Opening Bell: 9.19.17

Maybe we've got this whole QE unwind thing backwards; Bill Gross is merely average; the sharing economy comes to sex dolls; and more.
Author:
Updated:
Original:
Getty Images

Getty Images

Wall Street’s Bond Gurus Have the Fed’s Balance-Sheet Unwind All Wrong (BBG)
“During QE, the important thing was the signaling effect -- the Fed was going to come in and reflate the economy, provide stimulus and higher rates of growth, and dissuade people from owning Treasuries and force them into other markets,” said Brian Nick, the chief investment strategist at TIAA Investments. “Now on the way out, if the idea is that the Fed is not as stimulative as it once was, it might have the effect of depressing” bond yields.

Bond King Bill Gross Falls to the Middle of the Pack (Businessweek)
Weil has called Gross “the best fixed-income investor on planet Earth,” but he’s said issues such as the Pimco lawsuit worked against him. “I did go to Bill and say, ‘It looks like every time you punch them you punch yourself, and maybe we ought to consider how much we like that,’ ” Weil said in a June conversation with Bloomberg News. “Bill said, ‘If you know anything about me, I’m a fighter, and if I don’t think they’re treating me right, I’ll make my case.’ That’s his business. It’s not our business.”

Fixing the ‘Brain Damage’ Caused by the I.P.O. Process (NYT)
Perhaps the most unusual part of his exchange’s approach — which is still working to get approval from the Securities and Exchange Commission — is how much influence and voting power investors would have over companies. Currently, an investor who owns one share for a month, or even a day, has the same voting power as someone who has owned a share for years. Mr. Ries wants what he calls “tourists” — short-term shareholders — to have less voting power than long-term shareholders, whom he calls “citizens of the republic.” Over time, shareholders of companies on the LTSE would gain more votes based on their length of ownership.

The Most Overpriced Asset In The World? (Macro Tourist)
Paying the German government 69 basis points for the privilege of allowing them to hold your money over the next two years might go down as one of the dumbest trades in the history of finance. Negative rates are one of the great perversions of modern monetary theory. They should have been avoided at all cost, but instead they were embraced throughout Europe and Japan. But just because something is asinine doesn’t mean that shorting it is wise.

People thought they caught JPMorgan buying bitcoin after Jamie Dimon called it a 'fraud' — but that's not what happened (BI)
"They are not JPMorgan orders," a spokesman said in an email to Business Insider. "These are clients purchasing third party products directly." In other words, JPMorgan asset managers weren't buying this product for their clients. Rather, the bank's clients were using JPMorgan's pipes to buy it themselves.

What is ‘Utility Settlement Coin’ really? (FT Alphaville)
On paper, the technology promises to un-encumber cash collateral by creating a much more reliable form of distributed settlement, requiring a fraction of the collateral needed to operate a comparable centralised system. Yet for any of this to work, central banks and lawmakers would have to buy into the theory that blockchain really is a magical panacea to the settlement and squaring problem.

Hubbard’s Ties to Ackman May Pose Conflict in ADP Proxy Battle (BBG)
Glenn Hubbard, dean of Columbia Business School, has had a complicated relationship with Bill Ackman. Hubbard has been an expert witness for Ackman’s Pershing Square Capital Management, making $1,500 an hour this year to help the hedge fund fend off an ongoing shareholder lawsuit, according to regulatory filings and court records. The dean is also a director at Automatic Data Processing Inc., where Ackman is waging an acrimonious proxy battle to win three board seats, including Hubbard’s.

Money, Power, and Deer Urine (New Yorker)
The plan’s disparate treatment of urine and meat is an example of what economists call regulatory capture: the process by which regulators, who are supposed to pursue solely the public interest, instead become solicitous of the very industries they regulate. Such industries typically use enormous amounts of money and political power to influence every detail of regulation. For Schuler, it’s not practical to forbid hunters to return with prey from the West, but banning the sale of deer urine is easy. It’s also, politically, far less risky. But it doesn’t serve the interests of the people—or the deer—of New York.

Sex doll sharing app launches in Beijing (Global Times)
In the sharing economy of the Wild East it seems anything is rentable. A newly-launched app in China is proving this with its offering of shared sex dolls. Xiamen-based app developer Touch announced Wednesday that it has started a limited trial run in Beijing that allows users to choose a plastic partner for home delivery. The app tries to address any health concerns by explaining its hygiene policy. "The dolls' lower parts are changed for every customer," reads the app. "Please remove the lower parts before returning. After the lower parts are cleaned, the doll can be used repeatedly."

Related

GundlachExplainsItAll

Opening Bell: 8.18.17

Truth Gundlach strikes again; Leon Cooperman has some strong words for Bill Ackman; Trump is worth $2 billion to Twitter; Marilyn Monroe sex dolls are not kosher; and more.

Getty Images

Opening Bell: 10.4.17

Trump gets Fed chair shortlist and Gundlach thinks Kashkari should be on it; Uber and SoftBank this much closer to making it official; 'love' not actually ingredient, per FDA; and more.

Opening Bell: 3.3.15

Bill Gross asks for 2-4 years to prove himself; Venezuela tops list of most miserable economies; Lumber Liquidators says everything is cool; StanChart's bonuses are down; "Seattle doctor disciplined for sexting during surgery"; AND MORE.

Photo: Getty Images

Opening Bell: 9.22.16

Yellen signals 2016 hike coming; Bill Gross is 'verklempt' after Fed decision; Australian hot dog and hamburger combination 'hamdog' coming to U.S.; and more.

(Getty Images)

Opening Bell: 1.12.17

Steven Mnuchin profited Paulson's housing investments; Bill Gross is right about Dow 20,000; Peter Thiel is concerned about Silicon Valley's sex life.

Opening Bell: 5.19.15

Greek leaders predict deal in week; Europe wants startups; US economy maybe not so bad; "MBTA oral sex suspects on the loose"; and more.

Opening Bell: 01.31.13

Deutsche Bank Swings To A $2.9 Billion Loss (WSJ) In the fourth quarter alone, the bank took €2.9 billion in charges, €1 billion of which was for "litigation-related charges." Mr. Jain said the charges "relate to developments in regulatory investigations and adverse court rulings which you are all familiar with," but didn't elaborate further. Deutsche Bank is currently embroiled in a number of legal disputes on both sides of the Atlantic, including the decade-long legal battle in the 2002 bankruptcy of Germany's Kirch Media Group. It is also among the banks that are under official investigation for allegedly rigging interbank benchmark rates, including the London Interbank Offered Rate. The rest of the quarter's charges were mainly related to losses from businesses bought before 2003, such as Bankers Trust and Scudder in the U.S., and impairments related to its investment in the Cosmopolitan Resort in Las Vegas and Maher Terminals in North America, which it put into an internal bad bank. The quarter's net loss of €2.17 billion compares with a profit of €147 million a year earlier. For the full year, net profit was €611 million, down from €4.13 billion. Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (Bloomberg) “We’ve galvanized Deutsche Bank around the achievement of our capital targets,” Jain, 50, said on a conference call with analysts. The loss “reflects a number of decisions we took to position Deutsche Bank,” he said. Barclays, RBS May Pay Billions Over Improper Derivatives Sales (Bloomberg) The lenders, including Lloyds Banking Group Plc and HSBC Holdings Plc, have set aside around 740 million pounds to cover the claims. Analysts say the total charges for the industry may be much higher than that after the Financial Services Authority said it found “serious failings” in reviews of product sales. SAC And Elan Blasted By Investor Who Lost Nest Egg (NYP) Ronald Weiland realized he’d made a bad bet in 2008, when he lost his $1 million nest egg trading shares of drug company Elan. What he didn’t know then was that the cards were stacked against him. Weiland now believes that he and other investors were played by Steve Cohen’s SAC Capital Advisors when the hedge fund giant — acting on information from a former trader accused of insider trading — abruptly dumped its huge long position in Elan and Wyeth and started shorting both stocks. “They had information that I didn’t have access to,” said Weiland, a 53-year-old former consultant for Arthur Andersen. “It’s totally a matter of seeing very wealthy people being able to game the system.” The big trading swing that netted $276 million for SAC and led to the arrest of former trader Mathew Martoma has also landed the firm in hot water. Elan investors have filed at least two lawsuits against SAC, accusing the firm of costing them millions, and several class-action law firms are looking to tee up more. US Targeting Tax Evasion (WSJ) On Monday, a federal judge in New York approved an Internal Revenue Service summons demanding still more records from UBS. According to court filings, the government now is focusing on U.S. taxpayers with accounts at smaller Swiss banks that didn't have U.S. branches but served customers through a UBS account in Stamford, Conn. Interactive Map: What NYC Neighborhoods Have The Most Public Drinking Complaints? (Gothamist) Greenpoint, Williamsburg, the Lower East Side, Hamilton Heights, East Harlem and Washington Heights are the worst offenders—on the other hand, almost no one is getting in trouble in Midtown, the Financial District, Red Hook, Dumbo, and the Upper East and West Sides. Since we already know there can be a a historical correlation between public drinking and public urinating (and sometimes only the urinating part is public), we decided to look at public urination complaints too...Some conclusions from this comparison: Midtown East and Chelsea have way more urination complaints than drinking ones. Union Square, Greenpoint and Randalls Island are also urinary offenders. It seems like nobody on Staten Island cares about people urinating on their lawns, and same goes for anywhere west of East Flushing. Blackstone Swings To Fourth Quarter Profit (WSJ) As of the quarter's end, total assets under management reached a record $210.22 billion, up 26% from the year earlier, as all of Blackstone's investment businesses continued to see net inflows and carrying-value appreciation...Blackstone posted a profit of $106.4 million, or 19 cents a unit, compared with a year-earlier loss of $22.7 million, or five cents a unit. On the basis of so-called economic net income, the firm reported a profit of 59 cents a unit, versus a profit of 42 cents a unit a year earlier. Analysts surveyed by Thomson Reuters recently expected a per-share profit of 47 cents. Ackman Ahead In Herbalife Bet (NYP) Ackman has scored a gross profit of about $260 million on his $1 billion short bet against the nutritional supplements company, based on an estimated 20 million shares shorted at an average price of $50. Loeb, who bought 8.9 million shares at an average price of $32, is up $44.5 million. Ackman has widened his lead considerably. Just two weeks ago, his gross gain stood closer to $120 million while Loeb had made an estimated $108 million. Threats Cloud Euro's Flight (WSJ) The euro, once on death's door, is on a monthslong tear, rising Wednesday to its highest level since November 2011. But even some investors who helped propel the currency above $1.3560 Wednesday say it can't fly much further. Europe's economy is still in the doldrums, they say, and a stronger euro could make the situation worse. And with central banks elsewhere racing to push down their own currencies, boosting the relative value of the euro, the European Central Bank eventually could be compelled to join them. Jobless Claims in U.S. Rose 38,000 Last Week to 368,000 (Bloomberg) Economists forecast 350,000 filings, according to the Bloomberg survey median. The increase followed a combined 45,000 drop in the prior two weeks. Guy Inadvertently Posts Public YouTube Video Inviting His Fiancée’s Best Friend Over for a Threeway (Gawker) We've all been there. You're super excited after getting the go ahead from your fiancée Cynthia to invite her best friend Zoey over for a threeway, so you hastily record a video introducing yourself to Zoey and letting her know that you're totally open to having a threeway this week, next week, the week after that, whenever, anytime, today, or maybe tomorrow, whenever possible, and you're just really excited to show her things that she's never seen and do things that were never done before in a threeway. Then you hastily upload the video to your public YouTube account that 300 people are subscribed to, and await your threeway.