With Washington at Impasse, Worry Over Investor Reaction (NYT)
“We may have a few stressful days coming up — stressful for the markets of the world and the American people,” William M. Daley, the chief of staff for Mr. Obama, said on CBS’s “Face the Nation” Sunday morning…Analysts point out that the government has neared the brink on reaching crucial financial agreements in the past without marketwide collapse. Still, the greatest anxiety in the markets is that investors will lose confidence in Treasuries and move toward selling them, which would drive their values down and their rates up…Treasuries have been at the center of panics in the United States before, though far earlier in American history. Richard Sylla, a finance professor at the Stern School of Business of New York University who has written about panics, pointed to 1792, when one Treasury trader ran into problems and sent the market into a spiral in which it lost 25 percent of its value… “Today we talk about what happens if the Chinese sell all the U.S. securities; in 1893, foreign investors were doing just that,” Mr. Sylla said.
Moody's Warns Greek Default Virtually 100 Percent (AP via NYT)
The agency said the new EU package of measures implies "substantial" losses for private creditors. As a result, it cut its rating on Greece by three notches to Ca — one above what it considers a default rating. Though Moody's said a Greek debt default is "virtually certain," it noted that the new measures will increase the likelihood that Greece will be able to stabilize and eventually reduce its overall debt burden.
Money market funds cut euro bank exposure (FT)
US money market funds have sharply cut their exposure to banks in the eurozone over the past few weeks and reduced the availability of credit, even in stronger countries such as France. The money market funds, historically crucial providers of short term financing to European banks, have withdrawn from all but extremely short-term lending as concerns about sovereign debt have mounted… The 10 largest US prime money market funds reduced their total exposure to European banks by 8.7 per cent on a dollar basis in June, according to the rating agency.
Bank of Ireland to Avoid State Control (Bloomberg)
Ireland agreed to sell as much as 37 percent of Bank of Ireland Plc to an investor group for 1.12 billion euros ($1.61 billion), a day before a rights offering was set to give the government majority ownership of the lender. Private investors will own at least 68 percent of the country’s largest bank after the transaction closes tomorrow, Finance Minister Michael Noonan said in a statement today. The stake is being sold to fewer than 10 institutional investors from outside the country, according to three people with knowledge of the matter.
Bond traders face uncertain week (FT)
Government bond investors and traders are braced for a testing week, as the US Treasury aims to sell $99bn in new debt with the clock ticking on resolving the impasse over raising the country’s debt ceiling. This week’s debt sales may attract less demand from institutional investors concerned about a possible default by the Treasury in early August, leaving bond traders with more than their usual share of the auctions – a result that could lower bond prices, which move inversely to yields.
SAC boasts YTD returns of 9.2% (NYP)
SAC Capital Advisors LP, the $14 billion firm founded by Steve Cohen, told investors that its main hedge fund rose 9.2 percent this year, beating both the stock market and the hedge fund industry.
The Maid's Tale (Newsweek)
She was paid to clean up after the rich and powerful. Then she walked into Dominique Strauss-Kahn's room—and a global scandal. Now she tells her story…“Oh, my God,” said Diallo. “I’m so sorry.” And she turned to leave. “You don’t have to be sorry,” he said. But he was like “a crazy man to me.”
Ameritrade to Discuss Pursuit of E*Trade (WSJ)
TD Ameritrade Holding Corp.'s directors plan to discuss at a meeting Tuesday the possibility of trying to acquire rival online-brokerage firm E*Trade Financial Corp., according to people familiar with the situation. The board meeting was already scheduled when hedge-fund firm Citadel LLC, E*Trade's biggest shareholder, prodded the company last week to explore selling itself.
Companies churn out profits but not jobs (Reuters)
About 78 percent of companies in the benchmark S&P 500 index that have reported second-quarter earnings have beaten Wall Street expectations…Economists say the ability to do more with less has helped create a two-speed U.S. recovery. The S&P 500 has doubled in value since the recession ended and per-share earnings are currently on track for a new annual record, while employment remains below the level seen in late 2008 when corporate profits troughed.
Ex-JPMorgan Banker Admits to Stealing Identities for $1.1 Million Theft (Bloomberg)
Hao “Howie” Wang, 28, of Newark, New Jersey, pleaded guilty today in New York state Supreme Court to grand larceny, identity theft, falsifying business records, forgery and scheme to defraud, the office of District Attorney Cyrus R. Vance Jr. said in a statement.
JPMorgan Chase holding up Mets-Einhorn deal (NYP)
The Mets' pending deal to sell a minority stake in the team to David Einhorn is dragging on well beyond its expected closing date because lender JPMorgan Chase is not letting the team structure the deal as a loan, making it harder to complete, The Post has learned.
Money Manager Ken Heebner: A Hot Touch Gone Cold (Businessweek)
Deftly shifting into and out of sectors such as homebuilding and commodities, he posted returns averaging 32 percent annually from 2000 through 2007, a period when the Standard & Poor's 500-stock index returned just 1.7 percent a year. Then the magic stopped. CGM Focus, which Heebner runs from Boston, is the only domestic stock fund to trail at least 96 percent of its peers in 2008, 2009, and again this year, according to research firm Morningstar (MORN)
US Fund Giant To Buy New Twitter Stake (Sky News)
The US mutual fund management giant T Rowe Price is to invest more money in Twitter, the microblogging phenomenon, as part of a fundraising round valuing it at more than $8bn, I have learned.
Social Security payments would fall with new inflation gauge (USA Today)
The bipartisan "Gang of Six" plan presented by six senators last week proposed shifting to a so-called chained consumer price index. The traditional CPI simply tracks a basket of goods, everything from cars to kitchen utensils. The basket of goods doesn't change. The chained CPI shifts goods in the basket every few years, based on consumer preferences. The idea is that if the price of a good such as beef shoots higher, consumers will start buying more chicken. The basket would then give a larger weighting to chicken than beef. The result: The inflation rate doesn't rise as quickly because people are buying more inexpensive chicken and less expensive beef.