Borrowing heavily from Albert Edwards "Ice Age" analogy of our new normal, PIMCO's Bill Gross, after explaining why he does not have a cell phone, discusses the "frigidly low" levels of "The New Neutral" in this week's letter. Confirming Ben Bernanke's "not in my lifetime" promise for low rates and a lack of normalization, Gross explains that the "the new neutral" real policy rate will be close to 0% as opposed to 2-3% (just as in Japan) leaving an increasingly small incremental rise in rates as potentially responsible for popping the bubble. Gross concludes, "if 'The New Neutral' rates stay low, it supports current prices of financial assets. They would appear to be less bubbly," clearly defending the valuation of bonds knowing that he can't expose stocks as 'bubbly' without exposing his firm to more outflows.
- Inside the White House's decision to free Bergdahl (Reuters)
- Dimon’s Raise Haunts BNP Paribas as U.S. Weighs $10 Billion Fine (BBG)
- Jobs Are on the Line as Banks' Revenue Slides (WSJ)
- Wall Street Adjusts to the New Trading Normal (WSJ)
- Nothing like objective, intense probes: GM recall probe to clear senior execs, finds no concerted coverup (Reuters)
- ECB ready to cut rates and push banks into lending to boost euro zone economy (Reuters)
- China Should Resist Further Stimulus, IMF Says (BBG)
- Carney Finds Ally in Draghi as Key Rate Kept at 0.5% (BBG)
- Assad wins Syria election with 88.7 percent of votes (Reuters)
Now that bitcoin has increased in price around 80% since the peak of doom and gloom, Flat Earth Society, can't see the forest due to tree bark blindness short-sightedness, it's time to bust some more Bitcoin myths and move on to what this stuff can really do.
Many people are closely scrutinizing Apple’s policy changes at its Worldwide Developer Conference yesterday, as Liberty Blitzkrieg's Mike Krieger notes that many within the Bitcoin community are focused on a small recent entry within the section on “Purchasing and Currencies” within the document: App Store Review Guidelines that "facilitates transmission of approved virtual currencies." Apple’s brand suffered earlier this year when the company decided to ban the Blockchain Bitcoin app. In fact, it unleashed such a firestorm that diehard technologists and Bitcoin fans took to YouTube to post videos of themselves destroying their iPhones. This apparent shift in stance, as Bloomberg reports, is being celebrated with Bitcoin entrepreneurs were already predicting an explosion of activity.
- Unstoppable $100 Trillion Bond Market Renders Models Useless (BBG)
- Afghan president fumes at prisoner deal made behind his back (Reuters)
- Spain to Unveil $8.6 Billion Stimulus Package (AP)
- How fracking helps America beat German industry (Reuters)
- Obama to Urge European Allies to Stay Tough on Russia (WSJ)
- Frenchman 'admits' Brussels shooting in video (AFP)
- Heloc Payment Jump to Take Bite Out of Consumer Spending (WSJ)
- Obama Said to Propose Deep Cuts to Power-Plant Emissions (BBG)
- Lehman Lesson Lost as Bank Lobby Gains Clout (BBG)
- WSJ reports that WSJ reporting on Icahn insider trading probe may have killed it (WSJ)
- KKR liquidates former Goldman Sachs traders-run hedge fund (Reuters)
Friday's latest resignation of yet another former Obama administration faithful - that of White House press secretary Jay Carney - got us thinking: how many people have jumped off the USS Obamic? The answer is, in short, a lot. Below is a list (by no means complete) of the most prominent officials and advisors who have quietly exited the Obama administration stage left over the past 6 years.
Prof. Ken Rogoff’s book ‘This Time is Different: Eight Centuries of Financial Folly'; is one of the best researched public works on the subject of sovereign debt. And Rogoff’s conclusions (though hotly contested due to an ‘Excel error’) were that, sensibly, governments which accumulate too much debt get into serious trouble. Duh. Not exactly a radical idea. But in an article published yesterday afternoon on the Financial Times website (based on a recently published academic paper), Rogoff did propose a new idea that is radical: ban cash. All of it.
There can be little doubt that Thomas Piketty's new book Capital in the 21st Century has struck a nerve globally. In fact, the Piketty phenomenon (the economic equivalent to Beatlemania) has in some ways become a bigger story than the ideas themselves. However, the book's popularity is not at all surprising when you consider that its central premise: how radical wealth redistribution will create a better society, has always had its enthusiastic champions (many of whom instigated revolts and revolutions). What is surprising, however, is that the absurd ideas contained in the book could captivate so many supposedly intelligent people.
- Snowden: 'no relationship' with Russian government (Reuters)
- Bond Surge Worldwide Drives Index Yield to One-Year Low (BBG)
- Shares flirt with record highs on ECB easing bets (Reuters)
- Goldman Shuns Bonds Pimco’s Gross Favors in ‘New Neutral’ (BBG)
- Porn may be messing with your head (Reuters)
- Dish to Become Largest Company to Accept Bitcoin (AP)
- To Make a Killing on Wall Street, Start Meditating (BBG)
- Apple to get Beats, music mogul Iovine for $3 billion (Reuters)
- Fink Says Leveraged ETFs May ‘Blow Up’ Industry (BBG)
- Yellen Concerned by Housing Slowdown She Has Scant Power to Cure (BBG)
- Because snow in Q1? Citigroup’s CFO Says Trading Revenue Could Slide 25% (BBG)
- Banks Raise Caution Flag on Trading (WSJ)
- The answer is yes: Hilsenrath asks if BOJ’s Kuroda Awakening to His Limits? (WSJ)
- Google Develops Prototype Cars for Fully Autonomous Driving (WSJ)
- Amazon Expects Lengthy Hachette Dispute (WSJ)
- Tencent $1 Billion Game Shows Global Hunt for Mobile Hits (BBG)
- Vietnam, China trade accusations after Vietnamese fishing boat sinks (Reuters)
- SEC Set to Spur Exchange Trading (WSJ)
- Bank of Japan quietly eyes stimulus exit (Reuters)
- Japan Risks Low Growth Even as Easing Spurs Inflation (BBG)
- Hello Japan: Bond Market Message to Fed: Your 4% Rate Outlook Is Too High (BBG)
- Malaysia, UK firm release satellite data on missing MH370 flight (Reuters)
- Fighting rages in eastern Ukraine city, dozens dead (Reuters)
- Bad Credit No Problem as Balance-Sheet Bombs Rally 94% (BBG)
- Draghi’s Asset-Backed Drive Rouses Academic Skeptics (BBG)
- For-Profit Colleges Face Test From State, Federal Officials (WSJ)
We don't know what is more disturbing: that the largest 50 hedge funds (in a universe of about 777) account for some $716 billion in long equity assets or more than half the total (this number does not include non-equity long positions and, don't laugh, shorts of any kind), or that as we reported over the weekend, the investment thesis creativity across the hedge fund world has completely gone down the drain (considering the most popular stocks over the past three years have been Apple, GM and Google). What we do know is that when it comes to the epic pissing contest that are hedge funds, size matters. So for all your pressing questions whose is biggest... long equity book that is... here is the answer.
On Friday we showed what the most hated (by everyone) Russell 2000 stocks are as of the most recent period (and hence most susceptible to epic short squeezes), here is a listing of what the most beloved stocks, by hedge funds, are as of March 31. One thing to note: just like in the case of first Apple, then GM, any time virtually everyone piles into the most held stock, it means just one thing - there are no marginal buyers left.
"Words speak louder than actions until words stop working then we promise some actions... or more talk about actions." That appears to be the communication method-of-choice for the world's central bankers and The Bank Of Japan's Kuroda stepped into the breach today with his own demands. As Citi's Steven Englander translates, Kuroda is telling investors not to buy JPY just because the BoJ is being very reticent on policy ease (do as we say, not as we do). However, there is an important second message which is intended to be delivered to the Japanese bureaucracy - "Mr. Kuroda also acknowledged limits to what the BOJ can do to generate long-term growth."
- The Fed can't print trade? World Trade Flows Fall in First Quarter (WSJ)
- PBOC’s Zhou Says China May Have Housing Bubble in ‘Some Cities’ (BBG)
- ECB's Weidmann - Reviving ABS market not task for central bank (Reuters)
- LOL: Fitch upgrades Greece by a notch to 'B'; outlook stable (Reuters)
- LOL x2: Spain Sovereign Debt Rating Upgraded by S&P (BBG)
- China Will Vet Tech Firms After Threatening U.S. Retaliation (BBG)
- US to claim victory over China in WTO car dispute (BBG)
- Obama urges Democrats to vote in midterms, attacks Republicans (Reuters)
- U.S. Military Pushes for More Disclosure on Drone Strikes (WSJ)