher ever since. Putting the "plunge" in perspective, now the SHCOMP is back to levels not seen in... one week.
In a sign of just how dire the situation in Greece truly is, Reuters is reporting that Athens now owes billions to drugmakers as the consequences of being completely beholden to the ”institutions” which control the printing of a fiat currency now weigh on Greece's ability to provide basic medical services for its citizens.
"Today, six and a half years after the collapse of Lehman, there is a Bigger Short cooking. That Bigger Short is long-term claims on paper money, i.e., bonds."
"It’s mostly not about trade. Only 5 of the 29 chapters are about traditional trade." What little we know about the TPP has come from whistleblower site, Wikileaks. This is what Julian Assange thinks of this “trade” treaty in his own words...
"Japanese day traders, colloquially and collectively known as 'Mrs Watanabe', are buying the yen as it nears eight-year lows," Nikkei reports. For their part, private equity firms are cashing out at what they figure may be the top for Japanese stocks.
When has crony capitalism really gotten out of control? How about when a major U.S. corporation (a huge defense contractor, no less) is publicly threatening government officials to leave the country if the federal government doesn’t continue to boost their profits through government handouts...
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The Man in the Moon studies the pathology of Earth’s global economy and markets from a distance where there’s no gravitational pull towards empiricism or consensus. His findings: 1) the global economy is over-leveraged, fragile, stagnating, and increasingly centrally managed; 2) capital markets and asset performance have been captured by the perception of the ongoing value of money, and so; 3) unconventional investment analysis is prudent.
In spite of all of the 'apparently good' outcomes of Cuba’s experimentation with equal sharing of wealth; in recent years Cuba seems to be moving away from the planned economy model. Instead, it is moving to more of a “mixed economy,” with more entrepreneurship encouraged. While we don’t have explanations for all of the things that are going on, here are a few insights on what is happening...