First thing you see on TV, that is, as ARS is replacing Carl Quintanilla on Squawk Box. Apparently the CNBC team searched high and low for the right person to recreate the raw chemistry between the long-running threesome of Joe, Becky and Carl and concluded Sorkin’s the man for the job. Continue reading »
Archive for July 2011
The Atlantic points out a chart in Bernanke’s report to Congress showing the mean ratio of Americans’ net worth to annual income. After bouncing around 5x for much of the early ’90s, it went well above 6x during the tech boom, dipped briefly, and then soared to 6.3x-ish in 2007 before plummeting to around 5x again today. The Fed report, and Daniel Indiviglio at the Atlantic, point to this as a key restraint on consumer spending, as consumer confidence won’t rebound until people have repaired their balance sheets.
Here at Dealbreaker we were more surprised that the ratio was so high, since we assumed that the average American didn’t have much in the way of net worth beyond a 47 inch flat screen, a Wendy’s Baconator Deluxe and an underwater mortgage. So we looked around for median data, assuming that the mean was dominated by the top and fluctuations are driven mostly by Tiger Woods’s property tax bills. And we put together a somewhat different chart, based on the Fed’s Chartbook, which is triennial and only goes through 2007 (and measures slightly different things from the report to Congress):
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Vincent McCrudden Wasn’t Being Literal When He Put 47 US Regulators On His ‘To Kill’ List (Even Though He’s Not The Only One Who Wants Them Dead)
By Bess Levin
Remember Vincent McCrudden? He’s the guy who arrested in January after years spent threatening to murder, among others, Mary Schapiro, Richard Ketchum, Gary Gensler and various other SEC and CFTC officials. In one email to a CFTC staffer he wrote, “You fucking corrupt piece of shit! I have let so many of you fucking corrupt mother fuckers off the hook for doing this to my life. You my friend are not getting away with this. I am going to do this my way no and you, you corrupt mother fucking piece of shit are the first on my list! laugh mother fucker…I am going to make you a test case!” In another, vivid imagery involving a midget was used. In yet another, the chief operating officer of the NFA was told “It wasn’t ever a question of ‘if’ I was going to kill you, it was just of when.” For a while, McCrudden also had an “execution” list on his website and encouraged people to help him cross the 47 names off the list, telling them, “Go buy a gun, and let’s get to work in taking back our country from these criminals. I will be the first one to lead by example.”
Vincent is set to be tried next week and his attorney has come up with a two part defense: 1) everyone wants to see US financial regulators dead. 2) McCrudden wasn’t threatening so much as he was dialoguing about the flaws in the regulatory system. Continue reading »
Apparently a fun thing to do is to freak out about how Libor is losing its magic as an indicator of whatever it is an indicator of. Since it’s an indicator of interbank lending rates (being an interbank lending rate and all), news suggesting that it may provide a false signal of bank borrowing costs is interesting.
Today though we get (Money & Investing front-page) news that Libor is “losing its clout as a macroeconomic indicator,” by which the WSJ appears to mean that low Libor fixings are not giving everyone enough reason to panic:
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Citigroup Profit Beats Analysts’ Estimates on Investment Banking (Bloomberg)
Citigroup said profit rose 24 percent, beating analysts’ estimates on higher investment-banking fees and fewer losses tied to troubled assets. Second-quarter net income was $3.34 billion, or $1.09 a share, compared with $2.7 billion, or 90 cents, in the same period last year, New York-based Citigroup said today in a statement. The average estimate of 23 analysts surveyed by Bloomberg was for earnings per share of 96 cents.
S&P warns that chance of downgrading U.S. credit rating is 50 percent (WaPo)
Standard & Poor’s said late Thursday that it could downgrade the U.S. credit rating as soon as this month, and there is a 50 percent chance it will do so within three months, if Washington fails to come to an agreement over the nation’s debt…S&P managing director John Chambers said in an interview that the downgrade could come by the end of the month if Congress has not voted to raise the $14.3 trillion debt ceiling…Chambers said the country must implement a plan to reduce the annual budget deficit by roughly $4 trillion over 10 years, which makes the debt manageable over the long term.
Debt limit: U.S. outreach to banks, investors over possible default comes up empty (WaPo)
Obama administration officials have been privately exploring with major banks and foreign investors whether the government could devise a way to avoid a severe disruption in financial markets if the federal debt ceiling is not raised, according to several people familiar with the matter…But the message back from the market has been discouraging: The failure to pay any significant obligations would scare away investors and undermine the financial system.
High-yield bond issuance to hit record this year, says Moody’s (FT)
Mounting concern that the European debt crisis is spreading to larger southern economies such as Italy and Spain has rattled corporate debt markets this month and brought issuance of fresh high-yield bonds to a juddering halt…However, while the market remains “susceptible to shocks”, companies in Europe, the Middle East and Africa sold $58bn of high-yielding bonds in the first six months of the year, and should still surpass last year’s record $65bn, Moody’s said in a report.
The AAA bubble (FT Alphaville)
It comes from a new report, issued by the BIS and Basel Committee’s joint forum, on the subject of securitisation incentives…The financial crisis had a lot to do with triple-A ratings being slapped on to subprime securities which didn’t warrant them, we know that…The turmoil of 2008 shunted some investors from ABS into safer sovereign debt, it’s true. But you also had a plethora of incoming bank regulation to purposefully herd investors towards holding more government bonds, plus a glut of central bank liquidity facilities accepting government IOUs as collateral. Where ABS dissipated, sovereign debt stood in to fill the gap. And more.
Muni Default Plunge Belies Whitney Prediction as Borrowers Shun Insolvency (Bloomberg)
Time is running out for Meredith Whitney’s municipal-market default prediction to come true…Defaults fell 60 percent in the first half of 2011 compared with the same period last year, including a $12.5 million Austin, Texas, apartment project that made a late payment in June, according to Distressed Debt Securities Newsletter. Whitney, a bank analyst, predicted “hundreds of billions of dollars” of municipal defaults within 12 months in a Dec. 19 “60 Minutes” broadcast, fueling a wave of selling in the $2.9 trillion market. Continue reading »
$$$ Obama to Lawmakers: Decide Friday on Long-Term Deal (Bloomberg)
$$$ US jobless claims fall, but retail sales timid (Reuters)
$$$ IMF Warns on Europe’s Banks Ahead of Key Tests (WSJ)
$$$ Italian budget set for fast-track approval (FT)
$$$ Eastern Europe feels chill of eurozone crisis (FT)
$$$ Dimon: ’Everybody Is Going to Sue’ Over Mortgages (Bloomberg)
$$$ Deutsche Bank Union Pushes New Role for Ackermann (WSJ) Continue reading »
Research In Motion Will Not See Another Dime From One Incensed Private Equity Guy (Update)
By Bess LevinAccording to the 3,000 word email written by the ex-customer, RIM can kiss his $120/month good-bye. Continue reading »
We’ve long been of the opinion that what the Real Housewives series could really use is a hedge fund edition. Alex Cohen, Biff’s old lady, Eddie’s girl, Mrs. PTJ would all make for sensational television and I know I’m not alone in saying I would truly do unspeakable things to have Lisa Falcone and her piano-playing pig in my living room every Thursday night. Apparently producers are on the same page and are actively attempting to make our dream a reality. Continue reading »
Though his schedule is extremely packed, Nassim Taleb, who knows everything there is to know about risk while Ben Bernanke knows nothing, has agreed to co-author a paper with the IMF’s Monetary and Capital Markets department “for the G-20 to develop ways to apply his method for identifying tail risks, or the chances of low probability, high-impact event.” Topics discussed will presumably include but not be limited to destroying the Nobel prize before it can destroy us.
It turns out that when you say things like “let’s not pay back our debts, what’s the worst thing that can happen?,” one thing that does happen is that the credit ratings agencies start worrying that you might not pay back your debts. Weird. From Reuters:
Standard & Poor’s has warned lawmakers privately that it would downgrade the country’s debt if the Treasury Department is forced to prioritize payments because Congress does not raise the debt limit, a congressional aide said on Thursday.
That is, cutting off Social Security checks could avoid a technical default but not a downgrade. Moody’s yesterday threw out its own threat of pre-default downgrade.
You know who else had ratings agencies all up in their shit threatening downgrades just because of massive fiscal and political-will problems? Europe. And they have some ideas on how to deal. Short version: insert fingers in ears, close eyes, hum noisily. Longer version:
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