AM | @agumack
"Stormy weather in Shortville" — Elon Musk
- Global liquidity is recovering. Since the low of $3.19tn in late 2016, the EU Finance Club Global Dollar Liquidy indicator has staged an impressive recovery (*). The stock of U.S. Treasuries held by 'foreign' central banks stands now at $3.34tn. The $146bn recovery was led by the People's Republic Bank of China. Mr. Xi Jinping himself is said to lead the campaign to calibrate out-bound investment flows in order to stem capital flight. Judging from the FX reserves standpoint, the strategy appears to be working. But what will it do in terms of the chronic misallocation of capital?
(*) Federal Reserve: "Factors Affecting Reserve Balances".
______________
- Short-sellers losing money. Short-sellers are "nursing loses of almost $8bn this year" (*). The most shorted stocks appear to be the Faangs: Facebook, Amazon, Netflix and Google. In addition to the Faangs, Tesla is "comfotably the most shorted stock in the US"—and here short-sellers are losing $4.7bn this year. (Note this quote from Tesla's founder Elon Musk: "Stormy weather in Shortville"). Given the tremendous recovery in global liquidity, I'd be very reluctant to join the list of short-sellers.
(*) Robin Wigglesworth & Nicole Bullock: "Big tech companies in short-sellers crosshairs", Financial Times, 14 August 2017.
______________
- Meditation & Behavioral finance. I'm old enough to remember the bond bear market of 1994, with one European fund manager telling the Wall Street Journal that, instead of staring at his screen in agony, he'd rather go to a ... meditation retreat. And of course we know that Bridgewater Associates' Ray Dalio is a fan of transcendental meditation. Now Goldman Sachs is offering free meditation training to employees. When we'll discuss behavioral finance in Financial Markets BCO224 I'll make sure that I mention this topic. Want to know more on medidation? Here's a good piece from Wired (*).
(*) Robert Wright: "Is mindfulness meditation a capitalist tool or a path to enlightenment?", Wired, August 2017.
_____________
- Maersk. There are two articles on AP Moller-Maersk, the 113-year old Danish conglomerate (*). This line from CEO Søren Skou caught my attention: "Mr Skou's plan for Maersk is about shrinking the company to grow — a 'counterintuitive' approach, he concedes". It's all about getting rid of under-performing assets and invest in businesses with higher profit margins.
(*) Richard Milne: "Maersk chief forecasts further container sector consolidation" and "Global shipping boss charts course through troubled waters", Financial Times, 14 August 2017.
______________
