Archive - Dec 2015

Less than two weeks after Guotai chief Yim Fung went "missing" amid Beijing's reinvigorated crackdown on market "manipulators," Citic Securities - China's largest broker - says it cannot find two of its most prominent investment bankers. Considering recent events, you don't have to be a detective to make an educated guess as to what might have happened to Jianlin Yan and Jun Chen.

The left is now mixing terrorism and mass shootings to push a narrative to eviscerate the Second Amendment. We once again have rehashed stories about the AR-15 rifle, which isn’t as powerful as a hunting rifle and rarely used in crimes. And we have the media endorsing gun control policies that would require gun bans and confiscation. They’re insinuating parts of it, but the brash call to ban guns entirely is coming.

"There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market. This important event falls at a peculiar time—less than 48 hours before the largest option expiry in many years. "

While EM sovereigns as a group may be in better shape now in terms of “original sin” (i.e borrowing heavily in foreign currencies) than they were during say, the Asian Currency Crisis, the confluence of factors outlined above means no one is truly “safe” in the current environment as moving from liquidation back to accumulation will entail a sharp reversal in commodity prices and a pickup in the pace of global growth and trade.

"The reaction of Erdogan and Turkish authorities can say one thing: they were stunned and shocked that Moscow has such evidence. This significantly affected the position of Turkey's NATO allies."

The dream and demand of Bernie Sanders and all of the other "democratic socialists" of all political parties is that all or at least significant parts of human life need to be micromanaged and controlled by government so people may be liberated from the "tyranny" of not having all they may want without finding effective ways of acquiring it through honest and peaceful work. The "freedom" about which Bernie Sanders speaks, and before him Franklin Roosevelt, in fact, involves a loss of liberty into an even greater degree of political paternalism.

Global equity markets, as measured by the MSCI Developed World index, are above the lows hit in early October but remain on a downtrend that began after markets peaked at the end of May this year. As SocGen's Andrew Lapthorne notes, the current level is now only just above where the index stood at the beginning of 2013 and less than 1% above the 2007 peak. In other words, as he warns, "the equity market has run out of momentum," and the 'bill' for the debt overhang is coming due.

Since taking office, Obama has boosted the number of people on the no fly list more than ten-fold, to an all-time high of 47,000 - surpassing the number of people barred from flying under George W. Bush. So should we be at all surprised that President Obama is using one egregious violation of Constitutional rights to target another?

The public-to-private sector "revolving door" has crossed into the macabre twilight zone.

Gold is an alternative to Fed “money.” If Fed money rises in value, gold deflates. Conversely, oil is a global GDP-commodity.  We believe the gold-to-oil ratio (GOR, gold/oz. divided by WTI oil/bbl.) is "deflation relative to reflation."

By excluding 294 "day of + day before" Fed meeting trading days (147 x 2 days excluded) out of over 4,500 total trading days since Jun-1997, the drop is ~50%. Basically, excluding just 6% of Fed-influenced days cuts the S&P 500 price in half.

"Invest for the long-term," "buy-and-hold," "stay diversified," are the mantra of every asset-gathering commission-taking 'manager' out there... However, as JPMorgan notes, empirically that is a loser's bet. In fact, investors owning just the top 10 performers of the S&P 500 has never suffered a single rolling 12 month period loss (lowest was April 2009 +0.24%).

“An unknown home-made explosive device has gone off at a public transport stop injuring three people"...