The Latest

Harvard Professor Shilling For Central Banks In War On Savers

Last week, we were dismayed – although not entirely surprised – to learn that Germany’s Social Democrats have proposed a €5,000 limit on cash transactions and the elimination of the €500 note. The rationale: if you’re paying in cash for something that costs more than €5,000, you’re probably a terrorist or a “foreign criminal.” Of course that’s nonsense but it’s a reflection of a changing world.

Emerging Market Facing Massive Capital Flight, Sidelined Central Banks

OJ-AF738_EMLIQU_11U_20160205043015

HONG KONG—Central banks in some emerging markets are stepping up efforts to flood their financial systems with cash, highlighting the pressure that they face from rapid capital flight. The moves amount to a collective turnabout from months of interest-rate cuts in 2015 that helped send emerging-market currencies down by as much as 20% to 30% over the past year against the U.S. dollar.

What’s Killing The Market—-The Macro-Momentum Bubble Is Bursting

tech bubble jpm

Just over two weeks ago, JPM’s Marko Kolanovic, whose unprecedented ability to predict short-term market moves is starting to seem a little bizarre, warned that the next “significant risk for the S&P500” was the bursting of the “macro momentum bubble.” Specifically, he said that there is an emerging negative feedback loop that is “becoming a significant risk for the S&P 500” adding that “as some assets are near the top and others near the bottom of their historical ranges, we are obviously not experiencing an asset bubble of all risky assets, but rather a bubble in relative performance: we call it a Macro-Momentum bubble.”

Cracks In Another Bull Market Bubble—-P2P Loan Defaults Way Above Models

20160205_P2PLOANS_0

Peer-to-peer lending is probably a bad idea. Securitizing peer-to-peer loans is definitely a bad idea. Despite these virtually irrefutable truths, the P2P industry is thriving and Wall Street’s securitization machine couldn’t be happier about it. Aswe reported last May, P2P loan volume was set to surpass $76 billion in 2015 and one driver of the boom is demand from the likes of BlackRock, Morgan Stanley, and Goldman, who have all underwritten securitizations of loans originated on P2P platforms like LendingClub, the number one player in the space.

Mind The Wall Street Fleece Factory—-Post-IPO Insider Sales Are A Big Red Flag

Investors pay close attention to what executives and board members do with their own shares in a company. The theory goes that if these insiders who know a company best are buying shares, they must have good reasons to be optimistic. And if they’re selling, they may be seeing signs of trouble way before the ordinary stock investors catch on.

Racing The Clock—-The PBOC Has Only A Few Months To Stop The Collapse

china-fx-2

China’s FX reserves could fall to $2.8 trillion, the lower end of the IMF’s recommended range within a few months, which could spark a tidal wave of speculative selling, forcing the People’s Bank of China (PBoC) to throw in the towel and let the market decide the level of the renminbi exchange rate — that’s according to Société Générale’s perma-bear Albert Edwards.

Contra Club

Harvard Professor Shilling For Central Banks In War On Savers

Last week, we were dismayed – although not entirely surprised – to learn that Germany’s Social Democrats have proposed a €5,000 limit on cash transactions and the elimination of the €500 note. The rationale: if you’re paying in cash for something that costs more than €5,000, you’re probably a terrorist or a “foreign criminal.” Of course that’s nonsense but it’s a reflection of a changing world.

What’s Killing The Market—-The Macro-Momentum Bubble Is Bursting

tech bubble jpm

Just over two weeks ago, JPM’s Marko Kolanovic, whose unprecedented ability to predict short-term market moves is starting to seem a little bizarre, warned that the next “significant risk for the S&P500” was the bursting of the “macro momentum bubble.” Specifically, he said that there is an emerging negative feedback loop that is “becoming a significant risk for the S&P 500” adding that “as some assets are near the top and others near the bottom of their historical ranges, we are obviously not experiencing an asset bubble of all risky assets, but rather a bubble in relative performance: we call it a Macro-Momentum bubble.”

Cracks In Another Bull Market Bubble—-P2P Loan Defaults Way Above Models

20160205_P2PLOANS_0

Peer-to-peer lending is probably a bad idea. Securitizing peer-to-peer loans is definitely a bad idea. Despite these virtually irrefutable truths, the P2P industry is thriving and Wall Street’s securitization machine couldn’t be happier about it. Aswe reported last May, P2P loan volume was set to surpass $76 billion in 2015 and one driver of the boom is demand from the likes of BlackRock, Morgan Stanley, and Goldman, who have all underwritten securitizations of loans originated on P2P platforms like LendingClub, the number one player in the space.

Contra News & Views

Emerging Market Facing Massive Capital Flight, Sidelined Central Banks

OJ-AF738_EMLIQU_11U_20160205043015

HONG KONG—Central banks in some emerging markets are stepping up efforts to flood their financial systems with cash, highlighting the pressure that they face from rapid capital flight. The moves amount to a collective turnabout from months of interest-rate cuts in 2015 that helped send emerging-market currencies down by as much as 20% to 30% over the past year against the U.S. dollar.

Mind The Wall Street Fleece Factory—-Post-IPO Insider Sales Are A Big Red Flag

Investors pay close attention to what executives and board members do with their own shares in a company. The theory goes that if these insiders who know a company best are buying shares, they must have good reasons to be optimistic. And if they’re selling, they may be seeing signs of trouble way before the ordinary stock investors catch on.

Racing The Clock—-The PBOC Has Only A Few Months To Stop The Collapse

china-fx-2

China’s FX reserves could fall to $2.8 trillion, the lower end of the IMF’s recommended range within a few months, which could spark a tidal wave of speculative selling, forcing the People’s Bank of China (PBoC) to throw in the towel and let the market decide the level of the renminbi exchange rate — that’s according to Société Générale’s perma-bear Albert Edwards.