World's Largest Sovereign Wealth Fund Has Worst Quarter In 4 Years After Losing 21% On Chinese StocksSubmitted by Tyler Durden on 10/28/2015 12:41 -0500
Norway's $860 billion sovereign wealth fund (tasked with managing the country's vast oil wealth) just had its worst quarter in 4 years and its first back-to-back quarterly loss since 2009 after an array of EM bets went awry. Meanwhile, the government is set to start making withdraws from the fund as slumping crude prices have effectively reduced inflows to zero.
Fearing the size of Mario Draghi's bazooka (so to speak), Sweden's Riksbank has just expanded QE by SEK65 billion, marking the fourth expansion in nine months and serving notice that the beggar-thy-neighbor, monetary madness gripping DM central banks isn't likely to dissipate anytime soon.
"The nightmare for the Riksbank board is maybe something like this: they are gathered in the south of Sweden, looking out over the Baltic Sea, when they see a giant wave of money coming in from the euro zone and try to fight it with a hose."
How governments all around the world resort to absurd marketing to finance largesse
To be king implies preeminence, or lasting rule. In the Arctic, such oil and gas supremacy is still little more than a dream. That dream remains alive in Russia however, and the nation – through an unmatched stubbornness and a decidedly timid field of competitors – is making a strong bid for the throne.
With crude prices still stuck in the doldrums, economists at Handelsbanken say the Norges Bank will soon be forced to cut rates to zero in order to stave off a looming recession. What we want to know is this: if the housing bubble that the Norges Bank has helped to inflate bursts, how does the central bank plan to deal with the fallout (which will be amplified by the economic drag from low oil prices) when it has exhausted its counter-cyclical capacity by cutting rates to zero?
Why is wealth/income inequality soaring? The easy answer is of course the infinite greed of Wall Street fat-cats and the politicos they buy/own. If conventional labor and finance capital have lost their scarcity value, then the era in which financialization reaped big profits is ending.
Yesterday morning, when previewing the day's tumultuous events, we said that "Futures Are Firm On Hope Draghi Will Give Green Light To BTFD." And boy did Draghi give a green light, that and then some, when his press conference unleashed one of the biggest one-day US equity rallies in 2015. This morning it has been more of the same, with global market momentum on the heels of Draghi's confirmation that Europe's economy is again backsliding (it's a good thing, if only for stocks), leading to momentum for US equity futures, which together with soaring tech/cloud, earnings if no other, are on their way to take out recent all time highs.
Despite today's ridiculous melt-up in US equities - all driven by USDJPY-correlated algos - after the completion of over 9 months of this year, the median stock in the United States has officially gone nowhere.
Much of the political thinking about violence in the United States comes from unfavorable comparisons between the United States and a series of cherry-picked countries with lower murder rates and with fewer guns per capita. This is, in turn, supposed to fill Americans with a sense of shame and illustrate that the United States should be regarded as some sort of pariah nation because of its murder rate. However, politically, historically, and demographically, the US has little in common with these nations.
Whatever the efforts of that expansive corps of intelligence analysts (and the vast intelligence edifice behind it), when anything happens in the Greater Middle East, you can essentially assume that the official American reaction, military and political, will be “surprise” and that policymakers will be left “scrambling” in a quagmire of ignorance to rescue American policy from the unexpected. The evidence, after all, is largely in. In these years, for what now must be approaching three-quarters of a trillion dollars, the national security state and the military seem to have created an un-intelligence system. Welcome to the fog of everything.
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Even with the drop in oil prices, the $7 trillion invested in Sovereign Wealth Funds makes them important participants in global capital markets; what they do, even at the margin, matters.
There can be little doubt that the massive, unprecedented surge in inventory accumulation (which counts positively to GDP) will eventually be liquidated. When it does the US enter recession, global dollar liquidity crashes, the value of dollar surges even higher, pulling EM further down and a world recession will be upon us again. In this scenario central banks panic...
While record mainland deficits covered by the petroleum sector is nothing new in Norwegian budget history, on the contrary it is closer to the norm, the 2016 budget did raise some eyebrows. The other side of the ledger, the net inflow to the SWF from activities in the North Sea will, again according to budget, be lower than the required amount to cover the deficit. This has never happened before and is testimony of the sea change occurring in the world of petrodollar recycling.