Business Education

One Bank Sees Volatility ‘Spilling All Over The Place’

Early last month, the Seth Golden crowd was summarily wiped out on a Monday afternoon when an already nervous market collided head on with the VIX ETP rebalance risk that multiple sellside desks had been warning about for at least a year. Time and again, analysts cautioned that beyond a certain point, levered and inverse VIX ETPs would have to panic-buy VIX futs into a vol. spike, exacerbating the situation and, if it was acute enough, likely leading some of those products to be redeemed. You can trace the history of these warnings in our “doom loop” archive. Over and over, the punditry dismissed those concerns and so did a lot of popular FinTwit personalities … right up until that Tuesday morning and suddenly all of those same people were bemoaning the injustice of the whole thing rather ...

White House Insiders Reporting That Pete Navarro Is Thirsty AF

In case you were worried that Gary Cohn’s White House departure would leave the US economy exposed to the influence of dangerous maniacs with beliefs on the outer fringes of crazy economic thinking, it’s time to panic. Per Axios: President Trump’s spirit animal Peter Navarro is telling associates he wants Gary Cohn’s job as the president’s chief economic adviser. Yup. Shit is getting reeeeeeal scary over at 1600 Pennsylvania Avenue. It appears that the new way of thinking is “If the adults are leaving, let’s have some fun!” And Pete Navarro is definitely looking around and wondering “I’ve finally got a real shot at being taken seriously!” Publicly, Navarro has been coy, telling Bloomberg TV he’s not in the running for the job. But privately, the hardcore nationalist trade adviser is all in...

Donald Trump’s Most Dr. Evil Moment Yet

While global markets were still digesting the Trump Administration’s gambit on broad-based steel and aluminum tariffs, the president signaled his next trade actions would be directed against China, in a tweet worthy of Dr. Evil himself. “China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States,” The president writes, upturned pinky placed gently at the corner of his pallid lips.  “Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!” Observers quickly pointed out that $1 billion is a hilariously low ask—less than 0.3% of the the U.S.-China trade gap. Turns out the president mistyped, and that the administration actually demanded...

Trump Goodbye Gary Cohn Erases All Doubt That Gary Cohn Needs To Go

(Getty Images) One of the reasons Donald Trump – who is still President – is the gift that keeps on giving for those of us who have inexplicably decided to spend our days penning ostensibly witty missives about the interplay between politics and markets is that it’s never 100% clear whether what comes out of his mouth reflects his own views or whether he’s inadvertently parroting the agenda of whoever currently has the upper hand in the ongoing death match at 1600 Penn. Everyone who has ever known Trump knows he doesn’t have a fixed view on anything unless whatever it is that’s under discussion can be couched in terms of his own supremacy. If the question can be boiled down to “who’s the best?”, the answer is always just “Trump”, but when it comes to questions that require nuanced answers ...

Angelo Mozilo Has Career Advice For Gary Cohn…No, Really

In the flood of Gary Cohn hot-takes that overwhelmed us yesterday [and we ‘loved’ all of your “He hates tariffs more than Nazis” quips because who can resist nuanced originality?] we almost missed out on a beautiful little moment of Cohn-related absurdist improv comedy created by Max Abelson of Bloomberg. Since everyone else was looking at why Gary finally escaped the White House or who would replace him in the gilded cage at the NEC, Abelson focused instead on what should be next for Gary himself, and he asked a handful of business types to offer their opinions. This experiment yielded a not-so-subtle diss from Bob Diamond (“I don’t mean this in a negative way — he’s more of an operating guy than a visionary.”) a self-serving fantasy from Kathy Wylde that Gary build a fintech unicorn in B...

Travis Kalanick Looking To Help Next Generation Of Tech Entrepreneurs Wait Too Long To Go Public

Silicon Valley’s prodigal enfant terrible has begun his return to Sand Hill Road relevancy. In a tweet this morning, our old pal Travis Kalanick announced the formation of a new investment fund that he will use to throw money at startups and non-profits. Name “10100” (we assume this a binary coding joke). The new fund seems to be a way for Kalanick to get back in the game via the $1.4 billion he took away from his divorce with Uber. But here’s how he put it in his own words: Some news… pic.twitter.com/urFBrb9aCV — travis kalanick (@travisk) March 7, 2018 It’s nice to have Travis back and we very much look forward to seeing which startups end up receiving his guidance on how to plumb the neverending pool of money that is the private equity market. We also look forward to getting a sense of ...

Amazingly Enough, Larry Kudlow Might Not Be The Worst Candidate To Replace Gary Cohn

We always knew that we would miss Gary when he was inevitably gone, but this is going to be ridiculous… Four rumored contenders for the position are: Kevin Warsh, former Fed governor and economic official for President George W. Bush; Shahira Knight, Deputy Assistant to the President for Economic Policy, Cohn’s top tax official; Peter Navarro, White House trade adviser, who argued for tariffs; and Larry Kudlow, CNBC senior contributor and conservative commentator, who shares Cohn’s views on trade. That’s quite the short bench. Warsh is a known quantity and real economist who also offers a quadrupling down on market fears of a hawkish Fed running amok. Shahira Knight is unknown enough to keep Wall Street nervous (but you’ve got to like anyone that’s comfortable telling Mnuchin to his face h...

Wilbur Ross Refutes Popular Misconception: ‘We’re Not Trying To Blow Up The World’

So obviously, the Trump administration is in damage control mode on Wednesday morning after Gary Cohn finally came to the conclusion that trying to keep this train on the tracks is an exercise in abject futility. Of course that was readily apparent to him last August when Trump resisted calls to publicly condemn actual neo-Nazis (“I don’t know if you know, they had a permit. The other group didn’t have a permit.”), but back then the tax cuts weren’t on the books yet and there was still a chance he could convince the President not to go the protectionist route on trade. Once Trump made it clear last week that Peter Navarro is his economic spirit animal and there was nothing anyone could say or do to change his mind, Gary lost his appetite for sadomasochism. To be clear, Wall Street hates th...

Donald Trump Proves Immune To Gary Cohn’s Mesmeric Grundle

Welp, it looks like Gary Cohn finally took our advice. The Big Grundle has finally escaped his voluntary bondage as Donald Trump’s National Economic Council Director after what we would generously refer to as “a wet shitshow nightmare” that somehow lasted more than 13 months. A lot of people were aghast when the Number Two at Goldman Sachs took a senior role in the Trump White House because the optics of “Government Sachs” are never popular. But in this White House, Gary Cohn was just what the doctor ordered. He was the guy that made Goldman tick, Lloyd Blankfein’s enforcer, a tough guy that understood markets. Gary might have been a Wall Street animal but he was also animal that understood Wall Street and 1600 Pennsylvania Ave. suddenly looked a lot like a zoo. Suddenly, Gary Cohn was the...

Rise And Fall Of The ‘Zombies’

One of the great ironies of QE is that while the post-crisis monetary policy regime was designed and implemented to reflate the global economy, there are certain places where these policies are actually deflationary. And when you think about it, it’s common sense. If you artificially suppress borrowing costs and distort the supply/demand dynamics in the fixed income market in order to engineer a hunt for yield, what you invariably end up doing is creating a “zombie” dynamic whereby otherwise insolvent companies are kept in something akin to suspended animation by virtue of wide-open capital markets. This is part and parcel of the whole “up the down escalator” dynamic in the oil market. Uneconomic U.S. production was allowed to effectively hibernate during the price downturn thanks in part ...

Because The Universe Is Hilarious And Cruel, Wells Fargo Is Now Being Shamed By Nuns

Sometimes in life, you come across a moment so beautiful and true that you have to just sit back, kiss your fingertips and luxuriate in how amazing life can be. So thank you for this, Bloomberg: Wells Fargo & Co. agreed to publicly report on the root causes that led to a rash of ethical lapses in recent years, a group of investors said.The group, led by the Interfaith Center on Corporate Responsibility and including about 20 religious organizations as well as state officials from Rhode Island and Connecticut, said Tuesday they would withdraw a shareholder proposal on the issue following the bank’s decision. They had sought to put it to a vote at the lender’s annual meeting in April. “Interfaith Center on Corporate Responsibility”? Does that mean…? “They were in a culture where they bel...

Trump’s Epic Squandering Of U.S. Trade Leverage

President Trump’s slapdash unveiling last week of new tariffs on steel and aluminum imports sent stock markets reeling and Republican free-traders scrambling to convince the president to reverse his decision. Now America’s closest allies, Canada and the European Union, are mounting high-profile responses to the decision, illustrating how politically toxic it can be for foreign leaders to appear weak in the face of Trumpian threats. For its part, the EU has announced tariffs against Kentucky bourbon and Harley Davidson motorcycles in an effort to hit American business in Trump Country, while Canadian and Mexican leaders have vehemently denied that these tariffs, or their removal, would be an acceptable tactic in ongoing NAFTA negotiations. And Tuesday, Bloomberg reported that the institutin...