The following are some of the news items mentioned in April 2023:

  • ICE BofA MOVE Index tracks expected swings in treasuries as measured by one-month options
  • Two year treasury yields slid a percentage point over three days in March 2023
  • Treasury market as of [2023-04-10 Mon] is about 24T usd
  • Berkshire Hathway is one of the biggest foreign issuers of debt in the Japanese currency
  • Kazuo Ueda took over the reins at the BoJ replacing Haruihiko Kurada. Kurada spent 11.7 Trillion in the pursuit of central bank’s stable 2 percent inflation target
  • Bangalore population is 13 million as of 2023
    • Called the second-slowest city in the world to drive in
  • Razorpay - answer to stripe
  • Gigerenzer thinks human judgment will remain critical, and the value might even by super-charged for people who learn to use the new technology properly
  • It will fall on students to challenge themselves and take the initiative to make their college education more AI-proof. They need to seek out the classes that make them think more rigorously, including math, and probability and statistics. Then balance those with humanities where they’ll learn history and how to write well
  • Why is gold performing well ? The single most important reason is the move in the bond market. Gold has no yield. Higher bond yield make it less attractive and vice versa. With bond yields falling, precious metals tend to outperform industrial metals
  • Inverted yield curve benefits gold
  • Singapore’s CPI stands at 6.3
  • Chinese have not flooded the Singapore financial firms with money as yet
    • The capital markets in SG and south east Asia are tiny by Chinese or HK standards
    • It takes time for these tycoons to feel comfortable with advisers they barely know
  • SG - High-end residential rents were up 28 percent in fourth quarter of 2022
    • Retail sales have surged 13 percent and license fees for cards are hitting 90k USD
  • Alibaba will integrate new AI model in Amazon echo like smart speakers as well as office chat software. The new AI model will be added to the company’s DingTalk app as well its smart home appliance provider Tmall Genie
  • LLM from Alibaba is called - Tongyi Quanwen - Truth from thousand questions
  • Baidu released Ernie bot in Mar 2023
  • Alibaba’s DAMO Academy launched M6, a 10-trillion parameter pre-training model in 2022
  • SenseTime, Alibaba and Baidu have started offering LLMs for Chinese market
  • Ueda indicated maintenance of the current monetary policy framework, including the negative interest rate.
  • Tupperware might go bankrupt
  • In recent years, a growing number of Chinese women have been shunning real-life relationships and instead finding romance in a series of viral videl games. Members of this subculture often develop powerful infatuations with the male characters in the games, spending thousands of dollars to unlock new levels
  • Many Chinese are dating their favorite chatbots. These AI chatbots won’t help Chinese overcome its well-known demographic struggles. But the growing social acceptance of chatbots and other AI applications ia crucial advantage in the race for AI supremacy, easing its implementation
  • Hedge funds argue with 3612 percent returns by Universa investments
  • Actively managed bond ETFs are not doing well. Only about 40 percent are beating their indices in 2023. Actively managed corporate bond ETFs including the ones run by Fidelity Investments, BlackRock Inc have stumbled over the past year
  • If many active bond ETFs have struggled in 2022 - when active management was supposed to provide protection amid rising interest rates - who’s to say they will be able to navigate future bouts of bond market volatility more effectively
  • In 2022, investors pulled more than 500b from bond mutual funds. The lure of a cheaper form of active management may be a tempting home for some of the money, but don’t be fooled. Index investing is winning out, even when markets are scary
  • Vanguard Short term tax exempt Bond ETF, which tracks an index of municipal bonds due in seven years or less, began trading in March 2023. This is Vanguard’s First New ETF in two years
    • Short term munis are luring investors with the highest yields in years after the Fed’s aggressive campaign to hike rates. Shorter maturities also offer the benefit of being less sensitive to swings in interest rates than their counter parts
    • Vanguard has about 82 TF and has nearly 2T in assets as of [2023-04-11 Tue]
    • VTES is the second muni-focused ETF after the 25 billion Vanguard Tax Exempt Bond Index ETF which it introduced in 2015
  • Munis are up 10 percent since Nov 2022
  • State and local munis gave the best Jan since 2009
  • Move from 9 percent to 4 percent inflation could be quick one. But the downmove to 2 percent will take a long time. -
  • Total assets in Money Market funds is about 5T usd as of [2023-04-12 Wed]
  • Money market funds attracted their biggest weekly influx of cash since the early part of the Covid pandemic as depositors pulling their money away from more-at-risk US banks sought a place to park their dollars
  • Money market fund assets at record 5.2T as rates beckon
  • Money funds have stashed trillions of dollars at the reverse repo facility
  • Fidelity Government Money Market Fund has a 4.5 pct yield as compared to 0.06 pct national average on interest checking accounts and 0.37 pct on savings accounts
  • Globally venture funds have invested 76 billion usd in the first three months of 2023, less than half the 162 busd they deployed in the same period a year ago
  • MSFT invested 10busd in OpenAI in 2023
  • Stripe raised 6.5busd in 2023
  • In the wake of crackdown on pro-democracy protests in HK in 2019, the UK offered millions of the city’s residents a path to citizenship under the BN(O) programmer - a move that angered Chinese authorities
  • Activist fund Elliott management has become one of the largest shareholders of Dai Nippon Printing
  • Activist Hedge Fund Definition: An activist hedge fund accumulates sizable stakes in companies to gain operational/financial influence and persuades Boards and management teams to enact their desired changes; they profit based on increases in companies’ stock prices after these changes take place.
  • Activist hedge funds are usually classified as “event-driven” within hedge fund strategies, and for good reason.
  • Long/short equity and credit hedge funds look for mispriced securities with potential catalysts that might change their market prices.
  • But activist hedge funds create their own catalysts by winning ownership and influence and persuading others to enact the changes they want to see.
  • China proposed new checks on artificial intelligence chatbots
  • Greenwashing - companies pretending to be greener than they were
  • Greenhushing- firms pretending to be less green than they were so they wouldn’t be accused of greenwashing
  • Greenbotching - well-meant environmental measures that are being implemented so badly that they backfire
    • Governments have promoted EV industry BUT many governments are failing to roll out reliable charging networks at anything like the rate needed.
  • Netherlands farmers don’t support the NO2 based reductions that the government has proposed
  • Divestment tweets are hitting carbon emitting companies
  • UMG, which controls about a third of the global music markets has become increasingly concerted about AI bots using their songs to train themselves to churn out music that sounds like popular artists
  • After [2023-04-14 Fri], there will no more Eurodollar futures contract based on LIBOR
  • Eurodollars debuted in 1081 and became CME’s biggest product in terms of volume and open interest in 1988. They are futures on the 3 month US dollar Libor, a decades-old reference rate for bonds, loans and other forms of credit. Their demise is a result of the emergence beginning in 2008 of evidence that Libor had been manipulated by lenders that contributed the rates used to calculate it
  • Daily SOFR contracts traded in 2023 is about 8Million
  • Options on eurodollar and SOFR futures are the only remaining products for which CME still maintains a trading floor in Chicago
  • A 21-year old national guardsman leaks US classified documents online
  • Singapore dollar nominal effective exchange rate S$NEER
  • MAS does policy adjustments via considering the exchange rate between SGD and a basket of currencies that includes USD, EURO, JPY, Ringitt and Yuan
    • It does not directly set the interest rates. Instead it does via exchange rate
  • There are three MAS currency band tools that are used
    • Slope: Adjustment to the slop of the trading band for MAS’s basket of currencies
    • Recentering: Officials re-centered the band upwards three times in 2022- effectively allowing the currency to appreciate. This tool is meant to respond to more near-term pressure
  • Widening: This is meant to accommodate exchange rate volatility rather than guide currency strength
  • Singapore MAS does a policy pause for now [2023-04-14 Fri]
    • MAS paused its tightening and gave a sobering commentary on global and domestic prospects.
    • Two scheduled policy decisions every year
    • Global economic outlook is bad says MAS
  • Feb Debt as of Feb 2022 is 31T usd
  • 75 pct of the debt is owned by public and rest is owned by U.S federal government
  • Japan and China own the most U.S debt of foreign countries
  • Servicing the debt is one of the federal government’s biggest expense
  • Just about 4% of India’s nearly 700 million smart phone users have iPhones
  • India has about 1.2 billion mobile phone users and 700 million smart phone users
  • India’s education industry is about 117 busd as of 2020. It is much smaller than US where spending is estimated to be well above 1T usd
  • Unemployment is a ticking time bomb in India because close to a third of nation’s youth aren’t working
  • BlackRock ditches 60/40 portfolio in favor of public and private investments as well as tactical holdings of bonds to navigate higher interest rates
  • BMA6040 is up 6.3 pct this year after tumbling 17pct in 2022
  • In 2018, individual traders accounted for 82 pct of all trades. By 2022, after extreme market turbulence, that had fallen to about 60 pct
  • There are about 13,000 mutual funds for sale for about 50000 mainland listed companies
  • Chief economist from China says - people just don’t trust the stock market, as it is notorious for being speculative. Also, late last year there was a crash in the wealth management market
  • HK Population of 7.4 million - 20 pct of Americans in the city left in the last two years
  • Adani scam - main allegation was that the people close to Adani used offshore shell companies to pump up the price of listed companies. Adani used these pumped up securities as collateral to borrow more money
    • aggressive expansion has come down
    • deal making has come down
    • prepaying and repaying a whole lot of debt
  • Melbourne is now Australia’s most populous city thanks to a slight tweak to where a geographical boundary is drawn. Melbourne is hoke to 4.88 million people in 2021
    • Median home value is 747k Aussie dollars as compared to more than a million ausd
  • Kazuo Ueda stresses policy continuity
  • Japan’s second-biggest brokerage plans to adopt ChatGPT technology from this month for all its 9,000 domestic employees
    • Wall Street lenders recently banned usage of new tool, with Bank of American telling employees that chatGPT and openAI are prohibited from business use
    • MUFJ will begin using chatbot for work such as drafting approval requests and responding to internal inquiries
  • India’s population has surpassed 1.4286 billion, slightly higher than China’s 1.4257 billion according to mid-2023 estimates by the UN’s World Population dashboard
    • India added 23 million babies in 2022
    • UN project that the world will grow to 8.5 billion in 2023 and will touch 9.7 billion in 2050, before peaking to around 10.4 billion in 2080s and remaining there until 2100
    • India has 2.4 pct of world’s land mass
    • More than half its population is under the age 30, with median age of 28
    • 2/3 of the population belongs to working age - 15 to 64 years old
    • Federal and state government spending on health care is around 2 pct of GDP, among the lowest in the world
  • Balysany, Millenium and BlueCrest, ExodusPoint have set up operations in Dubai
  • A number of hedge funds have flocked to Dubai in the past two years, drawn by the city-state’s low taxes, international connectivity and comfortable lifestyle. Neighboring Abhu Dhabi, home to sovereign wealth funds overseeing more than 1T uds has attracted its own share of big names
  • Multi-manager funds are pretty much the only part of the hedge funds industry still attracting new money. Hedge funds collectively have drawn no new money since 2008, with all of their growth fueled exclusively by performance
  • Clients at multi-strat funds typically sign up for high and opaque charges called “pass through”. Such charges can reach 10% or more on top of incentive fees, in share contrast with the standard hedge fund model of paying a 2% management fee and 20% profit
  • Single minded funds can also struggle with success, as growth spurts potentially make it more cumbersome to trade in the strategy that made their name. Any attempts to force change on a star trader could spook investors
  • Arm resets hit Indian home buyers. More than 40pct of the outstanding mortgages from banks and financial institutions in India have seen an increase in loan tenure, repayments or both
  • Apple introduced a new product with GS that will allow Apple Card holders to earn a 4.15 pct annual yield, with no feed or minimum deposit requirements
  • UK inflation sticks above 10pct, lifting prospect of a rate hike
    • Britain’s inflation problem combines the worst features of the US and Europe - soaring energy prices that hit across Europe and a level of workforce dropouts similar to the US.
  • India needs to advance on four broad fronts - urbanization, infrastructure, up-skilling and broadening its labor force and boosting manufacturing
  • 40% of Indian population lives in Urban areas
  • Though women make up 48% of the population, Indian women contribute only around 17% of GDP, compared to 40% in China
  • Manufacturing comprises more than a quarter of China’s economy compared to just 14% for India
  • Apple makes almost 7% of its iPhones in India
  • India is expected to reach 1.67 billion by 2050 - roughly 250 million people added in the next 30 years
  • If India can keep growing by 7pct and its currency holds firm, it should zoom past Germany and Japan to a third place ranking by 2030
  • The Biden administration unveiled a dense but sweeping set of restrictions on semiconductor technology exports to China in October. This means that companies like CXMT in China will face tough times ahead
  • Marine Capital which topped multi-strategy funds with a 101 pct gain last year betting on apple futures, is looking at opportunities to short related commodities like coke and coking coal as demand in the economy wanes
  • GS is joining calls on semiconductor shares, expecting a boost from data centers and ChatGPT
  • The US has increasingly limited the export of advanced chips to Chinese customers also seeking to enlist key equipment makers like the Netherlands ASML Holding NV to join the blockade
  • Zero day options first garnered mainstream attention when retail investors embraced them as a cheap way of gambling during the meme-stock era in 2021.
  • Retail crowd’s market share in 0DTE trading volume has expanded, topping 6% in 2022 versus 4% in the prior year. Among all of the cohort’s trades in the options markets make up 75 pct of the total
  • More than 40 percentage of SPX trading volume is made up of what’s known as zero-day-to-expiry options - a kind of trading that’s once again dominated by institutional investors.
  • SPX weekly options are
    • European expiry
    • Settled every day of the week
    • Contract size 100 times the
    • Weekly options payoff is based on the closing price
    • Monthly options are AM settled
    • 24 hours 5 day a week
    • Great to reacting to market specific events
    • Decay faster than monthly options
    • Don’t have much time to fix the trade
  • SPX 0 day options - Zero day to expiry 0DTE options
  • In 2022, CME group launched weekly options that expire on each day of the week
  • By 2022 Q3, more than 40 percent of total options volume was based on 0DTE
  • Only about 5.6 percent of all short dated options volume was attributable to retail market products.
  • 0DTE are not included in VIX computations and hence VIX might become less effective sentiment indicator
  • Technically all optionable stocks have 0DTE options available at least once a month. However, the most commonly traded 0DTE options are on SPX. Stocks that offer monthly options only have 0DTE options once a month and stocks that offer weekly options as well have then once a week
  • By adding weekly option expiration on all days of the week, we have a 0DTE on every day of the week
  • More than 12.6 busd has been sent to ETF in April 2023, the largest influx since January and more than twice the rate of Feb and Mar. Money is pouring into stocks as fast its being yanked out of cash
  • Governor Philip Lowe has been hammered for projecting in 2021 that rates might not need to rise until 2023.
  • Australia’s central bank should set up an expert policy board, hold fewer meetings and give press conferences explaining its decisions, according to recommendations from an independent review that would align it with many global peers
  • Money is moving out of ESG funds. A steady drop in fund flows came as Russia’s invasion of Ukraine boosted oil prices and consequently shares of companies involved in the production of fossil fuels, which tend to be excluded from ESG portfolios
  • Massive outflows from ESG ETFs in the first quarter - 6busd outflows
  • An activist investor is one that acquires a significant minority stake in a publicly traded company in order to change how it is run. Recently as many as five activist investors have tried their arm wrestling tactics with Salesforce and somehow this has crowded the space and weakened their power
  • Hindenburg report ultimately did not do anything spectacular to Adani group, says BBG correspondent
  • CBOE has announced tht a new one-day version of its flagship volatility index is poised to launch. CBOE 1 day VIX is scheduled to start on [2023-04-24 Mon]
  • VIX is trading near the lowest in more than a year, despite softening economic data, looming fears over the US debt ceiling and a mixed earnings season so far
  • Blast from the past
    • In Mar 2020, investors flocked to Treasury futures and the popular trade where one is long bond and short futures collapsed for leveraged plays.
    • Once the spread increased, levered funds ejected out. However unlevered players saw the opportunity and real money started flowing to arb the spread
      • As cash futures basis has cheapened, these positions have become competitive with other short-term investments
    • SGD was first pegged to British Pound Sterling (GBP), then to US Dollar (USD), but since 1985 Singapore’s national currency is pegged against an undisclosed basket of currencies. Although SGD has features of a fluctuating currency, it is strongly regulated by the Monetary Authority of Singapore (MAS)
  • Auto stocks, especially car manufacturers, retailers and parts suppliers, have nosedived this week ([2023-04-17 Mon]-[2023-04-21 Fri])
    • Pandemic years have generated sharp swings in demand for autos. Right after the initial covid outbreak and production stoppages, prices of cars shot up amid a severe supply crunch. Even when auto factories gradually reopened, the companies faced intense supply-chain delays and shortages, driving vehicle prices even higher
    • People have taken costly lost on cards that were overprices
    • Outlook is darkening for autos
  • On March 8, 2023, the gap between 2 years and 10 year treasury bond was about 111 basis points - the deepest inversion since the early 1980s
  • ICE BofA MOVE Index tracks swings in Treasuries as measured by one-month options
    • The MOVE indes is a well-recognized measure of U.S interest rate volatility that tracks the movement in U.S Treasury yield volatility implied by current prices of one month OTC options on 2, 5, 10 and 30 year treasuries
  • ICE BofA Move Index has tumbled nearly 40 percent since mid-March
  • Ice BofA MOVE index
    • The MOVE and the VIX are very similar in that they basically measure short dated one month volatility. The key things is that these indices are mostly coincident indicators as opposed to forward looking, because they tend to track realized volatility
    • Tight correlation between realized vol in the underlying and options on it
    • There are three main risks in the financial markets
      • Duration risk - when am i going to get my money back ? - measured by yield curve
      • Credit risk - Will I get my money back ?
      • Convexity risk - Path dependent How will I get the money back ?
    • Most of the three risks go together
    • Very steep yield curve or more inverted - the bigger the difference between the two, move movement there has to be and more uncertainty you have. The price of uncertainty means more implied vol
  • 10 year rate dropped from 2.5 to 1.5 in Mar 2020.
  • One of the risk management tool is sizing
    • I buy an asset large enough so it makes a difference in my portfolio, but small enough so I can survive a drawdown
  • Long big tech stocks is currently the most crowded trade and investors are holding the most bullish positioning in investment-grade credit versus high-yield on record
  • ETF flows this quarter show investors continue to pour into investment-grade credit funds
  • This year’s rally in risk assets is more to do with a 1T usd central bank liquidity injection than any improvement in the economic outlook
    • Mark King from Citi said that he could see a subtraction of worth 600b - 800b in global liquidity
    • Average global high-yield spreads have tightened to about 485 basis points, significantly less than the 543 basis points they struck during the height of the banking crisis.
  • Home prices are still far above pre-pandemic levels due to limited supply.
  • Biden to contest in the next US presidential elections
  • Education market is set to hit 7T usd by 2030
  • US domestic applications to MBA have fallen by 25 pct
  • Rakuten Bank, which is Japan’s largest by number of customers has been spun out of Rakuten, the country’s biggest ecommerce company, raised 625 musd in a an IPO
  • Allocations to the bond had shot up to the biggest overweight position since Mar 2009. Some of that comes from investors buying in to the enormous dip in the government bond prices over the course of last year. Fund managers' underweight position in equities relative to bonds has extended to the most extreme level since the financial crisis
  • An old article in FT on ESG investing. Nine bad things about ESG Investing
    1. ESG investing, if it changes the world, does so by affecting the cost of capital. That implies ESG investors can expect lower returns, but the ESG disingenuously promises outperformance
    2. If ESG investing does provide higher returns, then we can just call it “investing” and it changes nothing
    3. The biggest problems ESG investors claim to tackle have time horizons much longer than any investor, so purpose and profit rarely overlap where it matters most
    4. Funds investing or not investing in a given company in the secondary market doesn’t change much for the company itself, except for its cost of capital, and the market sometimes arbitrages that change away
    5. Telling people that where they partk their retirement savings is going to help save the world distracts them from doing things that actually will save the world
    6. Green bonds are a capital arb opportunity
    7. To change the financial calculus of the corporate world, ESG investing would have to be measured in the many trillions and it ain’t getting there.
    8. Corporations have been designed as profit seeking organizations with a responsibility to increase shareholder wealth. Trying to turn them into stakeholder organizations on the fly will fail
    9. We do not want Wall Street people deciding what is good for the society
  • China: Unemployment in March among those aged 16 to 24 has reached 20 pct
    • White collar workers routinely put in long hours, such as tech companies' notorious “996” schedule - where employees work from 9am to 9pm, six days a week
  • Jason Calacanis said some entrepreneurs were considering other US cities to launch or grow their businesses. Founders who use to see SF as the ultimate destination for their start-ups are now choosing to go to Austin, Miami, or the wider Bay Area and avoiding SF because of safety issues
  • US listed Chinese stocks have lost over 100 busd in market value this month
  • Commodity markets are struggling for direction with general-level confusion seen across asset classes. Conflicting signals between OPEC plus production cuts and worries about an economic slowdown as seen through lower refinery margins
  • Japanese investors are turning to creative trades using interest-rate swaps to try and squeeze some yield from a volatile global bond market. One such maneuver that’s gaining popularity seeks to lock in the yield premium longer-dated Treasuries have over equivalent swaps, by essentially going long the former and short the latter. Investors buy Treasuries and use the income from the bond to pay the fixed-rate leg of an interest-rate swap and pocket the difference
  • Even as Buffet’s blessing and buying by foreign investors helps drives out performance in Japanese stocks this year, retail investors are turning increasingly bearish
  • RBA stood pat at 3.5 percent this month to assess the impact of its tightening
  • Bloomberg’s Barbecue Index advanced 5.9 percent from a year earlier, slowing from 8.2 percentage in the fourth quarter of last year
  • China’s currency share in the cross-border payments and receipts rose to a record high of 48 pct at the money end from nearly 0 in 2010
  • Dollar Yen relationship is highly correlated with the spread between 10 year interest rates in Japan and US. Since the pandemic, yield differentials have driven the exchange rate to the exclusion of more or less everything else
  • The cost of factual mistakes is high when a chatbot is used for search. But when its designed as a companion, it’s much lower according to Eugenia Kuyda, founder of the AI companion app Replika, which has been downloaded more than 5 million times
  • Prompting is the language of generative AI, enabling instruction from human to machine, and is therefore perhaps the most useful tongue you could possibly master in today’s world
    • In the very near future, employees working in just about every industry imaginable will need to know how to prompt chatbots such as ChatGPT effectively and efficiently
    • A prompt engineer can create prompts that produce consistent, high-quality outputs at low costs
  • MSCI China is trading at just 7.6 times expected operating profit - 9 percent cheaper than averages going back nearly two decades
  • Property tax rate for foreigners rises from 30pct to 60 pct
    • For a purchase of property worth 5m usd, a foreign buyer will have to pay 65 pct in taxes in Singapore, including other levies, compared with about 4 pct in NY and 15 pct in London. That’s about 3.25 musd
  • China: Jobless rate for those aged 16-24 jumps to 20 pct in 2023
  • JP Morgan’s AI model based on ChatGPT says that Fed is in a hawkish phase.
    • Hawk-Dove score for FOMC statements
    • Hawk-Dove score for Fed speeches
  • The oil-gold ratio ( spot price of bullion divided by cl1 oil futures) is a barometer for the state of the global economy, with higher readings suggesting investors are positioning for a recession. The ratio has been rising since mid-2022 and spiked in late March as the banking crisis boosted gold’s allure as haven
  • Spot gold has rallied from around 1630 usd an ounce in early Nov to around 2000 usd - as investors bet the Fed was moving closer to ending its rate-hike cycle
  • The hottest new trade is the most boring asset class - money market mutual finds. Once regarded as a no-yield option investors would only use to park cash in a crisis, they now yield more than 4.5 pct. In the first quarter alone, investors flocked to them to the tune of half a trillion dollars
  • Trades for playing US Debt ceiling debate
    • Yen and gold both advanced after S&P put a negative outlook on its US credit rating in April 2011
    • Japan’s currency is likely to outperform
    • Asia’s higher quality stocks might outperform
    • Should the dollar slide, that may provide a tailwind for higher-yielding currencies such as rupee