Submitted by Tyler Durden on 01/21/2016 - 20:00
Despite the collapse in Chinese stocks, Bloomberg reports annual sales of Chinese equity-linked structured notes across AsiaPac rose to a record (prompting Korea's financial regulator to warn investors in August that their holdings had become too concentrated in notes tied to the China H-Shares index). When banks sell the structured products to investors, they take on an exposure that's similar to purchasing a put option on the index... which needs to be hedged via index futures; and if BofAML is right, Chinese stocks in Hong Kong are poised for a fresh wave of selling now that HSCEI has crossed 8,000 as banks are forced to hedge.
Submitted by Tyler Durden on 01/21/2016 - 21:45 It's official. More than 50% of the "wealth" effect created from the 2011 lows to the 2015 highs has been destroyed (despite the world's central banks going into money-printing overdrive over that period). Almost $17 trillion of equity market capitalization has evaporated in just over 6 months with over 40 global stock indices in bear markets...
Submitted by Tyler Durden on 01/21/2016 - 19:55 "At this point we think that the negative feedback loop between market performance, volatility and the real economy (wealth effect) is becoming a significant risk for the S&P 500... as some assets are near the top and others near the bottom of their historical ranges, we are obviously not experiencing an asset bubble of all risky assets, but rather a bubble in relative performance: we call it a Macro-Momentum bubble."
Submitted by Tyler Durden on 01/21/2016 - 19:43 "dip buying is officially dead and stocks (esp. US ones) are no longer impressed by promises of central bank largess. The reason the SPX has only witnessed insipid rally attempts during this weeks-long swoon is the absence of robust dip-buying."
Submitted by Tyler Durden on 01/21/2016 - 21:20 It is important to note that these are glacial processes and we aren't predicting this to happen on any particular schedule, but markets in 2016 have returned to a sense of fear and we just want to remind readers that there is a lot of space between 1870 and 1100 in the S&P 500.
Submitted by Tyler Durden on 01/21/2016 - 20:55
Submitted by Tyler Durden on 01/21/2016 - 19:30 Japan has pioneered the absurd in orthodox economics, but we mustn’t think we are all that far away from the same. What planet are we living on? It is, at least, truly the death of money both as an economic tool and even the living, historical concept. Again, if we think that only something for or from Japan, ask yourself what a Yellen might do if 2016 turns out the way it is shaping up. Our future is continuously bleak as central bankers cling with religious devotion to increasingly absurd redistribution schemes, or to fix the error – them.
Submitted by Tyler Durden on 01/21/2016 - 20:30 "I find the whole thing astonishing and what’s remarkable is the amount of anger whether it’s on the Republican side or the Democratic side..."
Submitted by Tyler Durden on 01/21/2016 - 19:00 We have seen this pattern before, and it did not end well. While the most mainstream indications of China's "stability" are droned on about as indicating some level of control (i.e. Yuan volatility suppression), the fact is that no matter how hard China tries to centrally plan the entire world, segments of the credit market are screaming "uncontained."
Submitted by Tyler Durden on 01/21/2016 - 18:30 It may not be as sexy as gold and silver, but sometimes even doctor copper needs a little squeeze and corner love as well, and according to Bloomberg, that is precisely what someone is trying to do. One company whose identity is unknown, is "hoarding as much as half the copper available in warehouses tracked by the London Metal Exchange."
Submitted by Tyler Durden on 01/21/2016 - 18:30 While the New York Times ridiculed Sarah Palin’s speech endorsing Donald Trump yesterday as “mystifying,” a big portion of it was a non-mysterious, coherent attack on big money politics.
"Most Of Us Ended Up At Office Depot": Thousands Of Angry Students "Flood" Government With Demands For Debt ReliefSubmitted by Tyler Durden on 01/21/2016 - 18:05 "In the past six months, more than 7,500 borrowers owing $164 million have applied to have their student debt expunged under an obscure federal law that had been applied only in three instances before last year," WSJ wrote on Wednesday. Imagine the shock when the US public suddenly realizes that bailing out jobless students isn't compatible with the "robust" labor market rhetoric.
Submitted by Tyler Durden on 01/21/2016 - 17:15 Is the economy “nowhere near recession?” Maybe. Maybe not. But the charts above look extremely similar to where we were at this point in late 2007 and early 2008. Could this time be “different?” Sure. But historically speaking, it never has been.
Submitted by Tyler Durden on 01/21/2016 - 17:06 The economic emergency decree and any measures that the government could take at this point may be too late. After two years of inaction and the recent decline in oil prices, a credit event in 2016 is becoming increasingly difficult to avoid, in our view. After two years of inaction, with depleting external assets and the recent decline in oil prices, a credit event in 2016 may be becoming hard to avoid, in our view.
Soros Reveals He Is Short The S&P 500: Warns China Will Have A Hard-Landing, Says "Fed Hike Was A Mistake"Submitted by Tyler Durden on 01/21/2016 - 16:36 There’s been no shortage of commentary from market heavyweights this week thanks to the World Economic Forum in Davos, but for anyone who hasn’t yet gotten their fill of billionaire talking heads, George Soros gave a sweeping interview to Bloomberg TV on Thursday, touching on everything from China to Fed policy to Vladimir Putin to Europe’s worsening refugee crisis. The most important point - for markets anyway - came when Soros revealed that he is short the S&P, and long TSYs.
Submitted by Tyler Durden on 01/21/2016 - 14:13 A week ago we warned of some insane movements and mysterious bid in OIL (the Barclays iPath oil tracking ETN) as it traded a stunning 36% rich to its underlying NAV. Well with oil resurgent today, as contracts roll, something just imploded in OIL...
Due to the efforts of thousands in a grassroots campaign, as well as the actions of Senator Maria Sachs and Representative Vasilinda who started a campaign 3 years ago, 3 GMO labeling bills are being put forth in Florida – Senate bills SB 1700 and SB 1708, and House bill HB 1369.
Polls report that ‘9 of 10’ people in the U.S. want to know what’s in their food, while 64 other countries already require GMO labeling. Yet we’re still struggling to achieve the right to know exactly what we’re consuming. With the DARK ACT and TTIP threatening food security and transparency, biotech giants like Monsanto and others in the biotech industry have been trying to keep everyone clueless about what’s in the food.
I am impressed, you answered very promptly even on a busy day; Thank you for the note and the consideration of timing on my sign up. I appreciate both! I’m also already pleased with the value of your service. – Comments from two subscribers to the Short Seller’s Journal
The S&P 500/Dow have started to sell-off relentlessly since the beginning of the year. This morning’s excuse was IBM and, once again, China. I guess Obama’s “America is exceptional” speech infected the brains of more people than I thought. The sell-off in the stock market surely can’t be attributable in any small way to the fact that the U.S. stock market never been more overvalued in its history. Not only is it trading at record valuation levels, the “value” of the stock market is resting on a mountain of debt and derivatives in the U.S. financial system of unprecedented size and diminished credit quality.
When a government has no money, it either prints it from thin air or steals it from taxpayers’ pockets. In the case of Brazil, its state of indebtedness and disastrous credit rating does not allow it to borrow more money abroad without having to pay hefty fees, so Dilma Rousseff has signed a new law, which was approved by the Congress, to tax people’s foreign income and investment returns.
Brazilian President Dilma Rousseff sanctioned on Thursday what has been called the Repatriation Act, which seeks to regulate resources and goods from lawful origins but that have not been declared before Brazilian authorities because they are kept abroad.
After significant deliberation U.S. District Judge Amy Berman has struck down Obama’s assertion of executive privilege over documents pertaining to Operation Fast and Furious, the Department of Justice program that allowed the sale and trafficking of thousands of weapons to violent Mexican drug cartels. Berman was appointed to the Court by President Obama in 2011. POLITICO has the details:
U.S. District Court Judge Amy Berman Jackson ruled Tuesday that the Justice Department’s public disclosures about its response to the so-called “gun walking” controversy undercut Obama’s executive privilege claim.