FT : Dubai looks to restart mothballed luxury developments for wave of wealthy i

Dubai looks to restart mothballed luxury developments for wave of wealthy incomers
Volume of residential transactions is at its highest since peak of 2009, says real estate group CBRE

Dubai developers are dusting off plans for long-dormant projects as demand for luxury property surges from a wave of wealthy new arrivals to the Gulf city-state.

State and government-related real estate firms are looking to restart projects that failed in the wake of the city’s debt crunch during the global financial crisis. These include the mothballed man-made Palm Jebel Ali island and the stunted towers of Dubai Pearl, a long-delayed development at the entrance to another famous reclaimed island, Palm Jumeirah.

These developments have long acted as visible reminders of past excesses but are now reviving thanks to a wave of new entrants to the city, from Asian billionaires and cryptocurrency investors to wealthy Russians looking to escape sanctions imposed after the invasion of Ukraine.

Dubai-based property consultants Mira Estate said sales to customers from Russia and the former Soviet states had doubled so far this year, compared to the same period in 2021.

“Billionaires and entrepreneurs have been flocking to the UAE in record numbers, leading to a surge in demand for real estate,” said Tamara Getigezheva, Mira’s chief executive. “Most homebuyers are looking for ready units and waterfront properties.”

The volume of transactions in Dubai’s residential market soared by a third in June 2022 compared to a year before. In the year to June, transactions reached their highest total recorded since the peak in 2009, according to real estate group CBRE.

“Off-plan” sales — of properties that have not been built yet — rose 47 per cent and ready homes by a quarter in the period. Prices increased by 10 per cent in the year to June, while average villa prices were up 19 per cent.

Villas on Palm Jumeirah, the reclaimed island beloved by the city’s wealthy, recorded the highest average sales rate in the city, according to CBRE.

It was developed by Nakheel, the government-owned firm that was at the heart of Dubai’s financial crisis in 2009 when it nearly defaulted on some of its debt.

Demand for waterfront properties is providing a renaissance for the company, which was previously controlled by state conglomerate Dubai World and now falls under the emirate’s sovereign wealth fund, the Investment Corporation of Dubai.

Palm Jebel Ali, which is three times larger than Palm Jumeirah, was put on hold in the aftermath of the 2009 crisis.

Nakheel’s new management, once it receives government approval, is expected to launch developments on the island to meet demand for beachfront real estate, said three people briefed on the plans.

Over the past few months, Nakheel has been contacting existing investors in the project and offering to buy back their contracts for plots and properties, said six people briefed on the offers. The company declined to comment.

Investors are being offered financial recompense or credit notes for other Nakheel properties, said three of these people.

Customers will also be given the opportunity to reinvest their cash in the revived Palm Jebel Ali, they added. In such cases, the company would provide partial compensation as prices on the island are expected to be much higher than for the original project launched two decades ago.

“I bought at a discount, but I don’t want to sell — I want the villa I bought,” said one Dubai businessman. Others who bought at a premium are facing poor recoveries on their investments if they sell back at the original selling price.

During its pre-crisis heyday, Nakheel also started developing an even larger man-made coastal project, Palm Deira, which was never fully reclaimed and was then rebranded Deira Islands.

Located off the city’s old town near the creek, the company is planning an array of commercial, residential and hospitality projects across the four islands, soon to be relaunched as Dubai Islands.

Another long-abandoned project set for a revival is Dubai Pearl, whose semi-complete structures have been a blot on the skyline for 18 years.

Construction work on the development of four towers connected on the top floor by a “sky palace” started in 2004 before faltering, leaving investors out of pocket.

The government recently cancelled the project and put it out to auction among various UAE-based bidders, said four people briefed on the move.

Dubai Holding, the conglomerate owned by the ruler Sheikh Mohammed bin Rashid al-Maktoum, won the auction, thereby taking back the land it sold to the original developer in the early 2000s. Investors are now expected to get a quarter to a third of their money back.

Dubai Holding did not respond to a request for comment.

The deal, if it completes, should provide some closure to thousands of investors who have been battling for recompense for years.

“Getting 25 per cent of my cash back after a 15-year wait isn’t exactly great,” said one. “It’s been a tough way to learn that contracts in Dubai are rarely worth the paper they’re written on. On the other hand, it’s still better than nothing.”

FT : Top Russian diplomat dismisses hopes of negotiated end to Ukraine war

Top Russian diplomat dismisses hopes of negotiated end to Ukraine war
Ambassador Gennady Gatilov warns that Moscow expects a long conflict as invasion reaches six-month mark

Moscow sees no possibility of a diplomatic solution to end the war in Ukraine and expects a long conflict, a senior Russian diplomat has warned, as President Vladimir Putin’s full-scale invasion reaches the six-month mark this week.

Gennady Gatilov, Russia’s permanent representative to the UN in Geneva, told the Financial Times that the UN should be playing a bigger role in attempts to end the conflict and accused the US and other Nato countries of pressing Ukraine to walk away from negotiations. There would be no direct talks between Putin and Ukraine’s president Volodymyr Zelenskyy, he said.

“Now, I do not see any possibility for diplomatic contacts,” Gatilov said. “And the more the conflict goes on, the more difficult it will be to have a diplomatic solution.”

His remarks, which come despite a flurry of shuttle diplomacy in recent weeks, are a blow to negotiators who had hoped that a recent agreement on grain exports from Ukraine’s Black Sea ports could form the basis for a broader deal.

The UN has become mired in “politicisation” because of the war and that has “damaged the authority of the UN and its organisations”, Gatilov said. As a result, it is unable to act effectively as a mediator, he complained.

“We do not have any contacts with the western delegations,” he said of his day-to-day work in Geneva. “On the protocol side we do not see each other . . . Privately we do not have any contacts, unfortunately . . . we simply do not talk to each other.”

Global diplomacy was in the worst state he had experienced in his 50-year career, Gatilov added. “The world has changed and the UN will never be the same as it was before,” he said.

Russia invaded on February 24, in what Putin called a “special military operation” to “denazify” Ukraine. It was condemned by western countries which imposed crippling sanctions on Moscow and severed ties. An initial attempt to seize Kyiv in a lightning assault was thwarted, forcing Moscow’s army to regroup and focus on an artillery-led campaign in the east.

Bilateral ceasefire negotiations broke down after evidence was discovered of war crimes committed by occupying Russian troops in April. Moscow has denied the allegations.

The failure to restart peace talks, combined with continued western military support for Ukraine, meant it was impossible to forecast how long the conflict could last, Gatilov said: “And so they [Kyiv and its western supporters] will fight until the last Ukrainian.”

Gatilov, who served as deputy foreign minister before being posted to Geneva in 2018, claimed that Moscow and Kyiv had been “very close” to an agreement that could have paused the conflict in negotiations hosted by Turkey in April. People involved in the talks have refuted this.

The UN and Turkey have sought to act as intermediaries between Kyiv and Moscow, and had recent success in brokering the deal on Ukraine’s grain exports.

But Gatilov said it was “unfortunate” that the UN was not playing a larger role. “I think [the grain deal] is the only example that they played a practical role in trying to mediate,” he said. “It should be more than that.”

Gatilov accused western countries of using the situation “as a matter of pressure on Russia, as a tool of isolation of Russia . . . damaging our position, economically, politically”.

“They do not care about the Ukrainian people, the Ukrainian soldiers,” he said.

Ukraine’s defence has been boosted by more than $30bn worth of weapons supplies pledged by the US, UK and other Nato allies. Zelenskyy has previously said that he saw direct talks with Putin as the only way to negotiate an end to the conflict, and only after a Russian withdrawal from all Ukrainian territory captured since February.

Mykhailo Podolyak, an adviser in Zelenskyy’s administration who participated in the failed peace talks, said on Friday that “negotiating with the Russian Federation means . . . a fatal ending for everyone”.

Turkey’s president Recep Tayyip Erdoğan, who has maintained relations with both Kyiv and Moscow since the invasion, visited Putin in Sochi earlier this month and met Zelenskyy in Lviv last week alongside UN secretary-general António Guterres in an effort to act as a mediator.

Erdoğan said during his visit to Ukraine: “I continue to have faith that the war will end at the negotiating table. Mr Zelenskyy and Mr Putin are of the same opinion.”

But that statement did not refer to any new developments that could lead to negotiations, according to a person familiar with the discussions.

Gatilov praised Erdoğan for “trying his best” to facilitate dialogue but dismissed speculation of direct talks between Putin and Zelenskyy, saying there “was not any practical platform for having this meeting”.

He also accused Ukraine of “a clear provocation” at the Zaporizhzhia nuclear plant which is occupied by Russian forces. Ukraine has blamed Russia for shelling the plant, while Nato has said Russia is using the nuclear site as a base from which to launch attacks.

“Russian troops are just guarding it. Just securing it. Why should we shell it?” Gatilov said. Russia has agreed to an urgent safety visit by the International Atomic Energy Agency to the plant.

CNBC : FTX grew revenue 1,000% during the crypto craze, leaked financials show

FTX grew revenue 1,000% during the crypto craze, leaked financials show

KEY POINTS
  • FTX saw explosive growth last year driven by its global trading business, according to audited financials seen by CNBC.
  • The exchange took revenue from below $90 million in 2020 to more than $1 billion last year as cryptocurrencies hit an all-time high. The U.S. business was only a blip on the top line, accounting for less than 5% of revenue.
  • CEO Sam Bankman-Fried’s empire expanded as FTX bought start-ups across Switzerland and Australia.

FTX rode the crypto craze to a billion dollars in revenue last year while expanding its global footprint through a flurry of acquisitions, according to internal documents seen by CNBC.

The audited financials give a rare glimpse into the privately held company’s finances. FTX was profitable, quickly expanding across the globe and saw breakneck growth.

The crypto exchange’s revenue soared more than 1,000% from $89 million to $1.02 billion in 2021. Its profitability, like many start-ups, depends on how you measure it. Operating income was $272 million, up from $14 million a year earlier. FTX saw net income of $388 million last year, up from just $17 million a year earlier.

FTX declined to comment on the leaked financial documents.

The company brought in $270 million in revenue in the first quarter of 2022, and was on track to do roughly $1.1 billion in revenue in 2022, according to an investor deck shared with CNBC. But it’s unclear how FTX held up in the second quarter as crypto prices plunged during the recent so-called “Crypto Winter.”

By way of comparison, publicly traded Coinbase also experienced a cash boom during crypto’s bull market, with $7.4 billion in revenue and $3.6 billion of net income last year. But in the second quarter of this year, it reported $808.3 million in revenue, a decline of 64% from the year-ago quarter, and a surprise net loss of $1.1 billion, compared with $1.59 billion in net income a year earlier, as retail trading volumes cratered.

FTX was founded three years ago by former Wall Street quant trader Sam Bankman-Fried. The 30-year-old CEO has recently stepped in as the industry’s lender of last resort, looking to backstop companies as liquidity dried up. On top of multiple loans of hundreds of millions of dollars, Bankman-Fried’s companies also looked to acquire distressed assets. In July, FTX signed a deal that gives it the option to buy lender BlockFi and was in discussions to acquire South Korean Bithumb. FTX also offered to buy Voyager in August but was turned down for what the company claimed was a “low ball bid.”

FTX had roughly $2.5 billion in cash at the end of last year and 27% profit margins, according to the documents. Margins were closer to 50% if advertising and “related party” expenses are stripped out. It last raised money in January, collecting $400 million from investors like SoftBank’s Vision Fund 2 and Tiger Global, at a $32 billion valuation.

Global footprint
FTX was founded at a time when Coinbase and Binance had solidified themselves as the world’s largest trading venues. Coinbase still operates largely within the U.S. Binance, the largest exchange by trading volume got its start in China, later moved its headquarters to the Cayman Islands and is now making a push for the U.S. market with an American subsidiary.

FTX has been quietly building its own fleet of global subsidiaries to compete.

FTX Trading Ltd. is headquartered in Antigua, with FTX Derivatives Markets based in the Bahamas, where Bankman-Fried lives. FTX Trading recently bought Digital Assets DA AG, out of Switzerland, as well as IFS Group and Hive out of Australia – bringing the total to 15 smaller companies across the world. Its portfolio companies span Cyprus, Germany, Gibraltar, Singapore, Turkey and the United Arab Emirates, among other countries, according to the documents. Crypto companies often acquire start-ups to quickly get the proper regulatory licenses to set up shop in a new country.

Bankman-Fried also founded trading firm Alameda Research, which accounts for about 6% of FTX’s exchange volumes, according to the documents.

FTX’s U.S. business is technically owned by a parent company, West Realm Shires Inc. As of 2021, FTX U.S. made up less than 5% of FTX’s total revenue. Still, the company is making a push to expand in the U.S. with a series of high-profile ads and sponsorships.

FTX spent roughly 15% of revenue on advertising and marketing in 2021, according to the documents. That may account for its 2022 Super Bowl ad with actor Larry David and high-profile celebrity endorsements by Tom Brady and Giselle Bündchen, who are also equity investors in the company. FTX also bought the naming rights to Miami’s NBA arena, formerly the American Airlines Arena. FTX planned to spend an estimated $900 million in advertising in the coming years, according to the documents.

The crypto exchange is also expanding into stock trading. It launched equities trading weeks after Bankman-Fried took a 7.6% passive stake in Robinhood, fueling speculation that FTX is looking to buy the trading app in a landgrab for U.S. retail accounts. Robinhood and Bankman-Fried have denied that a deal is in the works.

FTX has certainly ramped up its retail expansion efforts. But the documents show that it’s still mainly a venue for more sophisticated traders using derivatives – either futures, or options. About two-thirds of revenue came from futures trading fees, while roughly 16% came from so-called spot trading. Futures and derivatives trades tend to be more lucrative for exchanges.

CNBC : Bill Gates’ company TerraPower raises $750 million for nuclear energy and

Bill Gates’ company TerraPower raises $750 million for nuclear energy and medicine innovation

KEY POINTS
  • TerraPower, the nuclear innovation company founded by Bill Gates, announced a $750 million funding raise co-led by Gates and SK, a large South Korean conglomerate that is one of South Korea’s largest energy providers.
  • The money will go toward the development of nuclear energy innovations and nuclear medicine.

Bill Gates’ nuclear innovation company, TerraPower, announced Monday it has secured at least $750 million in new funding.

The funding was co-led by Gates and SK. Gates is the founder and chairman of TerraPower. SK, one of South Korea’s largest energy providers, invested $250 million.

The money will be used to develop nuclear energy technology and innovations in nuclear medicine, according to a statement from TerraPower.

“Whether it’s addressing climate change with carbon-free advanced nuclear energy, or fighting cancer with nuclear isotopes, our team is deploying technology solutions and investors across the world are taking note,” Chris Levesque, the CEO of TerraPower, said in a statement.

Nuclear energy has been undergoing a renaissance because the energy created by nuclear reactors doesn’t release the greenhouse gasses that cause climate change. There is, however, long-lasting nuclear waste that has to be stored carefully.

What TerraPower’s working on
TerraPower is working with GE Hitachi Nuclear Energy, a division of General Electric, to commercialize the Natrium system. It includes a smaller reactor than the conventional ones used in the United States and a molten salt energy storage system that allows the microreactor to boost its energy output for short periods of time as needed.

TerraPower is currently working to demonstrate its Natrium reactor technology at a soon-to-be-retired coal plant in Wyoming. The project is a collaboration with the federal government as part of the U.S. Department of Energy’s Advanced Reactor Demonstration Program (ARDP).

TerraPower also wants to commercialize a kind of molten salt reactor technology that could be used to provide carbon-free energy to heavy industrial operations, like water treatment plants, chemical processors and heavy industrial users. And the company is building the Traveling Wave Reactor, which it says will use mined uranium 30 times more efficiently and greatly reduces nuclear waste.

The firm also hopes to help treat cancer with its TerraPower Isotopes program.

Small amounts of slightly radioactive material can be used to help treat certain cancers. One such radioactive material, Actinium-225, can be used to help treat prostate cancer, lymphoma, melanoma and other cancers. TerraPower is working to innovate in the process to extract Thorium-229, which is needed to create Actinium-225, from sources of Uranium-233 that are being managed by the Department of Energy.

There is not enough Actinium-225 right now to meet demand, so TerraPower says it will use its “unique access” to Actinium-225 to bring the isotope to the pharmaceutical community.

CB : The Week’s 10 Biggest Funding Rounds: Bill Gates’ TerraPower Fuels Week Wit

The Week’s 10 Biggest Funding Rounds: Bill Gates’ TerraPower Fuels Week With Huge Round, Biotech Startups Surge

Things picked up a little on the funding front this week, mainly thanks to a monster round from a Bill Gates-founded startup and the immense interest in all things biotech and health care related. Aside from those rounds, marketing, travel and fintech startups also saw some large raises in what may be August’s best week so far.

1. TerraPower, $750M, energy: A slow week was picked up quite a bit by TerraPower’s huge raise. The Bill Gates-founded nuclear innovation company secured an equity raise that yields a “minimum of $750 million,” the company said in a release. The fundraise was co-led by SK Inc. and SK Innovation—which invested $250 million—as well as Bill Gates. The SK Group is among South Korea’s largest energy providers and this is not the only time it will be mentioned here. The round also is one of the largest advanced nuclear fundraises to date. Founded in 2006, TerraPower is an incubator and developer of ideas and technologies. The Bellevue, Washington-based company will use the new money to develop advanced nuclear technology, as well as developing new cancer treatments from nuclear isotopes.
2. Orna Therapeutics, $221M, biotech: As we said earlier, biotech and health care was big this week. Cambridge, Massachusetts-based Orna Therapeutics was the biggest as far as money raised. The RNA therapies developer announced a $221 million Series B. Drug giant Merck joined as a new investor and MPM Capital and BioImpact Capital also participated in the round. Founded in 2019, Orna has now raised $321 million, per Crunchbase.
3. Senda Biosciences, $123M, biotech: Cambridge, Massachusetts-based Senda Biosciences was another biotech company that saw love from investors this week. The company is producing “programmable medicines,” where biomolecules can be sent directly to human cells for treatment. Senda locked up a $123 million Series C from investors that included Flagship Pioneering and the Samsung Life Science Fund. Founded in 2017, the company has raised $266 million to date, per the company.
3. VidMob, $110M, marketing: It’s one thing to create advertising and marketing content, it’s another to know if it’s actually doing what it’s supposed to do. That’s where VidMob comes in. The New York-based company’s software helps marketers analyze the quality of that creative content used in digital advertising and gathers insights to help improve its performance. The platform was attractive enough to Shamrock Capital that it led the startup’s $110 million Series D this week. Founded in 2014, the company has raised nearly $232 million, according to Crunchbase data.
4. Atom Power, $100M, electronics: As mentioned earlier, SK Group popped up again on this list. The energy provider pledged late last month to invest $22 billion across a range of technology and clean tech industries in the U.S., and it’s clearly wasting little time. In addition to its TerraPower deal, SK Inc. and SK energy invested $100 million in Huntersville, North Carolina-based Atom Power, which is trying to digitize power distribution for EV charging. The company has developed a commercial solid-state digital circuit breaker that allows for smarter and more sustainable power distribution. Founded in 2014, the company has raised nearly $175 million, per Crunchbase.
6. Incredible Health, $80M, health care: San Francisco-based Incredible Health, a platform that connects health systems with nurses, closed an $80 million Series B funding led by Base10 Partners that values the company at $1.65 billion. Founded in 2017, Incredible Health says it has now raised a total of $97.5 million.
7. AtoB, $75M, fintech: San Francisco-based AtoB, a payments platform for the trucking industry, raised a $155 million Series B, which included $75 million in venture funding and $80 million in debt. The round was ​​led by Elad Gil and General Catalyst. Founded in 2019, AtoB has raised $230 million in debt and equity, according to the company.
8. Aero Technologies, $50M, travel: San Francisco-based premium air travel startup Aero Technologies raised a $50 million Series B funding and $15 million in convertible notes. The round was co-led by AlbaCore Capital Group and returning investors Expa and Keyframe Capital, with new investment from Capital One Ventures. Founded in 2014, the company has raised more than $104 million, according to Crunchbase.
9. Jet Token, $40M, aerospace: Las Vegas-based Jet Token, a private aviation booking and membership platform, announced a $40 million investment commitment from GEM Global Yield for post-IPO funding.
10. Moximed, $40M, medical devices: Fremont, California-based Moximed, which develops medical devices for people with osteoarthritis, announced $40 million in Series C equity and debt financing. The round was led by Advent Life Sciences. The company did not disclose the ratio of equity and debt. Founded in 2006, the company has raised more than $193 million, per Crunchbase.
Big global deals
Not surprisingly TerraPower took the top spot globally, but three non-U.S.-based startups made the top five global list.
  • China-based Viiyong, a manufacturer of multilayer ceramic chip capacitors, raised a Series B worth approximately $331 million.
  • DriveNets, an Israel-based cloud-native networking developer, secured a $262 million Series C.
  • Israel-based property management platform Guesty closed a $170 million Series E.

ZH : Did Friday’s move mean the bear is back?

Did Friday’s move mean the bear is back?

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SPX - 200 day moving average perfection
This could actually become the textbook reversal. You don't buy into longer term trend lines and the 200 day moving average. Supports that matter are: 4200 and the 4100 area.
Source: Refinitiv
SPX - the short term view
SPX fell below the short term trend channel that had been in place since mid July. Resistance levels are 4260 and recent highs at 4320. Supports are 4200 and then the 4100 level.
Source: Refinitiv
NASDAQ - another perfect reversal?
NASDAQ reversed right off the negative trend line. First real support is at 12900. Noteworthy is the negative divergence in the RSI.
Source: Refinitiv
Kostin travelled to arrive
King Kostin: "The S&P 500 has reached our year-end target of 4300 four months ahead of schedule. Looking ahead, upside risks to the index seem limited given this macro backdrop. But downside risks loom...." (GS head of strategy)
The pillars the squeeze stood on...
MS US Chief Equity Strategist Mike Wilson highlights that the surprising magnitude of this bear market rally has been driven by a combination of better than feared 2Q earnings, light positioning, and continued hope for a less hawkish Fed path. Maybe these support pillars are starting to "crumble" now. Q3/Q4 and 2023 numbers are starting to get revised down, positioning is not as "light" as 6-8 weeks ago due to massive short-covering and CTA buying and lastly, while inflation appears to be peaking, it's not likely to come off at a pace fast enough to spur the type of sustained Fed pause the equity market is already discounting (Morgan Stanley)
VIX looks so tiny - bond vol edition
Can VIX stay this "tiny" if bond volatility, MOVE, makes such a "comeback"?
Source: Refinitiv
VIX looks so tiny - FX vol edition
The most recent move in FX volatility is actually huge. VIX was up on Friday, but there is much more potential for VIX to move as equity people realize that "systematic" funds chase momentum and the fact cross asset vols have picked up lately...
Source: Refinitiv
The bitcoin "connection"
If crypto still is a good indicator of the "aggregate" psychology of the market then you should pay close attention to the latest px action in the "crypto majors". The BTC vs NASDAQ correlation perfection is less perfect these days, but it revived on Friday. Third chart shows NASDAQ vs ETH.
Source: Refinitiv
Source: Refinitiv
Source: Refinitiv
Systematics - short gamma, but no theta?
Systematic strategies have traded like they are running huge short gamma, but they have not received any theta. Most of these strategies are trend/momentum based, and when there is no real trend, they end up pressing lows and chasing highs. We have seen huge buys from this crowd over past weeks, but they are running out of dry powder...just in time when people decided to front run even more buying.
Source: GS
They can sell as well
CTA momentum chasing works both ways. Things could get "nasty" if the CTA community starts reversing the latest buy flow. Reshuffling risk is not overly easy at the moment, especially not if you want to do it quickly. Scott Rubner on the CTA flow from here: "$13B to Buy over the next week in a flat tape ($3.3B in S&P) / $17B to buy over the next month ($5.7B in S&P)… -Over the next month…Up big tape $48B to buy...Down big tape $147B for Sale…"
Source: GS
September is approaching
We all know September is not a great month from a seasonal perspective.
Source: GS
Ready for VIX
Gentle reminder about the VIX seasonality.
Source: Equity Clock
This buyer is slowing
Gentle reminder via Scott Rubner about the corporate buyers: "...Corporate blackout window begins on Sept 15th – one of the biggest buyers in the market slows – reminder they have 10b5.1 plans in place but pace reduces by about 1/3"
Short pain in a pic
The latest short covering has been extreme. As GS outlines: "On a percentage basis, the cumulative 20-day covering from 7/20 to 8/16 is still very large and ranks in the 99th percentile – omitted the 17th and 18th as we’ve seen modest “re-shorting” in the past two sessions."
Max pain market continues...
Source: GS PB
At least we saw greed
Recall we touched greed territory briefly earlier this week...
Source: CNN
Bulls beware
Goldman's positioning indicator is way off extreme lows and actually at one of the least extreme levels of all of 2022. The GS "Sentiment Indicator" measures stock positioning across retail, institutional, and foreign investors versus the past 12 months.
Source: Goldman
Talk the bearish talk....
....but maybe not walk the bearish walk......Investors say they are extreme bearish in surveys, but still have relatively high portfolio allocations to equities and are still running elevated leveraged positions. It's like listening to the "All In" podcast - they have been hysterically bearish now for a while, but they are all intrinsically long....
Source: Top Down Charts
Never forget - we move into short gamma on sell offs
We had a relatively big "gamma roll off" post this expiration, the "stabilizer" is gone. Don't forget that we also flip into short gamma should the market move lower. Absolute levels to the downside are not big at the moment, but demand for downside protection could "kick in" again, leading to vol becoming bid, dealers selling deltas to delta hedge and the entire short gamma dynamics play out again.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Recession is already here for many small businesses

Cover Story:
Recession is already here for many small businesses. For small businesses and households across America, recession isn’t an abstract concept or technical definition. It is a reality that many say they have felt since the start of this year, as rapidly rising prices ate into consumers’ budgets, hit firms’ profit margins, and pushed the cost of credit higher. Recently, the pain has lessened. A slowdown in major inflation gauges alongside an indication of robust hiring have investors betting anew on a “Goldilocks economy” that gently falls back into balance and allows for the Federal Reserve to stop tightening sooner than previously expected.

Interview:
-This week, Barron’s has interviewed Haim Israel. As head of global thematic research at Bank of America, Haim Israel studies the megatrends shaping the global economy that are likely to power investment returns. Some trends, including the rapid aging of populations in the US and China, and the march toward de-globalization as US-China tensions flare, are unfolding in the moment, while others, such as quantum computing, seem far away. Israel says a triad of crises in recent years—the clash between the U.S. and China, the war in Ukraine, and the Covid pandemic—has shaved the timeline for megatrends to evolve, meaning even long-term investors need to pay attention now.

Tech Trader:
-Since a June low, technology stocks have soared, with the Nasdaq Composite index up 20%. But the classic Looney Tunes cartoon offers a lesson to investors. Reality eventually matters. The sustainability of any rally led by triple-digit percentage gains from money-losing firms like Coinbase Global and FuboTV is suspect. More important, the latest developments show business trends in the technology sector could be getting worse, not better, suggesting a rough ride ahead for shareholders.

The Trader:
-Long term investors should avoid meme stocks: Take Bed Bath & Beyond, the latest and greatest meme stock. Shares dropped almost 24% on June 29 after a disastrous fiscal-first-quarter earnings report. Same-store sales dropped 23% year over year in the quarter, and the CEO announced his departure. Analysts cut their ratings, with the average analyst price target falling to about $4.50 a share from almost $8.
-Is it a bull market? Of late, there’s been more to be optimistic about. After its worst first half of a year in decades, the S&P 500 index has climbed 15% from its mid-June low, including a 1.2% slide this past week. The Nasdaq Composite has rallied 20% in the past two months, putting it in a new bull market—despite a 2.6% decline for the week. The Dow Jones Industrial Average is up 14% from its June low after a 0.2% dip for the week.

Features:
-About 3,000 cases of monkeypox were reported in the U.S. one month ago, but that number has risen to nearly 14,000 as of Aug. 18. This trend prompted the World Health Organization to declare a global public health emergency on July 23, followed by the Biden administration’s national emergency declaration on Aug. 4. Three supply chain professors and Barron’s agree that the US government, particularly the Centers for Disease Control and Prevention and the Food and Drug Administration, have been slammed for their slow response times and bureaucratic tendencies.
-Bitcoin and its peers should, in theory, trade independently of mainstream finance, but they have proved to be largely correlated to other risk-sensitive assets like stocks. Craig Erlam, senior market analyst at Oanda, said that while the trigger for the Bitcoin selloff wasn’t clear, “the fact that it has barely recovered any of those losses suggests there is substance to the move.” Erlam added that the break below $22,500 “could be significant if it holds, with the next key test once more being $20,000.’ He added: “The crypto winter may not be over yet.”

European Trader:
-Swiss-based commodities company Glencore has emerged as a prime beneficiary of Europe’s energy crisis.
High prices for coal, one of the company’s main offerings, are likely to persist as the war in Ukraine pushes past the six month mark. That, in turn, could lead to double-digit gains for the stock. “Glencore has already outperformed, and we think there is more to come,” says Tyler Broda, head of European mining at RBC Capital Markets in London. “Russia’s invasion changed the calculus in the global energy balance, and coal is a very key part of that, especially in Europe.”

Emerging Markets:
-India is the awakening giant of global internet. Since Jio Platforms (the internet arm of billionaire – and Asia’s richet man - Mukesh Ambani’s family conglomerate) stormed into the market in 2016, penetration has jumped from a quarter of the population to half of it, or 350 million new customers in raw numbers.
Ambani’s troops pushed this expansion with an epic cycle of price cutting, which bankrupted half a dozen rivals but left service fees among the world’s lowest. “For $3 a month, Indians get a voice and data package that would cost $60 or $70 in the U.S.,” says Venkat Pasupuleti, portfolio co-manager for India at Dalton Investments.

Commodities:
-Gasoline prices have been falling for weeks, but diesel and natural-gas prices remain much higher than a year ago. It’s mainly the latter two that are raising costs for the nation’s fuel-intensive agricultural industry, leading to expectations that food prices will remain high. Kent Vander Lugt, a farmer in southwest Minnesota, says his fuel costs are 60% higher than a year ago, increasing his cost per acre of corn raised by $30 to $40.
A major reason food is so “plentiful and secure” is abundant hydrocarbon, a compound made of hydrogen and carbon found in crude oil and natural gas, which allows for “synthetic fertilizers and cheaper horsepower,” driving massive increases in productivity, says Albert Chu, portfolio manager at Newton Investment Management, an affiliate of BNY Mellon.

Streetwise:
-Economic signs look healthy enough—job growth, wages, even consumer spending. But the retail sector is abuzz about consumers trading down. After Walmart beat earnings estimates this past week, it said that customers were buying less deli meat and more chicken, hot dogs, and canned tuna, and that US stores were getting a lift from high-income shoppers stopping in for bargains.

>>> World Health Organisation (WHO): New COVID cases have jumped by 15% and deat

World Health Organisation (WHO): New COVID cases have jumped by 15% and deaths by 35% globally in the last few weeks; More variants with such intense circulation will be seen in the coming days and doctors are noting increasing numbers of people who have been infected with BA.2 becoming infected again after four weeks by other variants
- Sharing some crucial data about the recent circulation, WHO's Maria Van Kerkhove said, millions have died from COVID19 since the start of this pandemic and 15000 are still dying each week.
- As per data, globally, over the last 4 weeks, 26,722,228 new cases and 62,892 new deaths were reported to WHO. That’s a 15% rise in new cases & a +35% increase in new deaths over the reporting period.
- The WHO official pointed out that in the coming day, the cases are likely to continue to rise ‘given the limited use of public health and social measures’. But COVID19 hospitalisations, deaths & Long Covid can be minimised.
- Currently, Omicron BA5 is the dominant circulating variant but new variants are to emerge in the coming days, the official said cautioning, “reduced surveillance, testing & sequencing globally is making our ability to track known & detect new variants much more difficult."
- Speaking of the new variants, she said, There will be more variants with such intense circulation. This virus does not yet have a seasonality or act predictably.
- Future variants will be more transmissible, may have further immune escape but we do not know if they will be more or less severe, she cautions
- Health experts across the globe are signalling alarm as they begin reporting that Omicron BA.5, the coronavirus strain that is currently outpacing other variants in infection and has become the dominant strain in the US and abroad, has the ability to reinfect people within weeks of contracting the virus.

FT : Strategic Value Partners sued in case revealing distressed debt tensions

Strategic Value Partners sued in case revealing distressed debt tensions
Investment manager challenged by minority shareholders after taking control of US mall group Washington Prime after bankruptcy

The $18bn distressed debt investor Strategic Value Partners seized control of the owner of US retail properties such as Rolling Oaks Mall in Texas and Tippecanoe Plaza in Indiana in a transaction approved by a bankruptcy judge last year.

Now, a group of minority shareholders in the mall company have sued SVP, saying they have been short-changed by the fund.

The case is part of a trend in distressed debt investing, in which investment funds snap up the discounted bonds of troubled companies in the hope of swapping that credit position for control of its assets in a subsequent bankruptcy.

The biggest investment groups are increasingly asserting their power to steer restructurings at target companies. This has led to grievances from smaller investors who claim that they have been steamrollered.

Washington Prime Group filed for bankruptcy protection in June 2021, citing a heavy debt load of $4bn, reduced traffic at its roughly 100 shopping centres and various concessions granted to retail tenants that were attempting to stay afloat in the coronavirus pandemic. The New York-listed company had been spun out in 2014 from the mall titan Simon Property Group.

Connecticut-based SVP, founded by Victor Khosla, was WPG’s largest individual creditor at the time of the bankruptcy filing. SVP led a group of creditors who held the vast majority of the company’s senior debt and unsecured junior bonds. According to the lawsuit, SVP owned 87 per cent of the reorganised company when it exited bankruptcy in October 2021 at an aggregate valuation of around $3bn.

In the lawsuit filed in Delaware state court on Thursday, minority holders in the reorganised WPG, led by Cygnus Capital, said that they were blindsided and ultimately cheated in a transaction earlier this year where SVP squeezed out the shareholders who owned just over a tenth of the remaining equity of WPG. Cygnus claimed that it only learned of the deal led by SVP when it closed at a price it deemed “grossly unfair”.

In its lawsuit, Cygnus alleges that “SVP took advantage of the Covid crisis to force and control a rushed bankruptcy process to take WPG Inc private”. The minority investor group seeks to either unwind SVP’s buyout of minority shareholders or be paid damages based on a revised valuation of Ohio-based WPG.

In an interview last year with Bloomberg television, Khosla denied that his firm engaged in “scorched earth” tactics, while acknowledging that his team could be tough negotiators. “We are not trying to find a little angle and make eight points on the bond we bought at 82. It gives you a lousy reputation . . . it’s just not us,” he said.

However, one creditor to WPG before its bankruptcy, who is not involved in the lawsuit, told the Financial Times that he was startled at the time by what he perceived to be the aggressiveness of SVP in the squeeze-out deal.

The person said that by leading a new cash investment of $325mn in WPG in the restructuring, SVP had already done well for itself. The fund had been able to purchase WPG equity at a 32.5 per cent discount to the mooted valuation of the new company, attractive terms related to SVP’s ability to commit significant capital. WPG had also sought alternative transactions to the SVP restructuring plan, but no credible counter offer emerged during the bankruptcy.

“Distress has never been an arena for the meek,” said Vincent Buccola, a professor at the Wharton School and a former corporate lawyer. “But in recent years, as norms of proportion and reciprocity have given way, many of the most sophisticated players have found themselves in court testing the boundaries of legal rights.”

The reorganised WPG is structured as a limited liability company, which typically offers fewer fiduciary protections to minority shareholders than a traditional corporation. The lawsuit plaintiffs allege that the transaction process “violated several requirements of the LLC agreement” and that SVP “obscured the Company’s asset valuations and concealed critical information from the Minority Unitholders”.

“Minority limited partners in many cases took the exact same economic risks and yet SVP is using is its majority control to create a two-class system that gives all the upside of the investment to SVP and leaves little for their limited partners,” said Christopher Swann, president of Cygnus Capital.

Cygnus challenged a WPG independent director, Martin Reid, describing him as being beholden to SVP. “Publicly available information indicate that Mr Reid’s livelihood depends on private equity real estate investors like SVP,” the plaintiffs wrote.

Reid did not respond to a request for comment.

SVP said: “We believe the lawsuit’s claims are completely without merit, and we intend to defend ourselves vigorously.”

The court papers also seize upon comments Khosla made at a Milken Institute financial conference earlier this year, where he seemed to boast about how surprisingly valuable WPG assets had become, describing what the plaintiffs said was the company’s mall located in Westminster, California.

“The mall is shut down and we got bids for it for a few hundred million dollars,” he said.