Let There Be Light in U.S. Markets
(MENAFN- ProactiveInvestors - UK) Fuller Treacy Money 09:37
Michael Bloomberg Considering Presidential Run: Current Discourse an Outrage and an Insult to the Voters
Here is the opening of this welcome announcement reported by US Weekly:
As 2016 presidential hopefuls are starting to bow out of the race during the early days of the primary season Michael Bloomberg told The Financial Times on Monday February 8 that he is considering throwing his hat into the ring.
'I find the level of discourse and discussion distressingly banal and an outrage and an insult to the voters' the businessman 73 told the paper about the current state of the race. He added that the public deserves 'a lot better.'
According to The New York Times the billionaire is considering running as an independent candidate.
The former mayor of New York who held the office from January 2002 until December 2013 also told The Financial Times that he would have to start including his name on ballots at the beginning of March. 'I'm listening to what candidates are saying and what the primary voters appear to be doing' he said.
But according to The New York Times report from January there may not be a lot of support for Bloomberg. A poll commissioned by the media executive found that 17 percent of Democrats and 9 percent of Republicans had a favorable view of the former mayor while half of Republicans and 26 percent of Democrats had an unfavorable view.
David Fuller's view
I certainly hope Michael Bloomberg does run as it would be good for politics and raise the incredibly low standard among politicians and not just in the USA.
What Executives Say About the Possibility of a U.S. Recession
Here is the opening of this topical article from Bloomberg:
Executives across corporate America are being asked for their views on whether a recession is in the offing.
Growth in the U.S. decelerated to a 0.7 percent annualized rate in the fourth quarter as companies contended with a slower global economy. The median probability for a U.S. recession in the next 12 months jumped to 19 percent in last month's Bloomberg survey of economists the highest since February 2013.
As stock and oil prices slide executives are offering their perspectives on the economy in conversations with analysts and investors. These comments were collected by Bloomberg from earnings calls meetings and conferences the past three weeks.
John Thain chairman and chief executive officer CIT Group Inc.:
'Given the recent performance of the equity market and our stock price the market seems to indicate a recession is imminent. I don't see that. Low energy prices do not cause recessions. While the energy sector itself is weak the U.S. economy is still growing." (Feb. 2)
Stephen Schwarzman chairman and CEO Blackstone Group LP:
'While it's always possible that a market correction becomes something more significant we at Blackstone do not see a recession in the U.S. We do believe that global GDP growth is slowing and we've seen a slowdown within certain sectors and regions in our global portfolio as a result." (Jan. 28)
David Fuller's view
Stock markets are better indicators of investor sentiment than economic prospects. Today investors are frightened by uncertainty; excessively choppy market action due to high-frequency trading; forced sales by sovereign wealth funds all of which are contributing to what will eventually be a healthy contraction in valuations.
My personal portfolio
Two long-term profits and a loss taken
Credit Market Risk Surges to Four-Year High Amid Global Selloff
This article by Aleksandra Gjorgievska and Tom Beardsworth for Bloomberg may be of interest to subscribers. Here is a section:
Exchange-traded funds that hold U.S. junk bonds slid to their lowest levels in almost seven years. BlackRock's iShares iBoxx High Yield Corporate Bond exchange-traded fund and SPDR Barclays High Yield Bond ETF both fell to the lowest levels since 2009.
Financials and energy were the two investment-grade sectors that added the most risk in the U.S. Markit CDX North American Indexes show. In high yield energy communications and health care fared the worst.
Chesapeake Energy Corp. the U.S. natural gas driller that's been cutting jobs and investor payouts to conserve dwindling cash flows lost more than half it stock market value Monday after a report that it hired a restructuring law firm.
The company's bonds led losses among high-yield debt on Monday. Chesapeake's notes due March 2016 tumbled to a record to 74.5 cents from 95 cents last week while its bonds maturing in 2017 fell to an all-time low at 34 cents.
'Broad oil weakness has now turned into distressed energy cases which investors view as possibilities of higher risk of restructuring or debt exchanges" Ben Emons a money manager at Leader Capital Corporation. 'Nothing has been announced of that matter but markets move quicker ahead of such possibility happening."
Eoin Treacy's view
Regardless of the answer when someone asks whether a default is imminent one has to conclude that the situation is troubling. This is as true of Chesapeake today as it was of Greece Portugal et al a few years ago.
Chesapeake's 2017 6.25% Senior UnSecured bullet bond now yields 150% suggesting very few people think it will make its last coupon payment due in July.
Alphabet becomes the world's largest listed company
This article from The Economist may be of interest to subscribers. Here is a section:
ON FEBRUARY 1st the day that Ted Cruz defeated Donald Trump in the Republican caucus in Iowa Google's parent company Alphabet won a contest of its own vaulting past its longtime rival Apple to become the most valuable listed company in the world by market capitalisation. Alphabet supporters are chuffed with the firm's strong quarterly earnings and new corporate structure announced last August. This was the first time Alphabet has shared more information about the performance of the firm's 'moonshot' projects such as self-driving cars and Nest smart thermostats. In 2015 these projects (i.e. not including the core advertising business Google) had an operating loss of around $3.6 billiona hefty figure but less than some analysts had feared.
Alphabet is now predominantly an advertising firm but it is selling a story about its ability to change and become more things to more people. Its believers think the firm will turn at least one of its moonshot projects into a significant earner of profits. The firm has a history of adeptly repositioning itself: it purchased Android in 2005 and YouTube in 2006 which helped it profit from the rise of smartphones and online video. It is also a leader in artificial intelligence an important area of investment for internet firms today with applications in everything from autonomous cars to photo-recognition as well as in Google's original internet-search business.
Eoin Treacy's view
A week might be a long time in politics but it's even longer in the markets when trades can be fired off in fractions of a second. Alphabet's market cap has fallen by close to $50 billion over the last week so that Apple is once more the world's largest company. Amid the headlines proclaiming Google's rapid ascent there was one statistic that seems to have been overlooked.
This man wants to upend the world of high-frequency trading
Thanks to a subscriber for this article by Anora Mahmudova for MarketWatch may be of interest. Here is a section:
'Markets have gone light years ahead while the surveillance system is outdated' said Joe Saluzzi co-founder of Themis Trading and a critic of high-frequency traders.
The SEC ordered the CAT's creation in 2012 outsourcing it to a partnership of national securities exchanges and associations known as self-regulatory organizations which are responsible for self-policing members including the NYSE Nasdaq OMX BATS Chicago Board of Trade and the Financial Industry Regulatory Authority (Finra) an independent not-for-profit organization authorized by Congress to regulate market participants.
Guidelines for the project indicated that it would be implemented in 2015. There have been more than 700 meetings to discuss parameters costs and vendors according to the Financial Times. As of November there was only a shortlist of potential vendors Finra SunGard and Thesys which the SEC is reviewing.
This frustrates Hunsader who calls the task 'obscenely easy' since he is already able to collect similar data through his subscription feeds albeit without participants' IDs. 'The Consolidated Audit Trail will NEVER get built' he tweeted recently.
Spokespeople for the partnership and separately the SEC declined further comment on the project.
Hunsader also laments the legal immunity afforded the exchanges which can't be sued if for example an investor believes others had access to information that gave them unfair advantages.
Granted immunity when they were created as nonprofit membership organizations because they are regulated by federal agencies some say they should have lost it when they became for-profit corporations. Without it Hunsader said it would be easier to hold exchanges accountable to market participants.
He points to a class-action suit that accused the major stock exchanges of making data available to high-frequency traders before the rest of the investing public. That case was dismissed by a federal court last year the judge saying the court lacked jurisdiction; the decision was appealed.
'If exchanges are stripped of their legal immunity legal cases and market forces would sort out the problem' said Hunsader.
And he says the exchanges' fines for quote-stuffing and other forms of wrongdoing are too low. 'A $75000 fine for abusive behavior is like instituting a 10-cent speeding ticket' he said.
Eoin Treacy's view
If exchanges have legal immunity from showing clear favouritism to their HFT clients they have absolutely no incentive to change. That helps to explain the slow pace of decision making in a sector clearly in need of reform.