Tag: finance

Ever since our creation, we have mocked the obsolescence of the concept of hedging in a centrally-planned, Fed controlled market (hence our name) saying – for example in 2015 – that “we are confident that as long as the Fed and central banks double as Chief Risk Officers for the market, “hedge” funds will be on an accelerated path to extinction, quite simply because in a world where a central banker’s money printer is the best and only “hedge” (for now), there is no reason to fear capital loss.”

But while hedge funds may be obsolete in a world in which there is no need to protect downside risk if central banks will inject trillion in liquidity any time there is even a modest pullback, then running a value investing strategy has been outright masochism, as fundamentals ceased to matter once the only thing that did matter is the Fed’s balance sheet, something we first pointed out back in 2010:

Take home message from Value Investor Congress: we are sick of looking at the Fed’s H.4.1 statement for investment decisions

— zerohedge (@zerohedge) October 13, 2010

This is especially true if paired with a short growth trade as the following chart make all too clear:

Now, a new scientific study confirms that our suspicions were correct all along, and that it is indeed the Fed whose market intervention has crippled hedge funds returns over the past decade.

A report from Alexei Orlov of the US SEC and Massimo Guidolin of the Bocconi University titled “Are Unconventional Monetary Policies a Priced Risk Factor for Hedge Fund Strategies?” tested 10 investing strategies against 18 unconventional monetary policy announcements from the Federal Reserve and European Central Bank between 2008 and 2016. And, as Bloomberg summarizes, it found that central bank policies are directly hitting more than half of the strategies, and indirectly whiplashing virtually the entire industry.

“The aim is to test whether – and how (i.e. positively or negatively) – each hedge fund index is exposed to monetary policy shocks,” the authors wrote in the introduction to their paper. The answer: pretty much everywhere.

The findings showed that central bank announcements “represent a risk factor that leads to negative, precisely estimated exposures” for six of the 10 strategies, which makes perfect sense: after all by definition hedge funds hedge, and with central banks intent on only one thing, i.e., to push stocks higher, it implicitly takes away at least half of the hedge funds’ expected returns, or at best forces them to become plain vanilla “long onlies.”

The strategies affected are convertible arbitrage, dedicated short bias, emerging markets, equity market neutral, fixed-income arbitrage and multi-strategy. And while global macro, equity long/short, managed futures and event driven strategies avoided that list, when the researchers looked at the indirect effects of policy pronouncements, it transpired there was virtually nowhere to hide.

In short, the Fed’s central planning of the market has meant that professional money managers of all stripes are now irrelevant, begging the question why pay 2 and 20 to have them manage money.

Meanwhile, 2020 is the 11th year in a row in which hedge funds struggle to outperform either their benchmarks or the broader market, with everything from overcrowding to Covid-19 hurting returns and shuttering funds.

It gets worse: as Bloomberg notes, Orlov and Guidolin found “breaks” in the conventional characteristics that help determine the return of each strategy, known  as factors, which corresponded to the UMP dates. That’s a tell-tale sign that Fed and ECB announcements are having such a large impact on the market as a whole it disrupts the foundations upon which hedge fund returns are built.

This means that in their attempts to prop up markets, central banks have broken it.

“Not only do we find that each of the 10 strategies and the industry as a whole feature a number of structural change episodes in risk exposures, but we also find that most of the endogenously determined break dates match, or nearly match, the UMP announcement dates,” they wrote.

So for all those wondering what to do in a world where finance professionals are totally clueless, here is a suggestion: with the Fed hell bent on making idiots the best performers out there, just give your money to the local neighborhood Robinhood trader. As the following chart shows, a basket of the 50 Retail Favorite stocks is up almost 30% YTD, massively outperforming both the S&P500 and a basket of Hedge Fund VIP stocks.

Authored by Daniel Payne via JustTheNews.com,

A highly anticipated clinical trial for a potential COVID-19 vaccine managed in part by the American drug company Moderna has resulted in some adverse effects in more than half of the trial’s participants, with one test group reporting “severe” symptoms. 

The trial, which is also being sponsored by the National Institute of Allergy and Infectious Diseases, administered the vaccine “as a 0.5-ml injection in the deltoid muscle” in two shots spaced about one month apart. Two separate groups received 25-microgram and 100-microgram doses, respectively. A third group with a 250-microgram dose was subsequently added. 

The vaccine “induced anti–SARS-CoV-2 immune responses in all participants,” the research team reported Tuesday in the New England Journal of Medicine. Researchers said that “no trial-limiting safety concerns were identified.” Yet a majority of participants still reported at least one side effect.

“Solicited adverse events that occurred in more than half the participants included fatigue, chills, headache, myalgia, and pain at the injection site,” the report states. Fever, joint pain and nausea were also reported. 

Side effects grew more common with more (and larger) injections, the scientists write: 

“Systemic adverse events were more common after the second vaccination, particularly with the highest dose, and three participants (21%) in the 250-μg dose group reported one or more severe adverse events.”

Notably, every participant in the two larger-dose groups reported adverse reactions after their second injections. One study participant in the smallest-dose group, meanwhile, was removed due to having developed hives after the first round of injections. 

The scientists said that due to the ongoing status of the project, they are not yet “able to assess the durability of the immune responses” generated by the vaccine, but that they intend to follow participants “for 1 year after the second vaccination” and examine regular blood samples to monitor the vaccine’s effects. 

A large trial “expected to evaluate a 100-μg dose” is “anticipated to begin during the summer of 2020,” the report states.

President Trump’s legal team is cooking up new objections to a subpoena for his tax returns and other financial documents filed by New York District Attorney Cyrus Vance, despite the Supreme Court rejecting his claim last week that he’s immune to criminal investigation.

On Wednesday, attorneys for the president filed a status report with a federal district court in New York, making it clear they intend to raise other objections – possibly including whether Vance’s subpoena is overly broad or relevant to a legitimate investigation, according to The Hill.

“The President should not be required, for example, to litigate the subpoena’s breadth or whether it was issued in bad faith without understanding the nature and scope of the investigation and why the District Attorney needs all of the documents he has demanded,” reads the Wednesday filing.

The Supreme Court ruled 7-2 this month that the president does not have absolute immunity to investigative subpoenas like the one issued by Vance.

“In our judicial system, ‘the public has a right to every man’s evidence,’” Chief Justice John Roberts wrote in the majority decision. “Since the earliest days of the Republic, ‘every man’ has included the President of the United States.”

Roberts also wrote that a “President may avail himself of the same protections available to every other citizen, including the right to challenge the subpoena on any grounds permitted by state law, which usually include bad faith and undue burden or breadth.” –The Hill

Another possible objection Trump’s team could raise is that a specific subpoena is intended to influence his official actions, or that compliance with said order could interfere with his official duties as president, the Supreme Court ruled – grounds that aren’t available to regular citizens.

The next status conference in the case is scheduled for Thursday.

A nationwide coin shortage is hitting major retailers across the US. Walmart is the latest retailer, and the largest, to announce, customers must use credit and debit cards when making purchases. 

“Like most retailers, we’re experiencing the affects of the nationwide coin shortage,” Walmart spokesperson Avani Dudhia told FOX 8. “We’re asking customers to pay with card or use correct change when possible if they need to pay with cash.”

Cash-paying customers are still welcomed at all stores, though self-checkout registers will only allow customers to pay with a card.

Federal Reserve Chairman Jerome Powell recently said virus-related lockdowns raised concerns about coin circulation. He told AP that the “flow of funds through the economy stopped” due to closures in the economy. 

Walmart was not sure how long the ban on money at self-checkout registers would last, considering it’s a nationwide issue. 

We’ve noted a handful of retailers so far that have banned cash/coins, including Kroger, Meijer, Dollar Tree, and Wawa. 

Twitter users seem to think the pandemic was a cover by elites to push a “cashless society:” 

Anyone else notice that post-corona, the cashless society is now almost completely in place with barely a whimper of dissent?

— Paul Joseph Watson (@PrisonPlanet) July 15, 2020

Went to #Walmart today. They would not allow customers to get any #cash back while checking out. They had a sign asking for #coins and would not allow the use of cash at self checkout.

This is an indicator something is coming. #TheGreatReset #TheGlobalReset

— TheLast✝️FreeGeneration (@John14_26_) July 15, 2020

At a Walmart 😐 seriously people!?!? Where did all of the coins go?? Corona didn’t eat them! 🙄😤

One world government? Cashless society?
Government rule!? One world government!?

Wake up America!!!!!!! Wake up Church!!!!!!! pic.twitter.com/8W5yXyztjL

— 🚫DM 🚫Lists 🐕🐈🙏♥️🇺🇸 (@soft63389) July 15, 2020

Walmart asking customers to pay with cards, amid ongoing national coin shortage https://t.co/PShtM1vSty Coin shortage is intentional! George Soros is behind this he wants along with his other cohorts For us to be a cashless society!

— julie carducci (@sseneqinu) July 15, 2020

@libertytarian a friend of mine posted this on her Facebook profile. Looks like Walmart is slowly rolling out the cashless society. Also, I went to a local VA Walmart and their self checkouts was all card only. No cash. pic.twitter.com/8LHDBGd88O

— Shane 🇺🇸 (@Skinner147) July 14, 2020

The “There is a National Coin Shortage all Self-Check puts are CARDS ONLY” experiment some places are running to see how the “cashless” system may operate. This sign was at MY local Walmart btw…meanwhile I got more coins then I need in the crib #FOH pic.twitter.com/9prLGScNWu

— Craig (@BrothahAmore711) July 13, 2020

The pandemic could be ushering in structural change, that is, a cashless society. 

Via SchiffGold.com,

The Federal Reserve serves as the great enabler. As I put it in a recent article, it is the engine that drives the most powerful government in the history of the world. The Fed’s ability to print money out of thin air backstops borrowing spending and removes any meaningful limits on the US government’s actions. It also creates the illusion that there are no consequences to the government’s actions.

We’re seeing that in spades in the central bank and federal government’s response to the coronavirus pandemic. The government is borrowing trillions of dollars and the Fed is monetizing that debt. On top of that, the central bank is propping up the stock market through its easy-money policy and corporate bond-buying programs.

Money is power and the Federal Reserve serves as an unlimited spigot pumping dollars into the system, enabling the biggest government in the history of the world to keep running.

As economist Mark Thornton put it in a Q&A published at the Mises Wire, we now have a generation in power that has no concept of monetary restraint. As a result, there is no need for government restraint. Thornton called it a collective “kick the can down the road” mindset.

It is truly remarkable. In the past, we had the gold standard restraint on fiscal and monetary policy (until 1971). That restraint had a lingering effect for a long time. However, the current group of voters and politicians no longer recognize that restraint or the consequences of ignoring a balanced budget restraint. The average American has no memory of the gold standard or even the stagflation of the 1970s. The current generation does not even recognize the idea of a government budget! The collective mindset is the classic ‘kick the can down the road.’ Obviously, the idea of a national debt limit is now rightly regarded as a joke.”

The federal budget deficit in June was nearly as big as the entire 2019 deficit and bigger than the budget shortfall in 2018. But people have been warning about budget deficits and the national debt for years. Most people don’t even care anymore. Thornton says we should.

Spending is out of control and tax revenues will probably miss the initial estimates. The millions of unemployed will likely have a hard time making tax payments. Expenditures for things like unemployment insurance and welfare payments will likely remain high. I think I am most concerned about interest paid on the national debt, as an uptick in rates could cause such payments and the deficit to balloon.

“Why should we care? The simple reason is that all this spending eats up real resources. The government buys something and the resources are not available for productive use. GNP (gross national product) goes up, but what are the real benefits? The government writes welfare payments or unemployment insurance checks and potential workers stay unemployed. It also raises future taxes. Good economic policy is about increasing private production and free trade. Bad economic policy is about living beyond your means and protectionism.”

We have been saying that the economy was already in bad shape before the coronavirus pandemic. The economy was a great, big, fat, ugly bubble that was doomed to pop. COVID-19 simply sped up this process. Thornton agrees with this assessment.

The rising unemployment and missed mortgage and rental payments will be linked to the government-mandated shutdowns, but the overall economy was already weak beforehand despite record stock markets and record low unemployment in late February. Savings were low and debt at all levels was very high. Job openings hit a record high in early December 2019 and were declining noticeably well before the virus and shutdowns hit. Therefore, I was expecting a weak economy in 2020 and the shutdowns brought it about sooner than anticipated and have no doubt made it worse. So, we have in effect both a business cycle depression and the economic restriction of the lockdown at the same time. I would not have been surprised if we had reached 10 percent unemployment, but obviously it would not have occurred so quickly without the shutdowns.”

Peter Schiff has been saying that the Federal Reserve’s money-printing will ultimately lead to a dollar crisis. But some believe the dollar’s role as the world reserve currency will save it. While the Fed’s policy is unprecedented and even outlandish, other central banks are going to even greater extremes resulting in a monetary race to the bottom. Thornton said it’s true that other central banks are trying to outdo the Fed, that doesn’t mean it’s no problem for the dollar.

Yes, while Fed policy is outlandish, other central banks are doing even worse. In particular, the Bank of Japan and the European Central Bank have been doing more so in terms of interest rates and buying assets. The Bank of Japan has increased its balance sheet 500 percent over the last decade, and they have had a near-zero interest rate policy for many, many years. The interest rate on Greek ten-year government bonds is 1 percent, for Spain it is 0.4 percent due to ECB asset purchases. Under normal circumstances who would lend to such governments for ten years for less than 1 percent interest? That says it all.

“It might seem that central bankers can paper over all our problems, but that will not be the case. Take a look at countries that have negative interest rates, negative interest rates on government bonds, and even negative prices for oil in futures markets. These are troubling facts that the world economy is fundamentally unbalanced.”

“The upside here is that this crisis holds the promise to discredit mainstream economics and fiat money.”

Update (1300ET): The billionaire rap icon, who announced his entry into the presidential arena in a July 4 tweet, told election strategist Steve Kramer that he was out of the race, New York Magazine reported Tuesday. Kramer was one of the campaign staffers hired by West to help get his name on the ballot in Florida, South Carolina and other states, according to the magazine.

But now “he’s out”, Kramer told NYMag’s Ben Jacobs.

*  *  *

Regardless of whether or not Kanye West’ presidential run is a gimmick, PR stunt or ploy to help Donald Trump, one thing it can’t be is ignored. West is actually polling at 2% according to a new national presidential poll conducted by Redfield & Wilton Strategies, according to The Hill. 

The news, although not to be taken too seriously, is still likely a minor headache for Democrats, who likely make up a majority of would-be West voters. Some have expressed concerns that West’s run – regardless of how serious – could wind up taking away crucial much-needed votes from Democrats. 

In a survey without West in the poll, Joe Biden led President Trump 48% to 40% while third party candidates like Jo Jorgensen, a Libertarian, and Howie Hawkins, a member of the Green Party, both got 1% of the vote. 

In the same survey, voters were asked: “If Kanye West is on the ballot in your state in the Presidential Election on 3 November 2020, for whom will you vote?”

It was then that Biden registered 48%, Trump registered 39% and Kanye registered 2%. The poll was administered less than a week after West announced, on Independence Day, that he would be running. 

West told Forbes after his announcement: “It looks like one big mess to me. One of the main reasons I wore the red hat as a protest to the segregation of votes in the Black community. … Also, other than the fact that I like Trump hotels and the saxophones in the lobby.”

West is up against the clock if he truly hopes to get his name on the ballot: more than 6 states have filing deadlines that have already passed and several more states have deadlines this week and next. 

Despite this, there is some indication West is taking things seriously. He was reported by New York Magazine to have a team in Florida last week gaining signatures for him to get on the ballot in what would be a crucial state in November. 

West is arguing that he should be given more time to collect signatures and get on ballots due to the pandemic. “I’m speaking with experts, I’m going to speak with Jared Kushner, the White House, with Biden,” West concluded.

Good luck with that.

Authored by Maria Copeland via Campus Reform,

A student at Texas A&M University who reported that racist notes had been left on his car windshield is responsible for the act, police say. 

KBTX-TV reported that in June, Texas A&M senior Isaih Martin alerted the university police when he allegedly discovered handwritten messages reading “All lives matter” and “You don’t belong here,” along with a third listing the N-word, on his vehicle, which he had parked at an apartment complex on the school’s property.

Martin posted a photo of the notes to a Twitter account that has since been made private. According to KBTX, the university responded to his post, asking him to report the incident. 

“For them to tell me I don’t belong here, when I have earned my spot like everybody else here, and am working to get a degree like everyone else is, that was just kind of hurtful because if anything I deserve to be here just as much as anybody else,” Martin commented at the time. 

“Acts of racism are irreconcilable with the values we uphold here at Texas A&M University. Those who promote hate, discrimination and disrespect are not welcomed at this institution. We are tired of bigoted members of our community marring the experiences of students of color,” Texas A&M President Michael K. Young said in a statement following the incident. 

He also announced that the university would offer a $1,200 reward to anyone who could provide information to identify the person responsible for the act. 

“Let me be clear: Incidents like the one yesterday have no place at Texas A&M. Anyone who believes that hate is acceptable is not wanted at Texas A&M.” 

Texas A&M police reported Thursday that, based on surveillance video footage, Martin likely placed the notes on his car himself. Footage taken from nearby cameras shows that passers-by may have come close to Martin’s car, but were only near the vehicle for a few seconds. 

The police report, obtained by KBTX, reads that Martin was seen moving around his vehicle, with two different “white specks” held in the area of his chest. The footage also showed him “stepping back and onto the sidewalk in front of his vehicle, most likely taking photos and videos. He then approaches his vehicle again on the passenger side and remains there for a few moments. He is then seen walking around the front of his vehicle. Martin then enters the driver’s door and drives away a few moments later. The total time spent at his vehicle is 1 minute, 15 seconds.”

No one besides Martin had sufficient time to place the notes on his car, the police concluded.

Martin told KBTX over the phone a few days ago that he would no longer be continuing the investigation with the police. He has made his Twitter account private, and he claims innocence, saying one of the people who passed by his car was responsible for the act. 

Police have closed the case, as the county attorney’s office deemed that leaving the notes fell under First Amendment speech protections and did not constitute a crime. Neither would the incident be considered a false report, since the event reported was not a crime. 

“As a public university, Texas A&M is limited by the Family Educational Rights and Privacy Act (FERPA) on providing specific student information and therefore will be unable to provide additional details,” the school said following the closure of the case. 

Like most polls leading up to November’s election, a new Monmouth survey finds Biden leading Trump, this time by a margin of 53-40.

This poll, however, revealed that 57% believe the so-called ‘silent majority’ of secret Trump supporters will hand Trump the win – an echo of 2016 when ‘rural America and the silent majority‘ came out in numbers to support the New York real estate tycoon.

Despite the challenger’s poll lead, voters are evenly divided on who they think will win the Keystone State’s electoral votes this year as a majority believe that their communities hold a number of “secret Trump voters.” Other poll findings include a close margin on the generic congressional ballot and better reviews for the commonwealth’s governor than for the president on handling the pandemic.

…

Most registered voters (54%) say they were surprised in 2016 when Trump ended up winning Pennsylvania’s electoral votes. They are evenly divided on whether they expect Trump (46%) or Biden (45%) to win the commonwealth this time around. One reason for this seems to be that most voters (57%) believe there are a number of so-called secret voters in their communities who support Trump but won’t tell anyone about it. Less than half that number (27%) believe there are secret voters for Biden. The suspicion that a secret Trump vote exists is slightly higher in swing counties (62%) and Clinton counties (61%) than in Trump counties (51%). The belief in a secret Biden vote is somewhat more prevalent in Trump counties (32%) than Clinton counties (23%) and swing counties (23%). –Monmouth

“The media consistently reports that Biden is in the lead, but voters remember what happened in 2016,” saiud monmouth pollster Patrick Murray (via Bloomberg). “The specter of a secret Trump vote looms large in 2020.”

Underestimating that “Shy Trump” voter was one reason pollsters underestimated Trump’s support in four years ago. A study by the American Association of Public Opinion Research suggested that asking about neighbors “warrants experimentation.”  “The general idea is that if people will not admit they personally would vote for Trump, they would admit that their neighbors would,” the AAPOR report said. Trump has been counting on that secret vote as national polls show him behind by 9 points and losing in the three battleground states that propelled him to victory four years ago: Pennsylvania, Michigan and Wisconsin. “I think a lot of people don’t want to talk about it,” Trump said Tuesday. “I think they’re not going to say, ‘Hey, I’m  for Trump. I’m for Trump.’ They don’t want to go through the process. And I fully understand that, because the process is not fair,” Trump said. -Bloomberg

The poll found that Biden has an advantage with voters under the age of 50 and older than 65, while Trump has the edge among those between 50 and 65.

“We’re leading all the polls, but also our voters don’t believe polls” is probably the zone D’s want their base in through November

— Benjy Sarlin (@BenjySarlin) July 15, 2020

At the end of last month, Gen. Michael Flynn (Ret.) penned an op-ed calling on the silent majority to “Wake up!” – warning that “our silent majority (the indifferen) can no longer be silent.” 

*  *  *

It is through our rights and privileges as American citizens that we challenge the political class and leverage our election process so “we the people” can decide who will govern.

We must not allow a small percentage of the powerful to overtake our position on America’s battlefield. We, as free-thinking and acting individuals, must control how we will live and not allow a few passionate others to change our way of life.

To the silent and currently indifferent majority: Wake up. America is at risk of being lost in the dustbin of history to socialism. The very heart and soul of America is at stake.

In war, as in life, most failure comes from inaction. We face a pivotal moment that can change the course of history of our nation.

We the people must challenge every politician at every level.

We also must stand and support our law enforcement professionals: They are the pointy end of the spear defending us against anarchy.

Now is the time to act.

Authored by Sophie Mann via JustTheNews.com,

Video from the body cameras on two former Minneapolis police officers charged in the death of George Floyd will be made available Wednesday for public viewing, potentially showing more about the fatal arrest that has sparked months of protests.

The attorney for former Officer Thomas Lane last week filed the video from his client and from fellow former Officer J. Kueng. But until now, only written transcripts of the encounter had been made public.

The videos can be viewed only by appointment.

Lawyers for Lane and Kueng, in addition to news media outlets, are petitioning to make the videos public, arguing that they will help construct a fuller picture of what happened during Floyd’s encounter with law enforcement on May 25. 

Floyd died after former Officer Derek Chauvin knelt on his neck for almost nine minutes while Floyd told the officers he couldn’t breathe. Chauvin is charged with second-degree murder, third-degree murder and manslaughter.

Former officers Lane, Kueng and Tou Thao were also on the scene while the incident occurred and are charged with aiding and abetting both second-degree murder and manslaughter. 

Lane’s attorney, Earl Gray, says the footage shows Floyd “actively resisting and acting erratic” and that allowing the bystander video to be the only one that is widely circulated “is not fair,” and tells only a piece of the story.

An attorney for the media outlets seeking a public release of the footage argued that the video should be made widely available to “all members of the public concerned about the administration of justice in one of the most important, and most-watched, cases this State – perhaps this country – has ever seen.”

The written transcripts state Floyd appeared to behave cooperatively toward the beginning of the encounter but becoming unnerved when the officers place him into the squad car. Floyd repeatedly stated he was claustrophobic and flailed around the back of the squad car so aggressively as to injure himself.