Institutional Investors

You just short some more...

In essence it’s all just a pretend game, and the fish in today’s investment world are probably far more aware of their own identity than the fish at a real life poker table. But it doesn’t matter. They’re still fish, and everybody knows they’re going down. And therefore so are your pensions and your other institutional investments. What are they going to do, stop playing? They can’t. So who are the solid players in this game, you ask? Why, Wall Street, of course. They’ve had their eye on your remaining cash all along.

Few are the market makers that make money no matter what the market does (especially since HFT firms, long since exposed for merely frontrunning big order blocks instead of providing liquidity, are now disappearing at an accelerating pace), and there are those who, rigged casino analogies notwithstanding, still want to place their money in the market betting on either more upside or downside. For their benefit a few days ago we posted "The "Crazy Ivan" Playbook: How To Time A Near-Term Market Bottom" however, we realize that most people are visual learners, so for them, here is the Investor Business Daily's compendium of the most notable market tops and bottoms in recent market history.

• Liberian Rubber Farm Becomes Sanctuary Against Ebola (WSJ)
• The World’s Most Powerful Central Banker: Janet Who? (BBG)
• Islamic State moves into south west of Syrian Kurdish town (Reuters)
• Waldorf to Be Biggest Chinese Property Purchase in U.S. (BBG)
• Spain Seeks People in Contact With Ebola-Infected Nurse (BBG)
• Hong Kong protests at crossroads as traffic, frustration pile up (Reuters)
• Immigration: Grim Caseload at the Border (WSJ)
• China Cuts Thousands of ‘Phantom’ Workers From State Payroll (BBG)
• U.S., U.K. Regulators Push to Settle Deutsche Bank Libor Case This Year (WSJ)
• Wall Street Moles Go to NY’s Top Cop, Spurning SEC Cash (BBG)
• Pimco's outflow headaches only just beginning (Reuters)
• Japan Lawmakers Flag Need for Exit Strategy as Yen Falls (BBG)

• This is why the locals are furious at the US: U.S-led raids hit grain silos in Syria, kill workers (Reuters) explaining this
• Billions Fly Out the Door at Pimco: About $10 Billion Is Withdrawn After Departure of Gross (WSJ)
• Pimco’s Ivascyn Takes on Gross With Unconstrained Fund (BBG)
• Revealed - the Troika threats to bankrupt Ireland (The Independent)
• Private Bad Debt Build-Up Casts Shadow on Greek Rebound (BBG)
• Fed Questions Bank Maneuver to Reduce Hedge Funds' Dividend Taxes (WSJ)
• Yuan-Euro Direct Trading Begins Tomorrow as China Promotes Usage (BBG)
• Geneva Report warns record debt and slow growth point to crisis (FT)
• Greenberg Team to Grill Bernanke, Geithner on AIG Bailout (BBG)... sadly only metaphorically

We have corporate insiders selling the farm, investment legends warning of a collapse, institutional investors selling stocks, and global growth slowing rapidly.

Just one guy's attempt to make sense of what is likely to happen in the coming days.

With the Alibaba roadshow kicking off this week, ConvergEx's Nick Colas reviews the second-order implications of this historic transaction. Over the next two weeks investors will have to consider important issues, such as which stocks money managers will sell to fund their BABA purchase and what securities (stocks and ETFs) hedge funds may short to pair against an Alibaba long position. And consider: "Do big IPOs signal a market top?" Also, with an estimated $7 billion in fresh cash and a valuable public stock post-IPO, BABA will also be able to play the M&A game aggressively. Just consider its corporate North Star: "Our mission is to make it easy to do business anywhere" (the first line of the S-1 summary). In short, Colas concludes Alibaba really is a big deal (at 27.3x trailing EV/EBITDA).

• Off balance sheet vehicles?  Check
• Conflicted bank "research" recommending muppets buy stock while soliciting banking fees from same stock?  Check
• Hoping to sell debt on to muppets?  Check
• Chinese corruption? Check
• State bailout of failed bank? Check

We believe Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets. Today we’re going to explain what the “final outcome” for this process will be. The short version is what happens to a cancer patient who allows the disease to spread unchecked (death).

• That will teach the UAE who's boss: U.S. Won’t Consult Syria on Militant Strikes: White House (BBG)
• Putin Set to Meet Poroshenko as Ukraine Tensions Escalate (BBG)... but the de-escalation algo?
• Tim Hortons’ Canadian Fans Squeamish of American Hookup (BBG)
• Israeli air strikes target more Gaza high-rises (Reuters)
• How Steve Ballmer Became a Rookie Basketball Mogul (WSJ)
• Buffett to Help Finance Burger King Tax-Saving Deal (BBG)
• U.S. Factories Keep Losing Ground to Global Rivals (WSJ)
• Boehner, Camp Profit From Corporate Bid to Avoid U.S. Tax (BBG)
• Experimental U.S. hypersonic weapon destroyed seconds after launch (Reuters)
• The Neo-Neocons (WSJ)

• Police fire tear gas, stun grenades at Missouri protesters (Reuters)
• Putin’s Pipeline Bypassing Ukraine at Risk Amid Conflict (BBG)
• Russia's Largest Oil Company Seeks $42 billion to Weather Sanctions (WSJ)
• Shells hit central Donetsk, Russian aid convoy heads towards border (Reuters)
• U.S. Tightens Sanctions, Putting More Russian Companies at Risk (BBG)
• How to Blindly Score 43% Profit Overnight in China Stocks (BBG)
• Tears guaranteed: San Diego Pension Dials Up the Risk to Combat a Shortfall (WSJ)
• Euro Recovery Halts as Germany Shrinks, France Stagnates (BBG)
• Billionaire Found in Middle of Bribery Case Avoids U.S. Probe (BBG)
• Hillary Clinton, Barack Obama 'Hug It Out' on Martha's Vineyard (WSJ)

If Venezuela is the case study of a country in the late stages of transition into a socialist utopia, then France is the clear runner up. The most recent case in point, aside from the already sliding French economy, whose recent contraction can be best seen be deteriorating PMI data which hints at the dreaded "triple dip" recession, nowhere is the economic collapse in France more evident than in its housing market which as even Bloomberg admits, citing industry participants, is now "in total meltdown." Pierre-Andre de Chalendar, chief executive officer of Saint-Gobain, summarized the current dire situation best: "Current figures are worrying and will be disastrous if nothing is done; clients of the building sector are sounding the alarm bell.”

If one wants to identify bubbles, one must perforce study monetary conditions. The comparison of historical data on valuations and other ancillary factors can only take one so far. The problem is that in times of strongly inflationary policy, the economy's price structure becomes thoroughly distorted, and that therefore a great many “data” can no longer be regarded as reliable... Most of the time, it's the eventual slowdown of money supply growth that brings a bubble to its knees.