Dan Loeb Purges Portfolio, Cuts Over Two Thirds Of Equity Holdings, Adds 25 New Positions

In Q2 Dan Loeb went to town to his holdings as of March 31. Of his roughly 38 different positions, Loeb cut 24 names to zero among which Cisco, Marvell Technology, Sara Lee, Google, Wells Fargo (with the Octogenarian of Omaha likely buying every share), El Paso, Abercrobmie, Goldman and many others. Of course, he kept his stake in Yahoo and added to Apple, while cutting his Delphi stake from 13.34 million shares to 11.5 million. He used the proceeds from these sales to add to new positions (latest 13F here) in new names such aws AIG, Aetna, Chesapeake, Cigna, Coca Cola, Enphase, Humana, News Corp, and Unitedhealth Group. Also, Loeb went quite optically against Bill Ackman and bought a $6.5 million share equivalent put in JCPenney. He is significantly in the money in this.  Altogether, his disclosed equity stake was at $3.3 billion as of June 30, down from $4.1 billion at March 31. Dry powder? Or more likely getting more into bonds (which he doesn't have to disclose on any filing).

S&P 500 Futures 'Plunge' 1.25 Points - Most In 10 Days!

Don't panic. Change is good. The S&P 500 futures market somehow dropped 1.25 points today - its worst in 10 days! - and yet, shock horror, data was positive, European leaders offered more jawboning support, and Treasuries weakened. NYSE volume remained bleak but S&P 500 e-mini futures (ES) volume rose to its highest in over a week (yes - we were stunned too - volume picked up as selling began) amid reasonable average trade size (especially as ES lost 1400). After VIX's implosion yesterday, it ramped over 1.25 vols higher today - testing back to 15% late on. The USD leaked higher all day, back to unchanged on the week (while Copper/Gold/Silver are all down 1.2-1.3% on the week - having gapped down on positive data this morning). Oil remains green on the week and spurted modestly higher on the day. Treasuries are still under pressure - not getting much back as equities sold off into the close - higher/steeper in yield by 4-8bps on the week now. Of course - the closing rampfest was inevitable as that stunning 4 point drop in ES was rapidly 'tickled' back up to near VWAP into the day-session close - though we note that ES was unable to get green and unable to reach the safety of VWAP with heavy 'down' volume after-hours. Cue 'Asian-opening-gap-worm' algo.

Is Investment Grade Issuance Driving Treasury Weakness (Again)?

Back in March, the last time we saw a notable and relatively sustained rise in Treasury yields, we pointed out a potential driver for this 'apparent' weakness - the heaviness of investment grade corporate bond issuance. This drives relative selling pressure in Treasuries for three potential reasons: pre-emptive rate locks are positioned; managers hedge away interest-rate duration to lock in the 'spread' on the bonds as they are jig-sawed into existing portfolios; and most simply speculative rotation from Treasury bond 'cash' into new issues (thus avoiding the convexity issues associated with such low yields on existing 'secondary' bonds). As the charts below show, in March, as we noted at the time, issuance expectations (the forward calendar) were falling and we suggested Treasury yields would drop as this implicit selling pressure would also lift. While this time Gross and Singer have spurred some risk-aversion, no doubt, the IG calendar suggests a lifting of the selling pressure soon here too.

Gold Daily and Silver Weekly Charts - Cheap Shot at the New York Open

SP 500 and NDX Futures Daily Charts - Technical Tug of War in Sparse Volumes

Facebook Shareholders: See Your Future

Dave in Denver at The Golden Truth - 1 hour ago

The internet mini-bubble Round Two: I mentioned to someone just yesterday that I think the Facebook IPO may be the biggest Wall Street pump-n-dump fraud I have ever seen or read about. Largest in terms of the dollar size and visibility. In that context, it was fraudulently marketed with willful and determined violation of the SEC new issue regulations (SEC Act of 1933) by both the underwriter, Morgan Stanley, and the upper management of Facebook; and it was fraudulently dumped on the unsuspecting - albeit greedy and ignorant - retail stock customers of Morgan Stanley and of the e... more » 

 

 

 

Chinese companies pull out of U.S. stock markets

Eric De Groot at Eric De Groot - 2 hours ago

The Chinese bypassing the nefarious and unpredictable activities of Wall Street buy US Treasuries directly from the US Treasury. Now an increasing number of Chinese companies are withdrawing from their US exchange listings. The movement of capital always follows the path of least resistance. All other explanations are window dressing designed to generate clicks or shape public... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

 

 

Retail Sales Number Derails QE Expectations

Trader Dan at Trader Dan's Market Views - 2 hours ago

This morning's Retail Sales number came in above expectations giving those expecting a Fed move on the QE front at the upcoming Jackson Hole summit reason for pause. The number caught a lot of folks off guard and while it was not spectacular, it was not in the "the consumer is not spending money" category. The market interpretted it as another reason for the Fed NOT TO ACT. Gold, which had been moving higher in its recent consolidation range until yesterday, immediately fell back on the data as the further squashing of another round of bond buying in early September seems even more ... more » 

 

 

 

The Only True Economic Theory (OTET),

Richard Daughty, a.k.a., 'The Mogambo Guru' at Mogambo Guru Report! - 3 hours ago

I know now, with the huge benefit of hindsight and a lot time spent with drunken friends explaining it all to me, how all my problems are somebody else's fault. I know that they are just being kind, of course, as there were a lot of the places where I personally went wrong along the worrisome, winding way of my worthless, wasted life, none of which, unfortunately, explains my bizarre use of such gratuitous alliteration that even I am embarrassed about it. Sorry. Anyway, I thus see crystal-clear that if I had made even one correct decision anywhere along the way, th... more » 

 

 

 

Hysterical Mogambo Analogy (HMA)

Richard Daughty, a.k.a., 'The Mogambo Guru' at Mogambo Guru Report! - 3 hours ago

With all of the monetary and fiscal insanity running rampant in the world, you can be sure that I am, more than ever, 100% against almost everything and everybody, but especially annuities. For those who are not familiar with annuities, it's a steady stream of regular payments from an insurance company paid to you, for as long as you live, which you purchase in advance by giving an insurance company a big wad of money now. When you die, they keep what's left. My reason for steering clear of annuities and insurances is because, at the beginning of the Weimar inflation in Ge... more » 

 

 

 

Fisker Lights Fire Under CEO Post, Hires Former Chevy Volt Head

Fisker, whose Karma superburningcar made headlines two days ago for being the latest addition to America's New Spontaneously Combusting Green Normal, has decided to double down on that elusive spark, and has released the incendiary news that it has hired as CEO none other than head of that other hot selling eco-car, the Chevy Volt. From Reuters: "Fisker Automotive named the former head of General Motors Co's (GM.N) Chevrolet Volt program as chief executive on Tuesday, marking the second time the troubled, government-funded start-up has replaced its top executive this year. Tony Posawatz, who oversaw the development of the Chevy Volt plug-in hybrid for six years before he left GM this summer, will replace outgoing CEO Tom LaSorda. "I've been recruiting him for quite a while and certainly had some people assist me in giving him the full story," LaSorda said during a conference call with reporters. "He's come in with eyes wide open."" Hopefully he's also come in with a fire extinguisher.

Are Former Bank Prop Traders Potential Bartenders?

We thought it timely to repost this oldie but humorous goodie on how bank style traders make their money. Ever wonder why Goldman, or BAC can have 90 straight days of profitable trading?  Don't wonder too much more, the answer is here.  The new reality is however, Banks are fast becoming utilities now that they cannot hide losses in mark-to-myth book keeping (whale legacy), and have removed (or renamed) their Prop trading divisions. The recent purge of prop traders and subsequent start up of unprofitable funds can be attributed to many things; among them market conditions, 100% correlated markets etc. But the biggest for a certain type of trader is a lack of flow, i.e. no clients to fleece or front run.

Morgan Stanley Defends Retail Sales' Seasonal Adjustments From "Crazy Zero Hedge Analysis"; BAC Upgrades Netflix

You heard our side of the story. It is only fair you hear the other side too.

NY State Regulators Settle With Standard Chartered At 0.14% Transaction Fee

Consider our minds blown, via Bloomberg:

• *NEW YORK SETTLES PROBE OF STANDARD CHARTERED FOR $340 MLN

The life or death of STANCHART is settled - they live; and the $250 billion of 'laundering' transactions - sanctions/terrorism/drugs-related or not - are settled for a 0.14% transaction fee (that'll teach 'em!). In other words, Std Chartered's IRR for committing years of crime is 714%. Finally this is a whopping 1.9% of the bank's entire 2011 revenues, or in other words they had to hand over 7 days of revenue (assuming a 365 day work week). Of course there are other fines/penalties to come but it looks like someone got a little over-excited at the regulators or as we note, STANCHART had some bottom-drawer details no one wanted outed. And now, employees of US "regulators," "enforcers" and various other "crime fighting" organizations can look forward to submitting their resumes to the British banks all over again.

What Happened The Last Two Times VIX Closed Below 15%?

VIX has only rarely traded below 15% during 'new normal' times. The period from 2004 to early 2007, the so-called 'Great Moderation', saw VIX average 13.6% - at the time stunningly low (and notably where VIX closed yesterday). While looking at VIX alone can be misleading (with regard to the term structure differences and realized vol premia), it is nevertheless a gauge of market's expectations of return volatility in the short-term - however contemporaneous that is. Following the two times that VIX first closed below 15%, the S&P 500 has suffered from a 5.25% and 7.75% plunge in the following two months - and each time saw a quick post-VIX-plunge pop in stocks that provided better entry levels for shorts. High Yield credit also stumbled hard widening 80 and 150bps respectively.

Heightened Expectations And The Collapse Of Credibility

The Status Quo around the globe is trying to manage perceptions to foster the illusion that all the high expectations can be met; but the reassurances are increasingly hollow, and the promises increasingly threadbare. People are waking up, one at a time, to the reality that all the promises and guarantees are fantasy, and their emotional response is deeply negative: they feel betrayed by the Status Quo and its institutions, and they feel a volatile mixture of rage, distrust and resignation. Studies have found that people (usually those in the lower social and financial tiers) with low expectations tend to be happier than those with high (and unmet) expectations. The Status Quo bought the support of the masses by raising expectations of permanently rising prosperity and security for all. Now that these near-infinite claims cannot be fulfilled, the Status Quo has no institutional ability to lower expectations to more realistic levels. It only knows how to spin artifice and fantasy, in the vain hope that managing perceptions will substitute for managing reality. This is how credibility is lost. Managing perceptions is a dangerous game, as the perceptions are pushed ever-farther from reality, increasing the shockwave when the two snap together: it won't be reality rising to meet lofty perceptions, it will be perceptions and expectations plummeting to meet reality. This is how the Status Quo will collapse: it will lose the faith of its people, and become the target of their wrath.

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