The Daily Alpha: Market Volatility, California Choo-Choo, Yahoo’s Coming Proxy, and Grandpa Simpson

The Daily Alpha: Market Volatility, California Choo-Choo, Yahoo’s Coming Proxy, and Grandpa Simpson

Garrett Baldwin

Alternative Thinking on Market Volatility, California Choo-Choo, Yahoo's Coming Proxy Battle, Balloon Dogs, and Grandpa Simpson's 2016 Campaign.

A little late today as most of this was written from 30,000 feet.  

Here’s what was worth paying $8 in Wifi for on Wednesday.

“This is like a replay of the same things that moved the markets in August. We’re perhaps getting confirmation that China is as bad as people think. We’ve lost the tailwinds from the Fed and investor enthusiasm and this adds to the mosaic of fear that’s out there right now.”

Keep Calm and Take Janet Yellen at Her Word…

That has been the mantra of the mainstream talking heads for the last few hours as they try to understand how and why the markets continue this free fall.

It’s not fair to expect the modern journalist to wrap their heads around the complexity of geopolitical tensions involving 1,400 year old religious rivalries and the impact on oil prices, the overconfidence of a Cold War propaganda machine attempting to intimidate a 21st century technological world by saying they launched something they didn't, how Keynesianism on super-steroids in China isn’t in any text book to study, or the fact that everyone at Federal Reserve has been playing brick breaker on their phones for the last ten years.

But here we are, the Dow fell another 250 points.

The rout is on, as Bloomberg explores a world on fire.

Benjamin Dunn at Alpha Theory Advisors told Bloomberg that this week reminds him of the rough patch that hit the markets in August.

Well, we still have a way to go before we begin making these comparisons.

We haven’t invoked Rule 48, and we haven’t faced 1,000 premarket conditions.

And this is the first time ever that many traders have ever operated in the non-ZIRP environment, as much as some people want to pretend that this doesn’t matter.

Right now, the VIX is back up above 21, which is nearly half of the intraday surge we saw back on August 24.

But the bears are now coming out hard against China. This morning, an analyst at Merrill Lynch projected that the Shanghai Composite Index is facing a 27% decline in 2016.

Buckle up…

"It appears that investors have lost all confidence in management and the Board."

At 37, Marissa Mayer became the CEO of Yahoo.

Prior to this appointment, she was the first female engineer at Google, where she takes credit for Gmail and the fact that the search page you likely use every day offers just a blank space.

She’s fiercely defendant of the Yahoo Brand.

When asked about her allegiance to Yahoo, she put her priorities in a neat list.

“God, family, and Yahoo… in that order,” she said.

That's what you want out of a top manager, even if she's willing to enrage every working mother-to-be with a relentless and illogical work habit.

But the last few years have been tumultuous.

This week, activist hedge fund Starboard Value’s Jeffrey Smith sent a very harsh letter to the CEO. Smith says that Mayer has failed to turn around the company.

Starboard has pushed in the past for a merger with AOL. It wanted Yahoo to sell off its internet business. 

Now Jimmy Smith’s group wants new leadership. 

"We are pleased to have resolved the Wyeth matter and are prepared to vigorously contest the remaining class action."

The man who owns a giant balloon dog is still cutting giant checks to settle insider trading charges against people from his former firm.

DealBreaker dives into the latest SAC Capital settlement by Steven Cohen. 

“Break them up!”

Bernie Sanders’ supporters are vigorously calling for the breakup of the Too Big to Fail Banks…

And Sanders, who is making some noise in New Hampshire, is pushing frontrunner Hillary Clinton further to the left on financial reform.

It’s almost as if the Democrats didn’t have 60 votes back in 2010 to pass comprehensive financial reform, break up the banks, and create structure for the 21st century banking sector.

Oh, wait. They did…

Today, the Wall Street Journal gives him plenty of room to rant about Shadow Banking and Hillary Clinton’s ties to Wall Street.

He is convinced that the Glass-Steagall Act would have stopped the financial crisis in 2008. 

Martin O’Malley, who knows as much about banking and the financial sector as he does about responsibly running a city, has echoed this as well.

Of course, it misses the larger issue about government’s role in the housing bubble, the SEC leverage decision of 2004, the actions of Goldman, Lehman, and Bear Sterns – which had no commercial operations…

Or whatever AIG was doing...

Or the art majors who were stamping AAA ratings on junk mortgages.

Or the fact that without the repeal, Geithner would have never been able to find his eleventh-hour magic and push the banks together to prevent a complete collapse. (Sad, but true).

Here's Bernie...

If you can’t access the article and hit a paywall, just type the title “Bernie Sanders Sharpens His Attacks on Wall Street” into the top line of Google Chrome. 

It’ll come up for free at the top of the ensuring search page under “In the News.” 

Take that Murdoch!

In addition, Sanders had some choice words for Wall Street – “Greed is NOT good,” a response to the only person who has played a Presidential Candidate older than him – Michael Douglas – and his role in Wall Street, a film Sanders just watched on a Beta Max while learning how to finally operate a Sega Genesis.

It’s just a matter of time that Sanders resorts to classic moral lines like “Money doesn’t buy you happiness…”

That may be true Mr. Sanders… but to quote Daniel Tosh, it’ll buy you a WaveRunner. 

Finally, behold one of the least logical arguments in favor of a state-government run boondoggle that you’ll see in the next few weeks – unless you want me to find you want again tomorrow.

"Millennials are fast moving, and high-speed rail provides a transportation infrastructure to support that."

Finally... "Millennials."

A word that hangs like a dirty bath robe by itself in an Amtrak station...

Here’s Arthur Koster, President of the Fresno City College chapter of the IWILLRIDE Project taking his advocacy to a new level...

What will Koster (and apparently every hip California millennial) ride?

Well, a high-speed rail train of course.

California -- if you didn't know is building a high-speed rail line from Los Angeles to San Francisco. Or at least advocates are trying to convince everyone this still a good idea. 

Plagued by costs, timing, and the fact that this project was commissioned in 1996, the price tag now stands at $68 billion -- or twice the GDP of Jordan.

This advocate believes that high speed rail is a great idea. In fact, he argues that this massive waste of taxpayer money will:

  • Allow anyone living in Fresno to work in LA or San Francisco (Sell that idea to your employer.)
  • Stimulate the economy (how New Deal of him.)
  • Eliminate the hassle of traveling by airplane (by increasing your travel time on a train across California fault lines.)
  • Help individuals achieve the American Dream?

This is a massive economic boondoggle that is already priced way higher than early estimates and one that violates common sense when it comes to a basic understanding of plate tectonics. 

I'm not talking to the person who emailed me this letter for six weeks...

The Central Valley of California doesn’t need a Choo-Choo train.

It needs water.


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