Archive - Jul 13, 2015

June was a bad month for most hedge funds. With China crashing, oil prices resuming their slide, volatility returning, and even momo favorite biotechs no longer rising at their conservative 10% monthly clip, few looked forward to writing their monthly investor letters, and nowhere was the carnage more indicative than in our favorite named hedge fund, the Tulip Trend Fund, which after soaring earlier in the year tumbled 15% in June and is now down almost 20% for the year.

"The Bank has started work to ensure there are no technical obstacles to our ability to accept equities as collateral should the need arise."

US Treasury bond yields are now lower on the day; EURUSD is plunging; and US equities are bid still near the highs of the day...

The new Greek deal is "absolutely impossible, totally non-viable and toxic …[they were] the kind of proposals you present to another side when you don’t want an agreement." Speaking with The New Statesman, former Greek FinMin Yanis Varoufakis blasts Wolfgang Schaeuble's position which will lead to "a humanitarian crisis" for Greece and warns, regarding this latest creditors' proposal, "if anything it will be worse [for the Greeks]." His conclusion is succinct, "we were set up...," Merkel and Schäuble’s control over the Eurogroup is absolute, and that the group itself is beyond the law.

Is the Greek "deal" falling apart already?

STUBB SAYS FINLAND CAN'T AGREE TO NEW LOANS FOR GREECE

KAMMENOS: GREEK PM TSIPRAS WAS BLACKMAILED AT EU SUMMIT

It was not today's IMF (non) repayment that traders, if not eurocrats and economists, are concerned about but tonight's maturity of a JPY 20 billion (about $160 million) Samurai note sold in 1995 and which matures on July 14. The reason why this paltry, in the grand scheme of things, payment is critical is that while continuing to repay the IMF is not an event of default if only purely technically, and for the rating agencies, a non-payment on the Samurai bond would start a cross-default cascade.

Headline reports give you only the public stories – simpleminded narratives that even voters can understand. The hidden story – and the real story – is that these are all clashes, battles, and skirmishes in the Great Zombie War. On the one side: honest workers, businesses, entrepreneurs, and households. On the other: fixers, meddlers, thieves, layabouts, and criminals. Is it really that easy to understand? Probably not. But it helps us put things in perspective.

"In our view, there are two main factors keeping investors sidelined. One is the residual implementation risks involved in the latest arrangements...  The second, of much broader importance, is the accumulated evidence of the inadequacy of the Euro area's present fiscal governance, which takes up too many resources and exposes the whole system to collapse."

In January, Curtis Jackson, aka 50-Cent, appeared on CNBC proclaimed as a multi-platinum rapper, and also a successful entrepreneur with a range of businesses. Just six months later he is broke, as WSJ reports, he filed for chaper 11 bankruptcy protection today. Court papers (below) show the rapper's assets and debt in the range of $10 to $50 million (after WaPo reported his net worth "at nearly half a billion dollars" in 2007). The bankruptcy filing comes just days after a jury directed Jackson to pay $5 million to the ex-girlfriend of a rap-rival over a sex-tape.

Despite the euphoria in global equity markets, The FT's Wolfgang Munchau - once one of the keenest euro enthusiasts - warns regime change is coming in Europe. The actions of the creditors has "destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union," Munchau exclaims, fearing they have "demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order." He concludes rather ominously, "we will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable."

The S&P 500 is experiencing its best 3-day performance since December... so does Greece matter after all?

EURUSD is plunging - now down 150 pips from Friday's close and having retraced the entire ramp on Greek proposals. The S&P 500, however, is surging...

As outlined exhaustively here over the past 24 hours, the new “deal" for Greece has implications far beyond the Aegean and may well mark the beginning of the end for the EMU experiment. But leaving the bigger picture implications aside for now, the two most important short-term considerations for Greece are: 1) establishing political stability, and 2) stabilizing the banks.

U.S. oil production has peaked... at least for now. That is the conclusion from a new government report that concludes that U.S. oil production is on the decline.

Demand for Silver Eagles spiked in the first week of this month leading the U.S. Mint to run out of its entire August inventory of coins. This coincided with a counter-intuitive 3.8% plunge in price last Monday. It would appear that prices are being forced down. This is likely being done to scare investors away in order to protect some large banks who are net short silver - and for whom a surge in price would be damaging - and possibly to facilitate large unknown entities to accumulate large volumes of silver at a knockdown prices.