Monday, 18 Aug 2014 | 10:34 AM ET

Wall St. taking advantage of junk bond exodus

Posted By: CNBC.com staff
Getty Images

Even as retail investors shy away, Wall Street is still making a dash for trash.

In fact, the recent exodus of funds from high-yield bonds has only whetted the appetite of institutional investors, who are using the slump in junk prices as a buying opportunity, according to an analysis from the Wall Street Journal.

The mom-and-pop crowd ditched a net $13 billion in junk bonds for the four weeks preceding August 6, a trend that has pushed firms like Alliance Bernstein even deeper into the market.

"Investors who panic in these sell-offs—it's the wrong thing to do," Alliance's Gershon Distenfeld told the Journal.

»Read more
  Monday, 18 Aug 2014 | 7:00 AM ET

Investors spending the summer on the sidelines

Posted By: Jeff Cox

After close to a year and a half of pumping money into the stock market, mom-and-pop investors have spent most of the summer in hiding.

Since May, money has been streaming out of mutual funds that invest in the stock market—particularly those that are focused on U.S.-based equities. Domestic equity mutual funds surrendered some $26.6 billion in May, June and July, according to data from Morningstar that reflects investor unease over a confluence of factors facing the market.

"Investors certainly have been given enough reason to be cautious," said Art Hogan, chief market strategist at Wunderlich Securities. "Every day, we wake up to a new or intensifying geopolitical problem, whether it's Russia, Ukraine, Pakistan, which could be building up as a problem. We have issues with Ebola—there's a multitude of concerns at the time, even when the market is just a percentage point or two of its record highs."

Consequently, investor behavior has changed.

»Read more
  Monday, 18 Aug 2014 | 9:09 AM ET

Steve Cohen is losing his top lieutenant

Posted By: Kate Kelly

Tom Conheeney, the longtime president of SAC Capital and top lieutenant to founder Steve Cohen, is stepping down Monday from the No. 2 spot at the former hedge fund's successor company, Point72, a company insider said.

Conheeney will be replaced as president by Douglas Haynes, a former McKinsey executive, the source said. Haynes joined Point72 in February as managing director of human capital. Point72 manages the assets of Cohen and certain employees and family members.

The surprise exit raises questions about Conheeney's standing at Point72. He joined SAC Capital in a less senior capacity in 1999.

»Read more
  Friday, 15 Aug 2014 | 12:16 PM ET

How David Tepper played 'nervous time' market

Posted By: Jeff Cox

David Tepper wasn't joking when he said it was "nervous time" for the stock market.

The billionaire head of the Appaloosa Management hedge fund rattled the markets in May, when he told attendees at the SALT Conference in Las Vegas that he was paring back his equity positions.

"I'm not saying go short, I'm just saying don't be too fricking long right now," he told attendees in remarks that went viral and immediately sent a shiver into the market.

Judging by his most recent quarterly filings with the Securities Exchange Commission, Tepper wasn't trying a sleight of hand, wherein he would try to get investors to sell so he buy at reduced prices.

Read MoreTepper on the market: 'Nervous time'

No, he was selling. Tepper, who made an eye-popping $3.5 billion in 2013, shed multiple positions.

»Read more
  Friday, 15 Aug 2014 | 12:33 PM ET

George Soros loads up on bearish market bet

Posted By: Kate Kelly

Soros Fund Management, the large family office that manages assets for billionaire George Soros, raised its protection against a U.S. stock market drop dramatically, sparking concerns that the powerful investment firm is expecting a big fall in equities.

During the course of the second quarter, which ended June 30, Soros Fund Management's position in puts—the right to sell at a certain price at an appointed time in the future—in a popular exchange-traded fund tracking the S&P 500 rose to 11.29 million shares, which appears to be a multiyear high for the investment manager. (During the first quarter, the size of that position was just 1.6 million puts, meaning that the second quarter marked a 606 percent increase.)

Based on some simple math, and assuming Soros still held the puts and that they were in the money (meaning they would generate gains if they were exercised today), the notional value of the bearish position is roughly $2.2 billion.

»Read more
  Thursday, 14 Aug 2014 | 12:23 PM ET

Why Russia, Iraq to have 'little impact' on market

Posted By: Jeff Cox

Investors are showing little reaction to the events in Ukraine and the Middle East, taking their cue from a Federal Reserve unlikely to show much concern despite the seriousness of both trouble spots.

An analysis from Goldman Sachs helps explain why the market has displayed only momentary reactions to the ongoing dispute between Russia and the separatists in Ukraine, and actually rallied the day President Barack Obama announced targeted airstrikes against ISIS rebels in Iraq.

Economists Michael Cahill and David Mericle believe investors will continue to dismiss the threats:

The current US air strikes in Iraq are unlikely to have a significant impact on defense spending or oil prices, unless the scale of the conflict changes considerably. Evidence from past U.S. conflicts that were similar in scale also suggests little impact on confidence and at most mixed evidence of a flight-to-safety effect in financial markets. The exchange of sanctions with Russia--a relatively minor U.S. trading partner--is also likely to have only a modest impact on the U.S. economy. Of course, both situations are highly unpredictable.

»Read more
  Wednesday, 13 Aug 2014 | 11:46 AM ET

Uh-oh: Trouble is brewing again in the repo market

Posted By: CNBC.com staff
Getty Images

The collapse of repurchase agreements—"repos" as they are known on Wall Street—signaled the beginning of the financial crisis, and there's trouble brewing in the market again.

Banks are retreating from repos as new regulations tighten controls on the types of risks they're allowed to take and make the trade more expensive, according to a report in The Wall Street Journal.

The practice involves short-term funding in which a hedge fund raises cash by selling securities to banks, which in turn sell to a third party—usually a money market fund—that then sells the bond back at a higher price and pockets the profit. While the process worked well for years, it collapsed when liquidity concerns surfaced at former Wall Street titans Bear Stearns and Lehman Brothers in 2008.

»Read more
  Tuesday, 12 Aug 2014 | 4:42 PM ET

That time Nassim Taleb debated a parody account

Nassim Nicholas Taleb, New York University professor and author
Jerome Favre | Bloomberg | Getty Images
Nassim Nicholas Taleb, New York University professor and author

If you follow @ProfJeffJarvis on Twitter, you know that he is a "thinkfluencer," which isn't a real word, nor is it a real Twitter account. Highly entertaining? Yes.

Apparently, Nassim Taleb, author of "The Black Swan," did not take the time to look at @ProfJeffJarvis's avatar (see:beer helmet) or read his biography. Closer inspection surely would have tipped him off that he was being goaded by a parody account.

»Read more
  Tuesday, 12 Aug 2014 | 12:26 PM ET

Icahn's fix for 'major asset bubble'? Activists

Posted By: Jeff Cox
Carl Icahn
David Grogan | CNBC
Carl Icahn

Carl Icahn sees U.S. markets in a "major asset bubble," and he says the only solution is for activist investors like him to keep companies honest.

In a blog post, the head of Icahn Enterprises boasted of his performance and said inept CEOs and aggressive Federal Reserve policies are creating treacherous times for investors.

"There are numerous challenges we are facing today whether it be monetary policy, unemployment, income inequality, the list can go on and on… but the thing we have to remember is there is something we can do about it: Shareholders, the true owners of our companies, can demand that mediocre CEOs are held accountable and make it clear that they will be replaced if they are failing," Ichan said in a Tumblr post that appeared on Yahoo Finance.

Public perception that activist investors only take short-term positions in companies is untrue, he added, asserting that shareholder vigilance is essential to protect investors.

»Read more
  Tuesday, 12 Aug 2014 | 3:26 PM ET

'Perma-bear' Schiff's funds have been on a roll

Posted By: Jeff Cox
Peter Schiff, CEO of Euro Pacific Capital, speaks at a panel discussion at the SALT conference in Las Vegas May 14, 2014.
Rick Wilking | Reuters
Peter Schiff, CEO of Euro Pacific Capital, speaks at a panel discussion at the SALT conference in Las Vegas May 14, 2014.

Call Peter Schiff a gold-bug perma-bear all you want, but he must be doing something right.

Despite his reputation as a perpetual Cassandra whose principal market call has been to buy gold and bet against the U.S. dollar, funds operated by Schiff's firm, Euro Pacific Capital, have been doing very well against their competitors over the past several years.

In fact, Euro Pacific's International Value Fund ranks in the top percentile against its 797 competitors, according to Morningstar rankings. It has done so while avoiding the U.S. market, which is on a 190 percent tear since the March 2009 financial crisis lows. Euro Pacific has most of its funds in privately managed and brokerage accounts and is a relative newcomer to the mutual fund industry, but the results provide a glimpse into how Schiff's strategy has performed.

"He's been called a perma-bear. Meanwhile, the last five years we've been fully invested in stocks," said Andrew Schiff, Peter's lower-profile brother. "Yeah, he's bearish on the U.S. economy, because we're a borrow-and-spend debt-fueled economy. He doesn't like that. He thinks it's a one-way street that's going to end badly. It doesn't mean he's a perma-bear."

»Read more

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