BlackRock’s Global Chief Investment Strategist, Richard Turnill, warned that markets have become eerily quiet recently. Now the firm is preparing portfolios for higher volatility.
U.S. equity market volatility is hovering around its lowest level since August 2015 and is well below its long-term average. This unusual calm follows declining market concerns about sliding oil prices, and the health of China’s economy and European banks. We do not expect this to last, and see a return to the higher-volatility regime that was the norm prior to QE.
The firm views Gold as a effective hedge if volatility spikes due to rising U.S. inflation fears. They also like TIPS and similar instruments. Foreign-currency exposure can act as a diversifier as well.
With WTI crude prices up 51% since early February, Macquarie Capital’s Vikas Dwivedi is calling for a short term correction back to the back to mid-$30 to low $30 range.
Dwivedi sees several short term factors impacting the price:
Continue reading “Crude Could Fall Back to $30s Short Term”
UBS thinks some gold buyers have gotten ahead of themselves and some near-term price consolidation could be in store. That said, downside will likely be contained and could present a buying opportunity.
In the firm’s view, the price of gold is dictated primarily by safe-haven investment demand and inflation hedging. They believe the direction of the gold price will be a function of investor belief in the two dominant opposing narratives that we see in the market today: Continue reading “Gold Near-Term Weakness Could Present Buying Opportunity – UBS”
The Chinese continue to have a huge appetite for U.S. companies and are paying up for the privilege. Just days after Terex said it will entertain an offer from Chinese rival Zoomlion, China’s Anbang now has the upper-hand to gain control of hotel giant Starwood Hotels & Resorts Worldwide (NYSE: HOT).
Starwood determined Monday that a revised $82.75 in cash, non-binding proposal from a Anbang Insurance Group-consortium is reasonably likely to lead to a “Superior Proposal” over its current merger agreement with Marriott International, Inc. (NASDAQ: MAR).
Of course, all of this is being driven by easy financing from China‘s mother banks.
Deutsche Bank equity strategist David Bianco sees the S&P 500 range bound between 1925 to 2100 until after the US general presidential election on November 8, 2016 (which more and more looks like a Donald Trump/Hilary Clinton showdown).
He does not expect the S&P to fall back into correction territory as a double-dip correction already happened. He said it would likely take clear signs of an impending US recession or a new global shock to cause renewed investor panic. Continue reading “Stocks to Remain Range Bound Until After Trump v Clinton – Strategist”
The New York Post exposed a “Glengarry Glen Ross”-type sales environment for risky loans at Morgan Stanley (NYSE: MS) in an article over the weekend.
In a follow-up to a March 2nd story, the Post said a twilight selling program split advisers into teams and offered them financial incentives to sell highly-profitable securities-based loans, or SBLs.
The program, original thought to only run in the New England regions, was wider than they original thought. One of the bank’s Florida complexes was also involved, the follow-up story said.
“They held it at night so that the advisers could focus on just selling the SBLs and not being distracted by trading and other work,” said Mitchell, who runs Incite Wealth Management. “It’s kind of an old-school sales ritual type of thing similar to the movie ‘Glengarry Glen Ross,'” he noted.
Fraud and Wall Street… the two go hand and hand and today was no exception.
Andrew Caspersen of PJT Partners was charged with a $95 million scheme to defraud investors, according to reports.
Caspersen, 39, was arrested on Saturday and is expected to appear in federal court later on Monday. His lawyer did not immediately respond to a request for comment.
Prosecutors said that beginning in July 2015, Caspersen fraudulently solicited investments by falsely claiming he had authority to conduct deals on behalf of his employer with another private equity fund.
Authorities said Caspersen obtained $25 million from a foundation affiliated with a New York hedge fund and one of the fund’s employees claiming their investment would be secured by $900 million of assets of Irving Place Capital Partners III SPV.
Instead, Caspersen took control of the funds for his own use, trading securities in his personal brokerage account, and largely lost the money due to aggressive options trading, prosecutors said.
Shortly before his arrest, Caspersen sought another $20 million from the same foundation and $50 million from another New York private equity firm, prosecutors said.
PJT said it was “stunned and outraged to learn of the fraudulent circumvention and violation of the firm’s compliance policies and ethical standards.”
Shares of PJT collapsed over 20% on the news before recovering modestly.
Live by the sword… die by the sword.
The robust subprime-laced auto lending market helped drive strong profits at regional banks, now cracks pose a threat to the banks most involved, according to a deep dive into the industry by analysts at Piper Jaffray.
Analysts led by Kevin Barker came away with three conclusions following their deep dive:
Continue reading “Cracks in Auto Lending Pose Threat to Regional Banks”
PIMCO’s Andrew Bosomworth discussed how monetary policy is divided into three phases: conventional, unconventional and monetisation.
- Conventional: policy rate changes, liquidity provision, reserve requirements
- Unconventional: negative interest rates, large-scale asset purchases
- Monetisation: full subordination to fiscal policy, helicopter money
Obviously, currently the ECB is in the unconventional phase and the U.S. Fed is trying to get back to the Conventional phase.
While unconventional methods appear to be ‘pushing on a string’ to create the right amount of inflation for a ‘beautiful deleveraging’, Bosomworth warns against monetisation, or ‘helicopter money.’
Continue reading “PIMCO Warns Against ‘Helicopter Money’”
Oh that pesky dollar… With tough talk out of fed heads this week, that they could be raising rates again as soon as April, the dollar is higher for the fifth consecutive day against a basket of major currencies.
Dollar strength is impacting oil, gold and other commodities as well as the broader equity market.
The implied probability of a rate hike at the Fed’s April 27th meeting jumped to 13.9% from 11.5% the prior day, according to the CME Group’s FedWatch tool. It was at just 1.9% last month.