Opening bit at the Council on Foreign Relations. “It’s not so long ago that I was introduced by a guy who said, ‘Larry, do you know what it takes to succeed as an economist?’ I said, ‘No,’ and waited. He said, ‘An economist is somebody who’s pretty good with figures but doesn’t quite have the personality to be an accountant.’ It was in Moscow and no one got the joke.” Hi-yoooo. So self-deprecation is apparently going to be the name of today’s game? If so, get psyched for the narc cracks.
Archive for June 2009
And here’s what they’re doing about it! HFA reports:
For more than 30 years, Bridgewater Daily Observations has provided clients with “real-time thinking in the global financial markets,” Ray Dalio said in a May 27 email to his investors. The problem, Dalio said, is that some of his readers are sharing the newsletter with others, including competitors and the media. This threatens the “tradition of open, quality communication,” he added.
Bridgewater…will now require investors and other recipients of the newsletter to install special software designed to prevent the emailed document from being forwarded or printed. Installing the technology requires “minimal effort” Dalio said, and can by done anytime over the “next few months.”
Which is fine, we guess, if you’re not interested in thinking outside the box. Since we always took RD to be an outside the B thinker, we’re going to take this opportunity to a) note that this is the sort of pedestrian measure we’d expect from a lesser firm throwing a hissy fit over people circulating their “we’re down 70 percent” updates and b) implore him to come up with something better. Some jumping off points include emailing the Daily Observations with an FYI that any attempts to forward or print will cause not only the email but the device it’s being read on to self-destruct, sending it out one syllable at a time, or requiring investors to appear in person at Bridgewater to have the letter read aloud to them (by a rotating roster of enticing celebrity guests). Surely you can do better.
Now that Goldman has received the green light to pay back TARP, the firm’s next hurdle is losing the commercial bank holding company status. While Goldman’s overall model has not changed much since it became a commercial bank in September, it is subject to additional supervision and regulations that constrain profitability.
With the worst of the financial crisis seemingly over, the benefits of being a bank holding company are outweighed by the restrictions and conditions, said Tom Sowanick, the chief investment officer of Princeton, New Jersey-based Clearbrook Financial LLC.
Since Goldman became a commercial bank, industry watchers have said the change would expose the firm to stringent capital requirements, dampening its ability to use borrowed money to boost profits for its lucrative proprietary trading business.
It is going to be a long road back to the point where regulators have some degree of trust in large firms to not blow up themselves or the banking system. Given all the GS favoritism conspiracy theories in DC, allowing them in particular to crank up the leverage again seems unlikely.
Goldman could shed “commercial bank” charter [Reuters]
“Thanks For Not Running” (Bloomberg)
Sean Swift, of JP Morgan, won the Corp Challenge this week in Central Park, and thereafter fired off this text to his pal: “Thanks for not running this year,” Swift, 24, wrote to his friend Karl Dusen, an analyst at American International Group Inc. who took the title in 2006, 2007 and 2008. “Maybe now I’ll get a bonus.”
Lewis Defends Merrill Deal (WSJ)
“Despite being pummeled by Congress, shareholders and other critics, Mr. Lewis likely isn’t stepping down anytime soon. “I don’t see anyone who could be doing a better job of leading this organization at this time,” said Walter Massey, Bank of America’s chairman.”
AIG Balks At Claims From Hudson Crash (NYT)
AIG is dragging its ass in paying the claims from the downed plane, it appears. The article attributes much of their slow response to the general perception that the crew handled the incident so well, explaining it’s hard to find fault in their actions when everyone considers them heroes.
BlackRock To Acquire Stake In Barclays Unit (NYT)
“BlackRock said Thursday night that it had agreed to buy Barclays Global Investors from the British banking giant Barclays for about $13.5 billion in one of the largest deals in the money management industry, creating a juggernaut with nearly $3 trillion in assets.”
Paulson & Co. Goes Long Distressed Debt/Mortgage Securities (Bloomberg)
Paulson & Co. is dumping a hefty little chunk of change into jumbo prime securitizations and distressed opportunities (including banks and finance companies). While not in direct contrast to his shorting of the subprime market in general, it could mark the fund manager’s belief that the market is turning (if only slowly).
Soros: Ban Credit Default Swaps (Guardian)
“Some derivatives ought not to be allowed to be traded at all. I have in mind credit default swaps. The more I’ve heard about them, the more I’ve realised they’re truly toxic…CDS are instruments of destruction which ought to be outlawed,” Soros told a meeting of the Institute of International Finance.
$$$ The Macklowe Selloff: What Happened to Harry’s Buildings [NYO]
$$$ Zipcar: no immediate plans to go public. [The Deal]
$$$ I want to take the time to acknowledge the work of guest @ 1:24PM. That was perfection– funny, historical, relevant to the birthday. This is what I’m talking about. A level of commenting you should all be reaching for.
$$$ How the recession is affecting Hollywood [Glamour]
The demand for risk must really be back. Citigroup was able to sell $1 billion in notes today without the FDIC guarantee. A nice victory for Team Vik.
Citigroup Sells $1 Billion of Notes Without U.S. Guarantee [Bloomberg]
We couldn’t agree more! Compensation Cop is much better. Or, if you’re looking for something more palatable, Dispenser of the Sticky Fifties. (Also: do you not love the ‘tude he took with Bartiromo?)
Hedge Fund Alert reports that Citadel has begun pitching a long/short equities vehicle to be launched next month. Here are the deets:
* 2.5% management fee
* 25% performance fee
* monthly liquidity
* no lock-up
* If the fund falls below the high watermark, “it will still charge a performance fee, albeit at a reduced rate of 12.5 percent,” which will remain in effect until it has earned back 250 percent of the drawdown. (Kensington and Wellington do not charge performance fees if assets drop below the HWM, which sometimes happens.)
Earlier today we obtained a copy of the fund’s marketing materials. We’ve determined them to be phony, but will pass them on at this time, as they seem to speak a bit of truth.
The rhetoric around the US Dollar losing its status as the world’s premiere reserve currency is getting heated once again. Dr. Doom started to go down that path today and China and Russia added their two cents as well. But it should say something when Roubini will only tread lightly in these waters.
“We may see complementary reserve currencies,” Roubini said at a conference today in Athens. While it’s “not going to happen overnight,” the development “will diminish the role of the dollar over time.”
And China and Russia are banking on a currency that doesn’t even exist.
From the mailbag:
Jon Ezrow, who was head of HY capital markets is leaving GoldenTree this week. This marks another of many high profile resignations at the firm in the last 24 months and calls into question the leadership of the firm. Since 2007, many of the top analysts and PMs have resigned from the firm or left to pursue other opportunities (AKA quit).
- Tom Shandell (Institutional Investor Magazine All-Star, ranked number one US gaming analyst)
- David Allen (Institutional Investor All-Star, ranked number one US Media Analyst)
- Andrew Susser (Institutional Investor All-Star, ranked number one lodging analyst)
- Oliver Wriedt (Head of Marketing)
- Wilfred Finnegan (Head of Sourcing)
- Larry McCarthy (Head of risk management, former Lehman Brothers star)
- Eduardo Cabral (now at Goldman)
- Raul Ramirez (left for Avenue)
Additionally over 10 other analysts have left, making the turnover one of the highest for any hedge fund. Combined with Steve Tananbaum’s poor performance in 2008 due to his strategy of going long the loan market with leverage in the Spring of 2008 (See his Barron’s interview from May 2008 called: Leveraged Loans: Ready for Takeoff!”) calls into question whether anyone will stick around since he is known to be one of the worst managers on the street. His flagship credit fund was down 70% and investors have been blocked from taking out money.
The Answer Will Be Revealed Shortly, Plus How Much The Individual In Question Can Bench
By Bess LevinPlease identify which well-known financier the following passage is about, from the latest issue of Vanity Fair.
“One of the rules at the gym was you don’t drop your weights– they can get damaged,” recalls Tim Gardner, an assistant manager at Total Fitness, “but I can still see him sitting on the bench, doing curls, and then standing up and dropping these weights from as far up as he could do. And people would turn and look at him. It was just for the attention, see? He loved to be in the limelight like that. I think if you looked up ‘narcissist’ in the dictionary, you’d find [this person]‘s picture.”
“I’ll never forget the first time I met [this person],” says Gary Findley, who managed the gym for a time. “I was inside the gym, and I heard this loud noise outside. I mean, loud. I couldn’t figure out what it was, so I walked outside. He was landing in the middle of our running track in a private helicopter.”
