Prudential

Uber Is Now Valued Higher Than 80% Of The S&P: Closing In On General Motors And Ford

Putting Uber's latest valuation in perspective, according to CapIq there were just 95 companies in the S&P500 with a market cap over $50 billion, suggesting Uber which did not exist when Lehman filed for bankruptcy, now has a market capitalization greater than 80% of the S&P. Specifically, at a $50 billion valuation, Uber is more "valuable" than FedEx, Marck, Deutsche Bank, General Dynamics, Nissan, Time Warner, Yahoo, Credit Suisse, Heineken and many other companies.

Frontrunning: May 11

  • Full picture of Clinton charities' foreign government funding remains elusive (Reuters)
  • Greece Readies for Another Week of Deadlines (BBG)
  • Greece says deal will be 'difficult' at Eurogroup meeting (Reuters)
  • Saudi Arabia’s Rulers Snub Arab Summit, Clouding U.S. Bid for Iran Deal (WSJ)
  • Saudi Aramco Said to Plan Spending $80 Billion Overseas (BBG)
  • The $900 Billion Influx That’s Wreaking Havoc in U.S. Bills (BBG)
  • Cameron rules out another Scottish independence vote (Reuters)
  • Banks Prep Defense for Anti-Wall Street Campaigns (WSJ)

Volatility Is The Square Root Of Time & Fat Tails

The trio of macro-prudential policy, the onset and evolution of shadow banking, and the nebulous concept of financial stability may have become a toxic cocktail which can be instrumental in moving forward the Federal Reserve’s timeline for lift-off zero bound rates.  The intuition here is stooped in concepts of volatility and how market structure evolution may contribute or detract from asset volatility. Volatility is the square root of time. Financial repression times time equals volatility. Financial repression and/or macro-prudential policy times time equals the inverse of financial stability. Financial stability inverted equals volatility squared.

Bank Of England Exposes US Cronyism: Questions Why Buffett's Berkshire Hathaway Is Not Too Big To Fail

If you thought currency-wars were a problem, just wait until crony-wars begin. In a stunning show of disagreement among the omnipotent, The FT reports that a Freedom of Information Act request has confirmed The Bank of England wrote to US authorities seeking clarity about Berkshire’s absence from a provisional list of "systemically import" (Too Big To Fail) financial institutions (SIFIs). The US Treasury declined to comment...

This Is What Happens When The US Treasury Market Is Taken Hostage By "Malfunctioning Algos"

"In some instances, malfunctioning algorithms have interfered with market functioning, inundating trading venues with message traffic or creating sharp, short-lived spikes in prices as a result of other algorithms responding to the initial erroneous order flow."... "If liquidity is as bad as it is now, what’s going to happen when things really get adverse?” said Richard Schlanger, who co-manages about $30 billion in bonds as vice president at Pioneer Investments in Boston.

Stocks And The Fundamental Backdrop: The New Strategy Is "Hope"

When Will Bad News Cease to be Good News for Stocks? It is quite amazing to watch this. Even as one economic datum after another indicates that a major slowdown is underway that could well turn into a recession (keep in mind that this is not a certainty – at similar junctures in recent years, aggregate economic data recovered just in the nick of time), the US stock market continues to take everything in stride. The longevity, intensity and persistence of a bubble is per se not proof that it will inevitably continue – it is only an indication of the likely amount of pain the market will eventually dispense.

Frontrunning: April 3

  • Iranians celebrate, Obama hails 'historic' nuclear framework (Reuters)
  • Iran Nuclear Accord Hailed as Landmark After Marathon Talks (BBG)
  • Two New York City women accused of planning 'terrorist attack' (Reuters)
  • Cyprus Lifts Capital Controls Two Years After Deposits Bail-In (BBG)
  • Jury Hits Chrysler With $150 Million Penalty in Boy’s Death (WSJ)
  • Greece says ready to make IMF payment on April 9 (Reuters)
  • Germanwings Co-Pilot Set Plane to Go Faster Before Crash (BBG)
  • IBM hire advisers to deal with restless investors - sources (Reuters)

Mortgage Regulation Australian Style

It's a total shock that maniacs who borrow nearly 100% on interest only terms to lose rental money to speculate on housing capital gains would love low interest rates. And with the lowest mortgage rates in Australian history, coinciding with the sloppiest lending standards in Australian history, combining with the highest property prices in Australian history, added to the highest household debt to income ratio in Australian history, what would you expect the biggest idiot of a treasurer in Australian history to do?

The Great Immoderation: How The Fed Has Sown The Seeds Of The Next Recession

There was a point in 2010 when American capitalism might have had an opportunity to heal itself and commence on a long march toward sustainable growth and real wealth gains. But the monetary politburo would have none of it - keeping the pedal to the metal until this very moment... and the rest is history. The Fed and the other central banks around the world have fomented a new and even more virulent and dangerous financial bubble.

Frontrunning: March 11

  • Fed Likely to Remove ‘Patient’ Barrier for Rate Increase as Soon as June (Hilsenrath) - which year?
  • Clinton says used personal email account for convenience (Reuters)
  • Euro sinks to 12-year lows as yield gap grows (Reuters)
  • Get Ready for Oil Deals: Shale Is Going on Sale (BBG)
  • EIA raises 2015 US oil production forecast, cuts 2016 outlook (Reuters)
  • How Falling Oil Prices Are Hindering Iraq’s Ability to Fight Islamic State (WSJ)
  • China economic data weaker than expected, fuels policy easing bets (Reuters)
  • ECB ‘Chasing Own Tail’ as Bond Rates Turn Negative, SocGen Says (BBG)
  • Swiss makers quietly gear up with smartwatches of their own (Reuters)

Can Brain Scans Predict The Market?

It’s one thing to predict one person’s shopping or investment decisions. But can brain scans be used to forecast the entire market? Neuroeconomist Paul Glimcher says, “If we had access to that data, when people pick stocks, can these models predict macro-level changes in stock prices from individual-level models of angels picking stocks? There’s reason to believe it might work.” Already, neuromarketing consultancies advise large companies like Google and PepsiCo on which products will do well, and how to position them in the marketplace. Maybe one day there will be boutique equity research consultancies that scan the brains of focus group participants as they answer questions about individual securities, and investors could incorporate these neural inputs as they mull whether to buy or sell a security. 

Frontrunning: March 10

  • Dollar at 12-year peak versus euro, emerging markets spooked (Reuters)
  • CIA sought to hack Apple iPhones from earliest days (Reuters)
  • Draghi Urged Greece to Allow Troika Back Before It’s Late (BBG)
  • Brent crude dips below $58 on strong dollar and supply (Reuters)
  • Credit Suisse replaces CEO Dougan with Prudential's Thiam (Reuters)
  • More "distressed" energy M&A: Verisk buys Wood Mackenzie for £1.85bn (FT)
  • Prepare for a surge in defaults: Investors Are Buying Stocks and Bonds From Energy Producers Amid Oil Price Drop (WSJ)
  • Private equity executive ordered to pay £72m to ex-wife (FT)
  • Democratic donors unfazed by Hillary Clinton's use of private email (Reuters)
  • Expensive Hepatitis C Medications Drive Prescription-Drug Spending (WSJ)
  • 'ISIS Hackers' Almost Certainly Not ISIS Hackers (NBC)