Private Equity

Frontrunning: December 23

  • Oil up after U.S. crude stocks drop, still close to 11-year lows (Reuters)
  • Global Stocks Rally; Mining, Metals Shares Lead Gains (WSJ)
  • OPEC Sees Demand for Its Crude Oil Falling for Rest of Decade (BBG)
  • The Trouble With Sovereign-Wealth Funds (WSJ)
  • U.S. Calls for 256% Tariff on Imports of Steel From China (BBG)
  • Iraqi troops expected to drive ISIS from Ramadi in days (Reuters)

Obama Abruptly Waives 1980 Foreign Investment in Real Property Tax Act

FIRPTA was implemented during a better era for Americans in response to international investors in the late 1980s and early 1990s buying U.S. farmland, as well as the more publicly visible buying of trophy U.S. property by the Japanese.  The US government has now expediently waived FIRPTA.

Bill Ackman Warns 2015 May Be "The Worst Performance Year In Pershing Square’s History"

"If the year finishes with our portfolio holdings at or around current values, 2015 will be the worst performance year in Pershing Square’s history, even worse than 2008 during the financial crisis when the funds declined by 12% to 13%. You might therefore find it surprising that we believe that 2015 has been a good year for our portfolio companies. How can this be?"

Market Panics As "China's Warren Buffett" Detained In "Richter Scale 9 Event"

China’s sweeping crackdown on sellers, “manipulators”, frontrunners, financial journalists and anyone else “suspected” of acting in such a way as to sow fear and uncertainty in the wake of the dramatic meltdown in Chinese equities that unfolded over the summer has ensnared money managers, high profile executives, and government officials alike. Earlier this week, it reached a crescendo with the disappearance of Guo Guangchang, known to some as “China’s Warren Buffett. We now have a bit more in the way of color regarding Guo’s detention and sure enough, he’s being “held in connection with an investigation.”

Frontrunning: December 11

  • Futures down sharply as oil hits seven-year low (Reuters)
  • Oil slides to new seven-year low as IEA warns of worse glut (Reuters)
  • But... but... they all said... Cheap Oil Gives Little Help to U.S. Spending (WSJ)
  • Disappearances in China Highlight Ruling Party Detention System (BBG)
  • China’s Credit Rebounds as Stimulus Helps Boost Loan Demand (BBG)
  • Junk Fund’s Demise Fuels Concern Over Bond Rout (WSJ)

Central Banks Continue To Rule Equity And Commodity Markets

Until pro-growth, low taxation and less regulation policy changes are enacted, we don’t foresee any changes to central bank policy nor the unsustainable market divergences and asset price distortions. Expect more media propaganda on how great the economy is while the reality is another story. Early signs are that retail sales this holiday season are poor. Nobody can predict when reality will set in and equity markets revert back to pre QE levels in 2008/09. The longer this charade continues, the lower equity markets will eventually go, and in the short-term so will commodities. Then the super cycle in commodities will begin anew. Much this will hinge on next fall’s election cycle.

Frontrunning: December 4

  • The Jobs Report Probably Won't Change the Fed's Mind on Liftoff (BBG)
  • U.S. authorities look for militant links to shooters in California mass slaying (Reuters)
  • Neighbors, Acquaintances Shocked That Couple Are San Bernardino Shooting Suspects (WSJ)
  • ECB Fumbles the Stimulus-Baton Hand-off, Mussing Up Fed’s Plans (WSJ)
  • OPEC Heads for Status Quo as Members Clash Over Crude Output Cut (BBG)
  • Foreigners drawn in as fear and loathing grip China's finance industry (Reuters)

Frontrunning: December 3

  • Mario Draghi Is About to Become the World's Market Risk Manager (BBG)
  • Five Things to Ask Mario Draghi From Negative Rates to QE (BBG)
  • Leaving behind baby and bombs, couple sows panic in California (Reuters)
  • Couple's motive in California rampage a mystery for police, family (Reuters)
  • In Grim Ritual, Barack Obama Again Calls for Stricter Gun Control After Mass Shooting (WSJ)
  • Islamic State Defeat Impossible Without Ground Force, Kerry Says (BBG)
  • OPEC States Push for Output Cuts in Face of Saudi Opposition (BBG)

Frontrunning: December 2

  • Yellen, in back-to-back appearances, could close out era of zero rates (Reuters)
  • ECB stimulus hopes keep Europe stocks at three-month high (Reuters)
  • ECB to Test the Limits of Its Bond-Buying Program (WSJ)
  • Watch for U.S. recession, zero interest rates in China next year, Citi says (Reuters)
  • Euro’s Loss Being Yen’s Gain May Be Headache for BOJ (BBG)
  • Yahoo Board to Weigh Sale of Internet Business (WSJ)
  • Islamic State Prevents Civilians From Fleeing Iraqi City of Ramadi (WSJ)

"On The Cusp Of A Staggering Default Wave": Energy Intelligence Issues Apocalyptic Warning For The Energy Sector

The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices — which few experts foresee in the near future — an over-leveraged, under-hedged US E&P industry faces a truly grim 2016.  "I could see a wave of defaults and bankruptcies on the scale of the telecoms, which triggered the 2001 recession."