When BofA’s Michael Hartnett releases his monthly Fund Managers’ Survey, the one chart we always head straight to is the one showing what the “smart money” investors, aka those polled clients who make up the survey (and the same ones who we reported ea…
It’s not just gold that has been in great demand. As Bloomberg notes, investors own the most silver in exchange-traded products in seven months, boosting holdings from a three-year low. The rebound comes as hedge funds and other money managers hold a n…
The European terrorist scare came back with a bang moments ago when gunfire broke out earlier today during a counterterrorism raid in the Belgian capital, local media reported. According to NBC, Belgian media reported that at least one suspect fled and at least one police officer was lightly wounded in the incident in the Forest area of the city. Police sealed off the neighborhood.
As RT adds, a police officer was injured during a house raid in the southern suburb of Forest, though it was unclear whether he was hit by gunfire, a police spokeswoman said, as cited by Reuters. She declined to comment on reports that counter-terrorism units were involved in the search.
A victim is removed from the scene where shots were fired
during a police search of a house in the suburb of Forest near
Brussels, Belgium, March 15, 2016. © Francois Lenoir / Reuters
La Dernière Heure newspaper reported that a Kalashnikov was the gun used in the shooting, and that the shooter is on the loose.
The mayor of the municipality, Marc John Ghyssels, confirmed the shooting to Le Soir newspaper, but said the number of suspects on the run has not yet been determined.
The Forest neighborhood is close to Molenbeek, home of several people involved in the November 13 terror attacks which killed 130 people. RT reminds us that Belgian authorities are still on the hunt for suspects and associates linked to the Brussels-based masterminds of the attacks.
This is a developing story.
Submitted by Arthur Berman via OilPrice.com, The oil-price rally that began in mid-February will almost certainly collapse. It is similar to the false March-June 2015 rally. In both cases, prices increased largely because of sentiment. As in the earlie…
Update: Trump wins Illinois, NBC, Fox project.
Update: Hillary wins Ohio, in a big victory on the heels of her surprise loss in Michigan.
Update: Gov. John Kasich takes Ohio, CNN projects.
— CNN Politics (@CNNPolitics) March 16, 2016
Update: Hillary wins North Carolina CNN projects.
Update: Marco Rubio has dropped out of the race. “While we are on the right side, this year, we are not on the winning side,” he told supporters at a rally near Miami. Here’s the official statement from the senator’s campaign:
Marco Rubio has ended his presidential campaign for president after losing the primary in his home state of Florida.
Rubio began his speech by congratulating Donald Trump, followed by a show of appreciation to his supporters.
Rubio discussed the anger that people are feeling right now, and eventually announced that he would be leaving the campaign trail.
Rubio’s event was also interrupted by a protester, to which Rubio responded, “don’t worry, you won’t get beat up at our event.”
Rubio’s campaign says he will be part of the “stop Trump movement.”
Update: It’s over in Florida according to CNN. The state goes to Donald Trump and Hillary Clinton who both pulled off huge wins.
— Donald J. Trump (@realDonaldTrump) March 16, 2016
In Ohio, Gov. Kasich (who says he will drop out if he loses the state) is ahead of Trump while Clinton leads Sanders.
As for North Carolina, Trump still has decent size lead on the field, while Clinton is the projected winner.
Clinton also leads in Illinois and Missouri.
Here’s a bit of color from the exit polls via CNN:
Voters in Tuesday’s contests expressed worries about the economy and a broad sense among Republicans that their party has betrayed them, according to early exit poll results. As voters continued heading to the polls in Florida, Illinois, Missouri, North Carolina and Ohio, early polling showed bipartisan concern about both the economy and access to jobs. Republicans continued the trend of saying they felt betrayed by their party, but only about a third or more Republican voters in the five states said they were angry with the federal government. The early exit polls represent initial surveys of voters as they left polling sites and reflect broad trends, but numbers are subject to some variation over the night as more voters are surveyed.
And then there’s this:
— Donald J. Trump (@realDonaldTrump) March 15, 2016
— Donald J. Trump (@realDonaldTrump) March 15, 2016
Watching other networks and local news. Really good night! Crazy @megynkelly is unwatchable.
— Donald J. Trump (@realDonaldTrump) March 16, 2016
Well, it’s another “super” Tuesday, and that must mean Donald Trump is angling to move even closer to the GOP nomination, an outcome that’s horrified the establishment and seemed so remote just nine months ago as to be laughable.
But the only one laughing now is Trump, and boy, oh boy is he laughing hard.
With 460 delegates awarded to Ted Cruz’s 370, the billionaire can effectively lock up the nomination if he manages to win in Ohio and Florida today, states where Gov. John Kasich and Sen. Marco Rubio (respectively) are for all intents and purposes making their last stands.
The Sunshine State should, by all accounts, be an easy win for Trump. A Quinnipiac University poll released Monday showed Trump with a dominating 46% to 22% lead over Rubio, who is facing a humiliating defeat in his home state where Trump made multiple campaign stops yesterday and where Sarah Palin told supporters that the billionaire doesn’t have time for “punk-ass little thuggery” from protesters.
“Tomorrow’s the day where we’re going to shock the country and we’re going to do what needs to be done,” Rubio said Monday, in Jacksonville. “We’re going to win the 99 delegates here in Florida.’’
Somehow we doubt it. And so does WSJ, who wrote the following today: “In Florida, more than 1.1 million Republicans—roughly half of the votes expected to be cast overall—have already voted. That total includes more than 100,000 GOP ballots cast in Mr. Rubio’s home base of Miami-Dade County, where he needs to rack up an overwhelming margin to offset a double-digit deficit in statewide polls.”
Kasich stands a better chance in Ohio than Rubio does in Florida. The governor is tied with Trump at 38% according to the abovementioned Quinnipiac University poll and he’s said he’ll drop out it he doesn’t win the state. “You will see me pick up steam and have momentum,” he told reporters. “I may go to the convention with more delegates than any of ’em.”
Obviously, that’s a virtual impossibility. Trump thinks so too. “This is a place I wanted to be,” he said, at a stop in Ohio. “This is going to do it. Ohio is going to make America great again. Kasich cannot make America great again.”
Trump also suggested in Tampa that if he can win Ohio and Florida and thereby effectively secure the nomination, he can stop attacking his GOP rivals and focus on Hillary Clinton. “The beauty would be if we win Florida and we win Ohio we can go and attack Hillary, no more attacking each other,” he said on Monday . “The Republican Party has to come together.”
Trust us, even if Trump stops the personal attacks on the other Republican candidates, there is no chance of him uniting the party. In fact, as Bloomberg outlined on Monday, the establishment will likely employ all manner of tactics to stop him from getting the nomination. “This will be a decisive day,” Ryan Williams, a Republican strategist who served as a spokesperson for 2012 Republican nominee Mitt Romney told Bloomberg. “The only avenue to stop Trump at this point is to deny him the 1,237 delegates he needs to win the nomination outright and force a contested convention [but] even if there is a contested convention, Trump’s rabid supporters would likely dominate the majority of delegate spots and make it hard for other candidates to pick up the votes needed to win the nomination after the first ballot.”
Click below for an interactive delegate simulator from WSJ:
Should Trump sweep all five states today, he may have an easy path to the nomination. “They’re already calling,” he told NBC, referring to the GOP establishment names who have doubted his cadidacy. “The biggest people in the party are calling.” Here’s the latest NBC poll:
On the Democratic side of things, Clinton will seek to reverse last week’s surprise loss in Michigan. She leads in Florida and Ohio, although Sanders hopes to use a similar strategy (i.e. appealing to workers who may be disaffected over manufacturing jobs lost in trade deals the former Secretary of State supported) to garner support in the Buckeye state as he did on the way to scoring last week’s upset win. Here’s the latest national poll:
But let’s face it, no one cares about that. It’s all about Trump. Even Hillary knows it.
“Man, you guys cannot stop talking about him,” she scolded on MSNBC Monday night. “He is a dangerous presence and, you know, it’s just like candy by the bushel.”
Eat it up America. You know you want to…
Following the recessionary surge in Wholesale Inventories-to-Sales ratio, this morning’s Total Business inventories-to-sales rose to 1.40x – the highest since May 2009. With a 0.4% slump in sales and 0.1% rise in inventories, the smell of recession lay…
After rallying off major support for the past month, the Global Dow Index is testing its key January breakdown level.
Money managers and strategists all have their favorite indices that they feel best instruct them as to the market’s likely path, and thus, the most suitable investment posture. For us, our favored index is the Value Line Geometric Composite as it is a very broad, unweighted average that we feel paints the best picture of the state of the overall equity market. Another index that we have recently found particularly helpful is the Global Dow Index. The Global Dow is also an unweighted average – of 150 of the world’s largest companies. Thus, we feel it provides a decent barometer of the global equity market.
Another reason why the Global Dow has become a focus of ours is because it has adhered particularly closely to our charting analysis. Any security or index that behaves “as it should” is an attractive target for us, especially in this bizarro HFT era where so many charting outcomes have been completely opposite that of conventional wisdom. The Global Dow’s chart conformity is especially interesting since little to no money is directly traded off of it. Then again, perhaps that is precisely why it has worked so well recently. Consider some of our recent posts covering the Global Dow:
- On January 6, the index was among those that we mentioned had suffered potentially key breakdowns that day. Key levels broken that day included the post-2009 bull market Up trendline and a key cluster of Fibonacci Retracement levels from the major lows since 2009. By our assessment, that opened up an immediate 10% of additional downside before hitting the next, sequential Fibonacci Retracement cluster.
- Indeed, it took the index just 2 weeks to traverse that 10% pocket lower, arriving there on January 20, which we noted at the time. It subsequently bounced from that support level – like it should have – rallying back since, following a February re-test.
Fast forward to today and we find the Global Dow back near the key January 6 breakdown level.
Here’s a zoomed-in look.
One of the basic tenets of technical charting analysis is that price has “memory”. That is, it should respond to price levels that proved impactful or significant previously. In this case, what had been support before the January 6 breakdown, now theoretically becomes resistance. And considering again the Global Dow’s recent obedient adherence to technical charting levels, the index should find this area nearby to be an uphill battle.
The underside of the post-2009 Up trendline is not far away. Nor are the Fibonacci levels. Add in the 1000-day simple moving average, the Down trendline from the May peak and 2 key Fibonacci Retracement lines from the recent decline (e.g., the 38.2% Fibonacci Retracement of the 2014-2016 decline and the 61.8% Fibonacci Retracement of the November-February decline) and you have some stiff potential resistance here for the index and the post-February global equity rally.
So, we would expect the climb to get a bit more arduous at this point for the Global Dow. On the other hand, if the index busts convincingly right through the area, it would be a good sign for the intermediate-term prospects of the rally (or perhaps it would mean that the HFT algo-bots have found our Tumblr).
* * *
More from Dana Lyons, JLFMI and My401kPro.
With Valeant in free-fall this morning, collapsing well over 20% after surprising Wall Street with the magnitude of its guidance cut and its simply atrocious results now that the rollup strategy has well and truly blown up, we thought it worth revisiting just what else Bill Ackman will have left to liquidate to meet margin calls on his core biotech holding as it collapses to its lowest since 2012.
As Bloomberg reports, Valeant Pharmaceuticals International Inc., dropped
16 25 29 percent in early U.S. trading after giving a new sales and profit forecast for 2016.
The guidance is lower than predictions Valeant provided in December, then pulled last month after the return of Chief Executive Officer Michael Pearson from a two-month medical leave. Sales for the year will be $11 billion to $11.2 billion, and adjusted earnings per share will be $9.50 to $10.50, the company said Tuesday in a statement.
“The challenges of the past few months are not yet behind us,” Pearson said in the statement.
And the result is an absolute slaughter for longs
Putting that in context…
… none of whom are bigger than Perhisng Square’s Bill Ackman, who after today will have a YTD performance of worse than -25%. Furthermore, given his cost basis aroun $170, means the margin calls will slowly but surely start coming in.
So what will he have to liquidate to come up with the cash? Here is a list of his top holdings.
And it appears he already is…
If you have any questions, ask Marc Goodman at UBS…
Of course Ackman is not alone…
And it’s not just stockholders – as Valeant Bonds are crashing to record lows…
One week ago, as the bear market rally was about to hit its peak post-ECB crescendo, we reported that according to Bank of America data, “The “Smart Money” Is Quietly Getting Out Of Dodge: Sells For A Sixth Straight Week As Buybacks Soar.”
The writing was on the wall with the selling prevalent across every investor class: “similar to the prior week, hedge funds, institutional clients, and private clients (aka the “smart money”)were all net sellers, though sales last week were led by private clients (vs. hedge funds the week prior). Our hedge fund clients remain the biggest net sellers of US stocks year-to-date.”
As for the ‘buyer’ no surprise there either: “buybacks by corporate clients accelerated last week to their highest level since August, and are tracking above levels we saw this time last year, though below levels we observed in 2014.”
In other words, the smart money sold to corporations buying back their stock, courtesy of bondholders who continue to eagerly fund this transfer of money, something even Bloomberg figured out yesterday with its report showing the “Only One Buyer Keeping The Bull Market Alive” (buybacks, for those who missed it).
Which brings us to the latest week, where in the latest BofA report on client flow trends, we find that Bank of America has largely thrown in the towel and reports that “Clients don’t believe the rally, continue to sell US stocks” and notes that the “smart money” has now sold stocks in the face of this bear market rally for a near record seven consecutive weeks.
Last week, during which the S&P 500 climbed 1.1%, BofAML clients were net sellers of US stocks for the seventh consecutive week. Net sales of $3.7bn were the largest since September and led by institutional clients (where net sales by this group were the second-largest in our data history). Hedge funds and private clients were also net sellers, as was the case in each of the prior two weeks, but a different group has led the selling each week. Clients sold stocks across all three size segments, and net sales of mid-caps were notably the largest since June ’09.
- Hedge funds have been net sellers on a 4-week average basis since early Feb.
- Institutional clients have been net sellers on a 4-week average basis since early Feb.
- Private clients have been net sellers of US stocks on a 4-week average basis since early January.
And if the smart money continues selling, means…that’s right, the corporations are buying their own stock:
Buybacks by corporate clients accelerated for the third consecutive week to their highest level in six months, which is also above levels at this time last year. This suggests that overall S&P 500 completed buybacks—which are reported with a lag—have likely picked up significantly as well.
It gets better: “Buybacks of Industrials stocks by our corporate clients last week were the largest in our data history, and Materials buybacks were also near record levels. These two sectors, along with Staples, have led the pick-up in overall buybacks in recent weeks.”
The stunning long-term chart which confirms that without buybacks, the S&P would be orders of magnitude lower:
Which brings us to BofA’s chart of the week: buybacks are picking up (in case someone was not aware).
The “unsinkable” global financial system is rushing headlong toward its encounter with the iceberg.
Why did the Titanic sink, despite being considered unsinkable? The conventional answer is the design of its watertight compartments was flawed: the watertight bulkheads were limited in height to a few feet above the waterline.
The ship was designed such that if the first few compartments were flooded, the flooding would be contained by the watertight bulkheads.
But the iceberg ripped open a gash almost a third the ship’s length, flooding the first six compartments. As the ship’s bow sank, water poured over the bulkhead into the seventh compartment, and so on, until the ship’s bow sank deep enough to bring the ship almost vertical, at which point the hull broke roughly in half–hence the two hull sections discovered on the bottom of the Atlantic in 1985.
But further analysis has revealed this isn’t the only reason Titanic sank. It turned out the ship’s hull plates were brittle due to high sulfur content in the steel, especially at cold temperatures (the water was near freezing at the time of the wreck).
Rather than deform as the iceberg scraped against the hull, the plates and rivets fractured, opening the gash that sank the ship.
The technologies of the early 1900s enabled shipbuilders to construct enormous ships almost 900 feet in length capable of steaming at 24 knots, transporting passengers across the Atlantic in comfort, but the technologies that made such ships and transits low risk were not yet developed.
The fact that large ships and powerful engines could be built created the illusion of low risk, because the risk factors were invisible until disaster struck. After the disaster, the flaws in the design of the watertight bulkheads, the inadequacy of the lifeboat requirements (there were not enough lifeboats for the crew and passengers), and the deficiencies in the wireless/radio requirements (ships were not required to have radio operators on duty 24 hours a day) were all obvious.
But the flaws in the steel plates and rivets would remain invisible until the technologies of steel production finally caught up with the other shipbuilding technologies. And better detection and tracking of icebergs would have to wait for radar and better navigational technologies.
Our financial system is like the Titanic: technologies such as high-frequency trading (HFT) and innovations such as securitization and complex derivatives have enabled major players to construct an enormous, fast-moving financial system that creates the illusion of low risk because the risks are not visible until disaster strikes.
The Global Financial Meltdown of 2008-09 was a close call, the equivalent of the Titanic veering off and barely missing the iceberg. In response, authorities imposed a variety of new regulations that are the equivalent of changing the regulations guiding lifeboats and radio operations.
But these regulations did nothing to address the risks created by the technologies of financialization that have leapfrogged safety systems and the real economy. In effect, the idea that the financial system is unsinkable remains intact, even though the flaws in its design (the equivalent of the watertight bulkheads) and its core technologies (the equivalent of the flawed steel plates) remain invisible.
The financial system’s huge size and apparent strengths have created a false confidence that it is unsinkable, and the ineffective regulations imposed after 2008-09 have only added to the illusion that the risk of a complete collapse is low.
All that has been accomplished since 2008-09 is there are a few more lifeboats and better communication when disaster strikes. But the risks of financial disaster have actually increased since 2008-09, as participants have bypassed regulations via shadow banking, dark pools,etc., and deepened their dependence on HFT skimming via superfast trades executed by superfast computers.
The “unsinkable” global financial system is rushing headlong toward its encounter with the iceberg, while the passengers and crew remain supremely confident and unaware of the risks, risks that will only become “obvious” after the global financial system has broken in half and sunk to the bottom, destroying most of those who believed it unsinkable.