A down and dirty guide to what we're reading on this Friday morning.
The Department of Justice and SAC Capital have agreed to a protective order intended to preserve SAC assets and ability to trade with counterparties while various legal cases against SAC continue. The background here is that all the big Wall Street firms doing business with SAC were quietly concerned about whether they could continue to trade with a firm under a criminal indictment. The government also didn't want SAC's positions shut down, fearing that might diminish the value of assets that it might seek to confiscate. The order should quell these fears.
Meanwhile, the SEC is apparently pressing to get JPMorgan Chase to admit wrongdoing as part of a settlement of the London Whale fiasco. Remember when people fear Mary Jo White would be too easy on the banks?
Goldman Sachs has managed to keep itself generally out of trouble today. But you should check out the paper Goldman released yesterday showing that forecasters are bad at forecasting, and tend to stay that way. Shocking, we know! The paper says that when forecasters are over-optimistic one month, they'll likely stay that way the following month. Overly pessimistic forecasts follow the same patter. It's forecast inertia all the way down.
Canadian housing starts fell slightly in July. According to Canadian housing officials, this is a sign the market is "stabilizing." A warning to our friends to the north: in January 2007, our Federal Reserve declared "signs of stabilization have appeared in the U.S. housing market." As it turns out, well, no need to go into all that. You get the picture.
Almost in passing, Warren Mosler points out something that deserves a lot more attention. Namely, the billions in profits turned over to the Treasury by Fannie Mae and Freddie Mac essentially act as a tax on the economy. The amounts turned over represent dollars that won't be spent on goods and services in the private economy.
To the extent that government spending isn't increased by the additional income, this is a drag on GDP. Here's our idea: Actually send dividend checks out to the American people instead of burying the money in Treasury.
It's Friday, so there's a lot of bank hopping news. Rachel Lord, head of corporate equity derivatives at Citigroup, is defecting to BlackRock. But don't expect Citi to be too broken up by it. BlackRock's one of the unit's largest clients, so this move cements that relationship. Morgan Stanley has hired Lisa Shalett, the former chief investment officer of Merrill Lynch's global wealth management division. Shalett is regarded as one of the top women on Wall Street, but she's been out of action since February, when she left Merrill.
In yet another high level departure from the Royal Bank of Scotland, Lee Rochford is leaving RBS's financial institutions group for "interests outside of banking" just three months after he was promoted to head the unit's business in Europe, the Middle East and African regions.
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