Horseman Global Unveils New Shorting Philosophy Using ETF Flows As A Catalyst

I am not a particularly big fan of the idea that markets are efficient. In fact I think people who believe this have never spent any time working in investment management. Everyone in the industry has seen how investment fads wash over the industry from time to time, only to wash out again as returns begin to disappoint.
– Russell Clark, CIO of Horseman Global
Well, the redemption-driven capitulation is over, and what until recently was the world’s most bearish hedge fund (which was down 24% in 2016 and another 7% to start 2017), with a net exposure in the negative triple digits is now effectively neutral, as the following breakdown of Horseman Global’s latest portfolio demonstrates.

This post was published at Zero Hedge on Apr 9, 2017.

Around the World with Chartology (Currencies Part 1)

As there seems to be a lot of interest in some of the currencies I would like to show you some charts we’ve been following for a very long time. Most of the charts will be long term in nature which won’t do us much good in the short term, but they will keep us in tune to the direction these currencies are most likely to take.
Knowing what to expect in the Longer term is important not only to currency and commodity traders but to the very Countries who’s currencies are impacted and to their exporters and importers as well.
Long time members may remember some of these massive tops in 2011 which led to the sharp decline in the PM complex and commodities. I won’t spend a lot of time on these charts as they’re pretty self explanatory.

This post was published at GoldSeek on 9 April 2017.

China Offers “Concessions” To Avoid Trade War As Trump Readies Anti-Dumping Probe

While there was much fanfare over last week’s summit at Mar-A-Lago between the presidents of the US and China, the tangible results to emerge from what was the year’s most important political meeting, aside for a few photo ops, were few and far between. That may change, at least for purely optical purposes, after a report in the Financial Times that China will “offer concessions” to the US to avoid a trade war, including better market access for US financial sector investments and beef, after the nation’s leaders decided last week in Florida they needed results on trade talks within 100 days.

This post was published at Zero Hedge on Apr 9, 2017.

Jim Rickards: Safe Havens During the Financial Warfare Era

Jim Rickards joined up with Stephen Guilfoyle, also known as ‘Sarge’ at The Street, to discuss his book The Death of Money and how investors can find a safe haven for their money in this modern era of financial warfare. The discussion hits at Rickards’ area of expertise as a currency wars analyst and covers what to expect from geopolitical interests in Russia, North Korea and beyond.
Jim Rickards highlights that he was recently giving a seminar to the U. S Army War College and remarks that what he informed them of was that ‘there has really been some economic aspect to warfare but it now completely non-kinetic. It can be decisive and when you combine financial warfare with the emerging cyber techniques you get into cyber financial warfare.’
‘In one of the case studies I am analyzing is where Russia has invaded Crimea. We responded with economic sanctions. President Obama indicated that he was not going to war but would apply economic sanctions. However, Russian President Putin thinks of them as an act of war. When you degrade the capability of your adversary through economic means, that’s an act of war. They may respond in a ‘war-like’ way.’

This post was published at Wall Street Examiner on April 7, 2017.

Bank Of America: “Previously This Has Only Happened In 2000 And 2008”

Although it will not come as a surprise to regular readers that, for various reasons, loan growth in the US has not only ground to a halt but, for the all important Commercial and Industrial Segment, has dropped at the fastest rate since the financial crisis, some (until recently) economic optimists, such as Bank of America’s Ethan Harris, are only now start to realize that the post-election “recovery” was a mirage.
A quick recap of where loan creation stood in the last week: according to the Fed’s H.8 statement, things continued to deteriorate, and C&I loans rose just 2.8% Y/Y, the worst reading since the start of the decade and on pace to print a negative number – traditionally associated with recessions – within the next four weeks, while total loans and leases rose by just 3.8% in the last week of March, less than half the stable 8% growth rate observed for much of 2014 and 2015.
Yet while zerohedge readers have been familiar with this chart for months, it appears to have been a surprise to BofA’s chief economist. However, in a report titled “Is soft the new hard data?”, Ethan Harris confirms that he has finally observed the sharp swoon lower and is not at all happy by it.

This post was published at Zero Hedge on Apr 9, 2017.

Three More Reasons to Worry about the Euro’s Future

‘Despite uncertainty over Brexit – formally triggered last week by prime minister Theresa May – central bankers from around the world see the UK as a safer prospect for their reserve investments than the Eurozone, a new poll reveals’: The Financial Times.
At first whiff, this may smell counter intuitive. After all, it’s the UK that’s supposed to be in the weaker negotiating position over Brexit terms. It also risks losing a sizable chunk of its core industry, finance. Yet according to a survey of reserve managers at 80 central banks, who together are responsible for investments worth almost 6 trillion, the stability of the monetary union is their greatest fear for 2017.
They have good reasons to worry. Here are three of them:

This post was published at Wolf Street by Don Quijones ‘ Apr 9, 2017.

“The Bear Market Is On Hold”: Deutsche Bank Throws In The Towel On Its Treasury Short

Six months ago, Deutsche Bank’s Dominik Constam – who roughly one year ago was lamenting the trendy at the time “secular stagnation” theme as an example of “capitalism in crisis” and was blasting negative rates as the “failure of globalization” – turned from prominent bond bull to bond bear, predicting a sharp jump in Treasury yields as the Trump reflation trade picked up traction and as Fed tightening accelerated pace.
Fast forward to this weekend, when Konstam became only the latest bond bear to throw in the towel on his trade reco, and as he abruptly writes in the latest edition of DB’s Fixed Income Weekly, “We are revising our forecasts lower – the bear market we expected to continue through 2017 seems to be on hold mainly due to the lack of progress on structural tax reform and we do not expect that to change anytime soon.”
In short, the “bear market is on hold” with the stated reason Trump’s failure to enact his proposed fiscal stimulus. Now if only somebody had warned Wall Street’s brightest and best paid minds just one week after Trump’s election that the president’s plan to “make America great again” was not going to happen…
In any event, here is Konstam explaining why he threw in the towel.

This post was published at Zero Hedge on Apr 9, 2017.

Stock Market Valuations and Hamburgers

Stock Market Valuations and Hamburgers
Valuations and Forward Equity Market Returns
Earnings Estimates
Bull Markets Go Out with a Bang
What Will Trigger the Next Bear Market?
Some Final Thoughts from John
Augusta GA, the Masters, and Tampa Bay
‘To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — – except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.’
– Warren Buffett, Fortune magazine: ‘The Wit and Wisdom of Warren Buffett’
A few weeks ago I spent two days giving multiple speeches alongside my friend Steve Blumenthal of CMG in a very cold New Jersey on the heels of a rather strong blizzard that had left the countryside white and beautiful. I listened to Steve do deep dives on stock market valuations. He started each of his presentations with Warren Buffett’s hamburger story, quoted above, before jumping into multiple charts. After a while, we began to go back and forth during his presentations, as I had my own insights on market valuations, generally in sync with his.
I asked him if he would be willing to do a joint letter on valuations from time to time (as he puts a great deal of research into the topic), and he agreed. This will be the first of our occasional joint letters (assuming we get a good response), with Steve doing the first draft and then me jumping in with comments and charts from my own sources. I want to thank the Ned Davis Research team for allowing us to use a few of their charts and data. (I should note that Steve will be at my conference, for those attendees who would like to talk with him further on this topic.) So let’s jump right in.

This post was published at Mauldin Economics on APRIL 9, 2017.

In Rare Twitter Appearance, Kyle Bass Slams Chinese Capital Lockdown

The Chinese have made it next to impossible for multi-national corporations to remove money from China. Many have been unable to since NOV.
— Kyle Bass (@Jkylebass) April 9, 2017

Hayman Capital’s Kyle Bass has traditionally been media shy when it comes to public appearances or statements on Twitter, and in fact has rarely if ever Tweeted since joining the platform in February 2015. The changed that last night.
The hedge fund manager, who over the past 18 months has obsessed with China’s financial system, and specifically the precarious state of its banks, betting on a collapse in the Chinese Yuan on expectations of ongoing capital outflows and/or a financial crisis, referenced a South China Morning Post article discussing the strict lockdowns implemented by Beijing on capital flight, saying “The Chinese have made it next to impossible for multi-national corporations to remove money from China. Many have been unable to since NOV.”
In his most recent interview with Bloomberg’s Erik Shatzker, Bass said that China has ‘recklessly built a system that’s going to need to restructure and that just so happens to be metastasizing right when Trump becomes elected. This is a fire that’s been smoldering and it’s now starting to burn, and Trump is just more gasoline.” As he put it later “in lifecycles, what Trump is going to do, he is going to speed everything up.” It remains to be seen if that statement, which was spot on for the most part since Trump’s election, will need to be revised in the aftermath of Trump’s recent meeting with Xi Jinping, especially with Reuters reporting that China’s media “cheered” the meeting between the two heads of state.

This post was published at Zero Hedge on Apr 9, 2017.

Thomas Frank: America In the Age Hypocrisy, Hubris, and Greed

“The whole world wants to know about what the hell is happening with us. So let’s talk about it. I live in Washington now, and the people I live among have no idea how people live here in the Midwest, not the faintest idea…
The last couple of years here in America have been a time of brisk prosperity according to official measurements, with unemployment down and the stock market up.
For Americans who work for a living however, nothing ever seems to improve. Wages do not grow, median household income is still well below where it was in 2007. Economists have a way of measuring this, they call it the ‘labor share of the Gross National Product’ as opposed to the share taken by stockholders. The labor share of Gross National Product’ hit its lowest point since records were started in 2011, and then it stayed there right for the next couple of years.
In the fall of 2014, with the stock market hitting an all time high, a poll showed that nearly 3/4 of the American public believed that the economy was still in recession, because for them it was.
There was time when average Americans could be counted upon to know correctly whether the country was going up or down, because in those days when America prospered, the American people prospered as well. These days things are different.
Let’s look at it in a statistical sense. If you look at it from the middle of the 1930’s (the Depression) up until the year 1980, the lower 90 percent of the population of this country, what you might call the American people, that group took home 70 percent of the growth in the country’s income. If you look at the same numbers from 1997 up until now, from the height of the great Dot Com bubble up to the present, you will find that this same group, the American people, pocketed none of this country’s income growth at all.

This post was published at Jesses Crossroads Cafe on 09 APRIL 2017.

Hedge Fund CIO: “Expect Enormous Losses In The Next Correction As There Is No Price Discovery In Index Investing”

In today’s excerpt from Eric Peters Weekend Note to clients, the CIO of One River Asset Management focuses on the one topic that is first and foremost on the minds of the active investing community: the unprecedented shift from active to passive management, and what it means for not only the industry, but for markets during the next “normal correction.”
‘Each day since the election $1bln has moved from active to passive management,’ said VICE, standing in the shadow of America’s mountain of private wealth assets. When you buy the S&P 500, you pay the prevailing price for every one of those stocks.
‘There is no such thing as price discovery in index investing.’ And there will be no price discovery on the downside either. The stocks that have been blindly bought on the way up will be blindly sold.

This post was published at Zero Hedge on Apr 9, 2017.

How to Defend Your Bonds and Increase Income in a Rising Interest Rate Environment

With the recent upswing in inflation and economic growth, bond investors are getting more concerned about the stress this may have on bond prices and their overall portfolios.
Should they be worried? Here are a few general items affecting interest rates we DON’T yet know:
-How much stronger will US GDP get?
-How far above the Fed’s 2% mark will inflation travel?
-How many times will the Fed raise interest rates?
-How high will the Fed funds top out at?
-When will another US recession start?
Though most fixed income investors are keenly aware of the above questions and uncertainties, they can, however, be positioned to benefit from an increase in rates through Floating Rate Bonds (FRBs).
Here are some things to consider:

This post was published at FinancialSense on 04/07/2017.

Government Shutdown Odds Are Rising, Goldman Warns

Having been quite confident that Trump would be able to pass some form of Tax reform as recently as two weeks ago, Goldman’s Washington analyst, Alec Phillips, is turning increasingly more pessimistic on the prospects that Trump’s economic agenda will gain traction in Congress, especially now that attention has seemingly shifted to Trump’s bombing policies in Syria (and perhaps North Korea in the not too distant future).
In a note over the weekend, the Goldman strategist writes that “following the failure to pass the American Health Care Act (AHCA), which would repeal the Medicaid expansion and tax hikes enacted in the Affordable Care Act (ACA) and reduce the tax subsidies for health insurance under that law, Republican leaders in the House have struggled to develop an alternative health proposal that might find enough support to pass. At this point, it still appears possible that the House could pass a revised version of the bill at some point in May. However, the compromises that might be made in the House to gain support are apt to reduce support in the Senate, and the process in that chamber would take much longer than even the drawn out House process, in our view.”
He also observes that lawmakers and market participants have refocused their attention on tax reform, “though a number of other issues are likely to delay activity on tax legislation for another several weeks.” This includes another potential attempt to pass health legislation, the possibility of a government shutdown, a debt limit deadline later this year, and geopolitical developments.
Which brings us to the key topc: the prospect of a government shutdown in less than three weeks. This is what Phillips says when discussing the risks of a government shutdown on April 29.

This post was published at Zero Hedge on Apr 9, 2017.

K.T. McFarland To Leave White House In Latest NSC Shakeup

Just days after Steve Bannon was removed from the principals committee of Trump’s National Security Council, on Sunday the shakeup in Donald Trump’s closest advisory circle continued, when as Bloomberg reports, K T. McFarland was asked to step down as deputy National Security Advisor after less than three months on the job.
She is now slated to become a U. S. ambassador to Singapore, Bloomberg cited a person familiar with White House personnel moves. According to USA Today, the move is seen as a “promotion” because Singapore is a key U. S. ally. The paperwork on her ambassadorial nomination is still being worked out, it adds.

This post was published at Zero Hedge on Apr 9, 2017.

Confusion In Bond World, As Eurodollar Shorts Hit New Record High Over $3 Trillion

One week after we observed the biggest monthly short squeeze in 10Y TSYs in history, it was a relatively calm week in the longer-end of the Treasury curve.
According to the latest CFTC data, spec net shorts in aggregate Treasury futures was little changed from the previous week at 612K contracts in TY equivalents. While, they continued to pare net shorts in TU and TY by 18K and 14K contracts, respectively, they increased their net shorts in FV and TN by 35K contracts and 6K contracts, respectively. Spec net shorts as share of open interest was unchanged at -5.8% over the week and was at about -2.0 standard deviations away from neutral.
While net Treasury futures shorts are now back to the lowest levels since early December 2016, traders continued to pile into the short-end betting massively on further rate hikes as Eurodollar shorts push on beyond $3 trillion: in the last week specs sold another 73K contracts in Eurodollar futures, taking their net shorts to the seventh successive week of record high of -3,129K contracts.

This post was published at Zero Hedge on Apr 9, 2017.