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Flirting with US high yield
Capital Markets
<p>U.S. high yield is looking more attractive now than it has in about a year, but it may not be quite enticing enough for investors yet, writes Eoin Walsh, partner and portfolio manager at TwentyFour Asset Management.</p> <p>"You are now being better compensated for the risk and with the Fed likely to remain very vigilant, even if they do raise rates, overall rates should remain low and should continue to keep default rates low - although energy companies are likely to suffer," says Magrath.</p> <p>The U.S. index offered 6.08% last November, and has widened to more than 8% today, much more than the Euro index. But this late in the cycle, investors need to remain cautious. Carl Icahn has been vocal about the worst case scenario, saying an overheating high yield market is dangerous for investors.</p> <p>Is U.S. high yield the right move? Perhaps it's a wait-and-see.<br /> Photo: Jennie Park</p>
Goldman's VIP list gets massacred, turning in worst relative returns since 2008
Hedge Funds
The very important positions are getting very horribly slaughtered. Goldman Sachs' VIP list -- the top 50 positions for 667 hedge funds with $884 billion in assets -- has turned in the worst relative performance to the S&amp;P 500 since 2008, losing 7%, reports CNBC. Valeant Pharmaceuticals led the way down, collapsing 64% in the third quarter. In fact, healthcare accounted for about 70%
Daily Scan: Oil prices rise after Turkey shoots down Russian fighter
Capital Markets
<p>Updated throughout the day</p> <p>November 24, 2015</p> <p>Oil jumped more than 3% on tensions in the Middle East and gold bounced its lows as markets grew increasingly nervous about the Turkey-Russia showdown. Meanwhile, the hunt for a suspect in the Paris bombings took a new turn when a street cleaner found a suicide vest in the trash in a suburb. Brussels remains in high alert a fourth day as the country battles serious terror threats.</p> <p>Here’s what else you need to know:</p> <p>Turkey downs Russian-made SU-24; Putin issues warning. The warplane was shot down by Turkish fighter jets after repeated air space violation warnings. In a televised appearance, Russian President Vladimir Putin warned that the action would have "serious consequences for Russo-Turkish relations." One of the pilots was shot and killed as he parachuted into Syrian territory and the other was captured by rebel forces. New York Times (paywall)</p> <p>Presidents Obama, Hollande meet to discuss war on terror. It's the first time Francois Hollande has been to the U.S. since the attacks in Paris on November 13. Hollande is on a global tour to whip up support for the battle against the Islam State group. The effort to create a coalition is more complicated now that Turkey has shot down a Russian fighter jet; Hollande visits Putin later this week. Wall Street Journal (paywall)</p> <p>Two airlines cancel Sharm el-Sheikh flights. British Airways and Easyjet have canceled services between the U.K. and the Egyptian resort town at least through the beginning of January. BBC</p> <p>&nbsp;</p> <p>Worst of all worlds for GDP revision. The second estimate for third quarter GDP was raised to 2.1% from 1.5% -- but only because inventories are higher. Personal consumption was weaker. Second quarter GDP was 3.9%. WBP Online</p> <p>S&amp;P /Case-Shiller housing index up 4.9% in September. The index, a rolling average of the previous three months, shows continued strength in housing prices year-over-year. “Home prices and housing continue to show strength with home prices rising at more than double the rate of inflation,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&amp;P Dow Jones Indices. S&amp;P Dow Jones Indices</p> <p>The State Department has issued a global travel alert in the face of rising terrorism. The travel alert will be in place until February 24 and is in response to a tide of terror attacks by the Islamic State group, al Qaeda, and Boko Haram.  BBC</p> <p>Chicago police officer charged with murder. Jason Van Dyke, a white officer, has been charged with first-degree murder in the death of black teen Laquan McDonald in October. Van Dyke will appear in court Tuesday afternoon. CNN</p> <p>In another Midwest city, five people were shot near a "Black Lives Matter" protest. Gunfire erupted in Minneapolis were people were protesting the shooting death of Jamar Clark. The suspects are three white males. CNN</p> <p>Fatal twin blasts in Egypt hotel on Sinai Penninsula.  Two bombs exploded outside a hotel in Egypt housing election judges on Tuesday, killing at least three people and injuring 12. The blasts came a day after the second round of a parliamentary election closed. Guardian</p> <p>German business sentiment climbs to 17-month high. The Ifo Institute Index of German Business Executive Confidence – commonly known on the strasse as the “Ifo” – came in at 109 in November, beating estimates for an unchanged 108.2 reading. Financial Times (paywall)</p> <p>Audi to pay millions for software update. The Volkswagen-owned carmaker reportedly needs to pay somewhere in the mid double-digit millions to update the software in its U.S.-market 3 liter diesel models. Authorities however have yet to give the German giant approval. MarketWatch</p> <p>Aussie troops “will not fight IS”. Australian prime minister Malcolm Turnbull has said the so-called Islamic State (IS) group is weak and Australia has no plans to send combat troops to fight it. His remarks contrast those of his predecessor Tony Abbott who described IS as a “death cul
Video: Turkey releases 'proof' that Russian jet violated airspace
Capital Markets
<p>Via Business Insider</p> <p>Photo:</p> <p>Photo: Marina</p> <p>&nbsp;</p>
Square may face a 'reckoning' in next downturn but lending startups on stronger footing
Fintech has been one of the biggest beneficiaries of the economic meltdown -- call it the silver living on that enormous storm cloud. Companies like Lending Club, Kabbage, and Square emerged from the ashes of a finance system gone haywire. They've also benefited from an expanding economy -- even if growth has been less than rip-roaring. Abhas Gupta, a venture
Hong Kong freedom of press faces test if Alibaba buys South China Morning Post
<p>Yet another internet mogul is eyeing an old-media news property. The New York Times is reporting that Jack Ma is in talks to buy Hong Kong's South Morning China Post.</p> <p>Can the CEO of Alibaba maintain the editorial independence of the SCMP? Even Jack Ma answers to a higher authority: Beijing. As any mainland billionaire will tell you, the Chinese authorities are not afraid of throwing their weight around.</p> <p>Freedom of the press was enshrined when Great Britain gave up control of the former colony. But there's freedom and then there's business.</p> <p>The NYT notes that it's not clear who the owner of the SCMP will be -- Jack Ma or Alibaba.</p> <p>In any event, Ma follows a long tradition of industrial/internet businessmen eyeing media properties. In 2013, Amazon CEO scooped up The Washington Post. The NYT reports the deal makes business sense for Ma:<br /> A deal for The South China Morning Post, the person said, would fit in with Alibaba’s broader holdings. The company owns stakes in Chinese Internet sites with a media bent, like Youku Tudou, which is similar to YouTube, and Sina Weibo, akin to Twitter. The person said that The South China Morning Post had a good brand and that the takeover “might lead to some synergy.” Any such advantages would be easier to realize if Alibaba were the buyer, the person said.<br /> Photo: Melies the Bunny<br /> &nbsp;</p>
The long-term investing impact of the Paris attacks
Asset Management
<p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>Last week’s horrific terrorist attacks in Paris were a reminder that, unfortunately, the ongoing fight with global terrorism is still with us, and my thoughts are with those affected by the tragedy.</p> <p>In a new paper, “After the Paris Tragedy,” the BlackRock Investment Institute recently shared some insights on how this significant escalation in the intensity of the terrorist threat could impact the economy and markets going forward. Here are three of the key points.</p> <p>Episodes of terror tend to accentuate existing economic and market trends, rather than constitute turning points. The market impact of past terror episodes, including the 2005 London bombings and 2004 train bombing in Spain, was generally ephemeral, according to a BlackRock analysis of data accessible via Bloomberg. In other words, the attacks created headlines, become market talking points and then disappeared. If anything, they heightened the trajectory of the economy and markets. For instance, the September 11 attacks magnified the 2001 U.S. tech bubble recession, but didn’t cause it.</p> <p>Similarly, in the near term, the tragedy in Paris is likely to bolster economic trends already underway in Europe. The fallout from these attacks will probably put some pressure on the French economy as well as the euro. A likely (but reversible) dent in European consumer confidence should cement plans by the European Central Bank (ECB) for more easing measures in December. Meanwhile, France will likely further loosen the austerity reins to boost defense spending, with other European Union (E.U.) members following suit.</p> <p>The longer-term impact of Paris could be different. The cause of the Paris attacks is rooted in a systematic breakdown of state control in the Middle East. The region is dogged by the aftereffects of the Arab Spring, sectarian conflicts and proxy wars between Sunni Saudi Arabia and Shiite Iran, and this cycle may just be getting started, as seen in recent attacks on civilians and the bombing of a Russian airliner.​</p> <p>With the Islamic State (ISIS) and its affiliates set on internationalizing their reach, the terrorist threat against the West is likely the highest it has been since 2001. If the Paris tragedy marks an evolution toward an extended, global conflict, the market impact could be much greater than past terror attacks stemming from regional conflicts.</p> <p>In addition, the Paris tragedy will complicate the path toward a political solution to the European refugee crisis, and the outcome is still unclear. It could lead to closed borders and harden the case in the U.K. for leaving the E.U., or alternatively, we could see more cooperation and integration among E.U. members.</p> <p>Geopolitics could start having a greater influence on markets going forward. Markets will have to contend with many political uncertainties in 2016. These include possible setbacks to the European project in the face of the refugee crisis and risk of more terror attacks; rising instability in the Middle East likely to be aggravated by the impact of low oil prices; a Russia and China increasingly assertive abroad while grappling with economic slowdowns at home; and a U.S. presidential election with a wide-open field of candidates and outcomes.</p> <p>These risks are playing out against a backdrop of asset prices propped up by years of plentiful liquidity. Liquidity conditions may be less benign in 2016. The Federal Reserve (Fed) is set to raise interest rates for the first time in nearly a decade, and the events in Paris aren’t likely to alter this. Elsewhere, emerging market central banks and sovereign wealth funds have been selling reserves and risk assets to defend currencies and or plug budget holes.</p> <p>This means markets are likely to pay more attention to geopolitics going forward, and it calls for cautious navigating in 2016.</p> <p>Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog.</p> <p>This article wa
NY Attorney General investigating possible manipulation in foreign-exchange trading
Capital Markets
<p>&nbsp;</p> <p> The New York Attorney General's office is investing possible foreign-exchange manipulation.<br /> Brokers are suspected to be engaged in "spoofing," whereby orders to buy or sell are entered into the market with the intent of being canceled prior to filled.<br /> Subpoenas have been sent to large forex brokers which may force the companies to release their records.</p> <p>The New York General Attorney's office, led by Eric Schneiderman, is investigating potential manipulation in foreign exchange trading, according to a Bloomberg report which cited "a person familiar with the matter."</p> <p>According to Bloomberg, Schneiderman ...</p> <p>Full story available on<br /> Photo: MoneyBlogNewz</p>
Clinton, Sanders and Trump not big fans fo Pfizer-Allergan deal
Capital Markets
<p> Following months of takeover talks, Pfizer Inc. (NYSE: PFE) announced on Monday it has acquired Allergan PLC (NYSE: AGN) for around $155 billion.<br /> The combination of Pfizer and Allergan marks the largest consolidation in the healthcare space.<br /> Presidential candidates publicly opposed the merger following the announcement.</p> <p>The healthcare sector saw its largest consolidation yet as Pfizer has agreed to acquire Allergan in a deal valued at around $155 billion.</p> <p>Pfizer's acquisition also represents the single largest inversion ever as U.S.-based Pfizer may be able to officially move its headquarters to Allergan's Irish domicile. By doing so, Pfizer's effective tax rate is expected ...</p> <p>Full story available on<br /> Photo: United States Mission Geneva</p>
Get ready for Thanksgiving week market doldrums
Capital Markets
<p>Everything except shopping slows down over the holidays in the United States, and that certainly as much true of Wall Street as anywhere else. That’s why it’s not too surprising to hear there’s hard data that back up the slowdown in the financial sector around Thanksgiving and Christmas.</p> <p>A November 17th report from Credit Suisse Trading Strategy highlights that the holiday doldrums on Wall Street are the real deal, with average volumes barely half of their normals. As Ana Avramovic and the CS team explain, the Thanksgiving holiday is pretty much a one-week blip and then back to business as usual until the week of Christmas when things slow down to a crawl.</p> <p>Thanksgiving week is historically slow<br /> Avramovic et al. point out that based on average Wall Street trading data over the past nine years:</p> <p> Trading volume on the Monday through Wednesday of Thanksgiving week is usually around  7% lower than the daily volumes over the previous two weeks.<br /> The volume on Friday’s half day is typically around half the volume of the Monday through Wednesday’s average.<br /> That said, most everybody is apparently ready to get back to work after the long holiday weekend, as post Thanksgiving week volumes are usually pretty close to pre Thanksgiving week volumes.</p> <p>December also likely to be a slow month<br /> Taking a look at trading trends throughout the rest of theholiday season after Thanksgiving, December’s average daily volume has been 3% below the year’s average, and 5% lower than November’s average, when you examine data going back over the last 17 years.</p> <p>This year hasn’t quite followed the typical pattern, though.August is typically the slowest month of the year, but this August had the 2nd highest monthly ADV in four years (after Oct 2014). Meanwhile, April and May were exceptionally slow.</p> <p>Avramovic and the CS team note that if you ” consider that December’s volume is 5% lower than November’s, then we might expect to see around 6.8 bn shares/day in December.”</p> <p>This article was originally published by ValueWalk. <br /> Photo:Steve Voght</p>