Derisking

Spot The "Outlier" Who Bought Stocks In Q2

The slow motion LBO of the market by the market continues, as more debt is issued fund stock buybacks and push stocks briefly, and artificially, higher, even as corporations lever themselves up to all time highs now that the even the merest risk of rising rates has been buried for years to come.

Hedge Funds No Longer Have Any Idea How To Trade This Market

While we sarcastically pointed out back in 2013 that with the Fed (and now every other central bank) as the market's Chief Risk Officer, there is no longer a need for anyone to do fundamental analysis, this has not only come true but the outcome is now is far worse. Because it confirms what we have said all along: not only is there no market left aside from what Central Banks decide will happen to "risk assets" on any given day, but the smart money- both hedge and mutual funds - have now completely lost the plot.

After Three Years, This Remains The Best Trading Strategy

One strategy that has worked unusually well for the last several years is a simple positioning trade of selling the 10 most overweight stocks and buying the 10 most underweight stocks by active managers. This single trade has yielded over 16ppt of alpha year-to-date

What The Biggest Hedge Funds Did In Q1: The Full 13-F Summary

While far less attention is being paid to hedge fund 13F filings, which show a stale representation of equity long stakes among the hedge fund community as of 45 days prior, than in years gone by as a result of increasingly poor performance by the 2 and 20 crowd, they still remain closely watched source of investment ideas but mostly to find out what the new cluster ideas and hedge fund hotel stocks are at any given moment. Here are the highlights from the latest round of 13F filings.

"The Bankers Have Gone Through This Before. They Know How It Ends, And It’s Not Pretty"

Oil companies have sold $61.5 billion in stocks and bonds since January as oil prices have tumbled. However, the fees geneated are a tiny fraction of the bank's real exposure to the energy sector, at over $150 billion. So have the banks learned their lesson?  "The bankers have gone through this before,” says Oscar Gruss’s Meyer. “They know how it works out in the end, and it’s not pretty." Then again, perhaps banks are just sailing on an ocean of liquidity allowing them to postpone the day of Mark to Market reckoning, especially since this time, everyone is in it together....

Peak Japaganda: Advisers Call For More QE (But Admit Failure Of QE); China's Yuan Hits 3-Week High

Asian markets are bouncing modestly off a weak US session, buoyed by more unbelievable propaganda from Japan. Abe's proclamations that "deflationary mindset" has been shrugged off was met with calls for more stimulus, more debt monetization, and an admission by Etsuro Honda (Abe's closest adviser) that Japan "is not growing positively" and more QE is required despite trillions of Yen in money-printing having failed miserably, warning that raising taxes to pay for extra budget "would be suicidal." Japanese data was a disaster with factory output unexpectedly dropping 0.5% and retail trade missing. Markets are relatively stable at the open as China margin debt drop sto a 9-month low. PBOC strengthened the Yuan fix for the 3rd day in a row to its strongest in 3 weeks.