Archive - Aug 2015 - Story

Shockwaves from China’s devaluation have conspired with sluggish global demand and an attendant commodities slump to wreak havoc on developing market currencies the world over. On the heels of Kazakhstan's dramatic move to float the tenge, here's which currencies are next in line to tumble.

When paying a premium for equities, or any asset for that matter, one runs the serious risk of capital impairment. Worse, most professional investment managers falling prey to the bullish sentiment currently surrounding this period of extreme valuations will likely not live up to their overriding fiduciary duty – the preservation of wealth. Following the herd may have its benefits at times, but following the herd over a cliff never ends well.  As Seth Klarman warned. “Risk is not inherent in an investment; it is always relative to the price paid”

Courtesy of the following chart by BofA, we have the answer: while for the most part of 2015, the move in the price of oil was a combination of both supply and demand, the most recent plunge has been entirely a function of what now appears to be a global economic recession, one which will get far worse if the Fed indeed hikes rates as it has repeatedly threatened as it begins to undo 7 years of ultra easy monetary policy.

Back on July 18, Christopher Bartley (a police lieutenant for the National Institutes of Standards and Technology), tried to refill a butane lighter. Or he tried to cook a batch of meth...

"The combined levels of bullish optimism, lack of concern about a possible market correction (don't worry the Fed has the markets back), and rising levels of leverage in markets provide the 'ingredients' for a more severe market correction. However, it is important to understand that these ingredients by themselves are inert. It is because they are inert that they are quickly dismissed under the guise that 'this time is different.' Like a thermite reaction, when these relatively inert ingredients are ignited by a catalyst, they will burn extremely hot. Unfortunately, there is no way to know exactly what that catalyst will be or when it will occur. The problem for individuals is that they are trapped by the combustion an unable to extract themselves in time."

Presented with no comment...

In this "baby with the bathwater" selling which we have seen in the past few weeks especially in EMs and China, various other such opportunities have presented themselves, and to assist readers who may be looking to buy cash at a disacount of as much as 60%, we have compiled a list of some of the most prominent global companies with a negative TEV, and whose cash can be bought at a substantial discount to fair value: in some cases as much as 60%.

Curious why someone just pulled a trapdoor from under the market? JPM's Marko Kolanovic, head of quant strategies explains. "Given that the market is already down ~2%, we expect the market selloff to accelerate after 3:30PM into the close with peak hedging pressure ~3:45PM."

Even if it is short term oversold, this is actually a quite dangerous market – caveat emptor, as they say.

"It's born classified. If a foreign minister just told the secretary of state something in confidence, by U.S. rules that is classified at the moment it's in U.S. channels and U.S. possession. [To say otherwise is] blowing smoke."

Following the biggest 4-day decline in AAPL stock since Jan 2014, the "no brainer" once-darling of the investing world has just officially entered a bear market, down 20% from its April record highs.

Is the US equity market done falling? Unless The Fed unleashes QE4, nope!

Mario Draghi's "whatever it takes" has failed... and USDJPY breaking its most significant trendline suggests Kuroda is about to fail too as USDJPY drops below 122 for first time since July...

OPEC next gathers December 4 in Vienna, just over a year since Saudi Oil Minister Ali Al-Naimi announced at the previous OPEC winter meeting the Saudi decision to let the oil market determine oil prices rather than to continue Saudi Arabia’s role of guarantor of $100+/bbl oil. Despite the intense financial and economic pain this decision has inflicted on Saudi Arabia, its fellow OPEC members, and other oil producers, the Saudis have given no indication they plan to alter course. Given the Saudi decision’s positive impact on their and their Gulf Arab allies’ relative position within OPEC and its negative impact on OPEC outsiders, it is possible, perhaps even likely, the Saudis will face an OPEC outsider revolt at the December 4 OPEC meeting.. with three possible outcomes - Reconociliation, Separation, or Divorce.

dear HFTs, get ready to be the scapegoats

— zerohedge (@zerohedge) August 20, 2015