Skip to main content

Top ECB Official Privately Called Investors, Banks After Key Policy Decisions [WSJ]
The calls began in March, after ECB President Christine Lagarde flummoxed traders by suggesting at a news conference that the central bank wouldn’t prop up Italy’s bond market. Italian stocks and bonds slumped. Hours later, Philip Lane, the chief economist, placed separate calls to 11 banks and investors in which he sought to clarify the message…. They included investors such as AXA SA, BlackRock Inc. and Pacific Investment Management Co., and banks such as Citigroup Inc. Deutsche Bank AG , Goldman Sachs Group Inc, JPMorgan Chase & Co. and UBS Group AG .

Judge Throws Out Trump Rules Limiting Skilled-Worker Visas [AP via U.S. News & World Report]
U.S. District Judge Jeffrey White in California said the government didn't follow transparency procedures and its contention that the changes were an emergency response to pandemic job losses didn’t hold water because the Trump administration has floated the idea for some time but only published the rules in October.
“The COVID-19 pandemic is an event beyond defendants’ control, yet it was within defendants’ control to take action earlier than they did,” White wrote…. The U.S. Chamber of Commerce and universities including the California Institute of Technology sued in California, arguing there wasn’t adequate notice or time for the public to comment on the changes.

Trump’s Time Is Short to Overhaul Fannie-Freddie as Hedge Funds Want [Bloomberg]
Even a partial shift could translate into windfalls for hedge funds. The preferred shares they own would likely soar if the Treasury Department relinquished or altered the terms of its roughly $220 billion stake of senior preferred shares in Fannie and Freddie…. It’s unclear how Mnuchin and Calabria taking action would benefit Republicans who will remain in Washington after Trump leaves town. Few Americans pay attention to mortgage securities, so it’s hard to see voters rewarding GOP lawmakers should that market avoid the perils that bond investors have warned about. Yet there very well could be political consequences for higher housing costs.

A V-Shaped Recovery Doesn’t Mean a V-Shaped Jobs Market [WSJ]
The portion of the economy that is recovering quickly isn’t likely to generate a lot of new employment opportunities: Certainly not as many as the economy will need to recover…. The proportion of people actually in the U.S. labor force—employed or looking for work—fell by 3 percentage points as the crisis hit. That has recovered about halfway, but even the recovery leaves participation in 2020 overall at its lowest levels since the late 1970s.

Facebook-backed digital coin Libra renamed Diem in quest for approval [Reuters]
“The original name was tied to an early iteration of the project that received a difficult reception from regulators. We have dramatically changed that proposition,” [CEO Stuart] Levey told Reuters.
Diem, which means “day” in Latin, now aims to initially launch a single dollar-backed digital coin, he added.

Why This Manager Thinks the 2020s Will Be a ‘Second Golden Age’ for Hedge Funds [II]
“The S&P currently trades at 33 times earning and a high percentage of U.S. equity value rests in a handful of stocks with nosebleed valuations,” Beer wrote. “On the fixed income front, Treasury yields are alarmingly close to zero and corporate credit appears to be in a bubble.”
“The 2020s may well be a ‘lost decade’ for simple, passive portfolios,” he added….
“The true competitive advantage of hedge funds may be their flexibility,” Beer argued. “A U.S. large-cap equity manager must still buy those stocks even at sky-high prices; pension funds might tilt their portfolios by a few percent, but no more. Research on hedge funds shows that they will change, and change in a big way, as market conditions evolve.”

Related

trump-tweet1

Opening Bell: 10.27.21

Robinhood’s crypto addiction bites; Facebook faces FTC fury; Trump tanks Trump stocks; and more!

trump

Opening Bell: 8.17.20

Slouching towards pandemonium; dollar doldrums; insider-trading German style; and more!

nobel prize

Opening Bell: 10.11.21

The second K and R step down from KKR; Izzy crypto trading?; SEC eyes EPS, Archegos; and more!

trump bitcoin1

Opening Bell: 1.16.18

Cryptos in a nosedive; US government shutdown imminent; Ackman in court; car ends up in 2nd floor dentists office; and more!

Getty Images

Opening Bell: 10.23.20

Staley smiles; tech trembles; Trumpian transparency; billionaires bicker; and more!

red square

Opening Bell: 3.24.22

Back in the summer of ’69; begging banks; criminal-in-chief; crypto catastrophe; and more!

Opening Bell: 06.21.12

SEC Said To Depose SAC’s Cohen In Insider-Trading Probe (Bloomberg) Cohen, 56, was recently deposed by Securities and Exchange Commission investigators in New York about trades made close to news such as mergers and earnings that generated profits at his hedge fund, said one of the people, who asked not to be identified because the investigation isn’t public. Neither Cohen nor SAC Capital, which oversees about $14 billion, has been accused of wrongdoing. Four-Week Jobless Claims Average Reaches 2012 High (Reuters) Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week's figure was revised up to 389,000 from the previously reported 386,000. Lawmakers Call For IPO Overhaul (WSJ) A bipartisan group of lawmakers called on regulators to overhaul the way initial public offerings are conducted, concerned that last month's flubbed stock sale by Facebook shows the current system unfairly punishes small investors. In a letter to Securities and Exchange Commission Chairman Mary Schapiro, Rep. Darrell Issa (R., Calif.) prodded the agency to revamp rules for pricing and disclosure in IPOs. Mr. Issa, who wrote the letter on behalf of the House Oversight and Government Reform Committee, said the social-networking company's steep share-price decline since its May 18 offering is a sign that investment banks are able to "dictate pricing while only indirectly considering market supply-and-demand." Separately, the Democratic chairman of a subcommittee of the Senate Banking Committee said regulatory changes are needed to bolster investor confidence sapped by Facebook's botched debut. Facebook’s 22% Rally Helps Stock Avoid Worst IPO Return In U.S. (Bloomberg) So that's something! Riskier Bets Pitched To Asia's Rising Rich (WSJ) In Japan, brokers are dangling what they claim is a tasty product in front of wealthy investors: a "triple-decker" that uses options to squeeze higher returns from stocks, "junk" bonds or other assets. If a triple-decker doesn't suit an investor's fancy, there is the increasingly popular—and slightly less complex—"double-decker." Elsewhere in Asia, so-called hybrid bonds and other high-yield varieties can be had. Investors in Singapore recently could buy so-called perpetual bonds through ATMs. Across Asia, brokers are pushing to sell increasingly complex products to the region's expanding ranks of investors, especially wealthy ones. These types of products appeal to those hungry for yield who normally focus on stocks and real estate but are worried about falling equity markets and the sudden shortage of initial public offerings. BlueMountain Said To Help Unwind JPMorgan’s Whale Trades (Bloomberg) A hedge fund run by a former JPMorgan Chase executive who helped create the credit- derivatives market is aiding the lender as it unwinds trades in an index at the heart of a loss of more than $2 billion. BlueMountain Capital Management LLC, co-founded by Andrew Feldstein, has been compiling trades in Series 9 of the Markit CDX North America Investment Grade Index in recent weeks, then selling the positions to the New York-based bank, according to three people outside the firms who are familiar with the strategy. JPMorgan tapped BlueMountain as a middleman after trades in its London chief investment office grew so large that the bank was creating price distortions that hedge funds sought to exploit, said the market participants, who asked not to be identified because they weren’t authorized to discuss the trades. BlueMountain was one of the funds that benefited from the price dislocations, the people said. US Olympic committee send cease and desist letter to knitting Olympics (TNT) The US Olympic committee has sent a cease and desist letter to the social networking group Ravelry, who had organised a Ravelympics in which contestants would compete in events such as ‘scarf hockey’ while watching the actual Games on TV...The US Olympic Committee has said that “the athletes of Team USA have spent the better part of the entire lives training for the opportunity to compete at the Olympic Games and represent their country in a sport that means everything to them” and that “using the name ‘Ravelympics’ for a competition that involves an afghan marathon and sweater triathlon tends to denigrate the true nature of the Olympic Games”. Romney Campaign Said To Ask Scott To Downplay Job Gains (Bloomberg) Mitt Romney’s presidential campaign asked Florida Governor Rick Scott to tone down his statements heralding improvements in the state’s economy because they clash with the presumptive Republican nominee’s message that the nation is suffering under President Barack Obama, according to two people familiar with the matter. Scott, a Republican, was asked to say that the state’s jobless rate could improve faster under a Romney presidency, according to the people, who asked not to be named. Lonely Hedge Fund Bullish On Greece Tries To Woo Investors (Bloomberg) In March, Elliott met with the investment chief of a family office in London who said within seconds of sitting down that the firm had no interest in giving money to a hedge fund wagering on Greece. The executive merely wanted to hear his story, Elliott, the founder of Naftilia Asset Management Ltd., said in a telephone interview from his office in Athens. Elliott, 39, responded by asking a few questions of his own, including whether the executive had invested in Russia after its 1998 currency crisis, in Argentina 10 years ago after the nation defaulted on its debt or in the Standard & Poor’s 500 Index (SPX) in March 2009, when the benchmark plunged to its lowest point in 13 years. Finally, Elliott questioned whether the family office’s investment chief had ever bought shares of Apple. In all cases, the answer was no. “Then you are not qualified to be discussing Greece with me because you have missed the best investment opportunities over the past 20 years,” Elliott retorted. National Bank Of Greece To Sell Luxury Resort As Slump Bites (Bloomberg) If you know anyone who's interested: The 3.3 million-square-foot (307,000 square-meter) Astir Palace complex has already drawn investors’ interest, according to Aristotelis Karytinos, general manager of real estate at the lender. The Athens-based bank and Greece’s privatization fund, which owns part of the property, will put out a public tender in coming months, he said. Fed Warns Of Risk To Economy (WSJ) Fed Chairman Ben Bernanke made clear in a news conference after the policy makers' meeting that he is prepared to take further action if he doesn't see progress on bringing down unemployment, which was 8.2% in May. "I wouldn't accept the proposition though that the Fed has no more ammunition," Mr. Bernanke said. He added, "if we don't see continued improvement in the labor market we'll be prepared to take additional steps." Australian mega-brothel gets go-ahead (AP) A Sydney brothel has received the green light for a multi-million-dollar expansion which will see it become Australia's largest sex premises, with rooms featuring multiple beds and pool tables. Plans to double the number of rooms at inner Sydney's "Stiletto" into a mega-brothel complex were knocked back late last year by the city council on the grounds that it was too big. But the owners won an appeal to the Land and Environment Court this week, with Commissioner Susan O'Neill ruling the Aus$12 million ($12.2 million) development, including a wing for group bookings, should go ahead...Stiletto promotes itself as "the world's finest short-stay boutique hotel and Sydney brothel". Its standard hourly rate of Aus$370 includes room, lady of choice and beverages.

Opening Bell: 06.25.12

Soros Pushes EU To Start Joint Debt Fund Or Risk Summit Fiasco (Bloomberg) “There is a disagreement on the fiscal side,” Soros, 81, said in an interview with Bloomberg Television’s Francine Lacqua at his home in London. “Unless that is resolved in the next three days, then I am afraid the summit could turn out to be a fiasco. That could actually be fatal.” Greece Seen Blocked From Debt Markets Until 2017 (Bloomberg) “The challenges facing Greece remain extremely large,” said Jamie Searle, a fixed-income strategist at Citigroup Inc. in London. “It will be a long while before they can get back to the market.” Spain Asks For Help (WSJ) The Spanish government has made its formal request for European Union aid to help finance the cleanup of its ailing banking industry, the finance ministry said in a statement Monday. Nasdaq: 'Arrogance' Contributed To IPO Flop (WSJ) Chief Executive Robert Greifeld said Sunday that "arrogance" and "overconfidence" among Nasdaq staffers contributed to problems with Facebook's initial public offering last month. Addressing a conference of corporate directors at Stanford University's Law School, Mr. Greifeld said Nasdaq had tested its systems extensively before the May 18 IPO, simulating higher trading volumes than actually occurred. But he said Nasdaq was unprepared for increasing numbers of canceled orders in the hours leading up to Facebook's debut. S&P's Method's Under SEC's Lens (WSJ) The scrutiny relates to S&P's decision in July 2011 to pull its ratings on a new $1.5 billion commercial-mortgage-backed security, or CMBS, issued by Goldman Sachs and Citigroup The unusual step sent the commercial mortgage securities market into turmoil and scuttled the deal for weeks, angering investors and issuers. The SEC's inquiry is part of its annual review of S&P and other credit-rating firms. But in S&P's case regulators are looking at whether it used more lenient standards to rate new CMBS than it used on outstanding deals, the current and former employees say. JPMorgan Unit Shifts Operations (WSJ) The CIO, which is charged with investing a portfolio valued at $370 billion, equivalent to about 17% of J.P. Morgan's $2.2 trillion in assets, will avoid trying to protect the bank using infrequently traded derivatives, according to people close to the matter. The CIO unit also will avoid private-equity investments. But those changes will be driven by a judgment that certain losing strategies were poorly conceived and hedged, not by a decision to foreclose investment options. CNBC'S Guy Adami Takes On The Ironman Triathlon (NYT) But he says none of those experiences compare with the rush he felt on a sun-dappled Sunday morning in late May in Red Bank, N.J., when he crossed the finish line of his first triathlon. It was at a so-called sprint distance — a half-mile swim, followed by a 13-mile bike ride and then a 3.2-mile run — which Mr. Adami, 48, completed in just under two hours, finishing 116th in a field of 160. Just signing up for that race was no small accomplishment for Mr. Adami, who, not six months earlier, had been leading the sedentary existence of a trader and carrying a flabby 235 pounds on his 6-foot-3 frame. But as a volunteer placed a medal around his neck, Mr. Adami had little time to celebrate. A far more daunting challenge loomed: on Aug. 11, he will join nearly 3,000 other weekendwarriors as they seek to endure, and complete, the first Ironman-distance triathlon to be staged in the New York metropolitan region. To put the magnitude of that 140.6-mile race in perspective, consider this. It will begin at 7 a.m. with a 2.4-mile swim in the Hudson River — the open-water equivalent of about 170 lengths in a 25-yard swimming pool, or nearly five times the distance Mr. Adami completed in that New Jersey sprint. Those participants who manage to complete that swim in 2 hours 20 minutes or less will move on to the bicycle portion — 112 miles in two loops along the deceptively hilly Palisades Interstate Parkway, or the rough equivalent of pedaling from Manhattan to Hartford. Riders who finish the bike ride before 5:30 p.m. — or 10 ½ hours after their odyssey begins — will embark on a 26.2-mile marathon, which will begin in Palisades Interstate Park on the New Jersey side of the Hudson and continue for several loops before concluding with a brisk run (or perhaps a staggering walk, which the rules permit) across the George Washington Bridge and into Riverside Park on the West Side of Manhattan. IPO Market Gets First Post-Facebook Test (WSJ) In the dry spell since the disappointing May 18 debut of the social-network company, plenty of IPOs have been pulled. And for a time it appeared there would be no attempt to test the waters in June. But a quartet of offerings is lined up for the final week of the month: cloud-based computer-services provider ServiceNow Inc., energy partnership EQT Midstream Partners LP; software firm Exa Corp., and biopharmaceutical firm Tesaro Inc. Judge likens Goldman logic to Orwell’s ‘1984’ (NYP) A federal judge blasted Goldman Sachs for its “Orwellian” defense against a lawsuit accusing it of misleading investors in the sale of risky securities, comparing the firm’s logic to the George Orwell classic “Nineteen Eighty-Four.” “Words such as ‘honesty,’ ‘integrity,’ and ‘fair dealing’ apparently do not mean what they say,” Manhattan federal court Judge Paul Crotty said in a 27-page opinion allowing the shareholder suit to proceed against the bank. The harsh words from Crotty relate to allegations that Goldman concealed conflicts of interest in several CDO transactions that were part of the subprime meltdown. $400M+ Tab For Madoff Swindler Ezra Merkin (NYP) The agreement will allow some of Merkin’s clients to recover as much as 40 percent of what they lost, with investors who had been kept in the dark recovering the most. Basel Bank Official Warns On Stimulus Measures (WSJ) Central banks currently find themselves "caught in the middle," Jaime Caruana said, "forced to be the policy makers of last resort." They are providing monetary stimulus on a "massive scale," supplying liquidity to banks unable to fund themselves in markets and easing government financing burdens by keeping interest rates low, said Mr. Caruana, speaking in Basel, Switzerland, at the annual general meeting of the BIS, a consortium of the world's central banks. "These emergency measures could have undesirable side effects if continued for too long," he said. "A worry is that monetary policy would be pressured to do still more because not enough action has been taken in other areas." Rare giant tortoise Lonesome George dies in Galapagos Islands (NYDN) The giant tortoise named Lonesome George — the last of the Pinta Island subspecies and an enduring icon of the Galapagos — died Sunday, the Galapagos National Park said in a statement. George, who was discovered in 1972 in the islands that inspired Charles Darwin’s ideas of evolution, was about 100 years old. Galapagos tortoises have been known to live for 200 years. “This morning the park ranger in charge of looking after the tortoises found Lonesome George, his body was motionless,” park director Edwin Naula told Reuters. “His life cycle came to an end.” Since 1993, various mates had been provided for Lonesome George in failed attempts to keep his subspecies alive. Two females of a different subspecies managed to lay eggs, but they were infertile. George was actually named after American actor George Gobel, a TV star of the 1950s, who called himself “Lonesome George.”