First it was Citi, then SocGen, now a third key investor has decided to pull their money from SAC - the once vaunted hedge fund which now everyone is now avoiding like the plague, and for which the only question now is "when" - when will Stevie close down shop, and will this happen before or after the paddywagons finally arrive at 72 Cummings Point road. The WSJ reports: "Titan Advisors LLC recently told clients that it had decided to withdraw its entire investment from SAC, said clients who received phone calls from Titan. "They've told us they still think SAC is a good firm but Titan doesn't need the headline risk, and we sure don't," said Tom Taneyhill, executive director of the Fire & Police Employees' Retirement System of the City of Baltimore, on Friday. Société Générale SA, which has client money in SAC through its Lyxor asset-management arm, also decided to pull its money from SAC, The Wall Street Journal reported earlier this month. At the time, an SAC spokesman declined to comment. Titan's departure is significant given SAC's long-standing relationship with one of Titan's founders. Titan co-founder George Fox began investing in SAC in the mid-90s, several years after Mr. Cohen started what became the firm in 1992."
Trailing the US, as not much else to do. EGBs firming up, but mostly because they‘re supposed to do so, as Equities end a little softer, because they have to, as well. Credit likewise. So no Risk highs under the Xmas three… All because of the US. Blue.
"Blue Christmas" (Bunds 1,38% -4; Spain 5,23% +1; Stoxx 2644 -0,6%; EUR 1,318 -40)
It may not be apparent immediately, but in the aftermath of last night's epic collapse in fiscal cliff negotiations, which incidentally was perfectly obvious to anyone with half a brain and who experienced last summer's debt ceiling fiasco, which sadly excludes all paid political and financial - including sellside - commentators, all of whom expected a prompt resolution to this polarized issue as recently as a week ago, there is major behind the scenes panic. Because while banks would write profuse, long-winded essays to explain the logic and rationality of the "deal", now that they are all faced with adjusting their narrative the best they can come up with are two sentence fragments such as this one from Citi's Steven Englander "Problem is that it is the right wing of the Republican Party that wouldn’t give Boehner their support, making it less likely that he could win broad support among Republicans for a compromise with the White House. Also he will have to spend next couple of days negotiating with both his own party and the Democrats without knowing how much he can deliver." The answer: nothing at all. In fact as Scott Rigell said “I’m not sure the people who have been up here 20 or 30 years really understand what the next iteration of this process is”. He is speaking for pretty much everyone else who has now been made a total fool by the Black Swan that is Congress. As a reminder a 3 month delay resolution assures a US recession, and a ~20% or so minimum correction in the stock market, which has been priced for absolute perfection for months, and which will once again have to be used by Wall Street as a means to get a consensus out of DC. Just as we predicted over a month ago. Finally while we may have avoided the Mayan apocalypse, we do have a quad witching and a NASDAQ rebalance to look forward to. Enjoy!
So easy and so profitable
EGBs and Equities rather a side-story today, as mainly static. EUR, too. Spain ticking in. Italian 2s on new lows (with the old reference nearing 1.5%). Good US GDP, bad Gold Dump Party (GDP, too). Worse Silver sell-out. Metal weakness? Maybe the Mayans are getting rid of their stocks before tomorrow? Another shy EStoxx high and Risk low. Don’t fight (the trend)…
"Merry Christmas (I Don't Want To Fight Tonight)" (Bunds 1,42% unch; Spain 5,22% -3; Stoxx 2661 +0,1%; EUR 1,322 -40)
- IMF Demands Partial Default for Cyprus (Spiegel)
- Boehner's 'Plan B' Gets Pushback (WSJ)
- Beijing criticises US ‘political checks’ (FT)
- White House Said to Tell Business Groups Talks Stall (BBG)
- NYSE tries to get hitched again: IntercontinentalExchange in talks to buy NYSE (Reuters) -> N-Ice coming?
- Greece faces ‘make or break’ year (FT)
- Fed rejects idea of consensus forecasts, "maybe forever": Fisher (Reuters)
- Rajoy Drives Spanish Revolution With Low-Cost Manufacture (BBG)
- Italian Senate Set for Budget Vote Before Monti Resigns (BBG)
- BOJ Loosens With Pledge to Review Inflation Objectives (BBG)
- Bowing To Abe, BOJ To Review Price Goal (WSJ)
EU confidence sparks a Euro bull run. Both the EU’s strongest and weakest economies are positively shifting. The S&P has lifted Greece’s credit rating by 5 notches to a “B minus”, and Germany’s IFO survey came in strong for the second month running indicating that business sentiment is on the rise.
Would be easy to call this boring, given the state of the market and volumes, but undercover Risk On definitively there. Greek 10s over the moon and far away (up 500 ticks)… Strong EUR. Seems a little easy, but who wants to fight? It’s Yule Time – at least until Friday, then we’ll see what the Mayans really meant.
"Oh Come All Ye Faithful" (Bunds 1,42% +0; Spain 5,25% -4; Stoxx 2658 +0,4%; EUR 1,326 +40)
Another boring session, worsened by year end inactivity… Good close. Fiscal Cliff haggling on-going with a positive spin this time and Risk riding high.Spain catching up and paring yesterday’s soft patch, as is Italy. ESToxx at the highest since Aug 2011. Credit very squeezed. EUR strong. Merry Mood!
"I Saw Mommy Kissing Santa Claus " (Bunds 1,42% +5; Spain 5,29% -12; Stoxx 2647 +0,7%; EUR 1,322 +50)
Utterly boring Monday session, worsened by year-end inactivity… Won’t get any better going forward, probably. Fiscal Cliff a cliff-hanger (I know, cheap)… Spain on the heavier side with contingent funding holes still popping up here and there.
"Jingle Bell Rock" (Bunds 1,37% +2; Spain 5,41% +4; Stoxx 2628 unch; EUR 1,317 +30)
Bingo Bongo, Good News hailing, Sleepily digesting in the South to end Stuck… What an uninspiring week… Felt slow as a Sunday Afternoon– for 5 days in a row… The only thing that wasn’t lazy and laid back was the EUR.
Update: The focus now shifts to the mother, the first casualty of her son's murderous rampage, who was a "big, big gun fan" as the NYT explains, and who went target shooting with her children, one of whom had Asperger's.
As we reported last night, buried inside the NYT biopic of Newtown shooter Adam Lanza was arguably one of the most important missing pieces in the story, at least so far, which could provide clues into partially explaining yesterday's tragic loss of young life, namely that the 20 year old man suffered from Asperger Syndrome, a high-functioning form of autism (two conditions which are being merged in the upcoming update of the Diagnostic and Statistical Manual (DSM-5) manual of mental disorders), which has been traditionally associated with social communication difficulties, including flat affect, and one which in some clinical studies has been shown to have a causal link to violence. In other words, in addition to the surge in the debate over national gun control and access limitations (ignoring that the perpetrator of the biggest school mass murder in US history - the Bath School disaster - used openly purchased dynamite and no guns, also ignoring that in the US there are roughly 300 million firearms), perhaps there should also be a broad discussion as to the risks of social misadoption of children with autism and other social and behavioral disorders.
Utterly boring Friday session, worsened by year end inactivity… PMI figures, which were actually needed on the more positive side to justify the latest levels in Risk were just so so in Europe. But, who cares? Periphery recovering further with Spain actually the best performer on the week (outside the bailed-out gang). US stuck despite better figures.
"Stuck in the Middle with You" (Bunds 1,35% unch; Spain 5,37% -1; Stoxx 2628 +0,2%; EUR 1,314 +60)
Markets getting back to some normality with the Periphery still recovering, although less today after the auctions, Bunds 5 wider on the week, Italy 10, but Spain 7 tighter across the curve from last Friday. Equities and Risk oblivious to that anyway and synching with the US. Getting difficult to find something crisp out there with reduced news flow and volatility. Excitement to be found in the US on FC developments, now that Greece, Spain and Italy are seemingly off the table and that the FED has moved to QE4.
"When It's Sleepy Time Down South" (Bunds 1,35% +1; Spain 5,38% +4; Stoxx 2622 -0,2%; EUR 1,308 +40)
- Here come the low margin products: Apple Tests Designs for TV (WSJ)
- Obama and Republicans Trade Offers to Avert Fiscal Crisis (BBG)
- Carney broaches dumping inflation target (FT)
- Bernanke Critics Can’t Fight Bonds Showing No Inflation (BBG)
- Corporate Taxes on Table in Cliff Talks (WSJ)
- US business chiefs back tax rise (FT)
- Greece Confident Bond Buyback Needed for Aid Succeeded (BBG)
- New Faith in Europe's Banks (WSJ)
- European Bank Sees Little Room for Rate Cuts (WSJ)
- North Korea Claims Success in Rocket Launch (WSJ)