Better lucky that smart? Managers of active funds are now extremely concentrated in the strongest parts of the US equity market with ‘momentum’ massively outperforming the market in August (and ramping higher off the North Korea missile launch lows).

Bloomberg’s Dani Burger notes that with more than half of their bets on high flyers like technology and online retailers, hedge funds have near-record exposure to momentum trades, a strategy that’s up 2.6 percent in August even as the S&P 500 heads for its worst month since the election. The resiliency of the bet was on display Tuesday, when Alphabet and Amazon opened nearly 1% lower before rebounding along with Apple to deliver the S&P 500’s biggest intraday reversal in 10 months.

“It’s like these things are like gold — it’s almost like a safe haven,” said Mark Connors, the global head of risk advisory at Credit Suisse Group AG.

 

“This resilient price action in equities is commensurate with the constructive positioning we see across hedge fund strategies and speaks to the persistent positive sentiment in 2017.”

The much-followed FANG Stocks soared over 2.1% off the opening lows…

 

The 50 most popular hedge fund longs…

Bloomberg’s Burger asks, how long can it last?

That’s a question that’s becoming more urgent for hedge funds that have finally caught up to a market where gains are delivered by an ever-narrowing cohort of stocks. Volatility has been rising amid renewed geopolitical tensions, signs of uneven economic growth in the U.S. and the threat of further interest-rate hikes by the Federal Reserve.

 

What’s more, the very nature of following momentum poses its own pitfalls. The strategy is one of the more volatile factors, and when rotations occur, pain seeps through as leaders quickly move to the back of the pack.

 

All that points to a hedge fund love affair that’s headed for heartbreak, according to Joseph Mezrich, head of U.S. quantitative analysis at Nomura Instinet LLC.

 

“We are concerned about this outsized exposure,” Mezrich, wrote in a note to clients. “The last time momentum exposure was this high was in 2013-2014, which led to a sharp decline in fund performance when momentum collapsed. Fund managers may be setting themselves up for a repeat.”

So what happens next? We leave to CS’ Mark Connors…

“You can’t manage your book for a big deleveraging… Momentum is an escalator up and an elevator shaft on the way down. But managing that is what active managers do for a living.”

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The Iranian Foreign Ministry has criticised the Kurdish government for its recent decision to hold a referendum on secession from Iraq. A ministry spokesman, Bahram Qasimi, described the decision by the Kirkuk provincial council as “a provocative, unwelcomed and wrong decision”. “The insistence on holding the referendum, despite the rejection of the Iraqi government, the United Nations and many regional and non-regional countries, does not support dialogue with Baghdad to settle the outstanding issues. It also affects the process of supporting Iraq’s victories in fighting Terrorism,” Qasimi said, according to the IRNA, a news agency. Qasimi stressed that the Islamic Republic “warns of the repercussions of this wrong decision, which is a flagrant violation of Iraq’s sovereignty and territorial integrity, […]

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According to the data from the Israeli Central Bureau of Statistics, the number of Muslims in Israel, including occupied Jerusalem, reached 1,534, 000 in 2016 (including 320.000 Jerusalemites) constituting up to 17.7 % of the population. These data, which was published on the occasion of Eid Al-Edha, showed that the number of Muslims increased during 2016 by 36 thousand people. This indicates that the rate of population growth remained constant over the last three years at 2.4 % a year. It is also considered to be the highest rate of any group in the country. Read More: Official data: Israel uses 85% of total area of historical Palestine Jerusalem has the largest concentration of Muslim population of any city, with 320.000 […]

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Authored by Mac Slavo via SHTFplan.com,
You may have thought that tensions with North Korea were abating following Kim Jong Un’s missile test stand-down earlier this month.

But as we and others outside of the mainstream media propaganda machine …

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Hurricane Harvey hit the US refining industry in Texas at a vulnerable time while gas prices soared more than 10 percent because of the anticipated …The post Hurricane Hit US Refineries, Gasoline Price Hard But Spared <b>Crude Oil</b&gt…

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After a two-year long bear market, bitcoin came roaring back in 2016, and has been climbing ever since.

The digital currency reached a new all-time high above $4,650 on Tuesday, an increase of more than 350% year-to-date. The sheer intensity of its gains has inspired some comparisons to the digital currency’s initial run-up, which ended with the collapse of bitcoin exchange Mt. Gox in early 2014, marking the end of the first bitcoin bull market.

Given bitcoin’s torrid advance, analysts from Bespoke Investments attempted to put its gains in context in a chart. The results are striking: Compared with infamous asset bubbles like tech stocks in the 1990s, bitcoin has climbed much further in far less time. According to Bloomberg, “there’s almost no comparison” between bitcoin and the tech-stock bubble.  

“Bespoke Investment Group contrasted the rise in bitcoin with infamous bubbles such as the tech market in the late nineties. There’s almost no comparison. Tech stocks rose just over 1,000 percent over the entire course of their bubble, and bitcoin is already up more than twice that. Take a look.”

According to CoinTelegraph, bitcoin analysts expect the digital currency to finish the year around $5,000.

And some expect the digital currency to go much, much higher. According to the Wall Street Journal, early Snapchat investor Jeremy Liew expects Bitcoin will reach $500,000 by 2030. Security company founder and notable eccentric John McAfee believes it’ll take only three years.

Alistair Milne, a popular bitcoin analyst who has a large Twitter following, calculated earlier this month that bitcoin would already be worth more than $7,000 if the digital currency’s share of the overall crypto market would return to its pre-2017 levels. Bitcoin’s market capitalization now represents less than half of the total for the broader market crypto market, down from about 90% early this year. The drop is largely due to bitcoin rivals like Ethereum and Litecoin, which put bitcoin’s YTD rise to shame.

If Bitcoin returned to market dominance of ~84% (where it was before the Bitcoin Unlimited/forking fears), the price would be ~$7000 today

— Alistair Milne (@alistairmilne) August 15, 2017

Bitcoin has made a habit out of routinely defying its most ardent skeptics. But the shadow of Mt. Gox still looms large over the digital currency market. And the risk of another bull-market-ending catalyst like a 51% attack on the bitcoin network or another major hack at one of the more mainstream exchanges could force out the week hands, sparking another precipitous drop.

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Yesterday, we detailed the story of a University of Tampa professor who suggested that Texans deserve the fallout from Hurricane Harvey because of their support for Donald Trump in the 2016 election.

As Campus Reform noted, Professor Ken Storey wrote…

“I don’t believe in instant Karma but this kinda feels like it for Texas, Hopefully this will help them realize the GOP doesn’t care about them.”

Of course, after posting this disgusting comment, he apologized…

“I deeply regret a statement I posted yesterday,” Storey tweeted. “I never meant to wish ill will upon any group. I hope all affected by Harvey recover quickly.”

But the damage was done, and today, as Campus Reform reports, the University of Tampa announced Tuesday that it has fired the professor.

In a statement sent to the university community, the school strongly condemned the comments made by Professor Ken Storey on Twitter, underscoring that the remarks “do not reflect UT’s community views or values.”

“We condemn the comments and the sentiment behind them, and understand the pain this irresponsible act has caused. Storey has been relieved of his duties at UT, and his classes will be covered by other sociology faculty,” the university wrote.

 

“As Floridians, we are well aware of the destruction and suffering associated with tropical weather,” the statement concluded, adding, “Our thoughts and prayers are with all impacted by Hurricane Harvey.”

We wonder how “deeply” Storey “regrets” his disgusting hate-speak now?

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Bloomberg’s David Westin spoke with Berkshire Hathaway Chairman Warren Buffett on his 87th birthday before his charity auction lunch at Smith & Wollensky’s in New York.

Among the topics discussed was the Fed’s upcoming balance sheet normalization: Buffett told Westin that the Federal Reserve will be “very careful” with how they handle quantitative easing as the Fed may have to find buyers for “trillions” in assets. Predictably, Buffett argued in support of QE which added tens of billions to his net worth: “[QE] did wonders for us coming out of 2008. Without it we would have gone back to the economics of 100 years ago. If the Fed had not been there to ease, we would have had a far different recovery. I think the Fed has overwhelmingly done the right thing. Now, we’ve never gone through a period like this and how it will all work out, we will find out. I think they will be intelligent about it but they’ve never played this game yet either.”

Separately, Buffett said the relentless, artificial, central bank-induced rally over the last several years has made it “harder to find bargains”, but that stocks “remain his choice over bonds.” Asked by Westin why cash has been piling up at Berkshire, Buffett said “it tells us stocks aren’t as cheap as they’ve been most of the time.” Buying shares after the 2008 financial crisis, Buffett said, was like “shooting fish in a barrel”, although he forgot to add that the US government bailing out his core financial holdings, did not hurt either.

In any case, in recent year, Berkshire’s stock portfolio, which includes multibillion-dollar stakes in companies like Apple, the scandal-plagued Wells Fargo and Coca Cola, was valued more than $135 billion at the end of June, almost the same size as the AUM of the world’s largest hedge fund, Bridgewater.

Stocks “have gotten less attractive as they’ve gone along,” Buffett said. “They’re still very attractive compared to bonds.”

Buffett has plowed money into stocks this year, including Apple. But finding new acquisitions has been a challenge lately. Earlier this month, his bid to take control of Oncor Electric Delivery Co., Texas’s largest power distributor, fell apart. That failed effort came six months after a Berkshire-backed deal to buy Unilever hit the skids.

 

The collapse of two high-profile pursuits in such a short time frame is a rarity for Buffett, who did his last major deal in 2015 when Berkshire agreed to buy aerospace-parts manufacturer Precision Castparts Corp. for more than $35 billion. While he’s made many offers that went nowhere, it’s less common for such misses to play out in public.

According to Bloomberg, the recent deal drought has bigger implications for Berkshire. The company doesn’t pay a dividend and rarely buys back its own stock, so failing to consummate a few major transactions means cash piles up from its subsidiaries. At the end of June, Berkshire had just shy of $100 billion.

Finally, in a discussion of assorted items, Buffett said that the US economy does not feel like a 3% GDP, that anger in the US stems from wealth inequality and when asked what’s the one thing that Buffett generally feared, the answer was “if we’re talking broadly, the answer is weapons of mass destruction.”

“Now you’ve got weapons that can kill millions and millions and millions of people, and you’ve got them in unstable hands in certain cases. We live in a dangerous world that way, it’s the only real problem for humankind.”

Buffett then said that in this context, North Korea is at the top of his list: “if you have a small, relatively poor country that’s spending a significant part of its GDP trying to figure out how to get an ICBM to hit the west coast of the US, there’s something going on in somebody’s mind that I don’t like.”

Finally, the reason why Buffett was in the New York Smith & Wollensky today is to dine with the winner of an annual charity auction that raises money for Glide, a San Francisco non-profit. The top bidder, who chose to remain anonymous this year, paid $2.68 million to bring as many as seven friends to lunch with the billionaire at Smith & Wollensky steakhouse. With insights such as these, we think the many could have been spent with a much higher IRR elsewhere.

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Authored by Daisy Luther via The Organic Prepper blog,

While it’s true there are a lot of stories about division and heartlessness, there are many stories coming out of storm-torn Texas that will give you hope for humanity again.

Kindness and love for our neighbors isn’t dead, despite a politically divided country. This is proof that we can work together and give selflessly.

This isn’t to underplay the death and destruction, but to highlight our humanity in the face of disaster.

Below, you can find 10 of my favorite heart-warming stories so far.

1. Four teenage boys rescued more than 50 people in Houston.  After waking up to discover his beloved truck was under water, a 17-year-old Texas boy enlisted his younger brother and two other teens to get on a fishing boat and rescue more than 50 people – and their pets – and bring them to the safety of a local shelter. (source)

2. Members of the Cajun Navy resuscitated an elderly woman found floating face-down in the flood water. As they were guiding their boat down a waterway that was formerly a road, three volunteers realized that what they initially thought was debris was an elderly woman. They jumped in and began resuscitating her in the water, saving her life. They were able to reunite her with her family and say she is doing well. This isn’t the first time that the Cajun Navy has thrown themselves wholeheartedly into a rescue effort, and Houston is welcoming their contributions. (source)

3. When a stranded woman went into labor, a human chain, a fire department, and a dump truck got her to the hospital. Luckily for a woman who went into labor early, the neighborhood worked together to get her to the hospital in time to give birth. As her new baby girl required intensive care immediately after she was born, it was a good thing that she was not born at home. (source)

They used a human chain to get her safely to the truck!! (Video shot by my roommate) Happy thoughts & prayers to the new parents! ?? pic.twitter.com/nlEaa9J8E4

— Callie Hatcher (@calliecalliejo) August 27, 2017

 

4.  Some employees who were stranded at a bakery by the flood made bread for hungry survivors. The bakers were stuck at the bakery for two days, but instead of being idle, they worked all night long to make hundreds of loaves of pan dulce bread to help nourish fellow flood victims. (source)

5. Bass Pro provided 80 boats for search and rescue efforts. When Houston officials ran out of boats, they asked for volunteers with boats to come and help out. Bass Pro answered the call with the use of 80 of their boats and $40,000 in emergency supplies. (source)

6. Two furniture stores turned their locations into pet-friendly shelters. Mattress Mac welcomed displaced residents, their children, and their pets into their stores to provide them with a comfortable place to stay. (source)

7. A storm chaser rescued a lost dog. A storm chaser stopping for gas on his way home was surprised when a bedraggled dog hopped into his Jeep. After he posted a photo on social media, he was able to connect with the dog’s owner and return him. (source)

8. A reporter and camera crew in a boat rescued a stranded family shouting for help. As the crew went past a home, they heard people calling for a help. The family’s home was being flooded with waist-high water. Their elderly mother suffered from Alzheimer’s. They were helped onto the boat and taken to shelter. (source)

9. Not one to let a disaster get him down, this man caught a fish in his living room. Watch these three videos…

10. Anheiser Busch stopped producing beer to can water. The Georgia brewery stopped production to provide 155,000 cans of safe drinking water for flood victims.

We’re sending more than 155,000 cans of emergency drinking water to those affected by #HurricaneHarvey. Stay safe everyone. pic.twitter.com/Wc1YzQQA9M

— Anheuser-Busch (@AnheuserBusch) August 29, 2017

These stories go to show you that we can all look past race, politics, and religious disagreements to help our neighbors, keep our spirits up, and perform acts of kindness. Wouldn’t it be nice if we could continue acting like neighbors after the disaster has passed?

 

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Crack spreads tend to tell us a lot about demand for oil products which leads to demand for raw crude oil. However, Hurricane Harvey created a huge …The post Cracks Move Higher On Harvey And <b>Oil</b> Is Likely To Follow appeared fi…

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