"How many rich people do you know today that are poorer than they were at the peak in 06/07 (apart from Dick Fuld), I don't think I know any.. QE has been distributive to the rich... but now that the world has started this policy it is unable to end it... the next recession will be a hard one because the tools in the toolbox are not there to avert a severe downturn... where are the liquidity worries at the moment? Equities would be the toughest to exit.. it's like a 5-lane highway going in and goat trail coming out... Brazil is great example"
Thanks to changes in patent laws implemented in 2012, hedge funds can now challenge patents for the bargain price of just $23,000 in a process that is now far more efficient than it once was. Some funds may be employing the strategy to drive down the prices of biotech stocks they're short.
Debt, Distraction, Currency Wars, Itchy Fingers
"Give Everyone A Check For $10 Million, It Will Create Inflation": Albert Edwards First TV Interview In 20 YearsSubmitted by Tyler Durden on 03/07/2015 20:20 -0400
In his first TV interview in 20 years, SocGen's Albert Edwards unleashes his brutal honesty on Raoul Pal in this excellent RealVisionTV discussion. From "what Japan is doing is absolutely off the scale," warnings about money-printing to the awkward reality that "policy makers cannot eliminate the business cycle," warnings instead that "they will make the eventual downturn far worse than it otherwise would be..." Edwards' discussion ranges from the UK and US "choosing lunatic policies" to describing Alan Greenspan as "a prospective economic war criminal," the SocGen strategist concludes, rather ominously, if policy-makers keep handing out free money, it will create massive problems, "there is a trigger point where you can create inflation. I don't know where that is. The central banks don't know where that is."
"I constantly feel inadequate, which may be what drives me," Kyle Bass tells Raoul Pal in this excellent discussion between two of the world's foremost (non-status-quo-hugging everything-will-be-fine) market practitioners. The interview with Bass, from the newly launched Real Vision TV, covers everything from how he got started in his career, what drives him, his process "it's an art - there is no science to it", and not only how we got here, but where we are going (inevitably)...
Yet another weak Japanese bond auction (this time 5Y maturity - lowest bid-to-cover and biggest tail since 2013), on the heels of last night revelations of a growing chorus of JPY-devaluation-fears has many wondering if the faith they placed in The BoJ's grandest experiment was wrong after all. With speculators now net short for Japanese stocks for the first time since Abenomics was unleashed, a series of weak bond auctions and a spike in JGB yields since the ECB unleashed QE, and now a surging JPY (tumbling USDJPY) as carry trader around the world pull back on leverage and exposure... perhaps - the idea that a nation can devalue itself into prosperity on the backs of the rest of the world was total idiocy after all and Kyle Bass' Potemkin Village is about to fall.
"Don't mess with Texas," may be a dire warning to most but perhaps after this "don't mess with Taxes" would be more appropriate. In what must have most free-thinking libertarians smirking, a man in Texas was arrested this week for “disrupting the operation and efficiency” of the local tax office - by trying to pay his taxes in $1 bills. Which leaves us with one question... does Kyle Bass pay his taxes with nickels?
If, as Kyle Bass so eloquently noted previously, "buying gold is just buying a put against the idiocy of the political cycle. It's That Simple," then recent (post-QE3) activity suggests the narrative is changing fast... Perhaps Larry Summers was right last week in Davos, "we have to recognize that the era when central bank improvisation can be the world’s growth strategy is coming to an end."
Kyle Bass would hold an economic summit every year at his ranch in East Texas. He would kick off the festivities by introducing his sniper friends.
Despite calls for a bottom all the way down from $90, $85, $80, $75, $70, $65, $60, $55, and then $50... crude oil prices (both Brent and WTI) are now below that crucial level (and as Kyle bass notes, even very wealthy nations like Saudi Arabia and Norway are going to have to tap into their sovereign wealth funds to support their annual budgets this year or next). WTI is trading with a $46 handle once again (at fresh cycle lows), and Brent is trading oince again at fresh cycle lows with a $48 handle. Just as worrying away from the apparently OPEC-over-supplied (and nothing to do with demand) oil complex, copper prices just broke below $6000/mt for the first time in 5 years (which 'over-supplier' will get the blame for that? Or is it really about demand after all, just as Saudi Prince bin Talal warned). And don't mention Iron ore, Steel, Aluminum... which all hit new cycle lows...
Kyle Bass' "nickel" trade is alive and well. A new report from the U.S. Mint reveals that it’s still not cost-effective to make pennies and nickels - Americans lost $105 million in 2013 due to their production.
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
While Kyle Bass once remarked that "the brevity of financial memory is about two years," it appears for today's energy stock traders the period of goldfish-like memory is a mere two days... As the following chart suggests, the 'bounce' in XLE - the S&P Energy Sector ETF - is entirely decoupled from credit's uglier-and-uglier reality (just as it did on Tuesday, only to crash again yesterday). Trade accordingly...
At the latest ECB press conference Draghi said that. “The monetary policy team had this week discussed buying all assets except gold”; qualifying a claim by fellow member Yves Mersch two weeks ago that gold bullion could be included.” If central bankers truly believed in sound monetary policy the headline would have said “We’ll buy all your gold”. That would have propelled both gold and the European equity markets upwards. As it is markets on the continent get cheaper as the good doctor fiddles.