Archive for October 2011

Write-Offs: 10.25.11

$$$ I.B.M. Names Virginia Rometty as New Chief Executive (NYT)

$$$ Amazon’s Spending Habit: Profit Plunges as Costs Rise (WSJ)

$$$ How to make ETFs less risky (Felix Salmon)

$$$ The income of the wealthiest 1 per cent increased by 275 per cent over the past three decades, versus 62 per cent for all Americans, according to the CBO (FT)

$$$ “I hate conforming to stereotypes, and pole dancing [at Ecole de Pole] offered something completely different from mainstream dance” and also from collateral management (eFN)
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In his most recent Wall Street tome, Money And Power: How Goldman Sachs Came To Rule The World, William Cohan wrote of a GS partner who several years back, sought to teach a group of new employees the values of stick-to-itiveness and having “the right attitude.” To do so, he “summoned a group of i-banking greenhorns to a conference room at 5PM on the Friday before Memorial Day weekend,” showed up at 10PM and fired those who’d left early. Lessons were learned.

Obviously, this little exercise would still hold up as an effective behavioral tool today. Having said that, 1) it’s been done, so people will see it come a mile away and act accordingly and 2) if you’re an employer who’d like to really crank up the heat on your staff, consider the following scenario: Read more »

Disappointed by MF Global’s dismal results today, its outsize European exposure, and its CEO’s politics, the Fox Business correspondent tweeted:

Maybe! Other possibilities include:
1. The Volcker Rule doesn’t go into effect until 2012, and
2. When it does go into effect, it will apply only to FDIC insured banks, not creepy quasi-bank things like MF Global.

But the Volcker Rule does matter for creepy quasi-banks. Read more »

“If you go back and read our original Netflix piece, we pretty well nailed it,” Tilson told Forbes today. “But we were quite early – we were almost a year early. So we got clobbered to the point that we couldn’t take the pain, and we just said, ‘You know what? There are better shorts out here.’ And later, to the Journal: “It’s been frustrating to see our original investment thesis validated, yet not profit from it. It certainly highlights the importance of getting the timing right and maintaining your conviction even when the market moves against you. The core of our short thesis was always Netflix’s high valuation. In light of the stock’s collapse, we now think it’s cheap and today established a small long position. We hope it gets cheaper so we can add to it.” [Forbes, WSJ]

  • 25 Oct 2011 at 3:34 PM
  • Banks

Um, This Isn’t So Good

Poor Sergio Ermotti was having a pretty good day today, with UBS’s stock up and clients more or less happy with the new business plan of “make 180% of your income on DVA and spend 140% of it on comp.” And then this went and happened:

UBS agreed to pay $12 million on Tuesday to settle accusations that it failed to oversee millions of short-sale trades over the last five years.

The Financial Industry Regulatory Authority, or Finra, accused the embattled Swiss bank of a “systemic supervisory failure.” The fine is among the stiffer penalties recently paid to Finra, Wall Street’s self regulator.

“The fine reflected broad gaps in their compliance system,” J. Bradley Bennett, Finra’s enforcement chief, said in an interview. “I think it’s very significant.”

Ordinarily it would be hard to get all that worked up about violations of Regulation SHO, the U.S.’s semi-prohibition on naked short selling. And that’s all this is, Reg SHO violations: UBS basically did a lot of shorting without properly locating borrowable stock, leaving them with naked shorts and settlement fails. Not great, but relatively benign for this week (or last week!).

Except, this (from the FINRA press release) sounds somehow familiar:
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  • 25 Oct 2011 at 3:32 PM

Civil War Brewing At Occupy Wall Street

Time was, everyone occupying Zucotti Park in protest of the financial services industry got along (some extremely well). Now, times have changed and battle lines have been drawn. On one side you have those who are pro drum banging. On the other, you have those who want people to cool it with the drums, out of fear that the neighbors who previously supported the movement will go anti-OWS, over the racket. Read more »

  • 25 Oct 2011 at 1:11 PM

Layoffs Watch ’11: Deutsche Bank

The Germans said this morning that 1) employees will face the ax if the “environment” doesn’t improve a-SAP 2) these cuts would be on top of those previously announced and 3) have you ever wondered why DB hasn’t had to announce that it’s letting go of 20 or 30 or 40,000 people? According to Stefan Krause it’s because the bank has been “proactive” about cutting staff, doing a little bit each day so it’s not overwhelming. Read more »

So far, the trading scandal doesn’t appear to have significantly hurt the confidence of UBS’s wealthy clients, who had pulled hundreds of millions of francs from the bank in 2008 and 2009 after Swiss authorities had to bail out UBS following about $50 billion in securities write-downs. A bruising tax evasion battle with the U.S. also drove clients away. UBS only managed to stem the exodus of clients late last year. [WSJ]