Why Crispin Odey's $11 Billion Fund Has 5% Daily Swings: "It's No Longer A Market But A Battlefield"Submitted by Tyler Durden on 03/23/2016 18:42 -0400
"By mid-March the fund was rising and falling by over 5% per day. At which point this was no longer an investment market but a battlefield. On the day that Draghi came out with his massive market support operation, the stock markets rose 2.5% and then closed down 1.5% on their lows. Imagine how painful it was to see the markets bounce the next day and celebrate his success. At that point I reduced the short book by a third and the long book by 10%."
Sadly, nations get the leadership they deserve. Turning a blind eye to reality is not a sustainable "solution." Leaders faced with unrest, rising demands and dwindling coffers always debauch their currency as the politically expedient "solution."
Slowly but surely Canadian oil and gas failures are starting to become a daily reality; failures such as that of Canadian junior oil and gas producer Terra Energy Corp which yesterday said it shut down production, ceased operations and announced the resignation of directors and officers on Monday, after its lender, Canadian Western Bank, demanded full repayment of its debt.
The market reaction from last week’s dovish FOMC statement took many by surprise, including BofAML's HY Strategy team, but as they say the High-Yield Emperor has no clothes, warning that the underlying commentary provided by Chair Yellen shows the vulnerability for high yield issuers to longer-term growth trends. Couple the deteriorating fundamentals for HY issuers with downgrades outpacing upgrades by a ratio of 3.5:1 and a worsening of global growth potential, and they believe the recent rally, though boosted by strong inflows and cash generation, will ultimately fade.
"Pfandbriefe", or "It Wasn't Me!": Why Nobody Realizes That Germany Is the Biggest Systemic Risk in the EUSubmitted by Reggie Middleton on 03/22/2016 06:41 -0400
Again, if it smells like a crash, walks like a crash and looks like a crash, why believe anybody who says it's not a crash?
It’s actually pretty easy. At an apt moment very soon, Trump should offer Governor Kasich the VP slot and Senator Cruz the vacant Supreme Court seat. Such a grand bargain would not only clear the primary field and quash any backroom hijacking of the nomination by the Washington GOP establishment; it would also permit each man to play his highest and best role at this great inflection point in the nation’s history.
Valeant "Kitchen Sink": CEO Out, Ackman In, Throws Ex-Goldman CFO Under The Bus, Warns Of Potential DefaultSubmitted by Tyler Durden on 03/21/2016 09:31 -0400
Pearson is out; Ackman is in... accounting mis-statements (balmed ojn improper conduct of CFO) resulting in worse than expected results... and no confirmation on the waivers from lenders... warning of possible default.
PBoC governor Zhou Xiaochuan is worried. The amount of debt accumulated by the country's corporate sector is "too much" and poses a "macroeconomic risk." Compounding the problem: the very same corporate sector has more than a half-trillion dollars in unpaid receivables on its books.
Negative interest rates are a tax! Not a traditional tax paid to the government, but an expense paid, on savings. Years of policy designed to encourage spending and discourage savings is likely reaching the end game; the point where those exhibiting prudence must be punished to keep the game going. At some point, and likely soon, central bankers will be forced to realize the efficacy of lowering interest rates is vanishing and is hindering achievement of their goals. When this occurs a paradigm shift in the way monetary policy is conducted will likely occur. Investors that understand this dynamic, and what it portends, will be in a much better position to protect and profit from the asset price adjustments that lie ahead.
In the same way that FDR had an existential political interest in generating inflation and preventing volatility in the US labor market, so does the US Executive branch today (regardless of what party holds the office) have an existential political interest in generating inflation and preventing volatility in the US capital markets. Transforming Wall Street into a political utility was an afterthought for FDR; today the relative importance of the labor markets and capital markets have completely switched positions. Today, the quote would be "markets are too important to be left to investors."
“Statistics can be used to say anything.” Numbers don’t lie – people do.
"On March 1st I came into the office to find out that they had started the layoffs. These people were fairly new and were in departments that the executive staff has now deemed unnecessary. I worked in subprime auto during the Financial Crisis and it feels much worse right now than it did there in 2007 or 2008."
Spain and Catalonia are locked in a hilarious staring contest over the latter's unpaid bank debt which Barcelona has essentially demanded that Madrid pay. If Spain says no, Catalonia may well just default, a move that would send yields on SPGB's through the roof. Of course if Spain does pay, Madrid is effectively subsidizing Barcelona's independence bid.
Well, Venezuela is out of elecricity - again. The Guri Dam, which provides some two thirds of the country's power, is at "critical levels." Thankfully, Nicolas Maduro has prepared some "measures."
Suddenly, what was until incomprehensible - a Valeant default - appears all too likely: under its loan agreements, Valeant has until March 30 to file audited financial reports. If it fails to do so, it then has 30 days before lenders can demand accelerated repayment. Needless to say, Valeant would be unable to fund such a loan acceleration without rapidly selling off key assets in a liquidation firesale, although there even exist limits on just how many assets Valeant can sell.