If only the $3.2 billion Goldman Sachs Global Opportunities hedge fund had listened to the firm's equity strategists, life would have been great. However, as Bloomberg reports, the so-called 'best-ideas' fund dropped 5.6% in October leaving it down 2.6% for 2014 as interest-rate bets went pear-shaped amid the crash-and-dash that was October's market manipulation. "We believe monetary policy needs to catch up with growth, and that interest rates in the US and UK are likely to rise by a significant amount," the fund wrote. It seems Goldman 'muppeted' itself. Things aren't working out... and as a gentle reminder, the fund lost 35% in 2008.
The authorities in Hong Kong are once again threatening to clear the protest sites. They have a legal pretext, in the form of court orders issued in response to complaints from the owners of buildings, who are losing traffic. The powers that be are in no mood for compromise. “Police urge the illegal road occupiers to obey the court order, remove obstacles and personal belongings, and stop the illegal occupation soonest.”
"My premise hasn’t really changed since I published my paper explaining why I had become more constructive towards risk assets this time last year. That is to say, the structural deficiency of global demand continues to radicalise the central banking community. I believe they are terrified: the system is so leveraged and vulnerable to potentially systemic price reversals that the monetary authorities find themselves beholden to long only investors and obliged to support asset prices. However, I clearly confused everyone with my choice of language. What I should have said is that investors are perhaps misconstruing rising equity prices as a traditional bull market spurred on by revenue and earnings growth, and becoming fearful of a reversal, when instead the persistent upwards drift in stock markets is more a reflection of the steady erosion of the soundness of the global monetary system and therefore the rise in stock prices is something that is likely to prevail for some time."
- Japan Prime Minister Shinzo Abe Calls Snap Election (WSJ) - as repeatedly priced in...
- Flash Boys Raising Volatility in Wild New Treasury Market (BBG)
- Not Greece again: Greek Bailout Review Stalls as Troika Demands Final Steps (BBG)
- Iran uses China bank to transfer funds to Quds-linked companies (Reuters)
- Porn Mags With Free Madrid Theater Tickets in Tax Protest (BBG)
- Hong Kong, China stocks ease on profit-taking after stock connect launch (Reuters) - Hang Seng down 500 points in past 2 days
- Halliburton Mega-Deal Sealed by CEOs Over Coke and Coffee (BBG)
- Wall Street to Reap $316 Million From Day of Mega Deals (BBG)
- Mass murderer Charles Manson gets marriage license, state says (Reuters)
After weeks of relentless flashing red headline barrage whose only purpose was to force snap algo buying of the USDJPY pair time after time after time, Japan is once again out of FX algo danging carrots after moments ago Abe confirmed what everyone had known already: he called a snap election to seek a mandate for his decision to delay by 18 months a further sales-tax increase that had been planned for next year; he also said he would dissolve the lower house of parliament on Nov. 21 in preparation for an election in December, without specifying a date. Cited by the WSJ, Abe said "To ensure the success of Abenomics, I’ve concluded that it shouldn’t be carried out next October and instead be postponed by 18 months,” the prime minister told a nationally televised news conference, stressing that the additional tax burden would risk putting the economy back into deflation. “I will seek the people’s judgment over our economic policy."
- Scuttled deals worth $580 billion put hedge funds on back foot (Reuters)
- Mounting Pressure on OPEC Spurs More Wagers on Oil Rally (BBG)
- It's not just US real estate: Chinese Students at U.S. Universities Jump 75% in Three Years (BBG)
- Frankfurt Open for Yuan Clearing as Liquidity Rises (BBG)
- Obama defends healthcare law after adviser criticism (Reuters)
- Michael Hasenstab Bets Big in Controversial Places (WSJ)
- Facebook seeks foothold in your office (FT)
- Russia Seen as Greatest Threat in Poll as Oil Erodes Putin Power (BBG)
- Falling Oil Prices Test OPEC Unity (WSJ)
While it was already leaked in the past week that oil service giant Halliburton would seek to purchase Baker Hughes, or, if the smaller oilservice company did not accept the proposed terms, make a hostile run at its board of directors, it was unclear how the Houston company would respond. As the Houston Chronicle summarized, BHI had "to make a tough choice: surrender control on a rival's terms or face months of sunken oil prices and cost pressures alone....Halliburton's demands come as crude prices have fallen dramatically and as the U.S. oil industry looks to an uncertain future. Much is unclear: how much oil producers will rein in equipment and service spending, whether oil prices will sink or swim, and how much Baker Hughes would be worth in six months after what would likely be a bruising battle for control of its board." Moments ago we got the answer and Baker Hughes shareholders decided they have had enough of the volatile oil price and are happy to cash out at this point, in a $34.6 billion deal that values BHI shares at $78.62/share.
Perhaps the biggest shock following last night's completely expected and very predictable (previewed here over a month ago) Japanese slide into triple- (actually make that quadruple) dip recession, is that it took the BTFTripleDip recession algos as long as they did to recover most of the overnight futures losses. Because after surging to 107 on a confused short squeeze kneejerk reaction, the USDJPY subsequently tumbled 150 pips to 105.50 as rationality briefly emerged, and the market wondered for a few brief hours if rewaring the destruction of one's economy is actually a prudent thing. Then, however, when European traders started walking into work, the now default USDJPY levitation on no volume came right back, and with that the correlation algo buying of E-mini futures, no doubt helped by the Bank of Japan itself taking advantage of the CME's ES liquidity rebate program. Because without confidence as expressed by the lowest and only common denominator left - global equities - there is nothing else.
The term “anarcho-capitalism” has, we might say, rather an arresting quality. But while the term itself may jolt the newcomer, the ideas it embodies are compelling and attractive: (1) each human being, to use John Locke’s formulation, “has a property in his own person”; (2) there ought to be a single moral code binding all people, whether they are employed by the State or not; and (3) society can run itself without central direction.
Our world, our life, has been built on debt and propaganda for many years. They have kept us from noticing how poorly we are doing. But now a third element has entered the foundation of our societies, and it’s set to eat away at everything that has – barely – kept the entire edifice from crumbling apart. Deflation.
For anyone curious how banks "represent and warrant" that they have thousands of tons of physical gold when in reality they have far less if not zero physical in storage and all in "synthetic" form, here is the blow by blow.
Here is the BIS once again with its noble - and now thorughly 'Austrian' - public service announcement, this time warning about the implications of a global "debt trap" and how everything will end in tears (stop us when this becomes familiar). We have just one request. Next time, instead of sharing these profoundly Austrian observations with the general public, maybe you can just discuss them at the next BIS Board of Directors' meeting which consists of...
‘Gold wars’ are intensifying with just 16 days left to polling day in the Swiss Gold Initiative. If the Swiss vote to revert to having 20% of currency reserves in gold, the Swiss National Bank will be forced to make huge purchases of gold bullion. Switzerland and its ‘Gold Initiative’ would contribute to driving the price of gold higher - likely in the short term and contributing to higher prices in the long term. Understanding the important recent past and what has led to the forthcoming Swiss Gold Initiative is important and why we look at it today. This context is all important and is essential reading for all who wish to understand the key issues in the debate, for all who invest in and own gold internationally and for all Swiss people.
The key event overnight was the release of European Q3 GDP data, which saw Germany averting a recession by the narrowest of margins when following a -0.2% drop in Q2 economic growth, Germany grew by the smallest amount possible in Q3, or 0.1%, in line with expectations, thus averting two consecutive quarters of decline, the technical definition of a recession. The French economy likewise posted a modest increase in Q3, although one wonders how aggressively the data had to be fudged for a country whose PMIs all indicate a -1% or greater contraction. Italy however was less creative with its use of "hookers and blow", and continued its recession with a 3rd negative print, contracting at -0.1% as expected, while Portugal also missed third quarter growth estimates.
Having told the world that it will not be undertaking system-wide rate cuts or stimulus - focusing more on idiosyncratic safety nets - last night's data from China is likely to have the PBOC frowning. Fixed Asset Investment (lowest growth since Dec 2001) and Retail Sales (lowest growth since Feb 2006) missed expectations, but it was the re-slump in Industrial Production (after a small 'huge-credit-injection-driven' bounce in September) that is most worrisome as China's 2014 output is growing at its slowest since at least 2005. As Michael Pettis previously noted "China will be no different... growth miracles have always been the relatively easy part; it is the subsequent adjustment that has been the tough part." Of course, this is not the 'soft-landing' so many bulls have expected, which, if enabled by moar credit, as Pettis warned "will inevitably lead to a very brutal hard landing."