And just like that the “no brainer” party’s over. Remember when in January 2014 Carl Icahn laid out his extensive thesis on why being long AAPL is the best investment out there? Or when a little over a year later, hoping for even more stock buybacks (even as he was decrying short term activism) he boosted his price target on AAPL to $240? All that is now over and moments ago Carl Icahn admitted that the hedge fund hotel holding AAPL stocks, which consisted of 163 hedge funds as of December 31, has one less member, and he has sold his entire Apple position.
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As BofA reported overnight when looking at the latest trading activity by its smart money clients, “BofAML clients were net sellers of US stocks for the thirteenth consecutive week last week—making it the longest uninterrupted selling streak in our data history (since 2008) as clients continued to doubt the market rally.”
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The latest shocking example of just how intertwined central banks have become in all capital markets, comes courtesy of the Bank of Japan which days ahead of a move which may see it double its ETF purchases from the current run rate of JPY3.3 trillion to JPY7 trillion or more (if Goldman is correct), is revealed to be a top 10 holder in about 90% of all Japanese stocks. Crazier still, if as Goldman predicts the BOJ doubles its purchases of ETFs, the central bank could become the No. 1 shareholder in about 40 of the Nikkei 225’s companies by the end of 2017,
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With the Dow Jones industrial average near its record high, slightly more than half of Americans (52%) say they currently have money in the stock market, matching the lowest ownership rate in Gallup’s 19-year trend. And the worst news for Yellen: “although Americans in all income groups are less likely to have stock investments now than before the Great Recession, middle-class Americans have been the most likely to flee the market”
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Eric Hunsader, founder of Nanex, has been at the vanguard of warning about the dangers and the rampant fraud that the rise of high-frequency trading (HFT) algorithims have let loose in today’s financial markets.
While he usually feels like a lone voice in a world happy to deceive itself, he was shocked to receive a $750,000 whistleblower award from the SEC for his efforts. He’s been sadly less shocked to see that since the award was publicly announced, the abuses he reported have only become more extreme and frequent. Continue reading »
And since stocks follow junk bonds….
Junk bonds started to decline in June 2014, and earlier this year threatened to implode. Contagion was spreading from the collapsing energy sector to the brick-and-mortar retail sector, telecom (Sprint), the media (iHeartMedia), and other sectors. It was really ugly out there. Continue reading »
Was it ever in doubt?
Oh just one thing…
Earnings expectations have plunged over 6% since the last time The Dow was here.
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Over the weekend, Bloomberg View’s quasi-economist wrote his latest laughable article, one which supposedly “explained” how “Everyone Worries Too Much About ‘Black Swans‘”, which in addition to being a rambling, meandering stream of consciousness that as is regularly the case with this particular author, made little sense, sparked a Twitter feud with the Nassim Taleb, the person who made the concept of a Black Swan into a household name.
We were therefore very amused to note that none other than former FX trader and fund manager, Richard Breslow who also writes for Bloomberg, seemingly had an epileptic fit upon reading the abovementioned drivel and wrote his own scathing reaction from the perspective of an actual trader, a rection which not only threw up on every argument of the so-called economist’s logic, but on everything else that now is passed off simply as, well, “the new normal.”
Here is Richard Breslow: Continue reading »
One month ago we were quite amused by what at that time was one of the most ridiculous short squeezes we have ever seen when the stock of Peabody Energy, exploded higher from $2 to about $6 in days on… nothing.
Many scratched their heads at this move as nothing fundamentally had changed in the company’s deteriorating operations, and its bonds are among the most distressed issues trading currently. The move was even more bizarre when just a few days later Peabody warned it may file for bankruptcy protection imminently.
And earlier today, it did just that, when in a historic event, one which is perhaps the lowlight of the sad demise of the US coal industry, U.S. coal giant Peabody Energy, the world’s largest coal producer, which employs 8,300 workers, filed for bankruptcy on Wednesday, the most powerful convulsion yet in an industry that’s enduring the worst slump in decades. The stock has finally responded accordingly.
The company filed Chapter 11 petitions for most of its U.S. entities in U.S. Bankruptcy Court in St. Louis Wednesday, listing $10.1 billion in debt. All of Peabody’s mines and offices are continuing to operate and are expected to continue doing so for the duration of the process. Continue reading »
In a somewhat more manic-than-usual introduction to his 2016 macro outlook, Eclectica’s Hugh Hendry – the first of the big bears to throw in the towel and kiss the ring of central planners – admits that things did not turn out quite as he expected, noting “I used to be a big deal”, that “I had $1.5 billion in AUM” and that “life is cruel.”
While the entirety of his presentation is certainly worth watching, what specifically caught our attention were the occasional, and rather troubling, streams of consciousness during which we get a glimpse into Hendry’s current frame of mind and, frankly, we are a little concerned, because while we have no doubt in Hendry’s investing genius (even if he did decide to infamously flipflop in 2013 and many of his LPs decided not to stick with him), the content of what he says is just a little troubling.
Some excerpts: Continue reading »
The Puerto Rican Senate and the House of Representatives have both passed an emergency declaration authorizing the governor to suspend payments on $72 billion in public debt — setting up a dramatic showdown between Puerto Rico and hedge funds amid the island’s historic debt crisis. The bill authorizes the Puerto Rican governor to “protect the health, security and public welfare … [by] using government funds first and foremost for public services.” The dramatic move comes one day after a group of hedge funds sued to freeze the assets of Puerto Rico’s Government Development Bank in efforts to stop the bank from spending money on the island that the hedge funds want to go toward upcoming debt payments.
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I keep hearing that the past 6 or 7 years in equities is just part of an even longer term secular bull market. And it strikes me very curious that investors continue to pay these fee based money managers and chief market strategists who continue to sell this theory. Let me show you a chart and then provide a very brief parable for you to consider.
Donald Trump continued to streamroll over all conventional narratives when during a massive 96-minute interview with the Washington Post on Thursday which was released today, in which he talked candidly about his aggressive style of campaigning and offered new details about what he would do as president, he said that economic conditions are so perilous that the country is headed for a “very massive recession” and that “it’s a terrible time right now” to invest in the stock market, which, the traditionally cheerful WaPo said embraces “a distinctly gloomy view of the economy that counters mainstream economic forecasts.”
Unfortunately, his “gloomy view” is supported by such events as the record surge in gun violence and deadly shootings in Chicago, where the locals also do not ascribe to the WaPo’s rosy take on events, and instead blame the economy and the lack of jobs for the ongoing social collapse in the windy city. Continue reading »
CHRIS HEDGES: We’re going to be discussing a great Ponzi scheme that not only defines not only the U.S. but the global economy, how we got there and where we’re going. And with me to discuss this issue is the economist Michael Hudson, author of Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. A professor of economics who worked for many years on Wall Street, where you don’t succeed if you don’t grasp Marx’s dictum that capitalism is about exploitation. And he is also, I should mention, the godson of Leon Trotsky.
I want to open this discussion by reading a passage from your book, which I admire very much, which I think gets to the core of what you discuss. You write, Continue reading »
On February 12, Jamie Dimon made headlines when he bought 500,000 shares, or some $26 million worth of JPM stock which coming one day after the market hit its lowest point in the recent selloff, has become known as the “Dimon Bottom.” Was it just good timing or was there something more to the purchase some wondered. As it turns out the purchase may have been nothing more than Jamie frontrunning his own company’s multi-billion buyback, because as JPM announced moments ago, the company of which he is a CEO, just authorized the repurchase of an additional $1.9 billion in stock over the next three months, thereby assuring CEO Jamie of an even great profits on his recent acquisition.
On gold & silver:
The first in a series.
By Harry Dent, author of the new book, How to Survive (and Thrive) During the Great Gold Bust Ahead:
The story on Wall Street and CNBC continues to be that we’re in a correction and this is a buying opportunity. Even Warren Buffett joins the chorus of stock market cheerleaders for the skeptical public. Well, I agree with the skeptical public, not the experts here!
The bull market from early 2009 into May 2015 looks just like every bubble in history, and I’m getting one sign after the next that we did indeed peak last May. The dominant pattern in the stock market is the “rounded top” pattern:
After trading in a steep, bubble-like channel from late 2011 into late 2014, with only 10% maximum volatility top to bottom, the market finally lost its momentum… just as the Fed finished tapering its QE. That’s because the Fed was the primary driver in this stock bubble in the first place! Continue reading »
Last week, when Bloomberg was celebrating the 7 year anniversary of the third longest, most central bank-supported, and thus “most hated” bull market in history, it said that “investors are awash in angst, showing little faith the run can continue. They worry about contracting corporate earnings, slowing Chinese growth and uncertainty over interest rates. And they’re walking the talk by pulling cash from stocks at almost the fastest rate on record. It’s not unwarranted – the S&P 500 has gained just 0.5 percent in the last 18 months.”
While confused by this unprecedented equity outflow, it then promptly spun the “bullish angle”and noted that just because the rally is the “most hated in history”, it probably will continue: Continue reading »
According to DoubleLine’s Jeff Gundlach, this is his favorite chart – backing his persepctive that equity markets have “2% upside and 20% downside) from here.
In his words: “These lines will converge…”
It should be pretty clear what drove the divergence, and unless (and maybe if) The Fed unleashes another round of money-printing (or worse), one can’t help but agree with Gundlach’s ominous call.
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Over the past year we have diligentlyfollowed the bursting of the second tech bubble which in the space of less than one year went from the “running of the bulls” to the “mauling of the unicorns“, mostly in the private markets but also – for those rare few who have made it beyond the IPO stage – in the public arena.
In the last few months, this painful reality finally hit ground zero – Silicon Valley itself, as best described in “The Mood In Silicon Valley Is Like The “Moment After The Titanic Hit An Iceberg.” As the Wall Street Journal summarized it: Continue reading »
In recent weeks Chinese stocks remained relatively resilient, levitating quietly day after day. That all changed overnight when the Shanghai Composite plunged by 6.4% with the drop accelerating into the close. This was the biggest drop in over a month and was big enough to almost wipe out the entire 10% rebound from the January lows in one session.
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Earlier this month, as retail investors lost confidence in the global economy and broader stock markets, an air of panic began to set in. Reports indicate the lines were literally forming around the block at gold stores throughout London and elsewhere. It was, by all accounts, the very scenario one might expect in an environment where trust in government and central banks has been eroded.
But it’s only the beginning, explains Auryn Resources executive chairman Ivan Bebek in an interview with SGT Report, as nation states and large investors are trying to get their hands on gold as fast as they can:
Before any big move in gold we have always seen extreme volatility or volatility pick up. This was just a taste of what’s to come in the next few years… We’ll look back at this and be reflecting on how minimal this move was compared to what’s going to happen as we go forward… Continue reading »