In an oddly ironic twist, today Donald Trump announced that he has picked as chairman of his newly launched fundraising operation none other than a former employee of the bank he has repeatedly criticized in the past, and which he used as a foil to criticize Ted Cruz: Goldman Sachs. In addition to Goldman, Mnuchin also worked for Soros previously. Where it gets even more ironic is that Mnuchin has donated frequently to Democrats, including to Clinton and Barack Obama.
Moments ago we the latest confirmation that the hedge fund business model is indeed suffering through an existential battle when MetLife Inc., the largest U.S. life insurer, said was seeking to exit most of its hedge-fund portfolio after a slump in the investments. According to Bloomberg, the insurer is seeking to redeem $1.2 billion of the $1.8 billion in holdings, a process that may take a couple of years to complete.
- Puerto Rico Development Bank Won’t Make Most of a Debt Payment Monday (WSJ)
- Why the jump in futures? Tokyo slide keeps mood downbeat (Reuters)
- Indiana to test Donald Trump’s staying power with evangelicals (Reuters)
- Gold Rallies Above $1,300 for First Time Since January 2015 (BBG)
- This Tech Bubble Is Bursting (WSJ)
For many students who went to school and took on student loans under the expectation of getting a six figure petroleum engineering job, a rude awakening is likely ahead. Petroleum engineering became a much more attractive field thanks to the shale boom, which meant that these engineers were no longer likely to have to take a job abroad or on an offshore platform. If shale is dead or partially dead, that changes the calculus for many petroleum engineers. To employ a meaningful number of the current stock of engineers, oil prices would likely have to get back to around $70 a barrel which would make shale at least reasonably profitable in many geographies.
If nobody is working in one out of every five U.S. families, then how in the world can the unemployment rate be close to 5 percent as the Obama administration keeps insisting? The truth, of course, is that the U.S. economy is in far worse condition than we are being told.
- Obama sending more forces to Syria to consolidate gains against Islamic State (Reuters)
- Global stocks, dollar stumble ahead of Fed, BOJ meetings (Reuters)
- The Rise and Deadly Fall of Islamic State’s Oil Tycoon (WSJ)
- Oil Producers Lock In Once-Snubbed Prices (WSJ)
- Yellen's Scope for Summer Rate Hike Widens as ECB Signals a Hold (BBG)
- 11,000 jobs at risk as BHS teeters on brink (The Times)
There’s no respite in sight.
"Our “Japanification” theme argues for big, fat, volatile trading ranges being the norm. The rallies (Japan rallied +20% every year during the 1990s (Chart 8) and the fades are always driven by Policy (panic & complacency), Profits (troughs & peaks in PMI’s) & Positioning (fear & greed). As bulls begin to dominate, confidence in the macro improves & the Fed starts to talk-up prospect of rate hikes, we would use Q2 to add to volatility exposure." - BofA
- Crude's Losses Drag Ruble, Loonie Lower; Stocks Pare Their Drop (BBG)
- Grand Oil Bargain Is Victim of Saudi Arabia's Iran Fixation (BBG)
- Both Parties’ Presidential Front-Runners Increasingly Unpopular (WSJ)
- It's up to you, New York: state takes center stage in election campaign (Reuters)
- Rousseff Hangs by a Thread After Losing Impeachment Vote (BBG)
- China March home prices rise at fastest rate in two years, top cities boom (Reuters)
In another quiet overnight session, the biggest - and unexpected - macro news was the surprise monetary easing by Singapore which as previously reported moved to a 2008 crisis policy response when it adopted a "zero currency appreciation" stance as a result of its trade-based economy grinding to a halt. As Richard Breslow accurately put it, "If you need yet another stark example of the fantasy storytelling we amuse ourselves with, juxtapose today’s Monetary Authority of Singapore policy statement with the storyline that the Asian stock market rally intensified on renewed optimism over the global economy. Singapore is a proxy for trade and economic growth ground to a halt last quarter." The Singapore announcement led to a sharp round of regional currency weakness just as the dollar appears to have bottomed and is rapidly rising.
- Italian Bank Stocks are Surging on the Back of Rescue Reports (WSJ)
- European Stocks Rise Led by Italian Banks; Emerging Markets Gain (BBG)
- Oil price dips on prospects for producers' meeting (Reuters)
- U.S. shale oil firms feel credit squeeze as banks grow cautious (Reuters)
- U.S. banks' dismal first quarter may spell trouble for 2016 (Reuters)
- Miserable Year for Banks: Stocks Suffer as Rates Stay Low (WSJ)
While YHOO shares have jumped after the announcement of several potential bidders (including Time Inc, Verizon, Bain, TPG, and Google), it has merely recovered the day's losses.
And so the great "oil production freeze" rumor, which helped halt oil's plunge after it hit a 13 year low in early February and forced a 50% short squeeze higher,has died after Bloomberg released an interview with Saudi Deputy Crown Prince Mohammed bin Salman, in which when asked if Iran needs to join freeze, he said: "without a doubt. If all countries including Iran, Russia, Venezuela, OPEC countries and all main producers decide to freeze production, we will be among them."
About a decade ago, Christian Leone's Luxor Capital was one of the biggest brand names in the industry, and alongside Harbinger and DB Zwirn, every trader and analyst on Wall Street wanted to work there. Since then things have changed. According to Reuters, Luxor, which had $3.8 billion under management at last check, "has been losing money for months" and on Monday it surprised investors when it announced it would "not be returning exiting investors cash in full, keeping a portion locked up until some illiquid investments can be sold."