The Bankers Are Getting Gigantic Pay Hikes As Shareholders Suffer Under the Hideous Visages of Underperformance

Your local, and gigantic, global bank thanks you for charging this year’s holiday shopping season onto one of their numerous 29.99% interest bearing credit cards. As such, profits have rebounded to pre-crisis levels; and with it, the compensation of the Ceasars who operate these denizens of criminality have soared.

Simultaneously, the share prices of these respective banks have slumped, mightily.

Let’s review the numbers.

Citi’s CEO, M. Corbat, increased by 27% to the paltry sum of $16.5 million (note: Corbat has zero homeruns and zero hits for the year)

Citi’s CFO, J. Gerspach, increased by 20% to a mere $9 million.

Citi’s Chief of their Institutional Clients Group enjoyed an 18.5% increase to $16 million.

Citi’s share price is down 25% over the past 12 months.

Bank of America’s CEO, B. Moyniham enjoyed a 23% spike to $16 million.

Bank of America’s share price is down 24% over the past 12 months.

And, lastly, JP Morgan’s own J. Dimon ‘earned’ $27 million in 2015, up 35%.

Jp Morgan’s share price was up a fantastical 0.11% over the past 12 months, which is more than enough to bestow a 35% hike to Dimon.

On the austere side, Morgan Stanley’s CEO, J. Gorman, was racked with a 7% reduction to the miserly annual pay of $21 million.

Morgan Stanley’s share price is down 33% over the past 12 months.

Goldman Sach’s CEO, Brooklyn’s own, Lloyd Blankfein, was penalized with a 4% pay cut to fall in at $23 million.

Goldman Sach’s share price is down 21% over the past 12 months.

Indeed.

I’d hardly call this ‘dumb money’. The Magellan Global fund manager, H. Douglass, has eviscerated and laid waste to fellow managers for years now. You’re only privy to this news of a very successful fund manager’s recent foray into risk aversion because of a charitable man in H. Douglass and the speed by which information passes through, in this day and age. Had this been the wondrous years of the Robber Baron era, you’d all be clamoring around the 3-d printer stock pits, hoping to snag a few shares– a fortnight before their absolute collapse.

Hamish Douglass, whose Magellan Global Equity Fund beat 99 percent of peers over the past five years, boosted cash to about 14 percent of assets by April to prepare for the “stiff headwind” he expected in share markets. He’d been sensing danger as far back as mid-2014. The stock-picking chief executive officer of Magellan Financial Group Ltd. now has almost 16 percent of his fund in cash, matching the biggest proportion since 2009, and no immediate plans to buy shares.
“We’re happy to bide our time in the cash position,” Sydney-based Douglass, 47, said in a phone interview. “We took a lot of our action well before any of this turmoil started.”

“Our central thesis is that China won’t collapse and that the yuan won’t collapse and that’ll we’ll get a continuation of the economic recovery story in the U.S. over the next few years,” he said.

The issue, as Douglass sees it, is valuations. If the economy recovers and the Federal Reserve gradually raises interest rates, some of the best-loved stocks are going to look overpriced. Once they fall he’ll start buying again, he said.

High-quality shares “are still at very expensive levels, effectively factoring in a zero interest rate world virtually forever,” he said. “We’re holding cash rather than the most defensive equities we would have otherwise held.”

“It’s better being six months too early than six minutes too late on these things, he said. “Maybe I was 12 months too early rather than 12 minutes too late.”
Still, when it comes to buying, he’s prepared to wait.

“China will steady over the next 12 months,” he said. “If that happens, as U.S. rates start to go up, we’ll get some interesting repricing that will enable us to deploy the cash.”

Even if he thought the risk was indeed systemic, H. Douglass is too embedded in the corporate apparatus of political correctness to say as much. Instead, like many of his peers, he leans on the cliche of valuations and how they might portend to lower equity prices.

No one sells 12 months in advance due to valuation concerns, unless they believe something grave was lurking in the shadows. Mr. H. Douglass is firmly embedded in the bear pornography camp, idly waiting for the world to burn.

The airline industry had it good, heading into 2015. Profits were at record highs, oil was dropping, and share prices were all soaring.

Critics have persistently said the airlines would eventually destroy themselves, complete morons bereft of the basic instincts that have permitted mankind to survive over 30,000 years.

Alas, fare wars are have deleterious effects on profits and share prices.

While that’s no longer the case, the “very toxic fare environment” has continued, said Virgin America Chief Executive Officer David Cush.

“We are not going to fly passengers at rates that will not make money,” he said on a Thursday conference call with analysts. “We are going to make sure we get an average ticket value up to where its sustainable and we can earn a return, and we’ll take the hit on load factor.”

One-way fares of $30 from Dallas to destinations along the U.S. West Coast and $41 walk-up fares from Dallas to New York’s LaGuardia Airport were among those Virgin America cited from a recent review of airline data filed with the U.S. Transportation Department. There’s no indication when the battle might end, and “everyone is feeling the pain,” he said.

Southwest and American are reporting load factors, or the amount of seats sold, above 90 percent on some flights to Los Angeles and New York, with about half the tickets priced below $100, he said.

Fare wars are occurring in other markets, like Atlanta and Chicago. In Dallas, however, “I’ve never seen anything like it in my life,” Cush said. “Clearly, what we have is a market-share war going on in Dallas.”

American Airlines Group Inc., the world’s biggest airline, has said it won’t lose passengers to discounters and is creating a Basic Economy fare class that would offer a seat at a low base price, with no extras. The carrier declined to comment Thursday, while Southwest didn’t immediately comment.

I am certain this will end poorly for all parties involved.

Breadth was robust for a -46 Nasdaq day at 42%. Risk assets, for the most part, traded off–paving way for a fanatical run in gold, bonds and utilities.

Asset managers have been flung far and violently ever since the calendar changed to the year 2016. It’s not unusual or without precedent to see markets digest gains, without it being a precursor of horrible times.

Not every rally will mean bull market, and vice versa.

Before passing judgement on whether or not this market has more upside in it, as I believe it does, let’s permit a few days to pass.

If I’m right, the selling done today and possibly tomorrow will be ephemeral. The Federal Reserve and other world central banks are now firmly in line to succor markets and improve overall conditions in investor sentiment.

It’s important to take note of these changes and invest accordingly.

Although risk assets are selling off today, the integral TWDFM names vastly outperforming–especially FANG.

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As long as the TWDFM core remains intact, immune to petty setbacks, I believe the rally will continue in risk assets. Watch them closely, for they are vital components to the mood of this tape.

Carson Block, the renowned independent research analyst who became famous for correctly targeting fraudulent, dog eating, Chinese companies–shorting them to zero, has started a hedge fund–seeded with $100 million.

It seems he’s now branching out past his celestial borders, targeting European “filth”, because people don’t pay attention to how dirty their companies are in Europe, apparently.

“You just find a lot of filth there,” Block told Reuters when speaking of European securities on the sidelines of the Absolute Return Symposium in New York on Wednesday.

The short seller’s publicly disclosed recent forays into Europe include a bet against French supermarket operator Casino Group, where Block is wagering the company’s stock will fall because of its high debt burden.

He is also shorting the stock of Rallye SA, the majority shareholder of Casino, and TeliaSonera, a dominant telephone company in Finland and Sweden.

Block recently launched a $100 million hedge fund after years of churning out research at his firm Muddy Waters LLC. He is best known for targeting the shares of China-based companies that he believed were frauds.

Block, a trained lawyer who started his career as an equity analyst, also said he expects become more active in shorting corporate bonds, something activists have generally shied away from.
Credits rated just above junk status, or BBB-, are a category of bonds where Block expects to find plenty of opportunity to find new short ideas.

“We are going to do more credit-based shorts going forward,” Block said.

He also noted that he his avoiding shorting biotechnologies, addling they “do not make for good shorts” because the companies’ scientific claims are hard to verify or discredit.

In case you’re worried about Block cessating his provocative Chinese fraud reports, do not worry. Block enjoy them too much to ignore.

Even as his focus moves to other geographies, Block has not forgotten about Asia. “We always pay attention to China because we love to short stock frauds,” he said.

Perhaps Pope Francis will endorse Hillary Clinton next?

For me, the best thing about Donald J. Trump is the fact that so many people seem to hate him. It’s odd, especially since he’s way ahead in all of the polls.

It’s almost like a real life government-media conspiracy unfolding before our eyes.

The Pope weighs in, ahead of a hotly contested S. Carolina primary, filled with very religious voters.

In a freewheeling conversation on his flight home from a visit to Mexico, Francis told reporters, “A person who thinks only about building walls, wherever they may be, and not building bridges, is not Christian.”

Trump, a real estate developer and former reality TV star, said, “If and when the Vatican is attacked by ISIS, which as everyone knows is ISIS’s ultimate trophy, I can promise you that the pope would have only wished and prayed that Donald Trump would have been president,” Trump said in a speech in Kiawah Island, South Carolina, using an acronym for the Islamic State militant group.

“For a religious leader to question a person’s faith is disgraceful. I am proud to be a Christian and as president I will not allow Christianity to be consistently attacked and weakened,” Trump said.

“No leader, especially a religious leader, should have the right to question another man’s religion or faith,” Trump said.

“The pope is a very political person. I think he doesn’t understand the problems our country has. I don’t think he understands the danger of the open border that we have with Mexico,” Trump told the Fox Business Network.

Despite this company smashing and exceeding estimates in every quarter since coming public, an analyst over at JMP securities thinks the party is over.

He downgraded the stock today, citing an unfavorable outlook for growth, slashing the price target from $220 to $165.

As a result, the stock is being flayed to the tune of 10%.

We’re all accustomed to panic, nowadays. At the first sign of dark clouds, everyone assumes we are in for a thousand day flood. Hence, people board the ark, amidst the zebra and boa constrictor, in search for safe haven.

The risk aversion carries out to any low risk, high yielding vehicle, such as REITs, utilities and mega cap staples.

A refreshing change in the demeanor of this market squall is the availability of gold as an effective hedge.

If, for whatever reason, none of the above appeals to your investment pallet, have a look at the Japanese yen. No bear raid worth its salt is absent the paranoia induced yen carry trade unravel analogue.

Point being, aside from selling short, you have numerous hedging options available to you. There is no excuse, in this day and age, for you to sit there, idle, as the market inflicts damage to your net worth.

Without question, Walmart’s horrible quarter threw a wet towel over the fiery heads of investors this morning. Couple that with the BREXIT fears (UK leaving the EU) and there is good cause for consternation, following a decent sized run.

Nevertheless, crude is higher and losses are somewhat manageable, at least in the early going. I will not sully the good name of this site to make bold predictions about the price action of the next 5 hours or so. Instead, I will reiterate my belief that the market will rally through April. Furthermore, the lion share of losses to come will commence from May through November, turning eager investors into landfill.

My SPY sales, which constitute 75% of my holdings, will begin early next week. A full schedule of my sales are posted inside of the blog section of Exodus. The other 25% of my assets are in long dated U.S. treasury bonds, via TLT–which has the dual purpose of providing me with income and stability against harrowing stock market losses.

It’s simply my belief that 2016 is not a year to be bold. Instead of running the fields like a lion after its prey, you should be the mouse, scurrying about the baseboards in search of crumbs.