DIC 14 15 SIT EC y POL
ZERO HEDGE
TODAY THE BIG SPECULATORS
CRUZADE:
1-
This
Is How The Credit Crisis Spreads To Stocks. Submitted by Tyler
Durden on 12/14/2015
"Yeah but it's junk credit... who cares! I am
invested in solid megacaps and even solider FANGs - what can go wrong?" Well,
this... www.zerohedge
Extracts:
The
biggest buyer of stocks in 2016, will be, according to Goldman Sachs, the
same as it was in 2015 - corporate management teams buying back their own
stock in near record quantities. But there is a problem with this thesis...
the cost of funding these epic buybacks is surging, making the un-economic
actions of the CFO (if very economical for their own bank accounts as they sell
record
amounts of their own personal stock to their company) even more
irrational.
Here is Goldman's David Kostin explaining who the biggest buyer
of stocks is (and will be) - as a reminder, it's not "mom(o) and
pop".
We expect corporations will
continue to be the largest source of demand for stocks, with net purchases by
US companies totaling $450 billion, equal to about 2% of public equity cap. We
forecast equity inflows from equity-related ETFs ($225 billion), equity mutual
funds ($200 billion), life insurance ($50 billion), and foreign investors ($25
billion). We forecast net outflows from households ($25 billion) and pensions
($150 billion).
Well, the cost of funding that carnival of financial
engineering and artifice (just ask Nordstrom, Macy's, IBM and so on) is soaring,
as high-yield decompression pukes over into investment grade markets,
spiking the cost of funding and crushing the 'economic feasibility' of
debt-funded shareholder-friendliness:
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2-
"Nobody
Could Have Possibly Seen This Coming". Submitted by Tyler
Durden on 12/14/2015
‘Because when your year-end bonus depends on you not
seeing it coming, you don't.’ www.zerohedge
Extracts:
We have been watching the market's "sudden panic"
about the implosion in the junk bond space with bemused detachment because, for
the better part of the past year, we have been warning that this is about to
take place. Here is a modest sample of articles from the past year commenting
on the dangers from junk:
..
- Junk Bonds Are Going To Tell Us Where The Stock Market Is Heading In 2015
- Add Junk Bonds To The Growing Pile Of Concerns
- This Alarming Indicator Is Back At A Level Last Seen 10 Days Before The Bear Stearns Collapse
- Junk Bonds "Even More Dangerous" Than Stocks, Icahn Says
- "This Will End Badly" High Yield Bonds Tumble To Worst Since 2011
- High Yield Credit Risk Explodes To Its Highest Since June 2013
- 4 Telltale Signs The Credit Cycle Is Turning Now
- The Complete Guide To ETF Phantom Liquidity
- How Fund Managers Use ETF Phantom Liquidity To Avert A Meltdown
- What Would Happen If ETF Holders Sold All At Once? Howard Marks Explains
- ETF Issuers Quietly Prepare For "Market Meltdown" With Billions In Emergency Liquidity
- Wall Street Sees Junk Bond Collapse, Prepares to Profit from it
- This Is When Junk Bonds Go Kaboom!
And so on.
However, in all honesty the warnings were there for those
who cared long ago and not just on this website. Back in July, the
WSJ wrote:
“They are going to be toast,” David
Tawil, president of hedge fund Maglan Capital LP, said of the funds holding
hard-to-sell assets like emerging-market debt and small-capitalization stocks. “It
will be one of our first levels of shorting the moment we start to see cracks,
because it’s ripe with retail, emotional investors.”
[…]
Finally, ETFs:
"ETFs are another form of financial engineering that
have grown rapidly over the past decade or so – from a small base in the early
2000s to more than US$2 trillion today. Equity funds still comprise the
majority of ETFs. But the share of fixed income ETFs, in which the
underlying assets are much less liquid, has grown substantially – in Europe,
from around 5% in the early 2000s to around 25% today” “In times of stress
not only can their liquidity characteristics revert back to that of their
underlying assets, they can also trade at a discount to the value of these
assets. We saw some of this effect in the market turmoil last summer. We
need to understand better why these effects happened and the circumstances in
which they could reoccur"
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3-
Martin
Armstrong Slams "Myopic" Policymakers' Ignorance That Lower Rates
Fuel Deflation. Submitted by Tyler
Durden on 12/14/2015
..
“Those in power
never understand markets. They are very myopic in their view of the world.
The assumption that lowering interest rates will “stimulate” the economy
has NEVER worked, not even once. Nevertheless, they assume
they can manipulate society in the Marxist-Keynesian ideal world, but what if
they are wrong?” www.zerohedge
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4-
MAGICIANS WILL SAVE THE WORLD by PLAYING
WITH DATA:
These
Are Deutsche Bank's Two Top Trades After A Fed Rate Hike. S- by Tyler Durden on 12/14/2015
"either the
Fed achieves its goals quickly to a very low terminal Funds rate. Buy bonds.
Or they need to be even more aggressive. Buy even longer duration bonds. The
choice is more about where to put the long leg of the curve flattener not about
whether to steepen or flatten the curve." www.zerohedge
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5-
HERE ONE TRUTH ABOUT SPECULATORS
Prominent
Tennessee Senator Fails To Disclose Millions In Hedge Fund, Real Estate
Investments. Submitted by Tyler
Durden on 12/14/2015
“Tennessee Senator
Bob Corker may have forgotten to disclose a few things. Like millions in hedge
fund investments. And millions in real estate investments. And millions in
"other" investments. He's "extremely disappointed" in
someone, although it wasn't immediately clear if it was himself.” www.zerohedge
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6-
ONE MORE TRUTH
Did
Goldman Just Do It Again? Submitted
by Tyler Durden on 12/14/2015
Here is one simple explanation of what Goldman suggests
you do:
Here is another: buy everything that Goldman has to sell.
Confused: see Abacus.
h/t @insidegame
..
LAST
ONES FROM ISIS’ SPECULATORS:
..
Junk
Contagion Spreads: Investment Grade Bonds Plunge To 2-Year Lows, Treasury
Liquidity Collapses, CLOs Next. “The
price declines are alarming and worrying," according to Rishad Ahluwalia,
JPMorgan’s head of global CLO research.
…
YELLEN ANSWER :
Janet
Yellen's "Junk Bonds Are Contained" Moment : “Taking into account
a broad range of metrics that bear on financial stability, our overall
assessment at this point is that threats are moderate." http://www.zerohedge.com/news/2015-12-14/janet-yellens-junk-bonds-are-contained-moment
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Ron
Paul: "If You Want Security, Pursue Liberty". Submitted by Tyler
Durden on 12/14/2015
Judging by his
prime-time speech last week, the final year of Barack Obama’s presidency
will be marked by increased militarism abroad and authoritarianism at home.
The centerpiece of the president’s speech was his demand for a new law
forbidding anyone on the federal government’s terrorist watch list from
purchasing a firearm. There has never been a mass shooter who was on
the terrorist watch list, so this proposal will not increase security. However,
it will decrease liberty.
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Cornering
Russia - Risking World War III. Submitted by Tyler
Durden on 12/14/2015
Official Washington is awash with tough talk about Russia
and the need to punish President Putin for his role in Ukraine and Syria. But
this bravado ignores Russia’s genuine national interests, its “red lines,” and
the risk that “tough-guy-ism” can lead to nuclear war. In short, Russia
is being offered only the binary choice: to acquiesce to the “benevolent”
hegemon, or to prepare for war.
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Another
High Yield Domino Falls As $900 Million Lucidus Capital Liquidates. Submitted
by Tyler Durden
on 12/14/2015
..
[ Big speculators are falling down .. Lucidus was working in
Brazil, among other countries in ruins]
..
Moments ago, a third domino fell as Lucidus Capital
Partners, a high-yield credit fund founded in 2009 by former employees of Bruce
Kovner’s Caxton Associates, has liquidated its entire portfolio and plans to
return its $900 million in AUM.
.. See this one:
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Submitted by Tyler Durden on 12/14/2015 - 08:02
- Oil prices drop towards 11-year lows on worsening glut (Reuters)
- Third Avenue Seen by Top Investors as Fueling More Carnage (BBG)
- Lucidus Has Liquidated $900 Million Credit Funds, Plans to Shut (BBG)
- Investor nerves tested with yuan, oil, Fed in play (Reuters)
- Junk Bonds Stagger as Funds Flee (WSJ)
- Seattle lawmakers set to vote on allowing Uber, other drivers to unionize (Reuters)
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Why
Stocks Have So Far Ignored The Carnage In Credit: Goldman's Five Reasons. Submitted by Tyler
Durden on 12/14/2015
Despite the decline in stock valuations, US equities have
performed far better than credit, causing investors to ask us, “What does
the credit market see that the equity market does not?” Credit markets are
reacting to a real deterioration in corporate balance sheets that the equity
market has yet to digest. High yield (HY) credit spreads have widened
dramatically since June and are currently in territory typical of recessionary
environments. In contrast, the S&P 500 is just 6% below its all time high
of 2131 reached in May of this year. Here are five observations...
,,,
Here are Goldman's
five proposed answers:
1. Credit is sending another false recession signal.
While credit spreads at current levels gave advance warning of recession in
1990 and 2001, our credit strategists note that spreads in 2008 didn’t reach
current levels until the recession, and in 2011 were a false signal. Most
economic data suggest current recession risk is low and we expect credit
spreads will tighten in 2016. See Global Credit Outlook 2016.
2. Liquidity is one reason for the sell-off in credit
that is not an issue for stocks. Liquidity in the corporate credit market
has been a widespread concern during the past two years and grabbed headlines
again today. In contrast, liquidity in the equity market remains robust, with
trading turnover higher YTD than during the first 11 months of 2014.
3. The narrow mega-cap equity market leadership has
exaggerated the difference between YTD performance of equity and credit. The
top few contributors to S&P 500 YTD return have pushed our breadth index to
nearly the lowest level in its 30-year history. While the S&P 500 total
return YTD is 0%, the median stock has returned -2%, and the HY index has
returned -6%.
4. The HY market’s large weight in Energy and
commodity-exposed industries is a major driver of weak credit returns. At
the start of the year, Energy and Materials firms accounted for 12% of S&P
500 market cap but roughly 25% of the HY credit market, as measured by the BAML
High Yield Master II Index. If the S&P 500 shared the same sector
composition as the HY index, it would have returned -3% YTD rather than its
actual 0%.
One of the biggest disconnects in the market in recent years
has been the unprecedented divergence, shown below, between stocks and
(initially) junk bonds, although the weakness is spreading across all fixed
income verticals.
“What does the credit market see that the equity market
does not?” Goldman also adds that "high yield credit spreads have
widened dramatically since June and are currently in territory typical of
recessionary environments." Which makes sense: after all at least half the
US economy, that which relies on industrial production and manufacturing is in
a recession:
Finally:
..
5. Credit markets are reacting to a real deterioration in
corporate balance sheets that the equity market has yet to digest. Ex-Financials,
the median S&P 500 firm’s net debt/EBITDA is at the highest level in more
than a decade, rising from 0.8 in 2010 to 1.0 at the start of 2015 to 1.3
today.
So after building up a strawman in 4 points why credit is
wrong, Goldman finally admits that it is credit that is always ahead of the
game and stocks either get a central bank bailout or are whacked on the head
with the usual several month delay in which they take the elevator down and
after the fact complain how "nobody could have possibly foreseen
this."
Needless to say,
with every incremental hedge fund liquidation and gating, the elevator ride
gets closer.
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The
Neocon's Hegemonic Goal Is Driving The World To Extinction. by
Paul Craig Roberts, S- by Tyler
Durden on 12/13/2015
As in George Orwell’s 1984, the IMF is dividing the world
into warring factions - the West vs. the BRICS. To avoid the coming
conflict that the neoconservatives’ pursuit of American hegemony is bringing,
the Russians have relied on fact-based, truth-based diplomacy. However,
neocon Washington relies on lies and propaganda and has many more and much
louder voices. Consequently, it is Washington’s lies, not Russia’s truth,
that most of the Western sheeple believe. The Western peoples are so
dimwitted that they have not yet understood that the “war on terror” is, in
fact, a war to create terror that can be exported to Muslim areas of Russia and
China in order to destabilize the two countries that serve as a check on
Washington’s unilateral, hegemonic power.
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INFORMATION CLEARING HOUSE
A Special Relationship. The United States Is
Teaming Up With Al Qaeda, Again. By Andrew Cockburn
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Turkey Smuggled Sarin Gas to Terrorists in
Syria. By Stephen Lendman
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Erdogan’s Strikes in the Dark and Russia’s
Thousand Stings. By Prof. Anthony F. Shaker. This is the
same addle-brained balkanization scheme that Bush and his Neocon gang (re:
Israel lobby) revived on the pretext of 9-11
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World
Leaders Signed a 'Death Warrant for the Planet' at COP21. By Marion Deschamps
and Cyril Mychalejko. “The Paris Agreement will be known as the
Polluters' Great Escape since it weakens rules on the rich countries"
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Capitalism’s
Cult of Human Sacrifice. By Chris Hedges. Those
who worship before the idols of profit will use every tool at their disposal,
including violence, to crush us.
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A Holiday
Note to Congress: . Half of Your Country is In or Near Poverty. By Paul Buchheit. Over half of Americans make less than $30,000 per
year.
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National
Health Singers - 'YOURS'. VIDEO. We believe
that every person has the right to NHS healthcare free at point of access and
that right should never, ever be threatened
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GLOBAL RESEARCH
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NEWS IN SPANISH
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ALC. Sopesando las herencias progresistas
y la renovación de las izquierdas. Eduardo
Gudynas
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Ecologia. El acuerdo de París: una farsa en la
lucha contra el cambio climático. Amigos de la Tierra
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Guatemala.
La dimensión de la tragedia
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PRESS TV
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