The Daily Alpha: Alternative Thinking on the Panama Papers, Marijuana Holidays, and the Brexit

The Daily Alpha: Alternative Thinking on the Panama Papers, Marijuana Holidays, and the Brexit

Garrett Baldwin

April 20, 2016

"The U.S. Attorney's Office for the Southern District of New York has opened a criminal investigation regarding matters to which the Panama Papers are relevant.”

This is what US Attorney for Manhattan Preet Bharara wrote to the International Consortium of Investigative Journalists asking for their cooperation to discuss the Panama Papers.

Fortunately, it was not a subpoena that would force journalists to hand over 11.5 million pages of documentation. The ICIJ is the body of global journalists who are working with media outlets to report on these documents as they are evaluated.

That said, the U.S. government plans to bring its full force and investigate tax avoidance fully.

It’s been a pretty interesting public reaction to the Panama Papers, particularly on Twitter and from members of the media. Many are blaming global capitalism for this problem of tax avoidance.

One thinks they don’t really understand the definition of capitalism. It’s pretty difficult to argue that corrupt leaders hiding their money in a tax haven is what capitalism actually is… But they’re trying, over and over again.

That said, here’s Megan McArdle explaining what’s really at play here from the leaders who have been hiding their money abroad: They have weak institutions and significant corruption.  

“This is the place where Bat Masterson was the marshal. This is where Jesse James’ gang did run. This is the place where Doc Holiday was a dentist and owned a brothel. This is the place.”

Pot smokers have probably gotten a head start today on their national holiday of 4/20.

Over in London, a gaggle of smokers is rallying for decriminalization. Across the United States, no doubt there will be rallies for full legalization like that of the State of Colorado.

Which brings us to Trinidad, Colorado, a small town just 11 miles from the border of New Mexico. It was once the home of Wild West outlaws and noble law men.

The town once boost 30,000 residents and was a source of middle class jobs and the nation’s once-strong manufacturing center. It had a large Pepsi plant, and its coal mining industry was booming.

But like many small towns around the U.S., industry left – by choice or by fiat – and took many of the job opportunities with them. The town’s population slumped to roughly 8,000.

Then, marijuana was legalized in 2014. The abandoned Pepsi plant became a pot distillery.   

The retail trade of marijuana – bolstered by the proximity to another state’s border – thrived.

The town was expecting $200,000 in tax revenue from its sales of legal marijuana.

It raised $800,000.

Much of that money was used to replace its failing water infrastructure – something that cities all across the nation are desperate to do these days.

This is happening all across the state, where Colorado was able to generate $1 billion in marijuana sales in 2015. They’re expecting even higher revenues and taxes this year

That said, the question Colorado has to deal with is what happens if other states begin to adopt their legalization habit. Will this be a boom and bust story? CNN investigates.

"We think the prices need to adjust ahead of the referendum and in the event … that there is an exit, there is a very significant devaluation of sterling that needs to come."

Hedge fund manager Jonathan Martin and CEO of Markham Rae predicts that the British Pound could lose 25% of its value if United Kingdom voters choose to exit the European Union.

It’s a chilling prediction, none that he discusses hedging strategies for anyone with significant exposure to the country. Here’s Martin chatting with CNBC at the Investors Choice Awards.

“The United States, the Cayman Islands, Luxembourg and Ireland together account for 82 percent of the world’s hedge funds as of February 2016.”

Eurekahedge is out with new data on the locations of the world’s hedge funds.

The United States still holds the lead, while the number of funds domiciled in the Cayman Islands has declined in recent years. Last year, just 15% of new funds were domiciled in the Caymans.

Here’s more on the breakdown of global hedge funds, and an update on global hedge fund performance in March.

“Hedge-fund shutdowns outnumbered startups last year for the first time since 2009.”

That’s data from HFR, which reported some pretty unsettling news today to Bloomberg.

Not only are more funds shutting down than opening, but capital outflows from hedge funds hit their highest level in the first quarter since 2009 due to the return of volatility.

Total outflows hit $15 billion for the first three months of the year.

Check back tomorrow…


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