Carlyle

According to yesterday’s Wall Street Journal, the bailed out financial criminals at Goldman Sachs are set to launch the latest and greatest toxic derivative product directly into the portfolios of willing muppets the world over... and it all starts this September. Yes, it’s called the “Fixed Income Global Structured Covered Obligation,” (ironically close to the acronym FIASCO) and no, you will not have a clue what’s in it. No seriously, you won’t have a clue.

• EU finalises Russian sanctions as BP warns of impact on business (FT)
• Geopolitical Risk Rises for Global Investors (BBG)
• Jaded Argentines brace for looming debt default (Reuters)
• In Argentina, Mix of Money and Politics Stirs Intrigue Around Kirchner (WSJ)
• Mom ‘Trusting God’ for Ebola-Infected U.S. Doctor’s Life (BBG)
• Thanks NSA: Tech Companies Reel as NSA's Spying Tarnishes Reputations (BBG)
• Goldman unit eyes foray into China amid metals financing scandal (Reuters)
• Cash out time: London’s Gherkin Tower Offered for Sale by Its Lenders (BBG)
• Apenomics strikes again: McDonald’s Japan axes profit guidance amid food safety scandal (FT)
• Do you see what happens Larry when you are the only USDJPY bid? Nomura Profit Falls More Than Estimated on Broking Slump (BBG)

• EU to weigh extensive sanctions on Russia (FT)
• U.S. lifts flight ban to Israel (Reuters)
• Russia says will cooperate with MH17 probe led by Netherlands (Reuters)
• Norway faces ‘concrete and credible’ terrorist threat (FT)
• Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
• But... but... PMI: Unilever Sales Growth Misses Estimates on Asian Slowdown (BBG)
• World’s Biggest Wealth Fund Reviews $8 Billion Russian Stake (BBG)
• Qualcomm latest US tech company to reverse in China (FT)
• Hamptons Home Sales Rise as Buyers Find More Inventory (BBG)

• Here come the gates which we predicted in 2010: SEC Is Set to Approve Money-Fund Rules (WSJ)
• Dick's cuts 400 jobs as golf now less popular (MW)
• Kerry arrives in Israel, pushes for peace (Reuters)
• Pay Penalty Haunts Recession Grads as U.S. Economy Mends (BBG)
• Appeals Courts Issue Conflicting Rulings on Health-Law Subsidies (WSJ)
• Rebel Stronghold Donetsk Holds Breath as Shellfire Mounts (BBG)
• Business executive wins Georgia Republican runoff in U.S. Senate race (Reuters)
• Five held in China food scandal probe, including head of Shanghai Husi Food (Reuters)
• Jobs Hold Sway Over Yellen-Carney as Central Banks Splinter (BBG)

• Secret Path Revealed for Chinese Billions Overseas (BBG)
• Traders Flood U.S. With $3.4 Trillion of Bond-Auction Demand (BBG)
• Just in time to cover bad earnings in a massive $3.8 billion "one-time charge": Citi says to pay $7 billion to settle securities investigation (Reuters)
• Troubled Epirito Santo family loosens grip on Portugal's BES (Reuters)
• BES puts in place new executives after central bank push (Reuters)
• Bank of China-CCTV drama may reveal power struggle in Beijing (SCMP)
• Portugal speeds up Banco Espírito Santo management changes (FT)
• Dark pool probe builds pressure on Barclays boss (Reuters)
• Russia Vows to Respond After Shelling From Ukraine (BBG)
• Ukraine forces end rebel airport blockade (Reuters)
• Obama Contends With Arc of Instability Unseen Since '70s (WSJ)

• Espirito Santo Financial Suspends Shares, Bonds on ESI Exposure (BBG)
• Europe Stocks Drop for Fifth Day as Espirito Santo Sinks (BBG)
• Espirito Santo Creditors Doubt Containment on Missed Payment (BBG)
• French Stocks Seen Extending Losses on Economy Concern (BBG)
• Stocks Slide With Portugal Bonds as Yen Gains; Oil Drops (BBG)
• U.S. Probes Hacking of Government Computers at Personnel Agency (WSJ)... finds terabytes of porn 
• It's Congress' fault: Obama rejects criticism over border crisis (Reuters)
• Israel Mobilizes 20,000 Troops for Possible Gaza Invasion (BBG)
• Chinese hackers pursue key data on U.S. workers (NYT)
• Donetsk Primed for Siege as Ukraine Army Hems In Rebels (BBG)

According to just released data by Murray Devine, the Median Ebitda multiple for buyouts has exploded to nosebleed levels, rising by over one full turn of EBITDA since 2013 alone, and at 11.5x in the first half of 2014 is nearly 2x higher than during the last LBO bubble peak in 2008, when the average company was taken private at a conservative 9.6x EV/EBITDA.

• Xi Says China Conflict With U.S. Would Be Disaster (BBG)
• Short selling drops to lowest level since Lehman (FT)
• Scoping the new subprime as watchdogs cry 'bubble' (Reuters)
• Carlos Slim to break up América Móvil empire (FT)
• Jury Acquits Rengan Rajaratnam in Insider-Trading Case (WSJ)
• Hamas rockets land deep in Israel as it bombards Gaza Strip (Reuters)
• Hong Kong Buyers Queue for New Homes After Prices Plunge (BBG)
• Rebel Stronghold in Ukraine Braces for Its Showdown (WSJ)
• Tiny Houses Big With U.S. Owners Seeking Economic Freedom (BBG)
• Chinese Cash-Bearing Buyers Drive U.S. Foreign Sales Jump (BBG)

• Facebook Researchers Manipulated News Feeds in 2012 Study (BBG)
• Argentina at Brink of Default as $539 Million Payment Due (BBG)
• Hedge fund correlation risk alarms investors (FT)
• As China Flexes Muscle, Obama Frets Over Rival’s Weakness (BBG)
• As caliphate declared, Iraqi troops battle for Tikrit (Reuters)
• Dubai Caps Worst Month Since 2008 as Real Estate Stocks Tumble (BBG)
• Russian Advisers Ready Iraq to Use New Combat Aircraft (BBG)
• Blackstone Readies Big-Bet Hedge Fund (WSJ) - so what was GSO?
• Pope says communists are closet Christians (Reuters)
• Thomson Reuters revising FX trading standards (Reuters)

Investors and speculators face some profound challenges today: How to deal with politicized markets, continuously “guided” by central bankers and regulators? In this environment it may ultimately pay to be a speculator rather than an investor. Speculators wait for opportunities to make money on price moves. They do not look for “income” or “yield” but for changes in prices, and some of the more interesting price swings may soon potentially come on the downside. They should know that their capital cannot be employed profitably at all times. They are happy (or should be happy) to sit on cash for a long while, and maybe let even some of the suckers’ rally pass them by. As Sir Michael at CQS said: "Maybe they [the central bankers] can keep control, but if people stop believing in them, all hell will break loose." We couldn't agree more.

• Must be an early winter: Housing Falters as Forecasters See U.S. Sales Dropping  (BBG)
• China Property Failures Seen as $33 Billion in Trusts Due (BBG)
• Polish Prime Minister Says Recording Scandal May Trigger Early Election (WSJ)
• Iraqi forces ready push after Obama offers advisers (Reuters)
• Priorities: U.S. cuts aid to Uganda, cancels military exercise over anti-gay law (Reuters)
• Kurds' Takeover of Iraqi City of Kirkuk Strengthens Their Hand (WSJ)
• U.S. says government lab workers possibly exposed to anthrax (Reuters)
• Netflix Up 21% With Tesla: The best U.S. stocks this month are ones that just a few months ago were the biggest losers (BBG)
• Architects of Iraq Invasion Return to Blame Obama (BBG)
• Nato claims Moscow funding anti-fracking groups (FT)
• Lawmakers Skeptical GM Bosses Were Unaware of Defect (WSJ)
• Corinthian Colleges Warns of Possible Shutdown (WSJ)
• Taiwan's Quanta to start mass production of Apple's smartwatch in July (Reuters)

• At least 74 dead in crashes similar to those GM linked to faulty switches (Reuters)
• Obama Calls for $1 Billion Europe Security Fund; Will Increase U.S. Military Presence in Eastern Europe (WSJ)
• Euro Inflation Slowing More Than Forecast Pressures ECB (BBG)
• China accelerates as euro zone stumbles (Reuters)
• Russia says Ukraine situation worsening, submits U.N. resolution (Reuters)
• Secondary Sales Squeeze Investors (WSJ)
• Barclays Said to Start Cutting Jobs in Investment Banking Unit (Bloomberg)
• Backlash Grows on Release of Sgt. Bowe Bergdahl in Taliban Prisoner Swap (WSJ)
• For fallen soldiers' families, Bergdahl release stirs resentment (Reuters)
• PIMCO's Gross stares at record outflow (Reuters)

Despite the plethora of talking heads proclaiming credit markets as awesomely supportive of stocks - High-Yield bond spreads are flashing red... But that's not stopping investors piling into the worst of the worst. As Liberty Blitzkrieg's Mike Krieger notes, in an all too reminiscent scene from 2007 (MBIA CDS traded 11bps at one point then remember), investors have been buying up bonds with a triple-C-rating en masse.

'Not' as exciting and headline-making as Day 1, as damage control was loud and proud after Tepper's "dangerous markets" call. The number of times we heard "what he meant to say was..." made us laugh but day 2 of the SkyBridge Alternatives Conference (SALT) varied from Leon Cooperman's "S&P to 2000" exuberance to Rubinstein's "markets are not cheap" disappointment and everything in between... with Nassim Taleb's "not enough people paid the price for 2008" conclusion summing it all up nicely.

• EU Court: Google Must Remove Certain Links on Request (WSJ), people have right to be forgotten on Internet (Reuters)
• Harsh weather: German Investor Confidence Drops for Fifth Straight Month (BBG)
• More harsh weather: China Slowdown Deepens (BBG)
• Harsh weather as far as the eye can see: China’s New Credit Declines (BBG)
• "Alien" artist, surrealist H.R. Giger dies aged 74 (Reuters)
• Pfizer urges AstraZeneca to talk as UK lawmakers slam offer (Reuters)
• Property sector slowdown adds to China fears (FT)
• Russia says EU sanctions will hurt Ukraine peace efforts (Reuters)
• U.S. Considers Relaxing Crude Oil Export Restrictions (WSJ)