It is not Liquidity that banks are asking but for more Collateral from Noble starting this year because they also understand that this MTM gain on commodity contracts and derivatives of Noble will unlikely be realized at more than 10% and therefore is not valid collateral for the trader’s working capital borrowing base requirements.
My overriding theme and the central drama for the coming year is that unexpected events can take on greater importance as the Federal Reserve ends its near-decade-long Zero Interest Rate Policy. Consensus premises and forecasts will likely fall flat, in a rather spectacular manner. The low-conviction and directionless market that we saw in 2015 could become a no-conviction and very-much-directed market (i.e. one that's directed lower) in 2016. There will be no peace on earth in 2016, and our markets could lose a cushion of protection as valuations contract. (Just as "malinvestment" represented a key theme this year, we expect a compression of price-to-earnings ratios to serve as a big market driver in 2016.) In other words, we don't think 2016 will be fun.
The last trading week of 2015 begins on a historic precipice for stocks: as reported over the weekend, the U.S. stock market has not been lower for any year ending in a “5? since 1875. That streak is now in jeopardy, because following Thursday's shortened holiday session which ended with an abrupt selloff, the overnight session has seen continued weakness across global assets in everything from Chinese stocks which tumbled the most since November 27, to commodities (WTI is down 2.5%) to European stocks (Stoxx 600 -0.4%), to US equity futures down 0.4% on what appears to be an overdue dose of Santa Rally buyers' remorse.
Timing a crash can be a fool's errand, and fortunately such efforts are largely irrelevant if you are tail hedging (though they are quite relevant if you aren't). But this doesn't mean that exercises in timing are without merit. Without a doubt (or at least with over 99% confidence), bad things happen with increasing expectation when conditioning on higher Q ratios ex ante. Factoring time into the equation, and again based on history, the confidence interval around the median time would point to an expectation that the crash should commence right about now.
“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey
- Top Trade #1: Long USD vs short EUR and JPY
- Top Trade #2: Long US 10-year ‘Breakeven’ Inflation
- Top Trade #3: Long MXN and RUB versus short ZAR and CLP.
- Top Trade #4: Long EM ‘External Demand’ vs. Banks stocks
- Top Trade #5: Tighter Spread between Italy and Germany Long Rates
- Top Trade #6: Long large-cap US Banks relative to the overall S&P500
There were a few different stories coming out over the last few days that reveal the true nature of government and the apparatchiks who use disinformation, devious machinations, fraudulent accounting, and taxpayer money to cover up their criminality, lies, and the true state of the American economy. The use of government accounting tricks to obscure the truth about our dire financial straits is designed to keep the masses sedated and confused.
Haruhiko Kuroda owns 52% of all Japanese ETFs. And now he wants more. Facing a lack of willing JGB sellers, the BoJ now faces the possibility that ramping up its easing efforts will entail expanding the bank's already elephantine equity portfolio. "At a fundamental level, I don’t support the idea of central banks buying ETFs or equities. Unlike bonds, equities never redeem. That means they will have to be sold at some point, which creates market risk."
It has been a while since Icahn, who is still looking for a $200+ print on AAPL stock courtesy of corporate buybacks, issued a "no brainer" investment alert. He did that moments ago, when he revealed a "large position" in AIG, whom he is now urging to follow John Paulson's advise in order to hit a $100/share price, by doing two things: "Pursue tax free separations of both its life and mortgage insurance subsidiaries to create three independent public companies" and to "embark on a much needed cost control program to close the gap with peers."
ECB Will Again "Frontload" Bond Purchases Ahead Of The Winter, No Advance Leak To Hedge Funds This TimeSubmitted by Tyler Durden on 10/08/2015 07:56 -0400
Moments ago, as part of its quite stale and otherwise irrelevant minutes of its September 2-3 governing council meeting, the ECB did precisely the same, announcing that as part of its ongoing open-ended QE program (which the ECB expects will be implemented fully by September 2016 "or beyond") it would frontload purchases between September and November because, you guessed it, volatility once again declines in December.
Any money manager, whether he is managing separate accounts or a mutual fund, will go through stretches where he looks smarter or dumber than he really is, though his IQ hasn’t actually changed.
Stan Druckenmiller's "Horrific Sense" Of Deja Vu: "I Know It's Tempting To Invest, But This Will End Very Badly"Submitted by Tyler Durden on 04/12/2015 19:45 -0400
“I just have the same horrific sense I had" before, Druckenmiller said to an audience at the Lost Tree Club in North Palm Beach, Florida (according to a transcript obtained by Bloomberg). "Our monetary policy is so much more reckless and so much more aggressively pushing the people in this room and everybody else out the risk curve that we’re doubling down on the same policy that really put us there."
GE’s announcement that its getting out of the finance business should be a reminder of how crony capitalism is corrupting and debilitating the American economy. The ostensible reason the company is unceremoniously dumping its 25-year long build-up of the GE Capital mega-bank is that it doesn’t want to be regulated by Washington as a systematically important financial institution under Dodd-Frank. Oh, and that its core industrial businesses have better prospects. We will see soon enough about its oilfield equipment and wind turbine business, or indeed all of its capital goods oriented businesses in a radically deflationary world drowning in excess capacity. But at least you can say good riddance to GE Capital because it was based on a phony business model that was actually a menace to free market capitalism. Its deplorable raid on the public purse during the Lehman crisis had already demonstrated that in spades.
GE stock is down almost 13% over the last 7 years, and this is with record shares being taken off the market. However, Jeff Immelt thinks he has a solution for this problem after 15 years at the helm of GE.