Archive - May 2015 - Story

Whoever holds the most gold will hold the most real wealth and, by extension, gain the most prominent seat at the bargaining table for decades to come. Whether that table will be the IMF, the new AAIB (Asian Infrastructure Investment Bank), or any future central economic entity, the future will go to the player with the most metal, as he will be able to create the most currency, in whatever form it may take.

As investors, it is crucial to ignore headline statistical data and focus on the underlying data trends that affect the real economy. While it is currently "blue skies" for investors, there are clearly storm clouds forming on the horizon. It will be those who fail to take precautionary actions that suffer the worst of consequences when the storm hits.

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"We are not negotiating with domestic and foreign capitalists. We won't become a colony of Germany or any other Imperialist power", dozens of protesters said Monday, on the way to entering the Siemens building in Northern Athens and papering the exterior and interior with anti-austerity banners.

Whether it is more posturing ahead of OPEC's June meeting is unclear but the message from 'sources', according to The Wall Street Journal is "OPEC won’t agree to go lower," with regard global market share (which has fallen from more than 50-% to just 32% currently). The cartel's latest strategy report forecasts oil prices won't reach $100 - “$100 is not in any of the scenarios,” in the next decade (and could drop below $40) with its most optimistic scenario $76 in 2025 (which only Qatar and Kuwait can cover expenditures with). “If they want to sustain the organization, they have no choice,” but to reintroduce production quotas, adding any concession by stronger members would be temporary.

Having briefly tested above 3.00% on Thursday, for the first time since December 2nd, 2014, the post-payrolls reaction continues today with 30Y yields up 9bps and back above the 3.00% Maginot Line. We note, additionally, that as Deutsche reports, net short exposure to Treasuries is back at the extremes of its recent range.

Update: AP confirms Zimmerman not seriously injured.

George Zimmerman, who was acquitted in the 2013 shooting death of Trayvon Martin, has, according to WESH Orlando, been shot in Orlando, Florida.  The shooting involved two men and happened on Lake Mary Boulevard, police said. Officers at the scene said it appeared Zimmerman suffered a minor gunshot wound, Bracknell said. “He walked normally into the ambulance, so he wasn’t being helped or nothing,” said witness Ricardo Berrare.

With the class of 2015 graduating with a record amount of debt, one hopeful student appears to recognize her fate all too well...

As expected, today's Eurogroup meeting concluded without an agreement between Greece and its creditors as both sides cited "progress" and regurgitated familiar rhetoric around the need for a "comprehensive list of reforms", and a universal desire for a favorable outcome. Despite this, Athens claims it will make a €750 million payment to the IMF on Tuesday even as it isn't at all clear where the money will come from.

Here is what happens when you rebrand your real estate company as a cutting-edge P2P lender and your shares are listed on an exchange that's in the midst of a world-beating rally driven in part by millions of newly-minted, poorly-educated day traders...

As if the discussions in Brussels and Athens were not mired in enough uncertainty, Bloomberg reports that a Greek official confirms:

*STORCHAK ASKED TSIPRAS FOR GREECE TO JOIN BRICS BANK: OFFICIAL

The pivot appears to continue. Reportedly, Tsipras was pleasntly surprised by the proposal.

For many reasons the answer to the question: “will the commodity price rally continue?” is particularly important at this juncture, and the answer from Barclays is 'no' - it will prove very tough to make further significant gains in commodity prices from here unless supply/demand conditions improve very fast indeed. There are a multitude of factors but what erks them the most is the huge disconnect between price action in physical markets where differentials are signalling oversupply and futures markets where all looks rosy. The risks for a reversal in recent commodity price trends are growing, and with fewer market makers to absorb the shocks, potentially, a period of high volatility could lie ahead.

Putting Uber's latest valuation in perspective, according to CapIq there were just 95 companies in the S&P500 with a market cap over $50 billion, suggesting Uber which did not exist when Lehman filed for bankruptcy, now has a market capitalization greater than 80% of the S&P. Specifically, at a $50 billion valuation, Uber is more "valuable" than FedEx, Marck, Deutsche Bank, General Dynamics, Nissan, Time Warner, Yahoo, Credit Suisse, Heineken and many other companies.