Pimco's Gross Raised Rate-Risk Exposure (WSJ)
Mr. Gross's bond fund increased its duration to 5.82 years at the end of June from 5.15 years in May, according to Pimco's website. The increase in interest-rate risk cost Mr. Gross dearly. The fund suffered a loss of 2.64% in June in total return, compared with a loss of 1.55% on the Barclays U.S. Aggregate Bond Index, according to data from fund tracker Morningstar Inc. Mr. Gross's bond fund posted a loss of 3.6% last quarter in total return, compared with a 2.33% loss on the Barclays U.S. Aggregate Bond Index, according to data from fund tracker Lipper.
Bernanke faces grilling over bond buying (FT)
The Fed chairman testifies before the House Financial Services committee at 10am on Wednesday, and repeats the performance in front of the Senate Banking committee the next day, with markets still jittery about the central bank’s plan to gradually slow its $85bn-a-month in asset purchases. But Mr Bernanke has a growing problem as he tries to convince markets that a “tapering” of quantitative easing does not mean an earlier rise in interest rates: the widespread expectation that he will step down next January.
Wealth Products Threaten China Banks on Ponzi-Scheme Risk (Bloomberg)
China’s credit crunch in June spurred hundreds of millions of households and companies to divert a record share of their savings into wealth-management products, known as WMPs. The amount of such investments surged eightfold from 2009 to 8.2 trillion yuan as of the end of March, according to government data. ... WMPs look like time deposits to investors, except that about 70 percent of them don’t have their principal guaranteed by banks. About half invest in low-risk deposits, bonds and money markets. The rest venture into riskier areas including stocks, derivatives and loans to local governments and property developers, according the China Banking Regulatory Commission, which requires banks to register all WMPs they sell. The investments are popular because they provide rates of return higher than savings deposits, which are set at 3 percent annually, below this year’s government targeted inflation rate of 3.5 percent.
Spanish prime minister rejects calls to step down over scandal (Reuters)
Spanish Prime Minister Mariano Rajoy on Monday rejected calls to resign over a ruling party financing scandal and said he would not allow the matter to hold back his reform plans. The political pressure mounted on Rajoy as the former treasurer of his center-right People's Party gave new testimony before a judge looking into the affair, saying he had made 90,000 euros in cash payments to Rajoy and party secretary-general Maria Dolores Cospedal in 2009 and 2010.
Dave Matthews breaks down on bicycle, gets a ride to his concert from fan (Today)
A woman on her way to see the Dave Matthews Band perform in Hershey, Pa., on Saturday stopped her car to help a stranded bicyclist — and in the process saved the very rock show she was going to see. Emily Kraus and her boyfriend, Joe, were already running late when they noticed a man on the side of the road. When they pulled over to help, it was none other than Dave Matthews. The singer was out for a pre-concert bike ride when he got a flat tire, and he didn't have a cell phone to call for help.
Big Home Builders Gobble Up Rivals Starved for Cash (WSJ)
Without bank credit, small builders are unable to buy and develop the land necessary to build homes. That has allowed the biggest builders to rapidly gain market share, in large part by acquiring their smaller competition. "It's getting tougher and tougher for the little guy," said Michael P. Kahn, a building-industry consultant based in Palm Coast, Fla. "The big builders are coming in with big purses and saying, 'Sell me what you've got, I'll write you a check for it.'"
US ‘jumbo’ loan rates as cheap as standard mortgages (FT)
The average rate on so-called “jumbo” home loans was 4.84 per cent last week, according to mortgage research firm HSH Associates, only 21 basis points higher than on smaller loans that qualify for a government guarantee. Bankrate.com, the mortgage research firm, has reported that, in expensive metropolitan areas including New York, Chicago and Los Angeles, some jumbo loan rates are now lower than those on standard mortgages.
Banking Crisis is Over, But TARP Bailout is Still Alive and Kicking (FBN)
While big banks like J.P. Morgan Chase (JPM) and Citigroup (C) couldn’t return their TARP funds fast enough, dozens of publicly-traded lenders and thrifts are still sitting on nearly $5 billion in bailout cash some four years after the Great Recession ended. These TARP holdouts include medium-sized institutions like $2.3 billion Synovus Financial (SNV) and Puerto Rican lender Popular (BPOP), as well as much smaller lenders such as Atlantic Bancshares, which is on the hook for just $2 million. Banks that have been unable or unwilling to escape TARP now run the risk of being hit by a looming spike in dividend rates at the five-year anniversary of entering the government program as well as being stigmatized by customers and counterparties alike.
Early Peeks at Data Draw Scrutiny (WSJ)
A senior senator launched an investigation into an arrangement in which the University of Michigan sells early peeks at its consumer-sentiment survey to a select group of investors through Thomson Reuters Corp. In a letter sent last week, Sen. Charles Grassley (R., Iowa), the top Republican on the Senate Judiciary Committee, asked the university to answer questions about the arrangement and to provide a copy of the contract and any other similar contracts it might have entered into. "My concern is that the [university 's] decision to allow preferential access" to the report "may not be in the public interest," Mr. Grassley wrote.
$100 million house listings return with a vengeance (CNBC)
Brokers and real estate analysts say there are now more than a dozen homes in the U.S. listed or quietly on the market for $100 million or more. That's believed to top the number of $100 million-plus listings during the peak of the housing boom in 2007. "It's the most that I've ever seen," said Jonathan Miller, president and CEO of Miller Samuel, a real estate appraisal and consulting firm. "We're in this special period of time when nine-digit listings may not be commonplace, but they're certainly making their presence known."
Mom and Pop missing the rally, but OK with it (NetNet)
"They feel like, we're OK, we're not making a lot of money, we're not losing any money. We're up."
The oy of sex! Kosher lube a blessing for religious Jews (NYP)
Trigg Laboratories announced yesterday that the Rabbinical Council of California had certified 95 percent of its “Wet”-brand products as kosher after an intensive, two-year review. ... An Orthodox rabbi who works as a kosher supervisor — but who didn’t want be identified due to the subject matter — said the newly kosher lube should glide off the shelves. “There’s probably a market for it,” he said. “I’m sure for some people it’s better to have something that’s kosher than something that isn’t.”