Cuts are said to be going down tomorrow. Read more »
Archive for February 2012
I think everyone who’s ever worked at an investment bank saw at least a little something of themselves in the Journal’s fat asshole article this morning. My own feelings are mixed since, for me, investment banking was a lifestyle improvement over a previous job that left me partially paralyzed from overwork (true story! I got better). So in a sense I don’t have that much to complain about, but I did, and do, constantly and loudly and now on the internet.
Part of what sucks about banking – that I think the Journal article missed – is the frequent pointlessness of your activity: you get on a plane, go see a guy, tell him about this awesome merger or financing or whatever you’ve got planned for him, shake hands, and fly away never to see him again. And by “never” I mean “not until six months later, after he’s printed a deal away from you, when you go and do the same thing, but this time maybe you don’t shave.” You’d probably still be a fat, stressed, overworked cabbie-puncher if most of your ideas actually got executed, but you’d perhaps be less suffused with metaphysical dread. That’s how I’d feel anyway. Then, I blog now.
Anyway, a thing that I don’t know anything about, and never ever want to know anything about, so don’t tell me, is the proper price-to-book trading multiples of life vs. P&C insurance companies and whether there’s a conglomerate discount for being in both businesses. So with that as a disclaimer I found this pretty damn convincing: Read more »
Greek President Karolos Papoulias slammed Germany’s finance minister for recent comments about his country as stalled bailout talks stoked tensions between Greece and the northern European countries funding its rescue. “I don’t accept insults to my country by Mr. Schaeuble,” Papoulias, who fought in the resistance against the Nazis during World War II, said in a speech today. “I don’t accept it as a Greek. Who is Mr. Schaeuble to ridicule Greece? Who are the Dutch? Who are the Finns? We always had the pride to defend not just our own freedom, not just our own country, but the freedom of all of Europe.” Papoulias’s comments came as Wolfgang Schaeuble and other European officials pushed Greece to gouge more cuts out of its budget to qualify for a new bailout that would stave off an economic collapse. Schaeuble today blamed Greece’s New Democracy party, the second largest, for holding up agreement on a new rescue package and his deputy, Steffen Kampeter, compared Greece to a “bottomless pit.” [Bloomberg]
Admittedly it’s just a theory but hear us out– based on the following bonus numbers communicated to managing directors this morning in Stamford, is it possible the Swiss’s long-term revenue generating plan is to get someone to burn the place down so they can collect the insurance money and then work out of Howard Johnson’s? Read more »
John Chrin, a former managing director at J.P. Morgan Chase & Co. who left the firm in June 2009 to pursue an executive-in-residence position at Lehigh University, recalls seeing junior staff gain 30 or 40 pounds within a couple years on the job. When he worked at Merrill Lynch & Co., now a unit of Bank of America Corp., he recalls that one managing director ordered a chauffeur to turn on the air conditioning even though it was out of order, causing the car to burst into flames. The managing director then threatened to have the driver fired. Bank of America declined to comment…Alexandra Michel, an assistant management professor at USC’s Marshall School of Business, shadowed the bankers at the office—sitting next to them, following them to meetings, mirroring their hours and even pulling all-nighters—for more than 100 hours a week during the first year, about 80 hours a week during the second year, and then followed up with in-person interviews. One mild-mannered banking associate spoke about exploding in rage at a cab driver after unsuccessfully attempting to open a locked door from the outside: “I became so furious that I kept banging against the windows like crazy, swearing at the poor guy. And then I turned around and saw that a managing director was watching with his mouth open. I was so ashamed.” [WSJ]
LightSquared to Be Blocked by FCC Over GPS (Bloomberg)
The U.S. Federal Communications Commission vowed to block LightSquared Inc. after the Obama administration found the wireless venture backed by hedge-fund billionaire Philip Falcone would disrupt navigation gear. Federal agencies determined that LightSquared’s signals interfere with global-positioning system devices, Tammy Sun, an FCC spokeswoman, said yesterday in an e-mailed statement. The FCC is preparing to withdraw the preliminary approval it granted last year for the company to build a high-speed network serving as many as 260 million people, Sun said. “The commission clearly stated from the outset that harmful interference to GPS would not be permitted,” Sun said. “The commission will not lift the prohibition on LightSquared.” The FCC’s action marks a blow to LightSquared and a setback for Falcone’s Harbinger Capital Partners hedge fund, which has invested $3 billion in the venture. It follows a yearlong lobbying fight between LightSquared and opposing GPS companies that featured a series of government tests denounced by LightSquared as flawed.
LightSquared in a release issued yesterday before the FCC’s statement said it is “committed to finding a resolution with the federal government and the GPS industry.” The company said it “fully expects” the FCC “to recognize LightSquared’s legal rights to build its $14 billion, privately financed network.”
Greece Struggles to Win Second Financial Bailout as Europe’s Doubts Mount (Bloomberg)
Finance ministers canceled a Brussels meeting slated for today and will hold a teleconference instead to prod Greece to do more to clinch an aid package worth 130 billion euros ($171 billion) along with about 100 billion euros of debt relief from private bondholders. Greece needs the money to make a 14.5 billion-euro bond payment on March 20. The decision to cancel the meeting is “very worrying,” and “reflects a growing concern amongst some euro-area countries that Greece will not abide by the conditions of the second bailout package,” said Nicola Mai, an economist at JPMorgan Chase Bank in London. “It appears that some euro-area countries are willing to let Greece default.”
Hanks Paulson: Europe Crisis Will Take Years To Sort Out (CNBC)
“There is similarity [with the financial crisis in the U.S.] in certain regards. This has been going on for a long time and I think it will take years to play out,” Paulson told CNBC. Paulson, who served as Treasury Secretary when the subprime mortgages credit crunch erupted, sparking the world’s worst economic crisis since the Great Depression, said that at the time the U.S. was faced with a “collision of political forces and market forces”. “That’s really what you’re seeing in Europe,” Paulson said. “The structural issues around the EU are very difficult issues.”
Goldman Analyst Draws Scrutiny (WSJ)
Federal criminal authorities are investigating whether a Goldman Sachs Group Inc. technology analyst leaked inside information to hedge funds, adding a new angle to a broadening insider-trading probe, people close to the situation say. The development takes the insider-trading investigation inside the research operation of a major Wall Street firm for the first time. It involves Henry King, a high-profile analyst well-known among technology investors for prescient calls on tech firms…Goldman clients were told in recent weeks that Mr. King, head of Taiwan research, took a leave from his Goldman post in Asia after making a trip to the U.S. earlier in the year, people close to the situation say.
BNP Paribas Profit Hit By Greece (WSJ)
The Paris-based lender, France’s largest bank by market value, reported a 51% drop in fourth-quarter net profit to €765 million ($1 billion) from €1.55 billion a year earlier. BNP Paribas took a €567 million write-down on its Greek sovereign bonds and booked a €148 million charge as part of its plan to limit the impact of the European debt crisis by slashing its balance sheet. It expects to book an additional €850 million in charges to cover its downsizing plans in 2012 earnings but said it is “well-positioned to take on the challenges associated to today’s new environment and continue to finance its clients.” Revenue fell 6.1% to €9.69 billion, as continuing growth of the bank’s retail operations partially offset a sharp drop in corporate and investment banking revenue.
Shark Devours Another Shark Whole (AP)
National Geographic has released this soon-to-be classic photograph of one shark eating another shark whole. The photo comes from Daniela Ceccarelli, of Australia’s Research Council Center of Excellence for Coral Reef Studies. Ceccarelli was working with fellow researcher David Williamson on conducting a “fish census” off Great Keppel Island, part of the country’s Great Barrier Reef. That’s when Ceccarelli thought she spotted a brown-banded bamboo shark hanging out near the ocean’s floor. “The first thing that caught my eye was the almost translucent white of the bamboo shark,” Ceccarelli told National Geographic in an email. Instead, as Ceccarelli moved in for a closer look she noticed a camouflaged wobbegong shark emerging from seclusion with the same bamboo shark partially wedged inside its jaws. “It became clear that the head of the bamboo shark was hidden in its mouth,” she said. “The bamboo shark was motionless and definitely dead.” Read more »
$$$ Eurogroup Delays Meeting on Greece [WSJ]
$$$ EU to punish Spain for deficits, inaction [Reuters]
U.S. stocks experience significantly better returns during years when an American model graces the cover of the Sports Illustrated swimsuit issue than during years when the magazine cover features a foreign model, history shows. The S&P 500 had an average return of 14.3 percent during the 17 years since 1978 that featured an American, with positive returns a whopping 88 percent of the time, according to the Bespoke Investment Group blog. That’s about four percentage points above the average return during the years that featured a model from another country. The difference would be even greater, if not for the failure of the indicator in 2008, when the S&P 500 plunged 37 percent after Sports Illustrated featured American-born Marisa Miller and Lehman Brothers collapsed. Last year, Russia’s Irina Shayk graced the cover and the U.S. benchmark subsequently returned a disappointing 2.1 percent. [CNBC]
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The promise of a proxy battle, unless they comply with every one of his demands (e.g. replace four board members with Loeb and three of his friends). Little bit of DL trivia for the Third Point historians among us: with this latest 13-D, Loeb is reclaiming his tradition of notifying adversaries of his intent to wage war on February 14 (previous recipients of similar love letters include Salton Inc, Star Gas Partners, and AEP Industries). Sure he could have waited a day here or there but he’s a true romantic at heart. Even more thoughtful would have been delivering a copy of the filing in person via Barbershop Quartet but perhaps he’ll save that for next year’s lucky lady. [SEC]