Soothing Talk by Federal Reserve Official Buoys Wall Street (Dealbook)
At a news briefing in New York, William C. Dudley, president of the Federal Reserve Bank of New York, said that the recent turmoil in the financial markets was a risk to the United States economy. Crucially, he added that he found the prospect of raising interest rates next month “less compelling.” Mr. Dudley’s words were manna for investors who had been starved of good news in recent days. On Thursday, stocks in Asia opened broadly higher for the first time since last week, including in Shanghai, where the main index was up more than 2 percent. Jim Vogel, a strategist at FTN Financial, said the remarks were “likely to have influence well beyond today.”
Ackman says Pershing Square down for the year after markets drop (Reuters)
"At the date of this report, the year to date investment performance has been erased, and the Company is at a loss position for the year," Ackman's Pershing Square Capital Management said in its interim financial statement released to investors on Wednesday afternoon. Only three weeks ago the New York-based manager had told clients, including state pension funds in Massachusetts and New Jersey, that the fund was up 10.1 percent for the year through the end of July.
Hedge Funds Bruised by Stocks’ Meltdown (WSJ)
Monday, when the market collapsed more than 1,000 points in its largest ever intraday point decline, marked one of the worst days for many managers since the crisis. That is a hit to an industry that has for years excused its relative underperformance compared with benchmarks by promising that collections of bets on and against markets—a so-called long/short strategy—would insulate the impact of any future market gyrations. “We’ve struck out this month so far,” said one hedge-fund manager.
Margin Calls Bite Banks (WSJ)
Some lenders, including Bank of America Corp., are issuing margin calls to clients after the global market drubbing of the past week, forcing investors to choose between either putting up more money or selling some of the securities underlying the loans. Banks, meanwhile, are likely to take a hit to a key profit source if investors pull back from these loans as many expect. Among the largest firms, Morgan Stanley had $25.3 billion in securities-based loans outstanding as of June 30, up 37% from a year earlier. Bank of America, which owns brokerage firm Merrill Lynch, had $38.6 billion in such loans outstanding as of the end of June, up 14.2% from the same period last year. And Wells Fargo & Co. said last month that its wealth unit saw average loans, including these loans and traditional margin loans, jump 16% to $59.3 billion from last year.
Starbucks CEO tells baristas to be extra nice to customers amid stock turmoil (NYDN)
This week's stock market mess led 'Bucks boss Howard Schultz to issue a memo imploring baristas to be extra nice to customers, the Washington Post reported. "Today's financial market volatility, combined with great political uncertainty both at home and abroad, will undoubtedly have an effect on consumer confidence," the billionaire bigwig wrote in a memo titled "Message from Howard: Leading Through Turbulent Times." "Let's be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations."
Billionaires Get Burnt by World’s Biggest IPO Losses in Hong Kong (Bloomberg)
New listings in Hong Kong this year have dropped an average 28 percent from their offer prices when weighted by deal value, the most among global bourses tracked by Bloomberg. Companies accounting for 98 percent of IPO fundraising in the city this year -- or $19.7 billion of deals -- are trading below their offer prices. Every listing of at least $100 million is under water.
Federal Reserve Increasing Scrutiny of Bank Payment Systems (WSJ)
The Fed sent some of the largest U.S. banks, including J.P. Morgan Chase & Co., Bank of America Corp., Bank of New York Mellon Corp. and Citigroup Inc., notices earlier this year on their ability to monitor payments real-time. After the chaos of the financial crisis, the Fed has been pushing the banks to account for such payments as soon as they are settled, instead of hours later or at the end of the day.
Reuters Employees Bombarded With Reply-All Email Catastrophe (CMO)
A Reuters reporter tweeted that someone named Vince sent an email that ended up reaching 33,000 inboxes. As hundreds of email responses followed — with people clicking reply all to tell people to stop replying all — employees and reporters at the news and information company took to Twitter under the hashtag #ReutersReplyAllGate. The email was sent to “a large group,” according to a company spokesman. Some employees reported that their email slowed down, but the company spokesman said all systems are still working. The saga appeared to follow the typical narrative arc of a “reply allpocalypse,” as pleas for mercy only made things worse.
Naked Female Driver, 23, Who Caused Power Outage Charged With Driving While Stoned (TSG)
A naked driver who knocked out power to a Seattle suburb when she crashed her Volkswagen into a utility pole was under the influence of marijuana at the time of the accident, according to police. Crystal Daniels, 23, was charged this month with driving under the influence of an intoxicating drug after tests showed that the THC concentration in her blood was above the legal limit in Washington, where recreational use of marijuana is legal...According to police reports, Daniels, a Tacoma resident, drove her vehicle into a utility pole around 1:40 AM on June 17. The crash caused power lines to fall to the ground and resulted in “about a hundred yards of flames.” The resulting electricity outage affected about 4000 residents in Shoreline, a city about 10 miles from Seattle.