A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Quarterly regulatory filings uncovered that George Soros – one of the very few investors vying with Warren Buffet for the "best investor alive title" – has built a very large short position in the S&P 500.
Distressing? Maybe, but not necessarily. Mr. Soros is a hedge fund manager and hedge funds much prefer to use other people's money ("OPM" or "opium" in the insider parlance) for investment. This can be either borrowing funds from dealers to buy assets, or two-sided trades that involve shorting one asset and using the proceeds to buy another.
It's conceivable but unlikely (in my opinion) that Mr. Soros is "naked short" the S&P 500, meaning I think there's a long position paired with it. I don't want to speculate on what the actual long is, these trades can get very complicated. But if the trade is two-sided, all Mr. Soros needs to make money is for the long side of the trade to rise more than the S&P 500. (Depending on the extent of leverage on both sides. I told you it can get complicated)
George Soros Made A Huge Bet That Stocks Will Fall – Business Insider
The Chinese government is quietly cracking down on citizens looking to move assets out of the country, according to the Wall Street Journal's China RealTime blog. Despite laws against capital flight, Chinese banks and other sketchier organizations (like expensive jewellery stores offering returns in other countries) have been helping wealthy Chinese get around the rules.
The crackdown is part of a broad anti-corruption strategy that has bazillionaire favourites of the previous leadership scrambling for cover.
The implications are potentially serious for the Canadian real estate market, particularly in Vancouver where wealthy Chinese have been driving housing prices higher.
Leaky Borders: China Cracks Down on Wealthy Moving Cash Abroad – China Realtime
China's economy is bound up with Xi's anti-corruption campaign – George Magnus
See also: How to Make 43% Profit in China With No Idea What You Bought – Bloomberg
Paul Krugman, New York Times blogger and probably the most prominent economist on the planet, warns that there's no room for policy error in the United States, "wrong policies could still turn economic weakness into a more or less permanent depression."
Professor Krugman lists himself among the "not-enoughers", economists looking for developed world governments to do much more to stimulate the economy, to avoid the clear and present danger [of] Japanification."
The Forever Slump – Krugman, New York Times
Tweet of the Day is from the anonymous @jesse_Livermore , "Remember "The Great Rotation"? Another theme that just sort of quietly disappeared from all discussion."
Diversion: Canadian universities placed 24th, 37th,68th and 90th in the Shanghai Academic Ranking of World Universities survey of the world's best academic institutions. The methodology is clearly and deeply flawed however as UWO did not appear (yes, I'm kidding. Go Mustangs).
Academic Ranking of World Universities 2014 results: Harvard takes first place – Times Higher Education
Scott Barlow