• EquityNet
    12/01/2015 - 13:57
    While a good portion of us here in the states spent last week in a collective food coma, Australian zoologist, Adam Britton, launched a crowdfunding campaign to continue research on one of Paul Hogan...

Howard Marks

Tyler Durden's picture

World's Largest Leveraged ETF Halts Orders, Citing "Liquidity Constraints"

First The Bank of Japan destroyed the Japanese bond market, and then, back in May we warned that The Bank of Japan had 'broken' the stock market. Now, it appears the all too obvious consequences of being the sole provider of buying power in an antirely false market are coming home to roost as Nomura reports the "temporary suspension" of new orders for 3 leveraged ETFs - the largest in the world - citing "liquidity of the underlying Nikkei 225 futures market."

Tyler Durden's picture

Weekend Reading: Fed Rate Failure

The current surge in deflationary pressures is not just due to the recent fall in oil prices, but rather a global epidemic of slowing economic growth. While Janet Yellen addressed this "disinflationary" wave during her post-meeting press conference, the Fed still maintains the illusion of confidence that economic growth will return shortly. Unfortunately, this has been the Fed's "Unicorn" since 2011 as annual hopes of economic recovery have failed to materialize.

Tyler Durden's picture

Frontrunning: September 10

  • Compare: S&P 500 Futures Advance After U.S. Stocks Ignored Global Rally (BBG)
  • And contrast: Global Stock Rally Grinds to a Halt (BBG)
  • And be very confused: Global Stocks Lower on U.S. Interest Rate Uncertainty (WSJ)
  • Hilsenrath: Fed Wavers on September Rate Rise (WSJ)
  • Time for more QE: Abe Adviser Says Next Month Good Opportunity for BOJ Easing (BBG)
  • Brazil downgraded to junk rating by S&P, deepening woes (Reuters)
  • Kiwi dollar tumbles after New Zealand cuts interest rates (Reuters)
Tyler Durden's picture

Mom And Pop "Will Probably Get Trampled": Alliance Bernstein Warns On Bond ETF Armageddon

"In theory, investors can exit an open-ended mutual fund or an ETF at will. But the growing popularity of these funds forces them to invest in an ever larger share of less liquid bonds. If everyone wants to exit at once, prices could fall very far, very fast. A lucky few may get out in time. Others will probably get trampled."

Tyler Durden's picture

Was Monday's ETF Collapse Just A Warmup?

During Monday's flurry of tripped circuit breakers and flash crashing mayhem, ETF investors learned the hard way that Howard Marks was precisely correct when he warned that ETFs "can't be more liquid than the underlying and we know the underlying can become highly illiquid." The question now, is whether subsequent flash crashes will trigger even more spectacular divergences between fair value and ETF unit prices on the way to proving, once and for all, that ETFs may indeed be the new financial weapons of mass destruction.

Tyler Durden's picture

New Study Exposes The "Dark Side" Of ETFs

A new academic study from researchers at Stanford, UCLA, and the Arison School of Business in Israel suggests that ETFs are contributing to a lack of liquidity for the stocks they hold. Essentially, the argument is that increased ETF ownership leads to wider bid-asks, less analyst coverage, and higher correlations with broad market moves.

Tyler Durden's picture

Howard Marks Interviewed: "There’s No Free Market Today"

"If investors want complete safety, they can't get much income, and if they aim for high income, they can't completely avoid risk. It’s much more challenging today with rates being suppressed by governments. This is one of the negative consequences of centrally administered economic decisions. People talk about the wisdom of the free market – of the invisible hand – but there’s no free market in money today. Interest rates are not natural."

Tyler Durden's picture

With Market Closed, Trading Greek ETF Is Gamble, Guessing Game

Anyone trading the Global X FTSE Greece 20 ETF should take a cue from Howard Marks and ask themselves the following question: can an ETF be more liquid than the assets it references? 

Tyler Durden's picture

The "Global Macro Investor" - An Interview With Raoul Pal

"We have a problem with this, and that is central bank hubris. They now think that they are omnipotent, because, essentially the government has said we are going to pass over all control of the economy to the central banks, they say to everybody else including financial market participants that “you don’t know, you don’t understand, we have our models and they are right”. And that kind of hubristic approach is when you sow the seeds of your own destruction."

Tyler Durden's picture

How To "Measure" Risk

While investor behavior hasn't sunk to the depths seen just before the crisis, Oaktree Capital's Howard marks warns, in many ways it has entered the zone of imprudence. "Today I feel it's important to pay more attention to loss prevention than to the pursuit of gain... Although I have no idea what could make the day of reckoning come sooner rather than later, I don’t think it’s too early to take today’s carefree market conditions into consideration. What I do know is that those conditions are creating a degree of risk for which there is no commensurate risk premium."

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How To Spot A Bubble

Although a slew of ‘experts’ say the darndest things (e.g.Bloomberg ‘Intelligence’s Carl Riccadonna: “You had equity markets benefit from QE, but eventually QE also jump-started the broader recovery.. Ultimately everyone’s benefiting.”), we can’t get rid of this one other nagging question: who needs an expert to tell them that today’s markets are riddled with bubbles, given that they are the size of obese gigantosauruses about to pump out quadruplets?

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ETF Issuers Quietly Prepare For "Market Meltdown" With Billions In Emergency Liquidity

Looking for signs that the country's largest asset management firms believe a market meltdown may be on the horizon? Look no further than Vanguard and several other large ETF providers who have set up billions in credit lines with banks to guard against the possibility that a wave of redemptions could wreak havoc on illiquid credit markets.

Capitalist Exploits's picture

This One Thing has Killed Before and It's About to Kill Again

Liquidity is plentiful when you don't care about it and scarce when you need it most

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