Opening Bell: 1.19.17

Mnuchin’s Bank Foreclosed on This Couple. Now They Support Trump (WSJ)

Diana Yano-Horoski and her husband spent years in court fighting efforts by Steven Mnuchin’s OneWest Bank to foreclose on their home. Now, the couple are big supporters of President-elect Donald Trump and have no hard feelings against Mr. Mnuchin, his nominee for Treasury Secretary. “Mnuchin did a bad thing to us,” said Gregory Horoski, who runs Internet-based businesses including one selling collectible dolls. “As a businessman, I can tell you that if roles were reversed, I would have done the same exact thing.”

Bankers at Davos discuss plans to move jobs out of UK (FT)

One US banker estimated this initial phase would “cost hundreds of millions of dollars but not a lot of people moving”. Another top US executive said: “You need to have a broker and a bank in the UK, and a broker and a bank inside the EU. We have that already. There will be other small adjustments, but it is as simple as that.”

Brexit Postings for Bankers May Hinge on School for the Kids (BBG)

“In a period of three weeks, I must have had inquiries from some 20 families of people in the financial industry in London, which is totally atypical,” said Frank Powell, headmaster of Runnymede College, a British school to the north of Madrid with about 850 pupils. “Practically all of them prefaced this by saying they may be moving to Madrid.”

How Deutsche Bank Made −€367 Million Disappear (BBG)

Illustrating the incestuousness of the deal, Paschi would need to buy the bonds and hand them over to Deutsche as collateral. Deutsche, for the sake of its own accounting, would need to sell the bonds to come up with cash that it then would give right back to Paschi to pay off the Santorini loss. And Paschi would buy the bonds in the first place from a third bank that had bought them from Deutsche.

Volcker rule and Dodd-Frank are here to stay, and banks need to get used to it: Barclays CEO (CNBC)

Barclays CEO Jes Staley has detailed how his company has adjusted to the different banking regulations in the United States and believes that his peers in the sector need to get used to them. "I think the Volcker rule is very clear, they want to move Wall Street from managing proprietary and trading desks to being agents and broker dealers for the broader capital markets," he told CNBC

The Illusions Driving Up US Asset Prices (Project Syndicate/Robert Shiller)

In the United States, two illusions have been important recently in financial markets. One is the carefully nurtured perception that President-elect Donald Trump is a business genius who can apply his deal-making skills to make America great again. The other is a naturally occurring illusion: the proximity of Dow 20,000. The Dow Jones Industrial Average has been above 19,000 since November, and countless news stories have focused on its flirtation with the 20,000 barrier – which might be crossed by the time this commentary is published. Whatever happens, Dow 20,000 will still have a psychological impact on markets.

The Mortgage Market’s $1 Trillion Pocket of Worry (WSJ)

In the first three quarters of 2016, banks accounted for 9% of mortgage dollars originated by the FHA’s top 50 lenders, versus 62% for all of 2010, according to Inside Mortgage Finance. Nonbank lenders accounted for 80% of mortgage bonds backed by single-family FHA loans in July 2016, versus 9% the same month in 2010.

Got Alpha? Then Don't Cast Stones (Gadfly)

Looking at fund flows into various strategies, it seems there were some pretty poor decisions made. The game plan that received the most new cash over the 12 months was managed futures, attracting a net $10.3 billion, according to industry researcher eVestment. Managed-futures returns for 2016, however, came in at a paltry 1.1 percent. Meanwhile, investors pulled more than $6 billion out of funds with a focus on distressed debt. Silly them. Buying bonds from companies under financial duress returned 13.3 percent last year, one of the best outcomes around.

Art Thief Drove Stolen Car to Seek Pardon From Wrong Attorney General, Police Say (NBC)

A PBS-loving convicted art thief who drove from Miami to suburban Washington, D.C., to ask for a presidential pardon was in custody Wednesday after he was found to be driving a stolen car, police said. Marcus Sanford Patmon, 45, of Miami, was arrested Sunday outside a Starbucks in Arlington, Virginia, after a police license plate reader indicated that his parked vehicle had been reported as stolen, police said.