RBS has a new internal motto called “Change the Bank.” What do the changes entail? Ixnaying on ealsday ikelay ABN AMRO-ay and firing a couple thousand employees. Continue reading »
Archive for August 2011
If You’re Going To Insider Trade, Think About Doing It In A Stock Not So Near To The SEC’s Heart
By Matt Levine
Particularly if you’re Hugh Hefner’s son in law: Continue reading »
Henry Silverman is a billionaire investor and a certified genius. His genius is evident in Cedant Corporation, the company he built with his bare hands that made him a rich many many times over. His genius is less evident in his decision to leave his wife for a yoga instructor he hooked with the line “Google me,” and thinking he wasn’t going to have to pay his ex big time, despite having no pre-nuptial agreement. Continue reading »
The Times today has a long piece about companies that lost their AAA ratings, with the number of nonfinancial AAAs going from 60-ish in the 1980s to four (JNJ, ADP, XOM, MSFT) today. Why did they lose the AAA rating? Well, “it became seen in board rooms as more of a straitjacket than a path to riches. Just as many consumers relied on their credit cards to finance a higher standard of living, companies took on more debt to reap bigger returns.” Or, in UPS’s case, “the ratings agencies started knocking down the company’s credit rating to AA because of the new pension arrangement” that it struck with its unions in 2007.
So … know anyone else who is borrowing to try to juice economic growth and/or dealing with ballooning retirement-and-medical obligations? Oh, right, those guys. America. Which Moody’s and Fitch reaffirmed at AAA (negative outlook) yesterday and which S&P is going to moan about for a while longer. The Times again:
But the truth is, even as the government maintained its AAA grade, the markets suggested long ago that the United States was no longer deserving of such a high rating.
The credit-default swap market provided one clue. … Even today, the price of insurance on a government default has been higher than that for Colgate Palmolive, the global toothpaste giant, which has a rating two notches below AAA.
Which is weird, right? Because sovereign ratings mostly overpredict default – that is, default rates on sovereigns at a given rating are below those on corporates. Here’s somewhat old S&P data: Continue reading »
“Citi rented out a yacht in the New York harbor the other night for interns who got offers. It was a four hour open bar with a DJ and let’s just say it got interesting at the end. There was limbo.” Continue reading »
Former FrontPoint Partners hedge fund manager Dr. Joseph “Chip” Skowron might be preparing to plead guilty, a court filing showed on Tuesday. In the court filing, federal prosecutors from the Manhattan U.S. attorney’s office said they intended to file a criminal information against Skowron, rather than seek a grand jury indictment. Defense attorneys say the move by prosecutors to bypass a grand jury and file an information usually indicates a defendant has either agreed to cooperate with the government, or will plead guilty. If Skowron enters a guilty plea, he will be the 47th person charged by prosecutors to either plead guilty or be convicted on charges arising from in the insider trading investigation. [Reuters]
Dartmouth Undergrad Has A Bone To Pick With Ray Dalio, ‘Faceless Hedge Funds,’ The Dartmouth Board, And Peers Who Flock To Wall Street To ‘Perpetuate Class-Based Systems Of Power And Dominance’
By Bess Levin
At a party in New Hampshire last week, one Dartmouth undergrad relayed a story to another about Bridgewater Associates. Apparently the former had chosen to abstain from the annual recruiting session that takes place over the summer for rising juniors and as a firm committed to probing the depths of any situation until they find the truth, Bridgewater wanted to know more. The hedge fund offered to pay the coed “$100 to write a statement explaining why she didn’t participate,” she told her friend, a proposition that sickened him.
The sheer arrogance and senselessness of this anecdote made me sick to my stomach, partly because, as planned, the exercise made her second guess her choice. But I had to admit there was a certain conceited logic to it — if this company can pay her $100 just to explain why she did not want to work for them, it’s easy to imagine how much cash she could rake in if she decided to pursue the job.
The exercise also got him thinking.
After I was done vomiting in my mouth, thinking of all the people who desperately need that hundred dollars, I began to think about the depth to which the recruiting culture has permeated our College. It has siphoned off some of our great minds into a dead-end field that sanitizes the intellect, offers almost nothing to human society, and conditions people to act in ways that are decidedly inhuman.
He continued. Continue reading »
Moody’s Affirms US Rating, Warns Of Downgrade (Bloomberg)
The outlook for the U.S. grade is now negative, Moody’s said in a statement yesterday…The compromise “is a positive step toward reducing the future path of the deficit and the debt levels,” Steven Hess, senior credit officer at Moody’s in New York, said in a telephone interview yesterday. “We do think more needs to be done to ensure a reduction in the debt to GDP ratio, for example, going forward.” A decision on the rating may be made within two years, or “considerably sooner,” according to Hess. Fitch’s David Riley said that while the rating may be cut in the medium term, its risks in the near-term “are not high.” The company expects to complete the ratings review by this month. “Although the agreement is a good first step in adjusting the fiscal challenges that the U.S. faces, it is just a first step,” Riley, Fitch’s London-based head of sovereign ratings, said in a telephone interview yesterday.
China Ratings Agency Downgrades US Debt (CNBC)
China’s Dagong Global has cut the credit rating on U.S. sovereign debt to A from A+, Chen Jialin, general manager of the international department at the firm told CNBC on Wednesday. The agency has also put the U.S. on negative outlook.
New Waves Of Layoffs Suggests Jobs Report May Disappoint (CNBC)
Economists expect about 85,000 non farm payrolls and a 9.2 percent unemployment rate, when the monthly employment report is released Friday. But some traders see that number as too high, and there are whispers the number could be flat. RBS economist Michelle Girard said she expects 75,000 jobs were added, but she concedes that number could be too high. Just 18,000 non farm payrolls were added in June, and 25,000 were added in May. “I just think there was very little reason for people to be hiring in July, if they weren’t hiring in May or June. I don’t think they’d be inspired to hire in July. The degree of uncertainty seemed greater,” said Girard.
West Reading police sergeant charged in stun-gun incidents (ReadingEagle)
A West Reading police sergeant was charged Tuesday with using a stun gun on three people, including shooting his father with the nonlethal weapon and posting a video of the incident on YouTube…Beighley shot his father, James Beighley, with a Taser he had taken home against department rules. Beighley, who is married with two children, was living at his father’s house in Topton between July and October 2010. Beighley was on the phone with his brother, Daniel Beighley of California, when he heard his father coming up the steps. He hung up the phone and shot his father with the stun gun as his father opened the bedroom door. Matt Beighley said he videotaped the act with his Blackberry and emailed a copy to his brother, then posted it to YouTube. Continue reading »
$$$ Market Erases 2011 Gains on Concern of Recession Return (Bloomberg)
$$$ Bill Gross: Debt deal was “a Republican Tea Party victory.” (Bloomberg)
$$$ Guggenheim: Europe on Brink of ‘Major Financial Collapse’ (CNBC)
$$$ Matthew Goldstein: Steve Cohen’s Forbidden Transcript (Reuters)
$$$ “When Goldman sheds those in its bottom 5%, the firm pulls him or her aside in a private meeting, reveals the news and then gives the employee three or four months in which to find a new job. During that period, that person will remain at the bank and their status won’t be revealed to anyone until they’ve found a new job.” (FINS)
$$$ Idaho Town Terrorized by Guy in Bunny Suit (Gawker) Continue reading »
UBS’s Current Financial Situation May Not Cover Metro North Tickets To Grand Central And Subway Passes Downtown
By Bess LevinUBS has ditched plans to move parts of its U.S. investment bank to downtown New York and will review its options in the wake of deep cost cuts designed to boost its flagging bottom line. UBS had been in “advanced” talks to move some of its Stamford, Connecticut-based U.S. investment bank to the World Trade Center site at the southern tip of Manhattan, according to two sources familiar with the negotiations. Those talks were suddenly called off on Thursday, the sources said on Friday…”This was due to uncertainty over (UBS’s) contraction and by how much,” said one of the sources. “UBS has been conducting a review of its real estate requirements in the Tri-State area. Part of this review involved discussions with World Trade Center management in downtown Manhattan. These discussions have been productive, but we are focused on midtown alternatives at the present time,” said a spokesperson for the Swiss-based bank. [Reuters, earlier]
S&P has made it so enticing to get involved in U.S. debt politics that the other agencies are jumping on the bandwagon. And Washington can’t win: while S&P continues to talk a big game about downgrading the U.S. for not cutting enough spending, Fitch is pinning its ratings outlook to GDP growth, which some economists will tell you is not going to come by cutting government spending in a recession.
Continue reading »
