Here’s Why Hedge Funds Are Poised for a Comeback – and Why It Matters to You

Hedge funds look like they’re down for the count, having been beaten-up by self-inflicted underperformance in the face of over-the-top fees, high-profile slip-ups, and investors stepping over them on their way to low-cost, passive investing strategies.
But don’t count Hedgies out just yet…
One reason hedge funds have been underperforming benchmarks has become abundantly clear and can be overcome (as you’ll see). They’re also knocking down fees to hold onto investors and attract new limited partners.
Not only that, the multitrillion-dollar trend towards passive investing could blow up spectacularly.
Today, I’m going tell you what’s going on with hedge fund underperformance, those exorbitant fees, and why the trend toward indexing could be hell for the market and a godsend for hedge funds.
But first, let’s all get on the same page…

This post was published at Wall Street Examiner by Shah Gilani ‘ October 24, 2016.

14% Of Polled Wells Fargo Customers Have Decided To Leave The Bank

Wells Fargo’s illegal cross-selling and fraudulent account creation practices appear to have caught up with the bank, just days after CEO John Stumpf announced his surprise resignation. As Bloomberg reports, management consultancy cg42 released a poll showing 14% of Wells Fargo customers have decided to leave the bank, “potentially withdrawing billions of dollars and crimping revenue.”
The data confirms what a separate poll by SurveyMonkey Intelligence released last week revealed. According to the survey, since the scandal broke, Wells Fargo has been losing asmuch as 140,000 of its mobile customers every week. The report finds that while the bank reported a downturn in new customer applications and accounts opened since the scandal broke, Wells Fargo curiously hasn’t reported on its customer churn rates. That is, the rate at which Wells Fargo is losing customers as they close their accounts after the scandal. (Conversely, customer retention rates would reveal the rate of customers keeping their accounts. Either metric works.)

This post was published at Zero Hedge on Oct 24, 2016.

A New Law Will Allow 1.6 Billion People Who Never Owned Gold, To Buy Gold – Episode 1109a

The following video was published by X22Report on Oct 24, 2016
Catepillar sales decline 46 consecutive months. US manufacturing PMI rises but the overall outlook is stagnant. Baltic Dry Index is now falling again it is at 831. Central bank in Austria reports they audited the their gold in the UK but will not publish a report. 1.6 Billion people will be allowed to purchase gold, demand will be up, prices will eventually rise


Gold $1262.00 DOWN $3.90
Silver 17.56 UP 11 cents
In the access market 5:15 pm
Gold: 1264.50
Silver: 17.60
The Shanghai fix is at 10:15 pm est and 2:15 am est
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
Shanghai morning fix OCT 24 (10:15 pm est last night): $ 1265.91
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1270.27
London Fix: OCT 24: 5:30 am est: $1267.00 (NY: same time: $1266.10: 5:30AM)
London Second fix OCT 24: 10 am est: $1267.60 (NY same time: $1267.60 , 10 AM)
Shanghai premium in silver over NY: 70 cents.
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

This post was published at Harvey Organ Blog on October 24, 2016.

Smartwatch is Dead, Market Implodes, Apple Watch Shipments Collapse

The market ‘experienced a round of growing pains.’
We have pooh-poohed the media love story about Apple Watch and similar devices when they first came out. We were particularly amused by how Apple was able to dominate entire front pages of the fawning financial press when it introduced the watch. At the time, nothing else mattered or happened. That was March 9, 2015. I took some screenshots, showing how great Apple really is in wrapping the media around its cordless Magic Trackpad… Apple Comes Out with a Watch, and Look What Happens:

This post was published at Wolf Street by Wolf Richter ‘ October 24, 2016.

Loonie Soars After BOC’s Poloz Says Fiscal Stimulus Has Eased Pressure For Lower Rates

The reason why the loonie is surging and USDCAD tumbling is because moments ago, in his testimony before the House of Commons committee in Ottawa, BOC head Poloz said that the Bank of Canada is taking a wait-and-see approach to dealing with Canada’s two-track economy, adding that fiscal stimulus has eased pressure for lower rates.
He said that ‘we have to weigh the risks of waiting longer against what are the costs associated with doing something more immediate’ adding that ‘if we were to be easing further, we’d be very close to using unconventional tools. And so that’s of course not a decision we take lightly.’ As a reminder, many have speculated that the BOC may be the next central bank to pursue NIRP, although for the time being at least it appears that the Canadian central bank is trying to push back.

This post was published at Zero Hedge on Oct 24, 2016.

Are High Taxes in Northern States Ruining Baseball?

With another Sunday come and gone, the sports media has noticed that ratings for NFL football are slumping. This is a problem not just for the NFL but for TV stations who have long depended on live sports – and NFL games in particular – as something to hang over the heads of viewers who are increasingly abandoning cable and satellite TV in favor of services like Netflix. Since live TV is largely exclusive to more traditional television providers, NFL football has been key in stemming the tide of so-called “cord-cutters.”
But, in terms of TV ratings, the NFL is still, relatively speaking, the golden goose. Certainly, when it comes to TV, NFL is in a better position than Major League Baseball which became a niche sport years ago.
Nevertheless, MLB baseball continues to survive thanks to robust ticket sales compared to other pro sports. This is partially due to the large number of games played every season in MLB, but it’s also simply due to the fact that many people like going to games as least as much as watching them on television. As Business Insiderrecently noted, more people go to MLB games than in the NHL, NBA, and NFL combined.
Unlike televisions broadcasts, however, attendance at a baseball game is not something that can be had anywhere. So, when people move away from metros with MLB baseball stadiums, that presents a problem for team owners.
Matt Doarnberger at Libertarian Sports Fan has noticed this problem for MLB:
More than any other sport, baseball is dependent on popular teams(almost always from big markets) to drive ratings.

This post was published at Ludwig von Mises Institute on Oct 24, 2016.

An IoT “Cannon” To “Bring Down The Web” Can Be Yours For Only $7,500

While an odd back and forth has emerged between Xiongmai, the Chinese video surveillance manufacturer whose “smart” video camera equipment was blamed by numerous sources blame for driving massive Internet attacks last Friday, accusations which the Chinese company first admitted by then denied, far bigger mass attacks may be in store. As Forbes first reported, hackers are now selling access to a huge army of hacked Internet of Things (IoT) devices designed to launch attacks capable of severely disrupting web connections. The finding was revealed just days after compromised cameras and other IoT machines were used in an attack that took down Twitter, Amazon Web Services, Netflix, Spotify and other major web companies.
In the report, RSA is said to have discovered several weeks ago that hackers were advertising access to a huge IoT botnet on an underground criminal forum, though the company declined to say which one. (F-Secure chief research officer Mikko Hypponen said on Twitter after publication that it was the Tor-based Alpha Bay market).
‘This is the first time we’ve seen an IoT botnet up for rent or sale, especially one boasting that amount of firepower. It’s definitely a worrying trend seeing the DDoS capabilities grow,’ said Daniel Cohen, head of RSA’s FraudAction business unit.

This post was published at Zero Hedge on Oct 24, 2016.

Can Gold Continue To Rise, Since The USD Is Moving Higher Too?

That question and other ones similar to it keep coming up lately and understandably so. Gold usually drops when the USD rises, but lately we do see both rising at the same time. I called a low in Gold recently and have been trading in the Precious Metals sector, but some are having a hard time believing it when they see the USD rising too. Allow me to share my thoughts on this. The following 4 charts are from the weekend report, where I tried to help my readers see the answer that question.
CHART #1 -The USD has slowly been approaching the Highs of 2015. The chart does look quite bullish, but it does also show prior lows being taken out and lower highs so far.

This post was published at GoldSeek on 24 October 2016.

5 Negative Factors For Oil Prices

It has been a rough 2 years for forecasters of crude oil prices. Essentially no one saw the 2014 crash coming, and everyone looked on in surprise as a barrel of crude oil tanked, from over $100 to less than $30. After the crash, many forecasters expected a speedy recovery driven by bankruptcies in U. S. Shale, only to be left surprised again by the slow pace of the structural adjustment of supply to demand, causing the crude oil price to remain in the $30 to $50 per barrel range much longer than anticipated. And now, just as everyone has begun forecasting ‘lower for longer’, crude oil seems to be breaking through the $50 per barrel range in response to the announcement that OPEC and Russia intend to cut production.
All these surprises did not happen because crude oil price forecasters are ‘quacks’ and ‘charlatans’ who don’t really know what they are doing. Rather, the issue is the large number of real world factors that impact the crude oil price – economic growth; interest and exchange rates; demographics; global, regional and local politics;weather conditions; et cetera – and the general unpredictability of these factors. On top of this, the global economy’s financial markets have made it possible for the crude oil price to move disconnected from these factors. Speculator sentiment can make the crude oil price move in anticipation of an event, that is before something has actually happened, and by more than is justified by the event (‘overshoot’).
Clearly, this makes crude oil price forecasting exceptionally difficult. That does not mean, however, there is no value in doing it.

This post was published at Zero Hedge on Oct 24, 2016.

Calm Before The Storm – Coming Out Of The Voldrums

Implied volatilities – the market’s best guess at short-term-future uncertainty – collapsed last week across every asset class from FX to equity. For now, as Bloomberg’s Richard Breslow notes, markets seem comfortably calm amid the real storm of macro, micro, and geopolitical risks, but many of the same ‘calm’ markets are at critical technical levels putting them all “in play.”
Also sprach Draghi: an ECB meeting for all and none, but as Bloomberg’s Richard Breslow explains, the bottom line is that he said little, promised less and the markets survived just fine. There was little clamoring for, nor palpable financial condition stress requiring, immediate action — and he obliged. He bought himself full optionality for December at no cost. Under the circumstances, it gives an interesting twist to the moniker Super Mario.

This post was published at Zero Hedge on Oct 24, 2016.

Bundesbank Confirms HFTs Reduce Liquidity, Contribute To Flash Crashes, Withdraw At Times Of “Market Stress”

Having warned all the way since 2009 that HFTs not only accelerate but are ultimately responsible for flash crash events like the countless example seen in global capital markets, from US stocks in May 2010, to ETFs in August 2015, to the FX, most recently the sterling’s instaplunge last month, we were content to read that another prominent institution validated our concerns – which have been repeatedly ignored by the SEC which has been unfortunately captured by the HFT lobby – when the Bundesbank today released a report in which it warned that high-frequency trading firms “tend to aggravate financial-market swings and contribute to ‘flash crash’ events.”
‘In a calm market environment, HFT market participants contribute a significant amount of liquidity,’ the Bundesbank said. ‘However, during highly volatile market phases, the research shows that HFT market makers in both Bund and DAX futures markets temporarily reduce liquidity. HFT actors are especially active in times of strong market fluctuations and can therefore contribute to trend-enhancing price developments.”
‘Taken together, the different behaviors of active and passive high-frequency trading firms indicate a heightened risk of periods of short-term excessive volatility, which could encourage market upheavals as far as flash events,’ the Bundesbank wrote.

This post was published at Zero Hedge on Oct 24, 2016.

How the Ballooning ‘Pension Crisis’ Will Impact the Economy

It’s not just the Dallas Police & Fire Pension Fund
In the very simplest terms, the Dallas Police & Fire Pension Fund is going broke, and the police who are counting on it for their retirement are beginning to panic. Police involved are retiring as early as possible and taking cash payouts because they fear that the fund will run dry and future checks may not be forthcoming. The whole thing is beginning to look like a run on a bank and it is just making matters worse.
It’s not that the DPFP is all that different from most of the public and private retirement funds; it’s just that what is happening has been noticed and made the headlines.
When you consider the number of people involved and the amount of money involved, the Dallas Police Retirement Fund is pretty insignificant considering that retirement funds in places like Chicago and the State of Illinois are probably in as bad a shape. Then there is the big daddy of all retirement funds, the Social Security Trust Fund.
Exactly why these funds are in trouble varies but the general view is that not enough contributions were collected, expected investment gains failed to materialize, and benefits were overpromised. Many of these funds also have a retiree health care component, and health care costs have risen dramatically. The bottom line is that these funds are having to pay out more than expected and they are not going to be able to deliver what they have promised without major changes of some kind.

This post was published at Wolf Street on October 24, 2016.

Why are Americans avoiding the Stock Markets; fear or lack of money?

A champion is afraid of losing. Everyone else is afraid of winning.
Billie Jean King
The financial crisis of 2008 scarred many individuals and scared away even more; add in the Great Recession, and one can see that the average can come up with many reasons to avoid the stock market. To make matters worse, the unemployment rate remains stubbornly high, and wages in most instances are dropping instead of rising which means that many Americans have little to no disposable income left after expenses. Don’t for one second believe the twisted statistics issued by the BLS (Bureau of labour department); those statistics are on par with toilet paper.
Individuals making $30,000 or less per year are more likely to avoid the stock market, citing insufficient funds as one of the main reasons. There appears to be a misconception in thinking that one needs a lot of money to invest in the markets. Nothing could be further from the truth. One can start off with small amounts and slowly add to this base over the years.; the power of compounding is amazing. If you start young enough even putting away $50-$100 a month can add up to a sizable bundle by the time you retire.
Another misconception is that investing in the markets is risky especially after the crisis of 2008. If one is investing for the long haul and in quality stocks, then investing is one of the surest ways of making money and building a sustainable nest egg. However, one needs to understand what one is getting into and not pluge into the markets blindly as is the case with most individuals.
Lack of education
We are referring to financial education and not higher education from institutes such as colleges or universities. We would even go as far as to suggest what these institutes teach regarding the stock market is useless. If you want to learn something, you need to allocate some time to it and then put that knowledge into practise. Regarding the stock markets it would be wise to look at the history of the markets; study past stock market crashes; the events that lead to the crash and events that set the foundation for the next bull run. Then paper trade before deploying your hard earned cash?

This post was published at GoldSeek on 24 October 2016.

World Stock Markets Firmer On Big U.S. Merger; Heavy Slate Of Earnings This Week

(Kitco News) – Global equity markets were mostly firmer Monday, ahead of a busy week of U. S. corporate earnings reports. Two big U. S. companies are merging it was announced over the weekend, as AT&T intends to purchase Time-Warner.
European equities were lifted in part by improving banking sector stocks.
Asian stock markets were helped by a rally in Japan’s Nikkei stock index after some slightly upbeat import and export data was released in Japan.
U. S. stock indexes are pointed toward higher openings when the New York day session begins.

This post was published at Wall Street Examiner on October 24, 2016.