At the annual Allen & Company conference here, DealBook asked Mr. Buffett whether he thought Mr. Blankfein might resign from Goldman in the coming months. The Oracle of Omaha didn’t mince words. “I don’t think he is. I’ve seen nothing to indicate that myself, and I don’t want him to,” he said enthusiastically. “I want him to stay!” [Dealbook]
Archive for July 2011
Congressional Leaders Emerge From Wildly Productive Meeting With Consensus On Debt Issue
By Bess LevinHere’s what they’ve got: we need to raise the debt ceiling. Continue reading »
“As we in detail go through some of the largest holders of Treasury securities and the various places where Treasuries are used in collateral and index agreements, it looks to us like there is a fair amount of leeway to not immediately react in the event of a default. It doesn’t look like most of these entities would need to either immediately liquidate their holdings or renegotiate contracts where Treasuries are used as collateral due to ratings downgrades. While it looks this way, we can’t be certain of this, because there are so many financial interconnections where a ratings downgrade or default on Treasuries could create unforeseen knock-on effects. And of course, there is the risk, albeit small, of a more substantial loss of confidence in whether the US will continue to pay on Treasuries, which would become an increasing risk if the debt ceiling negotiations drag on for a while after the official default. That could lead to significant liquidation of holdings and logistically disastrous renegotiations of contracts.” [Zero Hedge via HNM]
For the vast majority of those on the quest to become a Chartered Financial Analyst, there are three tests to be conquered and then they’re set. They’ve gained the keys to the kingdom. Three tests, they think, and you’re in. That’s because these people are not true children of the CFA. If they were, they’d spend their nights, weekends and holidays hosting CFA trivia night with friends, they’d scour eBay for CFA collector’s items, such as the first exam ever given, and they’d know that passing Level III? Doesn’t mean jack. Because after III comes the ultimate test: Level IV, AKA gaining access to Camp CFA.
What is CCFA? A weeklong “retreat” wherein the ultimate charter holders gather to decide who will be given the green light to spend the next 6 months of their lives studying for the next level and who will be punted back to square one. Whereas Levels I, II and III have pass rates that range from (ballparking it) 29 to 53 percent, i.e. anyone can get in, Camp CFA changes the lives of a mere 15 percent of people. And make no mistake, being chosen to attend Camp CFA is viewed as a life changing event. Some might even call it an honor. Continue reading »
That’ll teach you to think twice before forking over a few mill to your kid’s friend’s mom. Continue reading »
Warren Buffett told CNBC today that Congress is playing a “silly” game of “Russian Roulette” by threatening not to raise the nation’s debt limit as it debates deficit reduction. In a live interview on Squawk Box from Sun Valley, Idaho, where he’s attending the annual Allen & Co. media conference, Buffett warned of “enormous disruption” if there’s no deal to raise the U.S. debt limit. Buffett told Becky Quick that the country’s bills will be paid one way or the other, and Congress should address the situation with “maturity.” [CNBC]
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Hedge Funds
How To Make Your Hedge Fund A Runaway Success, By Alphonse Fletcher Jr.
By Bess Levin
One of the most wonderful aspects of the hedge fund industry is that because it attracts the brightest minds, said minds are constantly coming up with new and outside-the-box ways of doing things. Eventually the innovation catches on and before you know it, something that might initially seem crazy eventually becomes best practice at firms worldwide. Take Alphonse “Buddy” Fletcher Jr, for example. The hedge fund manager is the subject of a Wall Street Journal profile today that highlights what the paper describes as Fletcher’s “unorthodox practices.” While it’s clear that some people are passing judgment on Buddy’s ways of doing things, his wiser colleagues in the field will immediately recognize the genius found within and start furiously implementing his methods today. Such as:
Dealing with redemption requests: As many of you may have learned first hand, investors get fairly bent out of shape when you tell them they can’t have their money back. But if you don’t have the cash on hand, what’s the alternative? One hedge fund manager recently said he would pay clients back not in actual money but in illiquid shares of a firm called LightSquared and in what seems to have come as a surprise to him, they didn’t like that either. How does Fletcher deal with such issues?
Last month, after two of the pension boards sought to withdraw some of their cash, Fletcher instead sent them promissory notes “in satisfaction of this redemption request” that pledged payment within two years.
For those taking careful notes the steps are as follows: Step One: redemption request. Step Two: redemption granted. Step Three: investor says “what?”. Step Four: manager says “What are you ‘what’ing? You’re getting your money, just later.”
Let’s continue. Continue reading »
Treasury secretly weighs options to avert default (Reuters)
Senior officials, including Treasury Secretary Timothy Geithner, have repeatedly said there are no contingency plans if lawmakers do not give the U.S. government the authority to borrow more money. But behind the scenes, top Treasury officials have been exploring ways to prevent a financial meltdown that would be triggered if the government were unable to pay its bills on time, sources told Reuters.
President Looks for Broader Deal on Deficit Cuts (NYT)
Mr. Obama, who is to meet at the White House with the bipartisan leadership of Congress in an effort to work out an agreement to raise the federal debt limit, wants to move well beyond the $2 trillion in savings sought in earlier negotiations and seek perhaps twice as much over the next decade, Democratic officials briefed on the negotiations said Wednesday.
Hedge Funds Move Past Greece With Bets on Wider Debt Crisis (Bloomberg)
Hedge funds that trade bonds and loans are increasing bets that Europe’s sovereign debt crisis will spread to Portugal, Spain and Italy, even after Greece won a temporary reprieve with 12 billion euros in aid.
UK interest rates remain on hold at 0.5% (BBC)
Economists had expected no move in rates as the latest data has shown the UK economic recovery remains weak. The committee’s decision comes despite the annual rate of inflation remaining at 4.5% in May, well above the Bank’s 2% target.
Goldman: Tight Supply to Push Up Oil Prices (WSJ)
Oil supply will be “critically tight” in 2012 and prices are likely to surpass their recent highs as spare production capacity and inventories are “effectively exhausted,” analysts at Goldman Sachs said in a research note Thursday. Goldman also reiterated a recommendation that its clients buy some forward oil contracts now, before prices move higher later.
SEC in China audit deal push (FT)
US regulators will next week push for a deal that would allow them to inspect auditors based in China in an effort to ease rising investor concerns over the accounting of many Chinese companies…Negotiations over auditor inspections has been going on since 2007. China has traditionally denied US authorities access, citing sovereign issues.
Falcone spoiling for fight (NYP)
Philip Falcone wants to meet with Sen. Charles Grassley (R-Iowa) after the lawmaker left “an inappropriate impression” about the hedge-fund billionaire by referring in a letter to serial violators of securities laws.
No deal on Mets just yet (NYP)
David Einhorn’s exclusive negotiating period with the Mets has expired, The Post has learned, although the two sides remain locked in talks and determined to hammer out the last few “gritty details” over the sale of a minority stake in the money-losing team.
Morgan Stanley Yoga-Troubadour-Crossword-Math Pro Muller Flees (Bloomberg Markets Magazine)
Muller is the founder of Morgan Stanley (MS)’s Process Driven Trading group, or PDT, a 70-person band of Ph.D.s and computer jockeys. They use algorithm-rich programs to bet Morgan Stanley’s money on pricing discrepancies in global markets. Muller, who has had no outside investors to please, has kept the strategies and performance of PDT under wraps, stoking the curiosity and envy of rivals. “They say: ‘I know him. He made a boatload of money for Morgan Stanley,’” says Arjun Divecha, chairman of Boston-based GMO LLC, who manages about $18 billion using quantitative techniques. “They don’t know how he’s done it.” Muller makes no apologies for his obsessive secrecy. “I want my competitors to know absolutely nothing about what we do,” Muller says. Continue reading »
$$$ Cantor says GOP open to cutting tax loopholes in debt deal, but Senate Republicans balk (WaPo)
$$$ Europe lashes out over downgrades (FT)
$$$ Blackstone latest buyout fund now $16 bln (Reuters)
$$$ Goldman Took Biggest Loan in Fed Program (Bloomberg)
$$$ Wall Street braced for earnings backlash (Reuters)
$$$ The Crisis We Should Be Panicking About: Bacon Prices (CNBC) Continue reading »
It could also be interpreted as the greatest veiled threat since Angelo Mozilo said Bank of America “will reap the benefits of what [Countrywide] has sowed.” Continue reading »
The clam-juice cocktails at the private Stock Exchange Luncheon Club, where brokers lined up three deep at the raw bar, contained tomato juice, cooled water from boiled chowder clams, ketchup, celery salt and the option of a freshly shucked clam. Add vodka and they called it a Red Snapper. “Everyone for years tried to duplicate it, and it was dead wrong,” said Grasso, 64, who started at the New York Stock Exchange as a clerk for $81 a week in 1968, a year after the NYSE first accepted a woman as a member. [Bloomberg]
