Thursday, 12 Mar 2015 | 2:41 PM ET

This is how billionaires enjoy super-low tax rates

Posted By: Lawrence Delevingne
Marc Lasry
David A. Grogan | CNBC
Marc Lasry

For some, the only thing worse than filing taxes is knowing that others making millions of dollars are paying half the rate.

That's what has long infuriated critics of something called "carried interest," a rule that lets the managers of some private investment funds pay a long-term capital gains rate—usually 20 percent—on the money they make over the year on behalf of their clients. Even though the investment profits are how they're paid—hedge, private equity and venture capital fund managers often don't draw much of a salary—they don't get hit with the top income tax rate of 39.6 percent.

A small but growing group of investment managers thinks that needs to change.

"Taxing carried interest at the same rate as ordinary income is not unreasonable to me," said Marc Lasry, CEO and co-founder of $13.2 billion hedge and private equity fund firm Avenue Capital Group.

»Read more
  Wednesday, 11 Mar 2015 | 2:45 PM ET

Someone's getting rich on your kids' test scores

Posted By: Lawrence Delevingne
Student Allison Ramirez asks for help in a fourth-grade math class at Piney Branch Elementary School in Takoma Park, Md., where teachers are training themselves to teach students in a new style of learning math to prepare them for more rigorous education standards under Common Core.
Linda Davidson | The Washington Post | Getty Images
Student Allison Ramirez asks for help in a fourth-grade math class at Piney Branch Elementary School in Takoma Park, Md., where teachers are training themselves to teach students in a new style of learning math to prepare them for more rigorous education standards under Common Core.

The controversy over Common Core hasn't stopped companies from cashing in on the education standards program.

States have already awarded hundreds of millions of dollars in Common Core-related contracts to businesses including Pearson, McGraw-Hill Education CTB, Houghton Mifflin Harcourt and Apple since 2012. And, despite some legal challenges and boycotts, more contracts potentially worth billions of dollars for testing, instructional materials and teacher training are on the way.

"Common Core has clearly been an important market for the large education companies," said Paul Irby, a market analyst with business intelligence firm Onvia.

»Read more
  Thursday, 12 Mar 2015 | 10:38 AM ET

Even with Apple, the Dow would still be meh

Posted By: Jeff Cox

For all of the excitement about Apple joining the Dow Jones industrial average next week, it might not make such a big difference.

In fact, had the Cupertino, California tech behemoth been in the group since the start of the year, the index still would be struggling to get into positive numbers, according to computations by brokerage firm Convergex.

As of Wednesday's close, Apple's $143 share price, including a 12 percent year-to-date gain, would have added just 82 points to the price-weighted index—a nice gain but barely enough to pull the average to level ground in an up-and-down year for the market. The Dow was off 187 points for the year heading into Thursday trading, which saw a nice rally on Wall Street that brought the industrials to around even in 2015.

"To get the Dow moving higher, you'll need some of the heavyweights in this price-weighted measure to get moving," Nick Colas, the chief market strategist at ConvergEx, said in his morning note Thursday.

»Read more
  Tuesday, 10 Mar 2015 | 1:28 PM ET

These stocks have gained 1,000%+ during bull run

Posted By: Jeff Cox

Since the darkest days of the financial crisis, stocks have been on an almost unconstrained tear to the top.

The Nasdaq has soared 285 percent, the S&P 500 is up nearly 210 percent and the Dow industrials have surged 172 percent since the market bottomed on March 9, 2009. That was when it looked like the world was ending and the stock market was little more than a black hole that countless dupes had shoveled money into.

Since then, markets have rallied for a number of reasons, not the least being the Federal Reserve's willingness to push nearly $4 trillion of liquidity into the markets and keep interest rates near zero as part of an easy monetary policy on a level never seen in the U.S.

Gaudy as the numbers sound for the major indexes, some individual stocks have done even better.

Some 32 stocks in the S&P 500 and another 13 in the Nasdaq have been what legendary investor Peter Lynch dubbed "ten baggers," or investments that increased by 10 times their value, or 1,000 percent, during the six-year bull market recovery, according to numbers from Bespoke Investment Group and FactSet.

(No, Apple hasn't been one of them. The tech giant during the period gained 952 percent as of midday trading Tuesday.)

The companies range from old-line firms like CBS to surprises such as Sirius XM, which had been trading at 12 cents a share back in late 2008.

No Dow 30 company made the cut, though many have turned in outsized performances. American Express is up 657 percent, Walt Disney has climbed 575 percent and United Health has surged 544 percent.

A look at the "ten baggers" from the S&P 500 and Nasdaq, which on Tuesday marked the 15-year anniversary of its historic peak:

»Read more
  Thursday, 12 Mar 2015 | 8:57 AM ET

Gartman: Sell the euro rally when it hits here

Posted By: Jeff Cox

A day after a huge selloff on the euro, the currency enjoyed a nice bounce—and a potentially good selling opportunity for currency traders.

Widely followed investor Dennis Gartman believes Wednesday's euro tumble, which took the currency below 1.05 against the dollar, was in part an overreaction to comments from European Central Bank President Mario Draghi, who said a weak euro was helping the region's economy.

At a conference in Frankfurt, Draghi defended the ECB's foray into U.S.-style asset purchases, or quantitative easing, and those holding the currency took the remarks to heart, taking the euro down to a near 12-year low. The euro rallied to 1.0634 in Thursday morning trade, a gain of more than 0.8 percent.

»Read more
  Tuesday, 10 Mar 2015 | 9:15 AM ET

Activists give hedge funds best returns in a year

Posted By: Lawrence Delevingne
Bill Ackman
Adam Jeffery | CNBC
Bill Ackman

Hedge funds are back in the black for 2015, and some familiar strategies are leading the way.

Following losses in January, the average fund gained 1.93 percent net of fees in February, bringing year to date returns to 1.56 percent, according to a new report from industry data tracker eVestment.

The top-performing strategy last month was corporate activism, a style of investing that has surged in popularity and was generally boosted by rising stocks over the month.

The average activist investor gained 5.37 percent in February, bouncing back from an average loss of 3.44 percent in January, according to eVestment. That brings the year's returns to 1.55 percent following a 4.83 percent gain in 2014. It was the best performance for the industry since February 2014.

»Read more
  Monday, 9 Mar 2015 | 12:04 PM ET

Case for a correction: Why even bulls are nervous

Posted By: Jeff Cox
Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

Count Standard & Poor's top market expert among the bulls who have recently sounded a decidedly cautious tone.

Sam Stovall, U.S. equity strategist at S&P Capital IQ, told clients Monday that an impending interest rate hike combined with a handful of other factors will likely cause a substantial stock market drop. Specifically, he believes the S&P 500 likely will enter a correction phase, defined as a drop of more than 10 percent but less than the 20 percent move that would constitute a bear market.

Friday's unemployment report helped cinch the case: While the gain of 295,000 new nonfarm payroll positions emphasized a firming job market, it also brought home the reality to investors that the Federal Reserve is only months away from boosting its benchmark interest rate target.

That, according to Stovall, is almost certain to result in market tumult similar to what happened after the jobs report hit. The market plunged on the prospect of monetary tightening, a pattern Stovall said should persist at least through the early stages of Fed action.

»Read more
  Monday, 9 Mar 2015 | 10:48 AM ET

$100 million NYC apartment tax bill: 0.017%

Posted By: CNBC.com staff
One57, a new luxury skyscraper apartment building on New York City's West 57th street.
Mike Segar | Reuters
One57, a new luxury skyscraper apartment building on New York City's West 57th street.

Talk about a steal: The total property tax bill for a $100 million Manhattan penthouse apartment came to $17,268—a rate of just 0.017 percent— thanks to a controversial valuation loophole.

The calculation, made by The New York Post using data from Revaluate.com, highlights the unusual methods the city employs when calculating real estate values for condos and apartments.

The ultra-low rate was given to the undisclosed buyer of the most expensive apartment ever sold in One57, a new super-luxury tower overlooking Central Park.

»Read more
  Thursday, 5 Mar 2015 | 2:01 PM ET

A tough pill for pensioners to swallow

Posted By: Lawrence Delevingne

The rising price of stocks and bonds last year helped push pensions closer to full funding. But corporate and public plans remain well short of having enough money to pay out what they've promised to retirees.

The ratio of pension assets to liabilities, or funding ratio, for 131 state-sponsored defined benefit retirement systems was an estimated 80 percent as of June 30, up from 74 percent for the 2013 fiscal year, according to new data from Wilshire Consulting, the investment advisory business of Wilshire Associates. Put another way, 87 percent of the 92 state retirement systems that reported data for the 2014 fiscal year are underfunded.

"Global stock markets rallied strongly over the twelve months ended June 30, 2014, augmenting the positive performance of global fixed income and allowing pension asset growth to outdistance the growth in pension liabilities over fiscal 2014," Wilshire researcher Russ Walker said in a statement.

»Read more
  Thursday, 5 Mar 2015 | 11:49 AM ET

Too big to fail banks just keep getting bigger

Posted By: Jeff Cox

Too big to fail? It may turn out that the biggest banks in the U.S. are too big to break up.

The idea that the TBTF institutions were going to get cut down to size after the financial crisis has turned into a giant myth. If anything, the system has gotten even bigger.

JPMorgan Chase, No. 1 among banks and thrifts in total assets, has seen its base swell to more than $2.5 trillion, according to SNL Financial. The company's deposit base alone has grown by 29 percent since the end of 2008.

»Read more

About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.


Wall Street