“U.S. Stocks Are Having One of the Best Years in Half a Century.”
Rarely in the last half century have the stars been so aligned for U.S. stocks.
The collapse in volatility and mid-year slump in bond yields has helped investors earn the third biggest risk-adjusted return from U.S. equities in 50 years, according to Bloomberg Sharpe ratio calculations. The measure tracks stock returns relative to Treasuries and volatility.
U.S. stocks have hit new highs this year as a bull market that started in March 2009 is poised to become the longest on record. Treasury yields are ending the year little changed and stock volatility is close to historic lows. Investor enthusiasm for technology shares and optimism over the potential benefits of U.S. tax reform have helped drive returns.
Companies are enjoying a ‘Goldilocks’ backdrop for profits with strong pricing power and surging cash flows, strategists at Jefferies Group LLC wrote in a recent note to clients. However, the backdrop for equity markets has been unique, and may not recur in 2018, they said.
“The high Sharpe ratio is unlikely to be repeated given real rates are likely to move up in 2018,” wrote the strategists including Sean Darby. “Equity returns should still be positive, but we see a lower Sharpe ratio in 2018.”
“Exclusive: U.S. spy chief orders changes in ‘unmasking’ policy.”
The top U.S. intelligence official has ordered tighter restrictions on how the names of Americans kept secret in intelligence reports can be revealed during presidential transitions, according to documents seen by Reuters.
The move follows unsubstantiated charges by President Donald Trump and his allies that his predecessor’s administration spied on Trump and improperly “unmasked” the identities of his associates during the 2016 presidential campaign and transition.
Current and former senior U.S. intelligence officials who have reviewed the documentation dispute those claims by the president. In September, the U.S. Justice Department said in a court filing that it had no evidence to support the president’s claim that President Barack Obama ordered surveillance of his Trump Tower campaign headquarters.
In a Nov. 30 letter sent to Representative Devin Nunes, Republican chairman of the House Intelligence Committee, and other top lawmakers, the Director of National Intelligence Dan Coats said the new unmasking policy is due by Jan. 15. Nunes was among the first to charge that U.S. intelligence agencies collected information on Americans involved in Trump’s transition team. A Nunes spokesman declined comment.
Coats wrote that the new policy will reinforce existing procedures that “make clear that IC (intelligence community) elements may not engage in political activity, including dissemination of U.S. person identities to the White House, for the purpose of affecting the political process of the United States.
While Coats, in his letter, said the new policies are intended to keep politics out of intelligence issues, some current and former officials said the draft presidential order could do the opposite.
“If this executive order is implemented as written, or worse if it’s written into law, it is not only an infringement on the political independence of the intelligence community, but it will endanger our ability to work with our allies, who may fear we’ve been drafted into a political party,” said one U.S. official familiar with the issue, speaking on condition of anonymity.
“California wildfires: Nearly 200,000 flee as new blaze spreads.”
Nearly 200,000 residents have been evacuated from their homes in California as firefighters battle several raging wildfires. Governor Jerry Brown declared a state of emergency in San Diego on Thursday after a new blaze spread from 10 acres to 4,100 acres in just a few hours. Three firefighters have been injured and about 500 buildings destroyed.
One death has been reported – a woman’s body was found in a burned-out area in Ventura County. But an official told the Ventura Country Star newspaper that the death, in the town of Ojai, may have been the result of a car crash not related to the fire. About 5,700 firefighters have been battling the brushfires, officials said on Thursday, with firefighters drafted in from neighbouring states to help.
The Thomas fire in Ventura County to the north of Los Angeles remains the largest of the blazes and has spread as far as the Pacific coast. It has consumed 180 square miles (466 sq km) since it broke out on Monday, and destroyed more than 430 buildings, fire officials said.
Some 450 elite racehorses in the area were let loose from their stables to escape to safety, the Associated Press news agency reports. Not all survived, but it’s not known how many died.
By Thursday afternoon local time, California’s fire service said the blaze had forced the evacuation of 189,000 residents. The White House said it was in contact with Californian authorities and ready to offer whatever help is needed.
California is entering its fifth day battling dangerous wildfires driven by extreme weather: low humidity, high winds and parched ground. Authorities have issued a purple alert – the highest-level warning – amid what it called «extremely critical fire weather». The powerful desert-heated Santa Ana winds have been fanning the flames.
“Inside Banks, Bitcoin Futures Are Riling Trading Executives.”
Bitcoin is coming to Wall Street on Sunday, and some executives at the world’s biggest banks aren’t sleeping well.
With just a few days left until Cboe Global Markets Inc. debuts futures contracts on the cryptocurrency, many banks are still weighing whether to offer them to clients — and if so, how to handle the mechanics. Several of the largest firms, including JPMorgan Chase & Co. and Citigroup Inc., aren’t immediately offering clearing of the futures as they wait to see how it will work, according to people briefed on the plans.
In interviews, some executives and traders said their desks are eager to get in on the action — but most sounded cautionary notes, ticking off concerns and unanswered questions. Bitcoin’s violent price swings this week have made the new market look all the more dangerous.
Some bank CEOs and industry leaders have spent months deriding bitcoin publicly — “it’s a fraud,” “the very definition of a bubble” or an “index for money laundering” — and who knows what they’ve said privately. Now, what will it look like if firms help clients into investments that blow up? How might internal commentary over the futures sound if it ever spills into legal cases? One executive, for example, privately referred to the cryptocurrency as “sh*tcoin.”
Enthusiasts say bitcoin is a currency. The Commodity Futures Trading Commission says it’s a commodity. So does Goldman Sachs Group Inc. So it may seem natural for trading desks in those markets to handle the new contracts. But one executive said there’s at least an argument to be made that equities desks (and delta one traders specifically) are used to the math: Bitcoin is like a volatile stock, and futures, at least in some ways, are like the options that track it.
When asset prices are steady, it’s relatively straightforward for banks to make markets: Help a customer buy or sell an asset, and then take some time to find another client who wants to take an opposite position. But bitcoin is too radioactive for banks to hold — it swings wildly within minutes and there’s no established model to account for it on the balance sheet. So banks will try to clear the new contracts, matching one investor with another. That can be tough. A few traders, for example, said many clients are only interested in shorting. That can make for a pretty hard day at the office: Without longs, the trades may be costly and hard to set up.