Goldman Ball Sachs Declares the End of the BRIC Era

Many years ago, Goldman Ball Sachs coined the acronym BRIC, as a cool and new way to promote wanton investment into the world’s shittiest markets: Brazil (I spell it with a Z, fuckers), Russia, India, and China. They had the media sucking their dicks because of it, with James Cramer touting BRIC almost every night on his clown show, featured on CNBC.

Well, all bad ideas, eventually, die. And so does the BRIC’s of shit. Goldman is merging their BRIC fund with their emerging market fund, effectively shutting it, the fuck, down.

Fourteen years after former Goldman Sachs economist Jim O’Neill coined the acronym that ushered in an unprecedented investment boom, the biggest emerging markets are now sputtering. Russia and Brazil have fallen into recessions. China, long an engine of the world’s growth, is poised for its weakest expansion since 1990.

The downfall of the BRIC fund, which had lost 88 percent of its assets since a 2010 peak, also underscores how the strategy of bundling disparate countries into a single investment theme is losing its appeal among investors.

“The promise of BRIC’s rapid and sustainable growth has been challenged very much for the last five years or so,” said Jorge Mariscal, the chief investment officer of emerging markets at UBS Wealth Management, which oversees about $1 trillion. “The BRIC concept was popular. But nothing is eternal.”

What does it all mean? Well, for one it means the Wall Street marketing apparatus is no longer actively promoting the investment in BRIC, because they’ve lost their dirty fucking shirts in it and have abandoned their BRIC profit centres. Also, it’s an acknowledgement of something almost everyone already knew: the BRIC nations are scandalous bastards, undeserving of hard western currency.

Lastly, it might mean the bottom is in for BRIC, since despondency usually correlates with overly depressed prices. Bear in mind, sometimes prices are down for a reason and cheap prices could always get cheaper.

About 4 years ago I became obsessed with classical music. Many of my long term readers probably noticed an uptick of classical music pieces being used here, references to certain composers and orchestras. When I get interested in something, anything, I tend to overdo it and get immersed in it.

At any rate, I discovered Philip Glass’s music and was immediately sold. If you’re listening to Glass, you either think he’s a complete moron, or a genius.

This documentary about him is more than just the music. It highlights his struggles, the journey from NYC taxi cab driver to a world renowned composer.

I enjoyed it a great deal and I hope you do too.

We were supposed to close down 1,000 points; but the market traded up a little.

It was a fucked week for commodities, REITs, utilities and good for banks, hospitals and semis. It’s rather fitting to see the best sector (REITs) and the safest (UTES) get ravaged this week, as the destructive forces of this insidious tape moves from one area of the market to the next–leveling everything in its wake.

Social media had a good week too, buoyed by AWAY and FB.

My SHAK position disappointed me today, closed down a point. I honestly believed those numbers warranted a much higher price today. You get what you get and you don’t bitch about the outcome. Some of you need to good old fashioned Irish discipline.

I was flat for the day, but up more than 10% since last month’s lows. My largest position is COST, by a factor of 2, followed by SHAK, CNC, PAH, AAPL and JAZZ.

For those of you on the fence about joining Exodus, just know that my portfolio is listed there with real time alerts for my buys/sales. My brain is superior to everyone that you follow on Twitter and talk to in real life. iBankCoin is an imperial power amidst a sea of rabble rousing catamites. See to your sins, repent, and join us in our never ending quest to complete the Orbital Space Cannon (OSC), which will be used for offensive purposes only.

UPDATE: Like our Facebook page, else feel my wrath.

I don’t even know what to say anymore. I guess higher rates will make CHK go away, finally, and pave the way for a better CHK. And, higher rates will help my mother save for retirement, since she hates stocks and loves CDs. Aside from that, raising rates is like sticking your face into the blades of a blender, on purpose. Sure, you’ll come out alive and in one piece; but you’ll be ugly as fuck.

Investors are suffering through the worst commodity collapse in a generation. Bulls can blame the cooling economy in China, the world’s largest consumer of metals, grains and energy. The nation’s slowest pace of the growth in two decades is stamping out demand and leaving the world oversupplied with everything from aluminum to wheat. The prospect that U.S. borrowing costs will rise for the first time nine years is compounding concern that raw-material users will slow or abandon plans for expansion, eroding consumption.

“It’s all about the jobs report and the outlook for the Fed liftoff,” James Cordier, founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “The quantitative easing in the U.S. that began almost a decade ago boosted commodities, mainly because of the weaker dollar. The infrastructure spending in China has changed dramatically. Both of those are now behind us.”

I guess you cannot have the market you want; but, instead, you get the market you are given.

I just need you to think this through, just for a second.

Rates are at zero percent and possibly going up by 25bps in a month. Because of that, people are selling their REITs and Utilities today, like rabid fucking dogs, because that 4% yield is gonna see some competition soon?

For fucks sake, TLT is down less than 2% today. In classic Wall Street fashion, everyone is getting so dramatic over the specter of slightly higher rates. Let me remind you: America has $20 trillion in debt. Don’t worry, the Fed isn’t going to raise rates to 5% and bankrupt the country.

I don’t own any REITs or Utes and I probably won’t buy any on this dip either. I do recall, however, REITs getting slammed to hell a few months back on the same concerns, only to come crawling right back to new highs, months later.

For now, the trade is short commodities, long banks. The yield curve will widen. Banks will rape people on credit card rates; and the market will accept the idea that rates can rise a little at the same time as Apple can still sell iPhones and people can still watch Netflix and take medicine and buy cars.

For fucks sake, I am surrounded by morons.

You do realize the fuckery that this market thrusts upon you, yes? It literally wants to make you a bad person, rooting for your neighbors to lose their jobs, pray that the minimum wage isn’t raised, and hope for loopholes to be created so that corporations can avoid paying U.S. taxes.

Fuck what the market is saying today, down 30 NASDAQS and looking ominous. Two hundred and seventy one thousand jobs were created last month. The unemployment rate is at 5%. Raw commodity prices are dropping. The dollar is rising, effectively increasing the buying power for all Americans and making our real estate super attractive to foreign buyers.

Regional banks are soaring. My largest bank holding is SBNY.

I’m bullish on these numbers and couldn’t care less if the Fed hiked in December, all things considered. It affects me not. Moreover, I can’t think of a better scenario for the U.S. consumer than a booming jobs market, heading into the holiday season.

Stocks should be bought.

Fuckery at its finest. Citi now joins a chorus of Fed hike cheerleaders, in what could only be described as “well, shit, that didn’t work, so let’s try this.”

“The growing size of household holdings of interest-bearing assets has reached the point where the ‘permanent’ income gained from sustained higher interest rates has a material impact on expenditures,” Lee asserted. “Consequently, if interest rates rise by one percentage point, this could boost the household income by $170 billion (i.e., $256.2 billion to $85.4 billion) and consumption by 1 percent.”

In other words, this analyst no longer believes in the ‘wealth effect’ of higher stock prices, which was crammed down our throats for the past 5 years. Now, he believes higher rates will enable old fuckers with CDs to save more; hence, they’ll be able to buy more wheeled chairs, for cash, money.

Yellen must have a fucking hard on after reading these numbers.

October Nonfarm Payrolls 271K vs 181K consensus; Prior revised to 137K from 142K

October Hourly Earnings +0.4% vs +0.2% Briefing.com consensus; Prior 0.0%

The unemployment rate is at 5%.

These are the best numbers of 2015, which is sure to cause investors to believe the Fed will hike rates in December. The dollar is spiking hard, up 1.25% v the euro. Futures aren’t really moving too much, which is suspect as fuck.

UPDATE: The market is pricing in a 74% chance of a Dec rate hike.

It appears the bullshit payment traansaction company is going to have its first down round. But don’t worry about their awesome VC investors. They’ll be taken care of.

The investors, including the private equity firm Rizvi Traverse and an arm of JPMorgan Chase, will benefit from a provision they negotiated that is known as a ratchet. Increasingly common in startup financings, ratchets are promises that investors will be issued additional shares if the company’s IPO prices at a disappointing value.

In Square’s case, investors bought $150 million of stock last year at a price of $15.46 per share, giving the company a reported valuation of $6 billion. What the numbers didn’t show was that investors had secured provisions to significantly limit their risk of losing money.

Now, if the IPO doesn’t translate to 20% gains for these late-stage investors, Square has promised to issue them enough additional shares to create that return, the filing shows.

The provision is buried in a single paragraph deep into the IPO prospectus. If the IPO prices below $18.56 per share, the ratchet will be triggered, the filing says.

The fuck? It must be good to be a banker.

It looks like Square’s IPO filing places the proposed valuation at around $4.1 billion, well under the private value of $6 billion. Dollars to donuts says it trades even lower once public.

Ahead of the most important economic data of the year, the jobs report, Jeff Gundlach is shooting his trebuchet at the Fed, trying to reason and teach mathematics and philosophy to a classroom of orangutans.

DoubleLine Capital co-founder Jeffrey Gundlach, widely followed for his investment calls, warned on Thursday that the U.S. Federal Reserve should not raise rates in December as economic and financial conditions have become vulnerable.
Gundlach said the Goldman Sachs Financial Conditions Index shows the market has already tightened for the Fed as the index sits at its worst level since 2014 and the Great Recession.
Gundlach, speaking at the Inside Fixed Income conference, also cited trailing earnings, which are not trending in the right direction. It also appears “the dollar has started another leg up,” he noted.
The biggest reason the Fed should not raise rates is the implied inflation rate in bond market pricing, he said. Implied inflation for the next two years is “darn near zero,” said Gundlach, whose Los Angeles-based DoubleLine was overseeing $81 billion in assets under management as of the end of the third quarter.
“Junk bonds are signaling with clarion bells: Do not raise interest rates,” Gundlach said. Excessive issuance of covenant-lite debt is yet another sign of danger in the credit markets, he added. Junk bonds should be sold on strength, he said.
If oil stays below $50, downgrades will come to the investment-grade bond market, he said

That last line is the most important. Any person in this market knows that there is debilitating deflationary pressures out there: fuck the jobs market. Take a look at prices and whole industries being ruined before your eyes, as the Apple-Amazon vortex of deep deflation makes its way to a shopping mall near you.

Anyone who is calling for a Fed rate hike is 99% bearshitter, 1% human being. Logic doesn’t exist in the Fed rate hike camp, with the U.S. oil and gas industry in tatters, and a $100 billion debt crisis looming in the on-deck circle.

Fed hikes: dollar rages on, oil crushed, $100 billion in debt goes kaput: panic and tragedy strikes Wall Street 2008 style.

Related: Double Line Capital just reported its 21st consecutive month of inflows, currently managing over $50 billion in assets.