Garrett Baldwin
Daily Alpha: Mar 22: Death By 1,000 Cuts, Trump’s Growth Issue, PE in 2016 and Regulating Starboard

Garrett Baldwin
Daily Alpha: Mar 22: Death By 1,000 Cuts, Trump’s Growth Issue, PE in 2016 and Regulating Starboard

Daily Fantasy's Death By 1,000 Cuts, Free Money in Japan, Private Equity in 2016, Regulating Starboard, and Trump's Troubles

Here's the Daily Alpha for March 22...

"This is a decisive and important victory for the rule of law in New York state," Schneiderman said at a news conference. "No company or individual no matter how powerful or well financed is above the law."

First up, Draft Kings and FanDuel are halting paid gaming operations in the State of New York.

Second, New York Attorney General Eric Schneiderman responds in the quote above like he’s never been to Wall Street before, missed the aftermath of the financial crisis, and didn’t read the book 13 Bankers.

“If you look at the market, what we’re seeing is just unbelievable, so to keep winning in this kind of environment based on judgment is tough.”

Here’s a story about a hedge fund in Japan making 19% by just letting the computer make decisions. That’s all well and good… given that the nation’s central bank has been pouring stimulus into the country like endless syrup onto a stack of pancakes.

But how will the computer work when the Bank of Japan runs out of bullets?

“Leading PE firms are arming themselves for future turbulence by probing deeply to understand the unique sources of their past successes, investing in skills that will enable them to create value across their portfolios and learning how to anticipate—and invest behind—the new macro forces that will disrupt industries and reshape economies.”

Bain & Company’s Global Private Equity Report 2016 hit the shelves today, and it’s quite a read. Last year was solid for exits after a wave of merger and acquisition activity.

Bain says that companies in 2016 will need to monetary policy changes around the globe and threat of a possible recession. Challenges also loom for capital raising after the best year since the financial crisis.

The report is available, right here.  

"We cannot allow our economy to be hijacked by a small group of investors who seek only to enrich themselves at the expense of workers, taxpayers and communities.”

Adam Smith enthusiasts will hate this story because it takes the rational self-interest out of the definition of capitalism.

Two Senators in Wisconsin are pushing new legislation that would update rules from the Depression regarding hedge fund actions that boost short-term gains at the expense of the company and its employees. 

Senator Tammy Baldwin, attributed above, explains that the new “Brokaw Law” is named after a town that went bust after Starboard Value forced the firm to sell or close a number of its Wisconsin papermills, replace its CEO, and boost short-term buybacks. The company was ultimately sold to a Swedish firm.

Here’s more on the bill that has been introduced by Democratic Sens. Tammy Baldwin and Jeff Merkley. The bill has also been sponsored by Wall Street critics Sen. Bernie Sanders of Vermont and Sen. Elizabeth Warren of Massachusetts.

This is going to be a very significant issue during the political season... in-between all the bouts of name-calling and straight up lies...

"You have to entertain the hypothetical."

Finally, a prominent fund manager has a new scape goat for the ills of the global economy…

Donald Trump.

This week, Jeffrey Gundlach of DoubleLine Capital projects a “global growth scare” between now and the end of the summer due to the pending GOP nomination of Donald Trump.

"That is where I see the vulnerabilities," Gundlach said, citing Trump's protectionist policies for a negative influence on global growth. "As he gets the nomination, the markets and investors are going to worry about it more. You will see a downgrading of global growth based on geopolitical risks. You must factor this into your risk-management."

There are fifty other reasons why the global economy is on the brink, but – right now – Donald Trump on the list next to “Are we eating too much quinoa in this Hemisphere.”

We need to focus on this list first…

  • How about negative interest rates and uncharted monetary policy in Europe and around the globe?
  • What about ISIS and terrorism threats?
  • How about China’s debt bubble that continues to inflate at a staggering pace.
  • How about a national debt that has doubled in six years?
  • How about Janet Yellen’s utterly inconceivable press conference last week?
  • How about the fact that everyone is balancing their hopes for the markets on a massive oil production freeze that a) doesn’t solve the unsustainable budgets of virtually every member of OPEC b) makes anyone who is a game theory enthusiast question its plausibility. What is OPEC’s role in the first place if it’s not colluding on price already?

Still, a proven liar like Trump with virtually no plan except letting us know that it’s “going to be great” is now emerging as a leading threat this summer to the global economy…

Good thing that we have all those other great options in this election…

Oh… wait…


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