After admitting to investors last Friday (after the close) that they won't be able to rely on Pokemon Go to bolster profits, the company came clean this week that a widely anticipated accessory for the blockbuster app will be delayed until September. The effect is simple - Nintendo shares are down 27% this week - the worst week since Aug 1989 (when the exuberance over Super Famicom died). Thanks to this double Pokemon "no," Nintendo has lost over $14 billion of market capitalization in the last week.
“I think we can let go of the idea that if builders build more homes, then somehow homes overall will be more affordable... We have a permanent housing inflation problem that started four decades ago and will not be easily cured by dithering with the inventory of larger homes.”
According to Reuters, Morgan Stanley and Italian lenders UniCredit and Intesa SanPaolo have rebuffed a proposal by Italy's third-largest lender, Banca Monte dei Paschi di Siena to back its proposed 5 billion euro cash call, a development which may lead to a bail-in of the troubled lender, and potentially spark contagion across the Italian banking system.
In a turbulent session for FX, the Yen soared as much as 1.4%, the most in three weeks, after Finance Minister Aso says the government will "leave actual policy measures to BOJ", sending the Nikkei lower by 1.4%. European stocks and U.S. equity index futures are little changed despite the slide in the key carry pair as the Fed starts its two day meeting.
Almost a decade after Microsoft made an unsolicited bid to acquire Yahoo for $50 billion, moments ago Verizon confirmed recent rumors that it would acquire Yahoo operating business for approximately $4.83 billion in cash, far below initial estimates floated several months ago that the segment could sell for as much as $10 billion. So how much does Marissa Meyer collect for "creating value" at the company during her 5 year tenure? Somewhere around $300 million.
Simple logic seems to have been suspended for the near universal disregard of the rules of common sense in the treatment of the money supply of the world. How long can this possibly persist? Obviously, at some point, this fantasy will be shattered. For just because central banks have continuously increased their balance sheets in recent years without igniting runaway price inflation doesn’t mean the danger isn’t there. Remember, correlation doesn’t imply causation. But it can imply confusion.
Whether it is due to the recent speculation that Japan may usher in helicopter money, or ongoing concerns about what Brexit may do to the future of European asset returns, there has been a dramatic shift in fund allocation and as Bank of America reports, investors are rushing to vote with their wallets. They have done so in the latest week by continuing to plow money into EM stocks, allocating a record amount of cash to Emerging Markets, while yanking a similarly record amount of cash from Europe.
The last time Goldman raised an private-equity buyout fund was in 2007: at just over $20 billion, it was the second biggest private-equity fund ever. It also top-ticked the market. Nine years later, the WSJ reports that Goldman is finally preparing a much anticipated sequel, in the form of a corporate-buyout fund with assets between $5 and $8 billion.
Most of what passes for modern monetary policy is nothing more than one assumption piled upon another (and then another, and so on). Taken for granted for so long, rarely are these unproven precepts ever challenged to justify themselves to the minimal standard of internal consistency, let alone prove discrete validity by parts. The latest is “helicopter money”, another sham in a long line of them proffered by at least one central bank today because it knows, as the others, nothing they have done has worked.
There is yet another confirmation that the slowdown in luxury spending continues, nowhere more so than in the world of "luxury" art. As the WSJ reports, Christie said it sold $3 billion in art during the first half of the year, down a third from the same period last year. Contemporary art, long the engine of Christie’s market dominance, was hardest hit, its $788 million in auction sales down 45% from a year earlier. Sotheby's didn't fare better: the New York-based auction house said first half sales dropped a quarter from the year before
Following the example set by the other banks, earlier today Morgan Stanley, the last big bank to report earnings, said its profit fell 12% in Q2 on a 9% drop in revenue even as the company weathered volatile markets that affected its investing and corporate clients. The EPS of $0.75, however, beat sharply lowered expectations of $0.60 on the back of sharp cost-cutting measures, pushing its shares up 3% in the premarket.
Now it’s $13 trillion... the total sum of negative-yielding debt in the world has increased in the last sixteen days alone by an amount that’s larger than the entire GDP of Russia. And just like the build-up to the 2008 subprime crisis, investors are snapping up today’s subprime bonds with frightening enthusiasm. So this trend will continue to grow for now, until, just like in 2008, the bubble bursts in cataclysmic fashion.