WorldoutofWhack

Kripa Mahalingan writes “
“Playtime is up for asset management companies, who have been designing imaginative schemes, as SEBI steps in with new regulations. Now it is time for fund managers to colour within the lines “

Outlook money presents us with the following chart:

Indian Portfolio managers will obviously want to defend their turf but the advancement is technology has taken away the asymmetry in information and democratized the information which is slowly getting priced at or moving quickly to ZERO.

This is quite evident in the performance of actively managed large cap funds where underperformance percentage in both short term and long term is quite stark.

Even among midcaps funds,almost 30% of funds are not beating the benchmarks over 5 year period and most of the this underperformance has come about due to change in regulations and narrowness of this rally during last three years.

This is no different than US where 5 stocks have contributed to 30% of S&P returns over last 3 years.

Investing environment

The world is slowly moving towards oligopoly and this market concentration among few players is also leading to concentration in market share and profitability. This is quite evident in US and as Jonathan Tepper writes in The Myth of Capitalism “tells the story of how America has gone from an open, competitive marketplace to an economy where a few very powerful companies dominate key industries that affect our daily lives. Digital monopolies like Google, Facebook and Amazon act as gatekeepers to the digital world. Amazon is capturing almost all online shopping dollars. We have the illusion of choice, but for most critical decisions, we have only one or two companies, when it comes to high speed Internet, health insurance, medical care, mortgage title insurance, social networks, Internet searches, or even consumer goods like toothpaste. Every day, the average American transfers a little of their pay check to monopolists and oligopolists”.

India is also following the same path of capitalism and it would be reasonable to assume this will lead to profit and market concentration. This environment of ” WINNERS TAKE ALL ” requires a paradigm shift in thinking by fund managers if they hope to beat the benchmarks. The other headache is Value vs Growth with growth outperforming value for so long that most active fund managers have become growth fund managers and do not hesitate to justify the overvalued growth stocks.

I think a combination of market concentration and growth investing mentality is going to make life tough (and not easy) for most active fund managers and although nobody can predict the future, I will hazard a guess that active portfolio managers underperformance is going to get more stark in this brave new world of oligopolies and tricky economic environment.

By Apra Sharma

Alternative investments are characterised by high leverage, more illiquid and subject to less regulation. Countering with the argument that make acquiring companies through debt illegal a valid point? Or is it that in this business, taking Sears in focus, political corruption exists? Or would one blame neither of the firms in transaction, but the ‘enablers’? Does this all boils down to flow of capital in Wall Street with such ease caused the ‘damage’ leaving big banks happy and reduced liquidity in debt markets will be a boon or bane to them?

As conceptual check, LBO managers seek to add value – from improving company operations and growing revenue and ultimately increasing profits and cash flows. The potential returns are to a large extent due to the use of leverage. If debt financing is unavailable or costly, LBOs are less likely to occur. A buyout deal may use a combination of bank loans (leveraged loans) and high yield bonds. In Leveraged Buyouts, assets of the target company serves as collateral for the debt and the cash flows of the target company are expected to be sufficient to service the debt. The debt becomes a part of the capital structure of the target company if the buyout goes through making the target company after the buyout a privately owned company.

The goal for private equity is to improve new or underperforming businesses and exit them at higher valuations, so the holding period could be from 6 months to over ten years. Although private equity funds diversify your portfolio, in short term, it may not provide returns above stocks but holding it for a longer term like shown for 20 years, private equity funds outperform. (However, PEPI isn’t a reliable measure and in absence of liquid market, investments may not be marked to market.)

American Investment Council, “Private equity continued its ability to generate the highest long-term returns, net of fees, for investors, according to the American Investment Council’s (AIC) Performance Update Report 2016 Q3, released today.

“Private equity prioritizes a long-term approach, rather than focusing on short-term gains,” said AIC President and CEO Mike Sommers. “This approach is why no other investment strategy can compete with private equity over a 10-year horizon, especially the public markets.”

The report found that annualized private equity investments over the 3- and 10-year time horizons outperformed the Russell 3000 index by 0.7 percent and 3.3 percent, respectively. Private equity also outpaced S&P 500 total returns over a 10-year time-frame, generating 10.7 percent annualized profit for investors.”

According to the Spectrem Group’s 2010 study of American investors with assets greater than $25 million, more than half have allocations to hedge funds, private equity and venture capital with 20 percent of total portfolio allocated to alternative investments. The increasing interest by institutions and high net worth individuals in alternative investments has resulted in significant growth in each category since the beginning of 2000. The Private Equity Council estimated that private equity leveraged buyout deals were approximately $720 billion in 2007 compared with $100 billion in 2000.

One of the key differences between leveraged loans and bonds is that leveraged loans are generally senior secured debt and the bonds are unsecured in case of bankruptcy. Therefore, even given covenants, because of the amount of leverage employed, the bonds issued to finance the LBO are usually high yield bonds that receive low quality ratings and must offer high coupons to attract investors.

Alternative to high yield bonds, mezzanine financing may be used. This type pays even higher coupon and in addition to interest or dividends, this also offers a potential return based on increases in the value of common equity. From 1990 – 2009, Sharpe Ratio of private equity was 0.34, global stocks 0.12, global bonds 0.50 and hedge funds with 0.62. In these two decades, private equity had -23.4% worst monthly return (VC, Real estate, commodities on more downside), hedge funds with -7.5%, global stocks at -19.8% and global bonds with -3.8%.

There are examples of successful retail private equity deal. For example Tops Market, it had a roller coaster ride. (Wikipedia)

1. At 12:01 am on December 2, 2007, Morgan Stanley Private Equity became the new owner of Tops Markets. Ahold‘s subsidiary Giant Food of Carlisle provided operational and support services for up to one year after the sale. Max Henderson, Executive Vice President of Tops, resigned his position from the company, and Frank Curci, a former Tops Friendly Markets CEO, returned as CEO of the company.
2. Tops Friendly Markets brought back approximately 100 corporate positions in marketing, merchandising and finance to Buffalo, New York. Recently, those positions had been based in Carlisle, Pennsylvania by Giant Food. Existing stores resumed upgrades and remodelling, and plans for new stores continue. Tim Hortons full-service restaurants or self-serve kiosks as well as Anchor Bar wings were added to all stores.  A growth rate of more than 10% is expected over the next four to five years.
3. In November 2013, Tops Markets announced a management buyout. The buyout, which is expected to be completed by the end of 2013 involves Morgan Stanley Private Equity selling all remaining shares to Tops management, including CEO Frank Curci. As a result, all decisions return to being locally made. In addition, it makes Tops Markets one of the largest privately owned companies in the Buffalo area.
4. On February 21, 2018, Tops filed for Chapter 11 Bankruptcy. None of the stores day-to-day operations are to be affected. According to the Securities and Exchange Commission, the reason for filing is due to Tops’ $720 million debt. This opportunity is being used to restructure financially so it can grow and be more competitive. 
5. On August 30, 2018, Tops announced they would be closing ten underperforming locations by November, including two in Syracuse, one on West Genesee Street (NY 5) at Westvale Plaza, and another on South Salina Street (US 11) at Valley Plaza, two in Rochester, one on Lake Avenue and another on North Winton Road, and one each in Perinton, Lyons, Geneva, Fulton, Elmira (the South Main Street location) and Saranac Lake (at the Lake Flower Plaza).
6. Tops Markets announced they emerged from bankruptcy on November 19, 2018.

However, not many retailers are likely to end up with the same fate as this grocery retailer. Debtwire tells us that about 40 percent of all US retail bankruptcies in last three years were private equity backed. Retail businesses under any circumstances is a difficult business to sustain and threats are from various domains.

“One example, Debenhams, a 200 year old British department store ended its operations last week. It was purchased by Texas Pacific Group in 2003, they a while later, promptly began selling assets, dramatically cutting costs and awarded themselves large dividends. Threats come from e-commerce, oversupply of retail, rising rents, tighter margins and OVER GEARED BAANCE SHEETS. Payless Shoes, Toys ‘R’ Us, Gymboree, Sears holding, Mattress Firm and Radio shack – all companies at some point were owned and controlled by private equity firms have filed for Chapter 11”, writes John McNellis on Wolf Street.

Toys ‘R’ Us story: Wolf Richter on Wolf Street writes, “On June 29, its remaining stores in the US will close. And then it’s over of the iconic retailer — one more victory for PE firms that have ploughed into retail during the leveraged buyout boom before the Financial Crisis, loaded them up with debt, and watched them collapse in what I have come to call the brick-and-mortar meltdown. Toys ‘R’ Us is just one of them.

PE firms Kohlberg Kravis Roberts (KKR), Vornado Realty Trust, and Bain Capital Partners acquired the publicly traded shares of Toys ‘R’ Us via a $6.6 billion LBO in 2005. They funded the acquisition in large part by loading up the acquired company with debt — hence “leveraged buyout.” In other words, the PE firm had little skin in the game, and over the years extracted $400 million in fees even as the retailer died.

The 33,000 employees, when it is all said and done in a few days, will be out of a job.

In a sense, the end came very rapidly, after 13 years of building up to it under the PE-firms’ iron cost-cutting fist. The meltdown started in early September when rumors emerged that Toys ‘R’ Us had hired a bankruptcy law firm. Its bonds collapsed on the spot. On September 18, the company buckled and filed for bankruptcy, assuring everyone that it would go on as a going concern. In early March, it became apparent that liquidation would be next. On March 15, the company announced it would liquidate all its operations in the US and Puerto Rico. And it began “final liquidation sales” at all its remaining Toys“R”Us and Babies“R”Us stores.

Among the biggest investors in PE firms are public pension funds. They provide about 20% of the $3 trillion in assets managed by PE firms. Public pension funds like the accounting of investing in PE firms: These investments are considered illiquid and long-term and don’t get marked-to-market. This gives pension funds the illusion of stability during times of market turmoil, and they don’t mind the sky-high fees. And PE firms love public pension funds because that’s where the money is – and the sky-high fees. It’s a symbiotic relationship.

But the Toys ‘R’ Us demise under the auspices of KKR, Bain Capital and Vornado Realty Trust has rattled some nerves, including at the $129-billion Washington State Investment Board (WSIB), which has been investing in KKR for over 30 years, making it one of the earliest backers. According to the Wall Street Journal, it invested in at least 23 KKR funds, including $1.5 billion in the fund that contained the Toys ‘R’ Us investment.

The WSIB held a meeting last Thursday discussing its investment in KKR and KKR’s account of the Toys ‘R’ Us debacle. A recording of the meeting was heard by Bloomberg News:

“Did anyone at KKR lose their job over the failure of Toys ‘R’ Us?” asked WSIB member Stephen Miller. “Did anyone have their bonuses cut? Did anyone have their compensation cut significantly? Because that’s one of the consequences of free-market capitalism.”

This is another retailer that was bought out by a PE firm, saddled with $8 billion in debt, and now grapples with its fate.”

Matt Levine writes on Bloomberg Opinion, “And in fact the financial press is absolutely full of stories of creditors complaining about private equity firms putting one past them, finding clever ways to get paid themselves while stiffing the creditors.

But that’s just the typical conflict. There are other possibilities. For instance here is the story of a time that Apollo Global Management LLC acquired a company and got its executives to pay Apollo to work there. 

The dust-up involves CEVA Logistics AG, a Swiss company that Apollo acquired more than a decade ago.

Former executives today say Apollo double-crossed them. In a $34 million class-action lawsuit against Apollo and CEVA, they say the buyout firm looked out for its own interest and used a deft stroke of financial engineering that ended up wiping out their equity. Apollo denies wrongdoing. …

Interviews with 35 current and former CEVA managers, as well as presentations made to prospective executives, reveal how Apollo and CEVA persuaded, pressured or required managers to put their money in. Over the years, Apollo and CEVA told executives they could make as much as 15 times their investment when Apollo eventually took CEVA public.

“It didn’t even enter my mind that I could lose this money,’’ said Smit, who signed a document promising she wouldn’t sue over the investment. “It feels like they robbed hundreds of people by legal means.’’

Apollo bought most of the equity of CEVA in a buyout, and let (or required) executives buy some equity too “since it would give them ‘skin in the game.’” When CEVA ran into trouble you might have expected Apollo to maximize the value of the equity even at the expense of its creditors. But instead Apollo bought a bunch of CEVA debt cheap, became a creditor, and then wiped out the equity:

Apollo started buying CEVA debt at a discount in 2007, according to the lawsuit and an Apollo document. That made it possible for Apollo and other big creditors in 2013 to swap debt for equity in a new company that would own CEVA. The lawsuit says the move erased the shareholders’ stake and let Apollo maintain control with minority ownership of a going concern with less debt.

This wiped out Apollo’s equity (but then Apollo got new equity in the recapitalization), and it also wiped out the executives’ equity (and they got nothing). 

In response to the lawsuit, Apollo and CEVA said they had no fiduciary duty to CEVA executives, and that even if they did, it wasn’t breached. Apollo said it lost its equity stake, too, and that a recapitalization was needed because CEVA was close to defaulting on some interest payments. 

Huh. Look, this is fine. Executives ought to be compensated in part through equity ownership of their company, and when a company can’t pay its debts, that’s supposed to wipe out the equity, including the equity owned by the executives. Their equity is supposed to be at risk, to pay off if the company works and not if it doesn’t. “It didn’t even enter my mind that I could lose this money” is a terrible thing to say about paying cash to buy illiquid unlisted stock in your own highly levered employer, come on.

There is one general lesson here, which is that when a portfolio company runs into trouble, a smart aggressive private equity firm will tend to do a good job of maximizing the value of its own stake in that company rather than the total return to all stakeholders. (Also it will do that openly and proudly, saying things like “what, we had no fiduciary duty to anyone else”: Every unsympathetic story like this makes Apollo look great to its actual investors, who are pleased to see it working hard and smart on their behalf.) There is also a more specific lesson, which is don’t pay Apollo to work at one of their companies. Honestly, when you write a check to Apollo to work at their portfolio company, and then you sign a document saying you won’t sue about it, what do you think is going to happen?” Looking back a year, in 2018, alternative investment firms have more than $1.8 trillion in ‘dry powder’ reserve with more than half with private equity funds.

Nicholas Rabener writes on Enterprising Investor, “Exposure to small caps likely explains private equity returns. Liquid alternatives to private equity can be created simply by buying small, cheap, and levered stocks.

Some have reached similar conclusions and proposed that the nature of locked-up capital is what makes private equity so advantageous. It keeps investors from redeeming their funds at market lows and helps private equity firms weather storms like the global financial crisis. But the same fund structure can be replicated through public equities at a fraction of private equity fees.

Furthermore, with $1.8 trillion sitting on the side-lines, too much money may end up chasing too few deals, creating high acquisition multiples that don’t augur well for expected returns.

Of course, high valuations are now the rule in both private and public markets. And corporate debt levels are at all-time highs.

Neither of these developments bode well for expected returns. So investors might be wise to reconsider direct private equity allocations and their liquid alternatives altogether.”

Barbarians at the Gate a docudrama and a comedy is based on a book about leveraged buyout of food giant RJR Nabisco. It is a story of greed, egos, and lust for luxury, high stakes, and treachery. After the expensive failure of a smokeless cigarette, the CEO of RJR Nabisco draws up plans to buy the company outright. But an influential LBO guru, who initially gave the CEO the idea for the LBO, is unhappy that the CEO is using his idea without involving him, and they end up in a bidding war. As the LBO guru puts it, “It’s not the company. It’s the credibility. My credibility. I can’t just sit on the bench and let other people play the game. Not my game. Not with their rules.” Among other things, the movie also shows that a CEO may have little to do with the success of his company — and much to do with its failings. The movie features many humorous but telling lines, such as: “You know the three rules of Wall Street? Never play by the rules, never tell the truth, and never pay in cash.”

https://wolfstreet.com/2019/04/19/retails-existential-threat-is-private-equity/

https://wolfstreet.com/2018/06/25/in-3-days-the-last-toys-r-us-stores-will-die-pe-firms-that-owned-it-are-under-intense-scrutiny-by-public-pension-funds-that-feed-them/

https://blogs.cfainstitute.org/investor/2018/12/03/private-equity-the-emperor-has-no-clothes/

https://www.mckinsey.com/~/media/McKinsey/Industries/Private%20Equity%20and%20Principal%20Investors/Our%20Insights/The%20rise%20and%20rise%20of%20private%20equity/The-rise-and-rise-of-private-markets-McKinsey-Global-Private-Markets-Review-2018.ashxhttps://blogs.cfainstitute.org/investor/2013/09/20/20-finance-films-for-entertainment-and-education/



By Doug Noland

April 16 – Bloomberg (Rich Miller and Craig Torres): “Federal Reserve Chairman Jerome Powell and his colleagues have made an important shift in their strategy for dealing with inflation in a prelude to what could be a more radical change next year. The central bank has backed off the interest-rate hikes it had been delivering to avoid a potentially dangerous rise in inflation that economic theory says could result from the hot jobs market. Instead, Powell & Co. have put policy on hold until sub-par inflation rises convincingly.”

April 15 – CNBC (Thomas Franck): “Chicago Federal Reserve President Charles Evans said on Monday that he’d be comfortable leaving interest rates alone until autumn 2020 to help ensure sustained inflation in the U.S. ‘I can see the funds rate being flat and unchanged into the fall of 2020. For me, that’s to help support the inflation outlook and make sure it’s sustainable,’ Evans told CNBC’s Steve Liesman.”

April 15 – Reuters (Trevor Hunnicutt): “The U.S. Federal Reserve should embrace inflation above its target half the time and consider cutting rates if prices do not rise as fast as expected, a top policymaker at the central bank said… ‘While policy has been successful in achieving our maximum employment mandate, it has been less successful with regard to our inflation objective,’ Federal Reserve Bank of Chicago President Charles Evans said… ‘To fix this problem, I think the Fed must be willing to embrace inflation modestly above 2% 50% of the time. Indeed, I would communicate comfort with core inflation rates of 2-1/2%, as long as there is no obvious upward momentum and the path back toward 2% can be well managed.”

It’s stunning how dramatically the Fed’s perspective has shifted since the fourth quarter. There’s now a chorus of Fed governors and Federal Reserve Bank Presidents calling for the central bank to accommodate higher inflation. Watching the inflation data (March CPI up 1.9% y-o-y), it’s not readily apparent what has them in such a tizzy. And with crude prices surging 40% to start 2019, it takes some imagining to see deflationary pressures in the pipeline.

The Fed’s (and global central banks’) dovish U-turn was clearly in response to December’s global market instability. Quickly, the global system was lurching toward the precipice. Acute fragility revealed – and central bankers were left shaken. And witnessing the speculative fervor that has accompanied central bankers change of heart, the backdrop is increasingly reminiscent of Bubble Dynamics following the 1998 LTCM bailout. A Bloomberg headline from earlier in the week caught my attention: “Evans Sees Lessons From 1998 Rate Cuts for Fed Policy This Year.” It said, “For the Chicago Fed president Charles Evans the situation recalls the Asian financial crisis of 1998. According to Evans, ‘The risk-management approach taken by the Fed is not unusual. It served us well in similar situations in the past.’”

Historical revisionism. For starters, the Asian crisis was in 1997. The Fed aggressively reduced rates from 5.50% to 4.75% in the Autumn of 1998 in response to the simultaneous Russia and Long-Term Capital Management (LTCM) collapses.

From Evans’ April 15, 2019 speech, “Risk Management and the Credibility of Monetary Policy:”
“Later, in the autumn of 1998, the fallout on domestic financial conditions from the Russian default led to a downgrading of the economic outlook and an aggressive 75 basis point easing in the funds rate over a two-month period. When making the first of those cuts, the FOMC noted that easing would ‘provide added insurance against the risk of a further worsening in financial conditions and a related curtailment in the availability of credit to many borrowers.’”

Clearly many borrowers – and the system more generally – should have faced much tighter Credit Availability by late-1998 – certainly including those aggressively partaking in leveraged speculation (equities, fixed-income and derivatives) and debt gluttons in the real economy – including the highly levered telecom companies (i.e. WorldCom, Global Crossing, XO Communications and a long list) and others (i.e. Enron, Conseco, PG&E, etc.).

Evans, not surprisingly, skips over LTCM. That the Fed orchestrated a bailout of this renowned hedge fund sent a very clear message that the Federal Reserve and global central banks were there to backstop the new financial infrastructure that was taking control of global finance (Wall Street firms, derivatives, the leveraged speculating community, Wall Street structured finance and securitizations). If the Fed had allowed the system take the harsh medicine in 1998 the world would be a much safer place today.

Evans: “How did this risk-management strategy turn out? In the end, the economy weathered the situation well. Productivity accelerated sharply, and by early 1999 growth was on a firm footing. Subsequently, the FOMC raised rates by a cumulative 175 basis points by May of 2000.”

Evans leaves out the near doubling of Nasdaq in 1999, along with what I refer to as “terminal phase” Bubble excess. The bottom line is the Fed aggressively loosened policy while the system was in the late-stage of a significant Bubble, and then failed to remove this accommodation until mid-November 1999.

And let’s not forget that the subsequent bursting of the so-called “tech bubble” led to what was, at the time, unprecedented monetary stimulus – including Dr. Bernanke’s speeches extolling the virtues of the “government printing press” and “helicopter money.” These measures were instrumental in fueling the mortgage finance bubble that burst in 2008. That collapse then led to a decade-long – and ongoing – global experiment in zero rates, open-ended money-printing and yield curve manipulation.

This whole fixation on deflation risk and CPI running (slightly) below target gets tiring – after a few decades. Clearly, the evolution to globalized market-based finance has profoundly altered the nature of inflation. CPI is no longer a paramount issue – especially with the proliferation of new technologies, the digitization of so much “output,” the move to services-based economies and, of course, globalization. There is today a virtual endless supply of goods and services – certainly including digital downloads, electronic devices and pharmaceuticals – that exert downward pressure on aggregate consumer prices. Importantly, consumer price indices are no longer a reliable indicator of price stability, general monetary stability or the appropriateness of central bank policies.

Central bank officials today lack credibility when they direct so much attention to consumer price inflation while disregarding the overarching risks associated with unrelenting global debt growth, highly speculative and leveraged global financial markets, and deep global economic structural maladjustment. In the grand scheme of things, consumer prices running just below target seems rather trivial. What’s not trivial are central bankers that now appear to have accepted that they will accommodate financial excess and worsening structural impairment. At this point, it appears Full Capitulation.

In the same vein (and same day) as Evans’ speech, former President of the Federal Reserve Bank of Minneapolis, Narayana Kocherlakota, posted a Bloomberg editorial: “The Fed Needs to Fight the Next Recession Now. Its tools are limited, so the central bank must compensate by being aggressive.”

“Almost 10 years after the Great Recession ended, the growing threat of a new economic slowdown raises a troubling question: When the next recession strikes, what can the world’s central banks do? With interest rates low and their balance sheets still loaded with assets bought to fight the 2008 crisis, do they have the tools to respond? ‘What, then, can the Fed do?’ In my view, it needs to be much more aggressive in using the limited tools that it has. For one, if your medicine chest is nearly empty, you want to keep your patient as healthy as possible. That means cutting interest rates now to lower the unemployment rate even further. Doing so could also boost demand during any recession: If people come to expect stronger recoveries, they will be more likely to keep spending even in downturns. A pre-commitment to strong growth could also help. In the last recession and ensuing slow recovery, the Fed treated its low-interest-rate policy largely as an emergency step that would be removed within the next year or two. Instead, the Fed should publicly commit now to maintain maximum stimulus after a recession until the unemployment rate falls below 3%, as long as the year-over-year core inflation rate remains below 2.5%. Such a promise, much stronger than any used or even suggested during the last recovery, would help minimize the damage and speed up the rebound.”

It’s simply difficult to believe such analysis resonates – yet it sure does. These are strange and dangerous times. Kocherlakota: “If your medicine chest is nearly empty, you want to keep your patient as healthy as possible.” Noland: If you’re running short of medicine, you better not encourage your patient to live a reckless lifestyle. You certainly don’t want to convince the foolhardy that you possess an elixir that will cure whatever ails them. These central bankers have really lost their minds: What they administer is anything but medicine.

Such central bank crazy talk should have longer-term bonds beginning to sweat. But, then again, bond markets are confident that central bankers from across the globe will be buying plenty of bonds over the coming months and years. When central bankers talk about accommodating higher inflation, bonds hear “more QE”. And while safe haven bonds may not be overjoyed at the thought of CPI creeping higher, they remain more than fine with bubbling risk markets – prospective bursting Bubbles ensuring only more expansive QE programs. The so-called U-turn marked an inflection point from a meek attempt to return central banking to sounder principles – to a decisive breakdown in any semblance of responsible monetary management.

I was convinced in ‘98 the Fed was committing a major policy error. Like today, the Fed and global central bankers were afraid of global fragilities. Yet markets and economies do turn progressively fragile after years of excess. These days, I worry about what central bankers have unleashed with their ultra-dovishness in the face of historic late-stage global Bubble “terminal excess.”

http://creditbubblebulletin.blogspot.com/2019/04/weekly-commentary-full-capitulation.html

The Volatility Index has fallen 60% over the past 17 weeks, the largest 17-week decline in history.

US Dollar leading all currency ETFs over the past year…

The first broad commodities ETF was launched in Feb 2006. It is down 28% since inception vs. a +200% gain for the S&P 500.

The trade headlines for today. President Xi has all time in the world but sadly President Trump does not have that Luxury. It will be naïve to think that US will prevail upon China in a trade deal