Hillary Clinton’s paid speeches are not relevant because of anything that they said, but because the organizations that paid typically $225,000 to her, for each of them, were paying a servant, for extremely valuable services that that servant is being expected to provide to the owners and top executives of that organization if that servant becomes the U.S. President (or, in the case of her husband Bill) for valuable services that already were provided by that servant when he was a President. They’re pay-offs, for services that are anticipated, or else that have already been provided. They are not (such as the author was assuming) for “the speech.”
About 25% of S&P 500 EPS growth comes from buybacks on average since 2012. The S&P 500 companies on aggregate pay out 2/3 of their earnings through dividends & buybacks.
We're gonna need a bigger bailout...
Thanks to the just released February diary of Fed chief Yellen, we now know exactly when she called Bank of England Governor (and former Goldman Sachs employee) Marc Carney and ECB President (and former Goldman Sachs employee) Mario Draghi. Can you guess when?
"I think stagflation is starting to show - that idea of stronger nominal growth but weaker real growth is starting to show up across the economy. It certainly is showing up with real personal consumption slowing; it's showing with slower job creation growth as the wage rate rises, and it's showing up in weaker profits as the share of labor income rises reducing profit margins for corporations."
When last we checked in on the 1MDB saga, Goldman was busy tying up a few loose ends. Tim Leissner, the banker who built the firm’s Southeast Asia operation from the ground up and the man behind a series of questionable deals that funded what would eventually become Malaysian PM Najib Razak’s personal slush fund, was essentially forced out in January, after bank investigators uncovered what they said was an unauthorized reference letter. Now, the global effort to find out how nearly three quarters of a billion dollars ended up in Najib's checking account looks set to ensnare all of the usual suspects.
For Japan, the post "Shanghai Summit" world is turning ugly, fast, because as a result of the sliding dollar, a key demand of China which has been delighted by the recent dovish words and actions of Janet Yellen, both Japan's and Europe's stock markets have been sacrificed at the whims of their suddenly soaring currencies. Which is why when Japanese stocks tumbled the most in 7 weeks, sinking 3.5%, to a one month low of 16,164 (after the Yen continued strengthening and the Tankan confidence index plunged to a 3 year low) it was anything but an April fool's joke to both local traders.
- Roller-coaster first quarter ends with shares, dollar under pressure (Reuters)
- Oil prices slide as U.S. crude stocks hit record (Reuters)
- GE Files to End Fed Oversight After Shrinking GE Capital (WSJ)
- FDA Eases Rules for Abortion Pill, Making Access Simpler (BBG)
- Kremlin denies report of Russia-U.S. deal on Assad's future (Reuters)
- Thirst for Gasoline Fuels Oil Rally (WSJ)
- Landlords in last-minute rush to beat stamp duty rises (BBG)
Amid secular stagnation, the Eurozone's old fiscal, monetary and banking challenges are escalating, along with new threats, including the Brexit, demise of Schengen, anti-EU opposition and geopolitical friction. Brussels can no longer avoid hard political decisions for or against an integrated Europe, with or without the euro.
"If Yellen is merely trying to square off the confusion between data and recent hawkishness, she will lean on the dovish side, if only to continue the market rally. However, as Deutsche Bank adds, "if we look at the impact of past Yellen speeches on macro sensitive topics since she became Fed Chairperson, we find a typical underwhelming impact."
We expect the S&P 500 to be range bound between 1925 to 2100 until after the US general election. We do not expect the S&P to fall back into correction territory as a double-dip correction already happened and it would likely take clear signs of an impending US recession or a new global shock to cause renewed investor panic.
It appears that the Chinese Politburo has also noticed that it finds itself straddled with yet another unsustainable housing bubble, not only in Shenzhen, but also Shanghai, and all other Tier 1 cities and has taken aggressive steps to slow down this exponential surge in prices before it gets even more out of control. As a result, on Friday the local government took the following "sudden" steps to halt the exponential rise in home prices and tighten the local housing market dramatically.
There's trouble brewing in the leveraged loan market as cracks continue to show in post-crisis CLOs. As we reported late last month, the number of CLO 2.0 deals’ equity tranches currently having NAV below zero has risen to 453. Given that, we weren't terribly surprised to learn that 6 CLO 2.0s are failing their interest diversion tests and another 20 are within a point of hitting their triggers.
"There is a concern that this competitive devaluations channel (the first link) may have broken down (to a large extent) because of the collapse in global trade. Global growth today is generating much less trade growth than in the past (chart below). As a result, currency adjustment is not enough to spur growth significantly because global trade is increasingly less important to the overall makeup of GDP. This raises the possibility that the currency war is largely futile."