Archive - Sep 2015 - Story

To the extent the memory of Fukushima had faded over the last several years, the "fallout" (no pun intended) from the nuclear-like blast that tore through an industrial complex at the Chinese port of Tianjin last month served to remind the world of how far-reaching and unpredictable the consequences can be when disaster strikes at a site that houses potentially toxic materials. Well, don’t look now but experts now say the No. 2 reactor at Fukushima may have suffered a complete meltdown.

After a 90-minute meeting, Presidents Obama and Putin emerge from the mudslinging apparently agreeing to disagree on everything. Putin blames US - specifically Obama - for "relations being so bad," adding trhat sanctions are not an "efficient" policy tool, and hopes US can play an active role in fighting ISIS with cooperation. Given the image below, we can only imagine how tense the meeting was...

Since the 2008 crash there has been much talk about how the fundamentals have not been dealt with and the fact that the can has only been kicked down the road. Political mavericks and commentators such as Ron Paul have frequently pointed out that nothing has really changed and that we are heading for even bigger disasters ahead if we continue to play ostrich... The truth is that we never left the economic downturn – we are currently in a period of manipulation that’s sole purpose is to mask the fact that there has not been a boom (or recovery if you like) to trigger the next bust.

No, it's not New York, or London; Moscow, Geneva, Vancouver or even D.C. According to Clarmond House, the most important foreign city - the one which China is making the center of its largest offshore infrastructure project - is the tiny port of Gwadar (population 85,000) which Pakistan purchased from Oman in 1958 for $1 million, and which has become the critical hub of China's future energy policy.

"Did Charlie Rose look like a f##king idiot last night on 60-Minutes, or what...?"

IPOs have underperformed the S&P 500 by a stunning 17% year-to-date, extending losses today to 26% year-to-date. With private valuations still sky high in the minds of their VC 'guru' investors, we suspect the fact that this year is now the worst year for IPOs since 2008 will begin to raise doubts about even the most unicorn-y opportunity.

What has always separated successful professional gamblers from the "weekend sucker" is knowing when to step away from the table.

"In the Twitter-storm furor over Turing’s recent one-drug price gouge attempt, the media has overlooked the reality that Martin Shkreli was created by the system. Shkreli is merely a rogue trying to play the gambit that Valeant has perfected." And there you have it: boost the prices of dozens of drugs in the span of 1-3 years anywhere between 100% and 800% and nobody notices (thank you insurance companies). But hike the price of one drug by 5,500% and suddenly all of America thinks you are satan incarnate.

Update: And there it is: GLENCORE DEBT INSURANCE COSTS SURGE TO RECORD HIGH; 5-YR CREDIT DEFAULT SWAPS RISE 207BASIS POINTS FROM FRIDAY'S CLOSE TO 757 BASIS POINTS

Those who listened to our reco to buy Glencore CDS at 170 bps in March 2014 can take the rest of the year off. As of this moment, GLEN Credit Default Swap were pushing on 600 bps, 4 times wider, and on pace to take out the 2011 liquidity crunch highs. After that, it's smooth sailing to all time wides and the start of a self-fulfilling prophecy which leads to the Companys's IG downgrade and the collapse of trillions in derivative notionals as what may be the trading desk of the biggest commodity counterparty quietly goes out of business.

On June 18, a donation of $500,000 was made to the Fiorina-supporting PAC by Keep The Promise I. Not only is Keep The Promise I a generous contributor who believes in Fiorina’s presidential aspirations enough to fork over half a million dollars — it also happens to be a Super PAC set up to fund a political rival of Fiorina’s and fellow presidential candidate, Senator Ted Cruz.

Today's most popular hedge fund strategy among institutional investors globally is "Alternative Global Macro Funds". Also known as a “go anywhere” investment style, active managers employ opportunistic trading tactics across asset classes, financial instruments, and geographic regions. Like many liquid alts, global macro funds grew rapidly following the financial crisis as investors looked for strategies that could diversify their portfolios in the midst of volatility in the global marketplace and historically high sector correlations against the S&P 500, thereby improving their risk-return profiles. Ultimately, success in this classification resides in selecting the right active manager given the strategy’s wide dispersion of returns.

"Germany's domestic intelligence chief warned on Sunday of a radicalisation of Right-wing groups amid a record influx of migrants, as xenophobic rallies and clashes shook several towns at the weekend."

Absent some entirely magical economic developments, Janet Yellen looks set to be an unlucky Fed chairman. There is a growing risk that the fabric of the financial system may start to unravel during her tenure. Today’s investors are not exactly a lucky generation. Assuming they’ve survived two precipitous declines in stock markets in the course of a decade, they’re now faced with overpriced stocks, overpriced bonds, overpriced everything.

VIX is "searching for a new home" according to Goldman Sachs as the current elevated level of implied risk lies at the high side (around 24) of the current business cycle (~18) and recession-esque volatility (~26) range. Current options prices imply a 7% chance of a 10% crash in the next month and uncertainty is running twice as high ahead of this week's jobs data than on a normal payrolls week...