Investors Panic-Buy Stock Crash Protection As Clinton Lead Grows

Despite the mainstream media’s constant spewing of the chaos and carnage a Trump ‘win’ in November will cause to the global financial markets (remember Brexit?), it seems that as Hillary’s lead grows, so professionals are piling into downside protection at the fastest pace in US history…
As Bloomberg notes, even with Hillary Clinton taking her biggest lead in the polls since August versus Republican Donald Trump, the relative cost of hedging a 5 percent decline in an exchange-traded fund tracking the S&P 500 is twice the cost of betting on a gain, according to data compiled by Bloomberg. High readings in the indicator known as skew came even as the CBOE Volatility Index spent the previous three weeks trading below 14, on average.

This post was published at Zero Hedge on Oct 12, 2016.

Steve Cohen Boosts Bonuses For Top Traders, But…

Despite the seventh consecutive month of gains for the broad hedge fund universe, calls for increased compensation have largely fallen on deaf ears as growth in AUM slows to the weakest since the financial crisis. However, as WSJ reports, Point72’s Steven Cohen is boosting the bonuses for top traders at his ‘family’ fund. There’s just one catch – they have to beat the market!
While this seems like a fair demand, this could be a big problem, as BofA notes, active managers are now more exposed to beta than they have been since 2008.

In other words, instead of taking “active” advantage of stock dispersion and alpha generation, all the “smart money” is doing, is simply adding leverage to broader market surrogates, and doing what every other investor at home can do for free: ride the S&P500.

This post was published at Zero Hedge on Oct 12, 2016.

Don’t Fight, Rewrite the Rules

Upon writing, we’re heading out of New York en route to the belly of the beast, Washington D. C., to finish up an interview.
It takes a lot of money, we’re reminded, to be poor in New York City. We thought the same thing a couple of weeks back while sauntering around San Francisco.
Although there are vast cultural differences between NYC and SF, there are at least two great similarities:
One, they both have thriving black markets
Two, they both have ridiculously onerous taxes and regulations.
This is, I’m sure you can guess, not by coincidence.

This post was published at Laissez Faire on Oct 12, 2016.

Learning from the British Election of 1722

It has become commonplace to note that the 2016 election campaign is unlike any America has seen before. Whether it is the issues brought to the fore, the number of scandals, or the intensity of the personal invective, it is hard to believe we are now within the bounds of what our founders had in mind.
In fact, we can make that statement going back more than half a century before our founding. The reason is that one of the greatest influences on colonial American political thought was Cato’s Letters, in which John Trenchard and Robert Gordon echoed John Locke in the early 1720s. According to Ronald Hamowy, its
arguments against oppressive government and in support of the splendors of freedom were quoted constantly and its authors were regarded as the country’s most eloquent opponents of despotism…[and] frequently served as the basis of the American response to the whole range of depredations under which the colonies suffered.

This post was published at Ludwig von Mises Institute on Oct 12, 2016.

A Clinton Foundation Moment: “Unless The Saudi Sheikh Gave Us $6 Million, This Sounds Crazy To Do”

In what appears an amusing instance of the Clinton Foundation caught (with its pants down) in a glorious pay-to-play moment, in one of today’s leaked Podesta emails from November 2011, Ira Magaziner, who is Vice Chairman and CEO of the Clinton Health Access Initiative, sent an email to John Podesta and Amitabh Desai, Director of Foreign Policy at the Clinton Foundation, in which he said that “CHAI [Clinton Health Access Initiative] would like to request that President Clinton call Sheik Mohammed to thank him for offering his plane to the conference in Ethiopia andexpressing regrets that President Clinton’s schedule does not permit him to attend the conference.”
He appears to be referring to Sheikh Mohammed Hussein Ali Al-‘Amoudi, a Saudi Arabian and Ethiopian billionaire businessman, whose net worth was estimated at Forbes at $8.3 billion as of 2016.
He is also a prominent donor of the Clinton Health Access Initiative.

To this the response by Desai is a very simple one: “Unless Sheikh Mo has sent us a $6 million check, this sounds crazy to do.”

This post was published at Zero Hedge on Oct 12, 2016.

Deutsche Bank Bond Buyers Return for More of Its Junk-Like Yield (290 BP Premium)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
Germany’s largest bank, Deutsche Bank, is in danger of sinking (like the battleship Bismarck).
Bloomberg – Investors piled into Deutsche Bank’s latest bond sale, seeking a second helping of notes sold less than a week ago at yields resembling junk debt.
The German lender sold another $1.5 billion of investment-grade notes on Tuesday to mostly the same investors who bought last week’s $3 billion private deal, according to a person with knowledge of the matter, who asked not to be identified because the information isn’t public. The deal was priced at a premium of 290 basis points, close to the average of 300 basis points for highly-rated junk debt in dollars and more than twice the 143 basis points Deutsche Bank paid for similar notes in August 2015, data compiled by Bloomberg show.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ October 12, 2016.

Desperate Central Bankers

I have been pounding the table over the mistakes made by central banks all around the world for some time now. When I started I was almost alone because markets were still going up and are no there were obvious market overvaluations. My argument back during QE3 was that over time an uber-dovish monetary policy would lead to excesses. We have now come to that point and I am no longer alone in my criticism. There is a growing concern from many corners of the globe that monetary policy, far from being benign, is actually quite malignant.
The problem is that the people who are in control of monetary policy, the central bankers, are in complete denial about the issues. They see the response of financial markets, and when they talk to investors they see the smiles on their faces. Which tells you the crowd these people run with. If they were talking to average savers and investors, retirees and those on pensions, they would be hearing a different story.
I have been bringing this issue up more and more because it is the single most important thing happening, with regard to our economic future. I think the shape of monetary policy in the US is actually more important than who we elect president – unless the new president actually changes the people who shape our monetary policy. Then, in terms of the economy, that is important!

This post was published at Mauldin Economics on OCTOBER 12, 2016.

The Current Gold Price Is A Gift

Two millennia ago, according to the bible, three wise men came to offer Jesus the gifts of gold, frankincense and myrrh. The peak of the Roman Empire is considered to be at the time Jesus was born although it took until 476 AD until the Western Empire finally fell.
Today, just over 2000 years later, we might be standing at another historical peak in the global economy. There are certainly many similarities like deficits, debts and decadence. Just like the Roman Emperors, current leaders have illusions of grandeur of a magnitude that the world has never seen before.
So let’s look at the modern version of the three wise men. What gifts are they bringing the world?As in the illustration below I have picked three central individuals in the world today; Draghi – head of the ECB, Li Keqiang – Premier of China and Abe – Prime minister of Japan. In themselves they are not that important but the country or region they represent is.
Italy – the next nail in the EU coffin
Let’s first look at Draghi the President of the ECB, obviously with the required Goldman Sachs connections.

This post was published at GoldSwitzerland on October 12th, 2016.

The Moment The Fed Discovered Reflexivity

Back in September 2013, when the Fed was still debating whether to taper or not, caught in a vicious cycle where any hint it would ultimately end QE would be met with a prompt selloff, DB explained how it had found itself in such a reflexive morass:
Another theme arising from their decision to hold fire was their worry that financial conditions had tightened over the past few weeks.

This post was published at Zero Hedge on Oct 12, 2016.

A Fractured France at the Crossroad of Multiple Risks

Since the beginning of 2015, the socio-political situation in France has become strained following a string of terrorist attacks as well as a wave of anti-government protests. Political violence and unrest coupled with stagnating macroeconomic performances have weakened the ruling Parti Socialiste (PS) and ushered in a ‘new normal’.
As France is set to ready itself for the May 2017 presidential elections, the country is at the crossroad of several political risks increasing the potential for relatively ineffective policy making as well as social and communal tensions. While pre-elections rivalries will soar and the government unions power play will continue to lead to periodic unrest, the elevated terrorist threat generated by radical Islamist will remain a major issue weighing on the political debate and everyday life.
The Left: A Free-for-All Fight in the Socialist Party
A key aspect defining the last months of President Hollande presidency will be the internal fighting pitting rival camps of the PS as the party is preparing to hold its primaries in January 2017.
With extremely low approval ratings, the political future of President Hollande appears to be set. As the PS is struggling to formulate a strategy to arrive at the elections’ second round, the president appears to be an obstacle rather than a support to his party. In itself this is a new situation in France; however, while the political situation of President Hollande is unlikely to improve in the coming six months, it is likely that his allies may try to push him to run in an attempt to safeguard the interests of the socio-democrat branch of the PS.

This post was published at FinancialSense on 10/12/2016.

The Specter of a Hard Brexit

The decline in the British pound sterling that began in June when the UK voted to leave the European Union (EU) accelerated last week, culminating in a ‘flash crash’ on Friday October 7th that wiped out a tenth of sterling’s value, briefly dropping the currency to its lowest level since 1985. While the market subsequently calmed down, sterling eased further on Monday and Tuesday, reaching $1.2122. (This morning sterling recovered to around $1.230 in London following the development given in the news update at the end of this note.)The steep decline in the nation’s currency does not reflect current weakness in the economy, which to the contrary has held up surprisingly well since the Brexit vote. Rather, the apparent cause is the increasing likelihood that the UK’s exit from the EU will be what is termed a ‘hard’ Brexit – that is, a clean break, with Britain leaving both the single market and the EU’s custom union, and ending EU obligations regarding contributions to the EU budget, the free movement of workers, wide-ranging EU regulations in areas such as product standards and labeling, and the jurisdiction of the European Court of Justice.
In an October 2 speech to a Conservative Party conference, Prime Minister Theresa May signaled her intention to take Britain out of Europe’s single market and to become ‘a fully independent sovereign country.’ She announced that she will invoke Article 50 of the EU treaty before the end of the first quarter of 2017, which will initiate a two-stage process of leaving the European Union. The tumbling currency indicates that global market participants consider the UK’s completely leaving the EU to be a less attractive alternative than a ‘soft’ Brexit.

This post was published at FinancialSense on 10/12/2016.

Dollar-Pound Parity Is Increasingly Likely

For the first time in history, dollar-pound parity could become a reality. In other words, the pound could soon be worth as much as the dollar.
So if you’re thinking about taking a trip to Great Britain, now would be a good time…
Over the past 10 days, Britain’s currency has hit a new low against the dollar, falling 5.4% to $1.22 on Tuesday intraday. This is the first time the pound has depreciated this much since June 1985.
A number of options traders are betting on dollar-pound parity, according to Bloomberg. Already, several traders have booked long-term puts with a strike price of 1. That means these traders will profit if the dollar becomes more valuable than the pound.
Don’t Miss: How Small Investors Can Take on Wall Street… and Win
Over the past six months, the cost to hedge against a sudden fall in the pound has widened by 2%, Bloomberg reports. In other words, there’s an increased cost associated with betting against the pound. And that means more traders are expecting a drop.
So why is the pound plummeting in the first place? As it turns out, the source of the currency’s woes started back on a single day: June 23.

This post was published at Wall Street Examiner on October 11, 2016.

Stocks Slide As ECB Hints At Delaying Additional Asset-Buying Decision

“Let’s not get too far ahead of ourselves,” warned an uncited ECB rate-setting source. Reuters reports the European Central Bank may discuss technical changes to its asset-buying scheme next week but a decision could be deferred until December when the bank will also decide whether to extend the scheme beyond March.
The reaction – disappointment…
The ECB declined to comment. The sources added that no decision has been made and board proposals have yet to be distributed.

This post was published at Zero Hedge on Oct 12, 2016.

Apple Mac Shipments Plunge, even as PC Shipments Rise from the Dead

A classic case of channel stuffing?
Worldwide PC shipments fell 3.9% in the third quarter from a year ago, according to IDC, thus continuing the long methodical decline of the entire ecosystem. But beneath the surface: shipments of the boring uncool brands rose worldwide and soared in the US, as shipments of cool Macs plunged.
Grave injustice? Or just sign or our commoditized times and channel stuffing?
Despite predictions of the sector’s death, these machines – desktops, workstations, and notebooks of all kinds, but not servers and tablets – are still the workhorses in the office environment, and their death is going to arrive only slowly and in fits and starts.
Lenovo, which in 2004 bought IBM’s PC division, is still the market leader, with a 21.3% share. But its global shipments fell 3.2%; it has growth trouble in China, its home market, where it does much of its business. For Lenovo, Q3 was the sixth quarter in a row of year-over-year declines.

This post was published at Wolf Street on October 12, 2016.

FOMC Minutes Preview: Beware The Hawkish Jolt

Today’s release of September’s FOMC minutes comes at a bad time for fragile markets and will intensify risk-aversion, according to Bloomberg’s Mark Cudmore. Based on the rhetoric from Fed officials in the days following the Sept. 21 decision, the minutes will emphasize that the committee are keen to raise rates, and that all meetings are live – – including November.
Stocks are flat post-FOMC, Gold the worst hit…

This post was published at Zero Hedge on Oct 12, 2016.