Valeant Crashes On News Of Criminal Probe

The stock of infamous pharma rollup Valeant peaked almost exactly one year ago. Since then it has been one relentless, first slow then precipitous drop, which wiped out more than 90% of the company's market cap, forced the CEO to resign, led to various Congressional hearings and civil lawsuits after it became a symbol of all that is wrong with corporate America, and brought the company to the verge of a technical default. That was the good news: Now the bad - Valeant is now under criminal investigation.

Frontrunning: August 10

  • World stocks hit one-year peak, dollar sags on weak U.S. data (Reuters)
  • Trump's remarks on gun rights, Clinton unleash torrent of criticism (Reuters)
  • Newly Released Emails Highlight Clinton Foundation’s Ties to State Department (WSJ)
  • One-in-five U.S. Republicans want Trump to drop out: Reuters/Ipsos poll (Reuters)
  • Soaring Debt Has U.S. Companies as Vulnerable to Default as 2008 (BBG)
  • BOJ to defend QQE in Sept policy assessment (Reuters)

US Futures Flat; Bonds Rise, Dollar And Oil Slide Over US Productivity Collapse Fears

Following yesterday's muted action which saw the S&P500 close unchanged, it has been more of the same listless trading overnight, with US equity index futures little changed as the Nikkei fell on the back of a stronger Yen, while government bonds rose and European stocks reversed early gains following the BOE failed bond monetization operation. Crude oil dropped for a second day after Saudi Arabia told OPEC that it pumped a record 10.67 million barrels of oil a day,

Chinese Bond Yields Tumble To 2009 Lows As Spooked Investors Rush Out Of Potential Defaults

The biggest (unspoken of) bubble in the world, just got bubblier. Following the lowest 10Y China government bond auction yield since records began in 2004, a surge of foreign inflows (seeking yield) combined with domestic flight-to-safety from the increasingly default-ridden corporate bond sector has sent China's government bond yields to 2009 lows.

James Grant: Negative Interest Rates Will End... Badly

“Radical monetary policy begets more radical policy... It seems to me, at some point, markets or voters will put a stop to this.” If and when that time comes, Grant notes that investors will be looking for physical stores of wealth, explaining "the case for gold is not as a hedge against monetary disorder, because we have monetary disorder, but rather an investment in monetary disorder."

Frontrunning: August 9

  • Search for yield drives stocks higher, pound falls vs dollar (Reuters)
  • China's slowing wholesale deflation takes pressure off central bank (Reuters)
  • Rajan Holds India Rates in Final Move as Inflation Quickens (BBG)
  • Brent above $45 on U.S. inventories, producer action speculation (Reuters)
  • Republican national security experts: Trump would be 'dangerous' president (Reuters)

Why A Special Circle Of Student Loan Hell Is Reserved For College Dropouts

Just in case it wasn't already bad enough to be a recent Millennial college graduate in the US with tens of thousands in student debt, it turns out there is a special circle in student loan hell reserved for those who never manage to graduate. Because as Bloomberg reports, when it comes to collecting on student loans, the U.S. Department of Education treats college dropouts the same as Ivy League graduates: They just want the money back.

Prospect Capital: The Enemy Within

John F. Barry III, the founder, chairman and chief executive of Prospect Capital, a Manhattan-based business development company, can't seem to get any respect.

Buffett Exits Entire Credit Default Swap Exposure, As Citi's Appetite For Derivative Destruction Surges

It was considered one of the bigger paradoxes for years. Back in 2003, Warren Buffett famously dubbed derivatives “financial weapons of mass destruction” and yet over the next several years went ahead and entered a number of the contracts, including both equities and credit, ostensibly by selling CDS to collect up monthly premiums. However, at least when it comes to CDS, after several years of Berkshire trimming its credit derivative exposure, it is now completely out. Meanwhile, Citi is loading up on any CDS it can find...

Saving The System: Exposing The 4 Fallacies Of Modern Monetary Policy

Monetary policy, we are told, is all about staving off recession and stimulating economic growth. However, not only is monetary debasement in any form counterproductive and destroys the personal wealth of the masses, but the economists who devised today’s monetarism have completely lost their way. The real reason for today’s global monetary policies is an ultimately futile attempt to prevent a systemic and economic crisis.