Today’s all-the-things-are-the-same-thing news, sort of, is Bloomberg’s report of the tiff between BlackRock’s Larry Fink and a guy at “Lyxor,” which is the name of SocGen’s ETF business and also a good way to make me think of the words “pyramid,” “casino,” “typo” and now “SocGen” all at the same time, which does not make me want to invest with them. Anyway, the crux of it is this:
So-called synthetic ETFs, offered by firms including Societe Generale’s Lyxor Asset Management and Deutsche Bank AG, introduce a layer of complexity and counterparty risk that investors may not be aware of, Fink said yesterday. Synthetic funds generate returns through derivatives contracts rather than owning underlying securities as traditional ETFs do.
“If you buy a Lyxor product, you’re an unsecured creditor of SocGen,” Fink, who heads the world’s largest asset manager, said at a conference held in New York by Bank of America Corp.’s Merrill Lynch unit. Providers of synthetic ETFs should “tell the investor what they actually are. You’re getting a swap. You’re counterparty to the issuer.”
Lyxor says au contraire mon Fink, physical ETFs are just as bad:
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Efforts to create the first electronic “dictionary” defining derivatives and other financial instruments universally have moved ahead with the creation by US regulators of a committee to help develop it made up of BlackRock, the investment manager, CME Group, the derivatives exchange, and Google.
Global Derivatives Lexicon Edges On [FT via HNM]
“I don’t see any reason to think we need a QE3. We’re in a soft patch today. We still have positive growth. I think expectations earlier this year were way too high, 3 percent or higher gross domestic product, I think we’re going to be in the span of 2-ish percent, 2 and a half percent for the entire year and the issues around QE2, it’s been telegraphed for months and months and we’ve seen interest rates down 60 basis points and the whole reason is investors are de-risking…they’re frightened of the world and all these issues we have in front of us.” Continue reading »
Think you’re above this edict? Okay, big shot, leave the mess. Larry Fink will personally lean your desk into a bin labeled “[your name]‘s crap” and file his nails while you beg for it back.
From: [redacated at BlackRock]
Sent: Wednesday, March 23, 2011 03:12 PM
To: NYC – PMG Bonds
Subject: CNBC ON FLOOR THURSDAY- COMPLETELY CLEAN DESKS BY 4 PM WEDS MARCH 23RD
PLEASE CLEAR ALL SURFACES AND CLEAN YOUR WORK SPACES BY 4 PM ON WEDS SO THAT YOU DO NOT DISTINGUISH YOURSELF BY HAVING TO LOOK FOR YOUR BELONGINGS ON THURSDAY MORNING.
(IT WILL BE EASY TO IDENTIFY THOSE WHO ARE SO EXPOSED.)
IT REALLY ISN’T AN OPTION TO DISTINGUISH YOURSELVES BY HAVING THE MESSY DESK ON LIVE TV; THAT OUTCOME WILL BE ELIMINATED FOR YOU.
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Noted Gaga fan and Robin Hood board member Steve Cohen may have had a role in pushing for the performance, though it very well could have also been honoree Larry Fink, who demanded the Gags the after dinner entertainment portion of the evening. [Bloomberg, earlier]
The BlackRock founder and CEO, whose one mistake in a 30+ year career was momentarily second-guessing just how much ass he kicks, was awarded stock valued at $12.8 million, bringing his total shares in the firm to 1.38 million. Continue reading »
