Former Morgan Stanley Chief Asia Economist: "Don't Listen To The Ruling Elite, The World Economy Is In Real Trouble"Submitted by Tyler Durden on 05/28/2016 14:00 -0400
"Don't listen to the ruling elite," warns former Morgan Stanley Asian Economist, Andy Xie, "the world economy is on the cusp of a prolonged period of stagnation and instability." Xie points out that the ruling elite is blaming it on people seeing things (skeptic and fiction peddlers), and that "their strategy is to change people’s psychology." Unfortunately for them he concludes, "the world is catching fire and that fire will eventually reach their Davos chalets."
Last Friday we first reported on two surprising developments: one was a record accumulation of crude tankers just off the coast of Singapore in the Straits of Malacca, awaiting higher oil prices to offload their precious cargo; the second was that as a result of previously profitable contango trades now flattening and making storage no longer profitable, oil shippers are now forced to ask for bank loans to fund offshore storage costs. Over the weekend none other than Morgan Stanley noticed precisely these two developments.
In the aftermath of the Panama Papers revelations, US authorities including the IRS appear to have begun a crackdown on tax evaders (if staying away from Washington D.C. for the time being for obvious reason), and according to Bloomberg they just landed a juicy target in the face of Morris Zukerman, a former head of Morgan Stanley’s energy group who now runs a private investment firm, who was indicted in Manhattan on charges of evading more than $45 million of federal and New York state taxes.
It wasn't just Japan's PMI which overnight printed at a disappointing 47.6, missing expectations and signaling the sharpest decline in operating conditions since December 2012. Overnight Markit showed that the Chinese credit-induced global slowdown is coming far faster than most (if not Morgan Stanley) expected, when the Eurozone flash PMI printed at 52.9, the lowest level in 16 months. As Reuters put it, this offers "the latest evidence that a strong acceleration in growth in the first three months of the year was only temporary" and likely
"With it now taking 6.5 units of debt to produce 1 unit of GDP, additional gains from the lending channel are limited, in our view. China data already suggest diminishing returns from a flagging stimulus. Our China economic activity indicator (MS-CHEX) is at 3% versus 10% last month, while property sales in top cities have slowed to 15%Y in the first two weeks of May compared to 55%Y in April. If we think China growth softens again over the summer, the question for markets is how far ahead of this prices react. The risks are rising that the time is now."
It has become clear that there is a shift away from the expensive, all-in-one, type of financial solutions for real-time traders, passive investors, and those tangentially interested in financial market information.
How Is This Not Criminal: Goldman Underwrites $2 Billion Tesla Stock Offering Hours After Upgrading Stock To A BuySubmitted by Tyler Durden on 05/18/2016 18:16 -0400
Call it criminal deja vu, all over again: "Morgan Stanley and Goldman, Sachs & Co. are acting as lead joint book-running managers for the offering, with Deutsche Bank Securities, Citibank, and BofA Merrill Lynch acting as additional book-running managers."
Is this why stocks are slipping? Following Hillary's hint last night that she would like to put her husband in "charge of revitalising the economy, because you know he knows how to do it," Bill confirmed the farce this morning, admitting he has asked for an "economic role" in his wife's adminstration. As Yves Smith so eloquently noted, after having institutionalized the neoliberal economic policies that have enriched the 1% and particularly the 0.1% at the expense of everyone else, Hillary Clinton wants to give the long-suffereing citizenry an even bigger dose. Good luck America.
"On May 9, 2016, following the announcement of the board review described elsewhere in this filing, the Company received a grand jury subpoena from the U.S. Department of Justice (DOJ)... In the five business days since we announced our review and resignation of our CEO, we have experienced a slowdown in a significant amount of investment capital... The identified material weakness is the result of the aggregation of control deficiencies related to the Company’s “tone at the top,” which manifested in three primary areas described further below."
Here is the visual representation of the current oil supply disruptions courtesy of Goldman.
What Is Troubling Morgan Stanley: "We Haven’t Done Well Enough To Pack It In And Head Off To The Beach"Submitted by Tyler Durden on 05/15/2016 12:43 -0400
"It’s been a tough year. The summer does not look easy. Many of us haven’t done well enough to pack it in and head off to the beach. If that’s the bad news, the silver lining may be that pricing within and between asset classes is throwing up an outsized number of interesting opportunities."
With the frenzied speculation that drove levels and volumes in Chinese commodities off the charts having dawned on everyone from Cramer to Chinese Securities regulators as 'not real', it appears everyone is scrambling to not be the bagholder for this bubble as authorities crackdown on Chinese asset managers pooling retail investor funds, warning of the rise of "ponzi schemes." While nobody knows for sure how much of the trading surge has been driven by individuals, but the evidence suggests retail punters are playing a big role, and as Bloomberg reports, the average holding period for contracts including rebar and iron ore was less than 3 hours in April!
As we reported earlier today, following the surprising "resignation" of the company's CEO and Chairman, Renaud Laplanche as a result of an "internal board review of sales of $22 million in near-prime loans to a single investor", which resulted in the stock losing a quarter of its market cap in minutes, subsequent revelations have seen the spotlight shining brightly on none other than former Morgan Stanley CEO and current Lending Club board member, John Mack, who according to Bloomberg invested in the same venture that led to the termination resignation of the CEO.