Private Equity

As Putin rejoices at his new-found wealth in Crimea after it was annexed (in a duff referendum where there was either ‘now’ or ‘later’ up for grabs to join the Russian Federation), the USA is wiping its tears with things that are closer to home and causing a great deal more grief than far off Ukraine. 

Putin Is No Mad Man to Russians as Power Play Trumps Economy (BBG)
Alibaba picks U.S. for IPO; in talks with six banks for lead roles (Reuters)
Russia hearts selling German energy: Billionaire Fridman’s L1 Buys RWE Unit for $7.1 Billion (Bloomberg)
Malaysia plane search straddles continent as police focus on crew (Reuters)
Saudi Crown Prince’s visit to China set to bolster investment (Al-Awsat)
Bugatti-Driving 26-Year-Old Tied to Penny-Stock Website (BBG)
Vodafone agrees $10 billion deal to buy Spain's Ono (Reuters)
The Hidden Rot in the Jobs Numbers (WSJ)
SocGen Ex-Trader Kerviel Walks to Forget Loss as Judgment Looms (BBG)
U.S. Banks’ $75 Billion Payout at Stake in Fed Tests (BBG)

The whole story about how private equity firms and hedge funds have steamrolled into the residential home market to become this decade’s slumlords is a story we covered long before mainstream media even knew it was happening. We first identified the trend in January of last year in one of my most popular posts of 2013: America Meet Your New Slumlord: Wall Street. Since then, we've done my best to cover the various twists and turns in this fascinating and disturbing saga. With all that in mind, let’s now take a look at the latest article from Bloomberg, which points out that Blackstone’s home purchases have plunged 70% from their peak last year. Perhaps they overestimated the rental cash flow potential of indebted youth living in their parents’ basements?

The Fed and the other major central banks have been planting time bombs all over the global financial system for years, but especially since their post-crisis money printing spree incepted in the fall of 2008.  Now comes a new leader to the Eccles Building who is not only bubble-blind like her two predecessors, but is also apparently bubble-mute. Janet Yellen is pleased to speak of financial bubbles as a “misalignment of asset prices,” and professes not to espy any on the horizon. Actually, the Fed’s bubble blindness stems from even worse than servility. The problem is an irredeemably flawed monetary doctrine that tracks, targets and aims to goose Keynesian GDP flows using the crude tools of central banking. Not surprisingly, therefore, our monetary central planners are always, well, surprised, when financial fire storms break-out. Even now, after more than a half-dozen collapses since the Greenspan era of Bubble Finance incepted in 1987, they don’t recognize that it is they who are carrying what amounts to monetary gas cans.

• China worries chill markets, copper slumps (Reuters)
• Peak dot com dot two idiocy: Candy Crush Saga maker King seeks $7.56 bln valuation from IPO (BBG)
• Obama Meeting With Yatsenyuk Raises Stakes in Ukraine (BBG)
• Federal prosecutors open criminal probe of GM recall (Reuters)
• Pimco Cuts Government Debt on Outlook for Fed Buying (BBG)
• Missing Malaysian Jetliner Confuses World That’s Online 24/7 (BBG)
• Mortgage Giants Face Endgame (WSJ)
• Russia Calls U.S. Aid to Ukraine Illegal Amid Standoff (BBG)
• U.S. judge freezes assets of Mt. Gox bitcoin exchange boss (Reuters)
• Ousted Libyan PM flees country after tanker escapes rebel-held port (Reuters)
• Senate-CIA Dispute Erupts Into a Public Brawl (WSJ)

While central bankers, asset-gatherers, and TV 'personalities' remain nonchalant of stocks being in a bubble, some are positively vociferous over the manipulated mania US investors are currently re-experiencing. Until the last few months, the new dot-com bubble had been quietly hidden behind the walls of the private equity world (as we noted here), but as the following chart shows, the bankers have found a willing audience for 'stories' and 'spin' as the percentage of firms IPOing with negative earnings soars to its highest since Feb 2000... that didn't end well and we suspect "peak-greater-fool" won't this time either.

• Malaysia Says Stolen Passport User Had No Links to Terror Groups (BBG)
• Malaysia military tracked missing plane to west coast (Reuters)
• Freescale loss in Malaysia tragedy leads to travel policy questions (Reuters)
• Top German body calls for QE blitz to avert deflation trap in Europe (Telegraph)
• Firms Suffer 23% Drop in Asia Fees Amid Search for Cash (BBG)
• Putin Dismisses U.S. Proposal on Ukraine (WSJ)
• Lenovo says China strike an IBM matter, but it won't cut wages (Reuters)
• Congress to Investigate GM Recall (WSJ)
• New hedge funds face life or death battle for funding (FT)
• Muni Bond Costs Hit Investors in Wallet (WSJ)
• BOJ keeps stimulus in place, cuts view on exports in warning sign (Reuters)
• ECB Homes In on Risky Assets as Inspectors Fan Out Across Europe  (BBG)
• Snowden: "The Constitution was violated" (Reuters)

• Index of largest Chinese stocks drops to lowest since February 2009 (BBG)
• Plane-Debris Hunters Seek Suspected Aircraft Window Part (BBG)
• New-Home Building Is Shifting to Apartments (WSJ)
• Forward Guidance Risks Stoking Instability, BIS Says (BBG)
• Alleged Bitcoin Millionaire Nakamoto Gets $28,000 Donations (BBG)
• Mexico kills drug kingpin reported dead years ago (Reuters)
• Tencent to Buy 15% Stake in JD.com to Boost E-Commerce (BBG)
• Bitcoin exchange MtGox 'faced 150,000 hack attacks every second’ (Telegraph)
• Noyer Says Stronger Euro Creates Unwarranted Pressure on Economy (BBG)
• Russian Forces Gain in Ukraine as Separatist Vote Looms (BBG)

Big Bubble Brutally Bursts ... Bringing Bankruptcies, Bond Busts

• Putin rebuffs Obama as Ukraine crisis escalates (Reuters)
• Behind the $100 Billion Commodity Empire That Few Know (BBG)
• Initial Public Offerings Hit Pace Not Seen in Years (WSJ)
• Russian Parliament Will Back Crimea Split From Ukraine (WSJ)
• Nakamoto Named as Bitcoin Father Denies Involvement, Flees Press (BBG)
• Chaori Can’t Make Payment in China’s First Onshore Default (BBG)
• Zombies Spreading Shows Chaori Default Just Start (BBG)
• Pimco's Gross declares El-Erian is 'trying to undermine me' (Reuters)
• U.S. Fighters Circle Baltics as Putin Fans Fear of Russia (BBG)

• Spot the inaccuracies: Stocks rise on Ukraine diplomacy, ECB easing speculation (Reuters)
• Bank of England Extends Record-Low Rates Into a Sixth Year (BBG)
• China's Chaori Solar poised for landmark bond default (Reuters), explained here previously
• EU leaders meet in Brussels to address Ukraine crisis (FT)
• Nine-month-old baby may have been cured of HIV, U.S. scientists say (Reuters)
• China Raises Defense Spending 12.2% for 2014 (WSJ)
• China Stock Index Rises as Developers Jump on Policy Speculation (BBG)
• VTB Cancels New York Forum as U.S. Relations Sour (BBG)
• IBM workers strike in China over terms of Lenovo takeover (FT)
• College Board Redesigns SAT Exam Making Essay Portion Optional (BBG)

• High Stakes Limit Bid to Cow Putin (WSJ)
• Russia says can't control Crimea troops ahead of U.S. talks (Reuters)
• Crimea Crisis Haunted by Ghosts of Bungled World War I Diplomacy (BBG)
• Putin’s Ukraine Gambit Hurts Economy as Allies Lose Billions  (BBG)
• Germany Says It Provided Equipment and Training to Ukraine's Riot Police (WSJ)
• China signals focus on reforms and leaner, cleaner growth (Reuters)
• China Shares in Hong Kong Decline Amid Default Concern (BBG)
• Beijing Signals New Worry on Growth (WSJ)

Earlier today we were surprised when none other than uber central-planning skeptic, not to mention bond fund manager, Bill Gross threw in the towel and in his latest letter advocated the purchase of risk assets - and Bill Gross is the last person needing reminding that in a day and age when the 10 Year yields just barely over 2.5%, this means not bonds but stocks. The surprise, however, promptly disappeared when we realized that PIMCO is merely the  latest entrant in the scramble for yield game following, with a substantial delay to all of its other "alternative" asset management peers, right into ground zero: European toxic debt.

• Russian markets hit as Putin tightens grip on Crimea (Reuters)
• Ukraine Sees More Russian Incursions as Standoff Worsens (BBG)
• Ukraine Crisis Roils Global Markets (WSJ)
• Cold War Ghosts Haunt East Europe in Moves for Crimea (BBG)
• How Moscow Orchestrated Events in Crimea (WSJ)
• Russia Gas Threat Shows Putin Using Pipes to Press Ukraine (BBG)
• Euro-zone PMI slowed less sharply than estimated (MW)
• Two top Microsoft execs to leave in reshuffle (Reuters)
• Soaring Luxury-Goods Prices Test Wealthy's Will to Pay (WSJ)
• IQ-Boosting Drugs Aim to Help Down Syndrome Kids Learn (BBG)

Readers will recall that back in October, when the only way for Bitcoin seemed up, none other than the head of sophisticated hedge fund/private equity megafund Fortress Group, Michael Novograts, recommended buying Bitcoin:  "I have a nice little Bitcoin position,” Novogratz said. "Enough that I’m smiling that it doubled... Put a little money in Bitcoin...Come back in a few years and it’s going to be worth a lot." Or, you can come back in a few months and now that the momentum euphoria is over and done with, watch it be worth far less.