Losing Ground In Flyover America, Part 3

The Fed’s crusade to pump-up inflation toward its 2.00% target by hammering-down interest rates to the so-called zero bound is economically lethal. The former destroys the purchasing power of main street wages while the latter strip mines capital from business and channels it into Wall Street financial engineering and the inflation of stock prices.

Q1 Slams Hedgies 'Most Popular Trade' - Momo Crashes Most Since 2009

In mid-February, we warned of the looming carnage for equity market-neutral funds, and sure enough, as Bloomberg reports, one of the most popular (and successful) hedge fund trades - playing the difference between high- and low-momentum stocks - crashed by the most since 2009 in Q1. After 6 years of almost unstoppable gains, equity market-neutral funds suffered their biggest losses since 2012 - comparable to the 2007 quant crisis devastation - as weak momo stocks massively outpeformed crushing the hedgies' models.

This Is What JPM Meant When It Said The "Market Is Trapped"

As the dollar weakens, it supports the most beaten down, energy, sector (which has now undergoing a record short squeeze), but it ultimately will pressure the broader market lower through Tech and Momo. As Kolanovic called it: "a market trapped by the USD."

"What The Hell Is Going On?"

The last few days have been "odd" according to one veteran trader and today's moves, with USDJPY plunging, S&P 'steady', and XIV (the inverse VIX ETF soaring) left the same trader exclaiming "what the hell is going on?" More unwinds from equity market-neutral funds? OPEX impacts? Or just the death-throes of a Fed-fueled market gasping its last breaths...

Quant Fund Carnage: Are Market-Neutral Funds Facing Another August 2007?

For equity market-neutral funds, there is a phrase more chilling than "worst since Lehman" and that is the quant meltdown in "August 2007" that put many funds out of business. While the mainstream media remains focused elsewhere, the last two weeks have seen equity market-neutral funds 'crash' (and today it is getting worse) as momentum factors diverge and memories of the 2007 bloodbath come back... as this forced unwind drives the current ramp.

Momo Bad News: JPM's Quant Guru Kolanovic Confirms Tech Bubble Has Burst... Again

"The biases of momentum investing and passive indexation have resulted in valuation distortions across assets as well as equity segments including Technology. Over the past years this trend has picked winning assets, sectors, and stocks often with less regard to fundamental valuation and more regard to momentum and extrapolated growth. We believe that 2016 may result in a reversion of this trend.... Even if this rebalancing comes as a result of market volatility and broader equity declines, long term it will benefit capital markets and the efficient allocation of capital."

In Historic First, Massachusetts Attorney General Warns Gilead To Lower Cost Of Hep C Drug Or Face Lawsuit

In a Jan. 22 letter to Gilead chief executive John C. Martin, made public Wednesday, the attorney general wrote that the high price of the company’s Sovaldi drug, which cost $84,000 for a full course of treatment, and its Harvoni drug regimen, which cost $94,500, “may constitute an unfair trade practice in violation of Massachusetts law.” The newspaper adds that Healey’s letter said her office was looking into bringing an unfair commercial conduct complaint against the company. It is rare, if not unprecedented, for a state attorney general to confront a drug maker on the cost of a therapy.