It has not been a good year for former Bear trader "right person at the right time" with his subprime short, John Paulson who after getting slammed on Valeant, if not quite as badly as Ackman, moments ago saw a quarter of his investment in Mallinckrodt - where he is a top3 holder - wiped out, when Citron tweeted that "MNK has significantly more downside than Valeant" and is a far worse offender of the reimbursement system.
If you think you're having a bad day (amid the post-payrolls turmoil), consider "America's richest woman" Christy Walton - the widow of Wal-Mart's John Walton. According to newly-released documents, her $32 billion wealth is actually around $5bn (as the assumption that John passed on the bulk of his wealth to his wife was wrong) plunging from 18th richest person in the world to just 280th. However, today biggest winner is her son, Lukas Walton who vaults to 103rd richest in the world as his fortune is revealed at $11 billion. Now those are first-world problems...
- Fed puts December rate hike firmly on the agenda (Reuters)
- Charting the Markets: A More Hawkish Fed Rattles Investors (BBG)
- China to modernize and improve fiscal and tax systems (Reuters)
- Deutsche Bank to Cut 35,000 Jobs in Overhaul (WSJ)
- Deutsche Bank Said to Near $200 Million Sanctions Settlement (BBG)
- Barclays profits drop as it abandons cost-cutting targets (FT)
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."
The size of Paulson's stake is unknown, however we do know that the top 20 shareholders top out at about $150 million in SYNN holdings. Assuming a $200 million Paulson stake, that means that Paulson's paper losses were likely $30-40 million today (depending on the price he build up his stake), losses which may have been booked if Paulson decided to cash out.
"The wealth management arm of Bank of America Merrill Lynch is liquidating its clients’ money from one of Paulson & Company’s funds and has put another fund under "heightened review,'" NY Times reports. As it turns out, this was not the year to be long Greece and Puerto Rico.
Religious imagery... peak condescension... everyone proclaiming "gold is dead"... In a nutshell, sentiment has plunged to negative levels not seen in years, if not more than a decade. Here are four mainstream media articles that provide some evidence we may be approaching a sentiment low. Some of them we're sure you’ve seen, others perhaps not. What amazes us is how they’ve all come out within the last two weeks.
The BLS continues to perpetuate the distraction officially known as the "unemployment rate" to hide the grim reality portrayed by the labor force participation rate, which shows the true decline of employment in America. The labor force participation rate of college graduates has never been lower. In the new normal, McDonald's has a lower acceptance rate than Ivy League schools. Just when you thought you had seen everything, a new story emerges: Alfred Postell has three degrees - accounting, economics, and law - but he is unemployed and homeless.
On Wall Street, a vital skill is the ability to sell something that you know is completely worthless. Goldman Sachs did it when it sold ABACUS 2007-AC1 to investors while hedge fund manager John Paulson was betting against it. Paulson paid Goldman $15 million to peddle this junk, which was a collateralized debt obligation that would make money when millions of people lost their homes. The SEC charged Goldman with fraud, and they eventually settled for $550 million. If you're an enterprising Wall Streeter who wants to make a name for himself without breaking the rules, you can operate a tantalizing scheme that investors can't resist. It's called Shubik's Dollar Auction.
The phenomenon of homeowners objecting to new development is called NIMBYism, which stands for "Not In My Back Yard." The premise behind this is that homeowners don't want to risk any changes that could adversely affect their living space or the value of their property. However, it's easy to see another motive behind NIMBYism: greed. As an investor of a highly leveraged asset, the average homeowner has every reason to inflate the price of their home as much as they can. NIMBYism also contributes to inequality... and perpetuates the two-class society that we see today.
A little over two years ago, in the middle of April 2013, there was a gold crash that came seemingly out of nowhere. Worse, for gold investors anyway, that crash was repeated just a few months later. Where gold had stood just shy of $1,800 an ounce at the start of QE3, those cascades had brought the metal price down to just $1,200. For many, especially orthodox economists, it heralded the end of the “fear trade” and meant, unambiguously, that the recovery had finally at long last arrived. However, gold price activity since QE3 has been a warning, and a big one, not cause for victory celebrations.
Meet The Extreme Super Rich: A List Of The 80 People Who Own As Much As The World’s Poorest 3.6 BillionSubmitted by Tyler Durden on 01/28/2015 15:31 -0500
"Eighty people hold the same amount of wealth as the world’s 3.6 billion poorest people, according to an analysis just released from Oxfam. The report from the global anti-poverty organization finds that since 2009, the wealth of those 80 richest has doubled in nominal terms — while the wealth of the poorest 50 percent of the world’s population has fallen." There you have it. The reason the wealth of the richest has doubled since 2009, is because “it’s not a recession, it’s a robbery.” Central bank and government policy has done this, it is no accident.
While it was already leaked in the past week that oil service giant Halliburton would seek to purchase Baker Hughes, or, if the smaller oilservice company did not accept the proposed terms, make a hostile run at its board of directors, it was unclear how the Houston company would respond. As the Houston Chronicle summarized, BHI had "to make a tough choice: surrender control on a rival's terms or face months of sunken oil prices and cost pressures alone....Halliburton's demands come as crude prices have fallen dramatically and as the U.S. oil industry looks to an uncertain future. Much is unclear: how much oil producers will rein in equipment and service spending, whether oil prices will sink or swim, and how much Baker Hughes would be worth in six months after what would likely be a bruising battle for control of its board." Moments ago we got the answer and Baker Hughes shareholders decided they have had enough of the volatile oil price and are happy to cash out at this point, in a $34.6 billion deal that values BHI shares at $78.62/share.
Though, if history is anything to go by, it offers a potential for outsized returns
Now that the financial oligarchs have had their way with the U.S. property market, to the point that average citizens can’t even afford to own a home (Zillow recently showed that 1 in 3 homes are unaffordable), it appears they have turned their sights overseas. What better market for bailed-out bankers to feast on than Spain, with its 50%+ youth unemployment rate and a continued depressed real estate market.