Tag: featured

New Jersey Freaks as David Tepper Packs Bags to Florida

Hedge fund titan David Tepper is sick and tired of paying nosebleed-high income taxes in New Jersey and has now made Florida the permanent home for his hedge fund and himself.  Now state revenue officials in high income tax states are freaking out.

From Bloomberg:

Tepper, 58, registered to vote in Florida in October, listing a Miami Beach condominium as his permanent address, and in December filed a court document declaring that he is now a resident of the state. On Jan. 1, he relocated his Appaloosa Management from New Jersey to Florida, which is free of personal-income and estate taxes.

His move has state revenue officials on alert.

“We may be facing an unusual degree of income-tax forecast risk,” Frank Haines, budget and finance officer with the Office of Legislative Services told a Senate committee Tuesday in Trenton.

Some 40% of New Jersey’s revenue comes from personal income taxes so it’s a big deal.  Top earners in the state can pay up to 9%.

With zero personal income tax in Florida it is no wonder Mr. Tepper and other hedge funds are looking to set-up shop in Florida and other tax-friendly states, both professionally and and personally.

There will likely be no end to the exodus of capital from highly-taxed states.

Retailers Dead Money as Economic Cycle in Later Stages – Barclays

Barclays came out negative on the U.S. Retail Broadlines/Hardlines sector in a report Thursday entitled “It’s About to Get a lot Harder.”

Analyst Matthew McClintock sees an asymmetric risk profile for investors at this stage of the economic cycle.  They highlighted that revolving consumer credit has accelerated at the same time retails sales have decelerated.  This, according to the analyst, suggests we are at the later stages of the economic cycle. Continue reading “Retailers Dead Money as Economic Cycle in Later Stages – Barclays”

Probability of Near-Term Rate Hike Plunges

Today’s comments from Fed Chairman Janet Yellen on rates pushed the probability of any near-term rate hike sharply lower.

The implied probability of an April quarter-point hike fell from 11.5% to 4.6%.

Aprilhike

The implied probability of a June quarter-point hike fell from 34.6% to 28.4%.  The probability of a 50bps-hike went in June went from 3.5% to 1.2%.

junehike

 

California Likes Unemployment; Raises Minimum Wage to $15/hr

California became the first state in the nation to commit to raising the minimum wage to $15 per hour statewide.

Under the plan, minimum wage will rise to $10.50 per hour on January 1, 2017 for businesses with 26 or more employees, and then rises each year until reaching $15 per hour in 2022.

Amid the news it will be important the bookmark the February 2016 unemployment stats (below) as a benchmark:

caluerate

Basic economics says the unemployment rate will likely go up from here, that is if the labor force stays the same.  As jobs dry up, those on the margin tend to leave the labor force all together and get on the welfare rolls – thus allowing the government to fudge the unemployment rate number.

 

Gold Near-Term Weakness Could Present Buying Opportunity – UBS

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”

Stocks to Remain Range Bound Until After Trump v Clinton – Strategist

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”

PIMCO Warns Against ‘Helicopter Money’

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’”

Ford is Ready for an Auto Collapse But are Investors?

Yesterday Ford (NYSE: F) made headlines after saying they would be profitable in North American even if SAAR fell to 11 million.

While this is an impressive statement, maybe the takeaway is that SAAR could actually fall to 11 million!  That would be down a whopping 37% from 2015 levels!

According to UBS analyst Colin Langan, in year one of the downturn, Ford believes Continue reading “Ford is Ready for an Auto Collapse But are Investors?”

Low Oil Prices Claim Two More Victims

Low oil prices have added two more victims today in two separate industries today.

  1. Quantum Fuel Systems Technologies Worldwide, Inc. (NASDAQ: QTWW) filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California.  Quantum Fuel Systems was spun-off from IMPCO Technologies in 2002.  The company is a leader in the innovation, development and production of natural gas fuel storage systems and the integration of vehicle system technologies including engine and vehicle control systems and drivetrains.  Needless to say but there is probably not too much demand for alternative fuel sources with gasoline at below $2 per gallon nationally.
  2. Emerald Oil, Inc. (NYSE: EOX) announced that the Company and its subsidiaries filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware.  Commenting on the bankruptcy the company said:

    “Like many other exploration and production companies, Emerald’s operations have been significantly impacted by the dramatic decline in oil prices, the continued low prices of oil and natural gas, and the general uncertainty in the energy markets. These macro-economic factors, coupled with Emerald’s substantial debt obligations, resulted in the Company’s decision to explore strategic restructuring alternatives to reduce its debt and achieve a sustainable capital structure. Over the last nine months the Company explored and presented multiple solutions to its lenders to solve the Company’s current financial condition, however the Company was unable to obtain the requisite lender consent. Emerald continues to evaluate and discuss alternatives with its stakeholders and believes that an in-court sale process will maximize value and position Emerald for future profitability.”

 

Deutsche Bank: Commodity Rally Won’t Last

Deutsche Bank believes the year-to-date commodity price rally appears to be driven by incrementally positive data from China and a weaker USD.  They don’t expect this trend to continue and still believe supply cuts across most commodities are required.

They remain concerned that supply cuts may now take longer, with improving options for marginal producers in the last three-months, and capacity reductions grind slower-than-expected on competing stakeholder interests and high barriers to exit.

Continue reading “Deutsche Bank: Commodity Rally Won’t Last”