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Daily Alpha: Fallen Funds, Fed Follies, Female Viagra, Billionaire Donors, and 42 Mins of Squawk Box

Daily Alpha: Fallen Funds, Fed Follies, Female Viagra, Billionaire Donors, and 42 Mins of Squawk Box

Garrett Baldwin



Alternative Thinking on Fallen Hedge Funds, the FORM Act, Female Viagra, Billionaire Donors, and Joe Kernan’s Terrible Jokes... 

“The bill would severely impair the Federal Reserve’s ability to carry out its congressional mandate and would be a grave mistake, detrimental to the economy and the American people.”

Janet Yellen’s demands that we don’t politicize monetary policy.

So, she responded to a bill aimed to boost transparency and accountability at the Fed, how else? By politicizing the Federal Reserve and monetary policy.

The Fed Chair opposes a law that would force the central bank to set its interest rate policy based on a mathematical rule.

Yellen says that doing so would "severely damage" the U.S. economy.

The Obama administration, which threatened to veto a bill in the House of Representatives, said the proposed law would would prevent the Federal Reserve from helping the U.S. economy.

Funny that this administration and Presidential candidates are demanding more control to address the forces fueling greater income disparity (er… inequality) across this country, but they can’t -- for the life of them -- understand that since 2009 quantitative easing and other policy decisions have been primary drivers of the conditions they seek to remedy.

But there’s something else going on. There's another reason why this Fed Oversight Reform and Modernization Act is worth – at least – discussion.

Today, every single member of the Fed's Board of Governors is an Obama appointee.

As Texas Senator Phil Gramm explains in the Wall Street Journal, that was never supposed to have happened under one presidency; however, a massive decline in term-lengths has fueled concerns about the Fed’s independence and level of non-partisan thinking.

Perhaps they should advise members to complete their terms.

There are plenty of people who would like to run one of the Federal Reserve banks for the full term, and people are still scratching their heads wondering why former Goldmanite Neel Kashkari has just been appointed the head of the Minnesota Federal Reserve Bank.

“This is obviously not what we were aiming for and I just don't think my strategy makes a lot of sense in this market environment so I just decided to give everybody their money back and regroup.”

Falling energy prices claimed another victim on Monday.

Chicago hedge fund Achievement Asset Management announced plans to close down and return $875 million in assets to investors.

It’s not just the size of the fund that is surprising but its length of independence as well. Founded in 2012 by Joe Scoby, the fund split away from Peak6 Investments last September and managed $2 billion at its peak.

The Wall Street Journal cites “a dramatic pullback for energy bonds,” as a reason why its strategy failed to perform.

To his credit, Scoby’s statements indicate maturity and a willingness to cut losses at a time that the fund was down 7% year-to-date. Scoby said he preferred to return the remaining cash to his investors instead of running “a laboratory with investors’ money.”

We all know he could have doubled down – like say Bill Ackman did on Valeant stock – only to see more money disappear.

That said, Achievement isn’t the only fund that announced it’s closing down in 24 hours though.

After a 9.4% loss this year, BlackRock is shuttering its global macro hedge fund.

“There have been a few casual inquiries, but no prescriptions yet.”

Speaking of Bill Ackman…

Valeant Pharmaceuticals hit a fresh 52-week low on Tuesday as the company’s CEO faces inquiries to testify before Congress and more concerns about its practices rattle investors.

Yesterday’s downturn was fueled by more bad news that one of the most anticipated breakthrough drugs in America has largely been a disappointment since its release.

Marketed as the “Little Pink Pill,” Addyi is referred to as the Female Viagra.

Valeant purchased the drug for $1 billion after the drug was approved by the FDA in August. The company anticipated it would be a huge boon given that one out of 10 women are affected by a hypoactive sexual desire disorder. Visions of the massive rush for Viagra in 1998, comparisons to Pfizer, flooded conversations about Valeant stock.

But since then, just 227 prescriptions have been written, according to Bloomberg.

The New York Post outlines why the drug is off to a slow start.

"Overall, GOP super PAC’s and politicians outraised Democrats $33,172,337.70 to $21,984,584.45."

In the most unsurprising report on Super PACs ever, it turns out that the biggest donors to politicians in the Tri-state area are hedge fund managers.

If you’re a hedge fund manager, see if you made the list…

If you’re not a hedge fund manager, find the name of your nearest overlord.

“Because You Missed Squawk Box”

Yesterday we introduced a new segment in which we try to watch Squawk Box in the morning for as long as possible.

This morning, we beat yesterday’s record.

Today, Squawk Box immediately broke live from Paris where a clearly exhausted chief international correspondent Michelle Caruso-Cabrera had been covering the late-night Paris raids and news that two international flights bound for Paris were diverted after bomb threats.

Despite the gravity of the situation, Joe Kernan took a minute between Caruso-Cabrera’s segments to mock The Great Andrew Ross Sorkin’s knowledge of sports. Standard Wednesday morning.

Following a commercial break in which a man pushed a little too hard to sell Chicagoans on buying a Subaru Outback (the Northwestern Fight Song before 6 am is too early),  the Great Sorkin broke down how Air Liquide will buy Airgas for $143 per share.

Unfortunately, Sorkin got his guest’s name wrong and quickly corrected himself.

As they broke down the deal, Kernan suggested that the deal was happening because of tax considerations on back-to-back questions, asking whether Air Liquide was able to offer more for the company because of lower corporate taxes in the United States. 

Air Liquide Chairman and CEO Benoît Potier (that’s a fun name to say) denied that suggestion.

Kernan concluded the segment by making fun of Sorkin for getting the guest’s name wrong.

[Editor’s note: Kernan also tried to bait Steve Liesman into an argument with Rick Santelli over housing starts later in the morning. Of course, it worked.]

The channel was changed at 5:42 CST for Bloomberg and Tom Keane’s bowtie.

From Bloomberg: Watch this fascinating segment on the current commodity volatility and the argument that we live in a “Popeye Economy.”

More on that later.

That’s all for today.

See you on Thursday…















































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