Net
In 2007, analysts and journalists said banks would report a “kitchen sink” quarter, taking heavy losses but “laying the groundwork for a strong recovery." Uh, oh.
- Friday, 25 May 2012 4:51 PM ETBy: John Carney
Jason Trennert of Strategas Reseach has a wonderful idea: bring the poppy back to Wall Street.
- Friday, 25 May 2012 4:50 PM ETBy: Kate Kelly, John Carney
Activist investor Carl Icahn raised his stake in Chesapeake Energy [CHK Loading... ()
Getty ImagesCarl Icahn
] to 7.65 percent, according to a filing with the Securities and Exchange Commission, and hammered its leadership in a letter accusing the company of “woefully inadequate” corporate governance."The basic function of a board is to oversee management and to hold it accountable,” Icahn wrote in a letter to the Chesapeake board attached to the filing. "We believe the board has failed this duty in a dramatic fashion. Rather than act as a source of stability and provide assurance to shareholders, this board has led the company through a highly publicized spate of corporate governance breakdowns while amassing an astounding $16 billion funding gap, which we believe has contributed to the share-price decline of over 55% from the 52-week high.”
Icahn argued adamantly for shareholder representation on the board and expressed disappointment that, after broaching that idea at a recent dinner meeting with Aubrey McClendon, Chesapeake's founder, CEO and chairman, the company subsequently refused to consider the idea until it had named a successor chairman.
He demanded that Chesapeake remove four directors from its board. He would have them replaced with two directors he selects and two directors selected by another large shareholder.
Icahn warned in the letter that if the company did not comply with the board changes, "we, as activists, will immediately take whatever 'actions' we feel are necessary to protect the value of this company."
- Friday, 25 May 2012 2:24 PM ETBy: John Carney
Is the Kansas City Fed president telling Jamie Dimon to leave the board of the New York Federal Reserve bank?
Getty ImagesJamie Dimon - Friday, 25 May 2012 1:20 PM ETBy: Jeff Cox
Large regional banks are filling a void created by the biggest institutions' regulatory burdens and the competitive disadvantage of smaller companies, analyst Dick Bove said.
Firms in the middle tier of banking — think US Bancorp [USB Loading... ()
cnbc.comDick Bove], PNC [PNC
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] and Capital One [COF
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], for instance — are growing their key commercial and industrial lending portfolios while their competitors have had to pull back their activities, according to an analysis from the widely followed Rochdale Securities vice president of equity research."The relative growth of the big regionals appears to be due to the fact that the big universals are dealing with multiple other issues that are slowing their ability to compete. In fact, many of these banks have simply pulled back from key lending businesses," Bove said in a note to clients.
"The community banks have simply been weighed down by regulations that are driving them out of the business. The government has gone after this industry with a 'meat ax' and it shows," he added.
- Friday, 25 May 2012 11:42 AM ETBy: Jeff Cox
If a stock market Moses ever had delivered to him 10 Commandments for initial public offerings, he'd probably find that Facebook violated just about every one of them.
A week after the ubiquitous social network's stunning IPO flop, Wall Street is still trying to figure out exactly what went wrong.
David Paul Morris | Bloomberg | Getty ImagesWhile not specifically targeting the Facebook IPO, Nicholas Colas, chief market strategist at ConvergEx in New York, has come up with just such a list of "musts" for IPOs. By the Colas standard, the Facebook IPO might find itself doomed for all eternity.
"No need to name names here, because it is not the point of this note to rewarm the leftovers of an already well-publicized failure," Colas said in his daily missive to clients. "Rather, as I watched the drama unfold in all its can't-look-away-from-the-car-accident glory, it occurred to me that the wounds of the past week were somewhat self-inflicted."
Here's a look at the Colas "commandments" and a view of how they apply to the Facebook situation:
- Thursday, 24 May 2012 4:03 PM ETBy: John Carney
This is the most important data point coming in the next few days:
PNC | Brand X Pictures | Getty ImagesThe Bank of Greece is due to update its website (here's the English version) any day now with an Excel spreadsheet revealing the aggregate balance sheets of Greece's monetary and financial institutions. It will be the clearest indicator yet of the health — or lack thereof — of Greece's banking system.
- Thursday, 24 May 2012 10:52 AM ETBy: John Carney
Markets in Europe surprised many on Thursday by rallying despite bad economic news and gloom over Greece.
One explanation for the rally is a widely circulating rumor across trading desks speculating about the possibility of joint intervention by central banks to provide liquidity to financial institutions across the globe.
Getty ImagesEuropean Central Bank - Wednesday, 23 May 2012 10:29 PM ETBy:
Ellen Egeth 
Ryan Anson | AFP | Getty ImagesFacebook CEO Sheryl Sandberg made her first post-IPO public appearance today. In a speech at Harvard Business School, she asked the newly-minted MBAs to pitch in and help Facebook’s bottom line:
"I wish for you four things. First, that you keep in touch via Facebook. This is critical (laughter) to your future success. And we're public now, so can you click on an ad or two while you're there?"
Sandberg’s other wishes? That students speak and seek the truth, that they be true to their authentic selves... And that this generation accomplishes what hers has not — a world where half the homes are run by men and half the institutions are run by women...
- Wednesday, 23 May 2012 3:29 PM ETBy: John Carney
Has Goldman Sachs been firing first-year analysts for landing jobs with private-equity firms?
Source: goldmansachs.comYesterday (Tuesday), Bess Levin of DealBreaker quoted an unnamed source claiming that Goldman had fired “a bunch” of investment banking first-years who had successfully landed positions presumably to begin after their 2-year Goldman contracts expired.
From DealBreaker’s source:
Goldman has been firing IBD first year analysts with buyside offers for next year. Senior people are calling up funds to ask if any analysts have received offers from them. A bunch have been cut so far.
My own investigation reveals that this is at least partly true. Goldman [GS Loading... ()
] has recently let a few employees go for taking jobs at private equity and hedge funds—although the total number fired is probably quite small. Maybe just three or four. This isn’t really all that shocking.
- Wednesday, 23 May 2012 12:25 PM ETBy: John Carney
Facebook stock, which closed Tuesday down more than 26 percent from the initial public offering price, may be hitting something of a bottom.
Emmanuel Dunand | AFP | Getty ImagesShares [FB Loading... ()
] rose more than 3 percent to close at $32.00 on Wednesday after an analyst report describes the shares as a "buy." And there is a lot of chatter in the market that underwriters may step in to support the stock to keep it above $30.
- Wednesday, 23 May 2012 10:15 AM ETBy: John Carney
The Facebook scandal du jour is the news that analysts at all three lead underwriters cut earnings estimates for the social network [FB Loading... ()
] sometime during the road show.
The legal rules about selective disclosures leading up to an initial public offering are very murky. IPO road shows themselves are a form of selective disclosure, in which companies and underwriters make presentations that go beyond anything you’ll find in the public filings. But, of course, selective disclosures at road shows are permitted.
Photo by Jodi Gralnick for CNBC.comWhat’s more, the very nature of an IPO means that disclosures surrounding them can slip between the cracks of regulation. A company having an IPO is, almost by definition, not yet a public company and so the normal rules codified as Reg FD don’t apply.
- Wednesday, 23 May 2012 1:58 AM ETBy: Tom Rotunno
Ted Aljibe | AFP | Getty ImagesYou know, you really don't need a forensics team to get to the bottom of this. If you guys were the inventors of Facebook, you'd have invented Facebook.
Mark Zuckerberg in “The Social Network”
-Tonight, the financial forensics teams say they want to get to the bottom of the Facebook IPO.
Robert Hum's Market Musings
- Stocks fade late in day, end mixed
- Dow & Nasdaq erase earlier gains, while S&P has first 2-day win streak since April 26-27
- Euro dips to 4-month vs. Dollar following former Greek Prime Minister Papademos’ comments
- Crude oil settles below $92 for first time since October
What Wall Street Is Saying Tonight
REGULATORS TO REVIEW MORGAN STANLEY FACEBOOK ALLEGATIONS/Reuters: “The Financial Industry Regulatory Authority's chairman said on Tuesday that regulators plan to review allegations that Morgan Stanley [MS Loading... ()
] shared negative news before Facebook's [FB
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] initial public offering with institutional investors. "The allegations, if true, are a matter of regulatory concern" to FINRA and SEC, Ketchum told Reuters.” - Tuesday, 22 May 2012 5:28 PM ETBy:
Linda R. Sittenfeld
On May 10, JPMorgan Chase reported a surprise $2 billion loss on a derivatives trade. The stock price [JPM Loading... ()
Getty Images] immediately sank almost 10 percent and kept falling. Estimates of the loss have been upped to $3 billion. CEO Jamie Dimon, long regarded as a Wall Street wunderkind, admitted on NBC's "Meet the Press" that JPM's hedging strategy was "flawed" and "poorly managed." The SEC, the FBI, and the Department of Justice are investigating. Congress will hold hearings. A class-action suit regarding the trade has been filed by the law firm Robbins Geller Rudman & Dowd, which recently won a $200 million award against Motorola. The firm also won $7.2 billion for shareholders of Enron.
We spoke with Sam Rudman, a former attorney with the SEC Enforcement Division and a founding member of Robbins Geller, about the case.
- Tuesday, 22 May 2012 4:40 PM ETBy: John Carney
Remember the kitchen sink?
Bloomberg | Getty ImagesA few years ago, investor expectations of bank earnings were said to be “at rock bottom.” Bank analysts and journalists explained that the banks would report a “kitchen sink” quarter, in which they would take heavy losses and start “laying the groundwork for a strong recovery,” as a BusinessWeek story put it.
That was 2007.
- Tuesday, 22 May 2012 11:47 AM ETBy: John Carney, Maneet Ahuja
Last Wednesday, J.C. Penney shares plunged nearly 20 percent—the worst decline ever for the retailer’s stock—after quarterly results disappointed investors.
Ryan T. Conaty | Bloomberg | Getty ImagesThe very same day, Bill Ackman, founder of Pershing Square Capital Management, gave a spirited defense of the company at the Ira Sohn conference. Ackman is a long-time holder of J.C. Penney stock [JCP Loading... ()
]. - Monday, 21 May 2012 9:26 PM ETBy: Tom Rotunno
"It's not whether you win or lose, it's how you place the blame."Ted Aljibe | AFP | Getty Images-Oscar Wilde
-Below, on its second day of trading, Facebook [FB Loading... ()
] finger pointing is in full swing as the stock drops 11 percent.
- Economy's Biggest Drag Right Now Is Government
- What’s This ‘Fiscal Cliff’ Anyway? Do I Need to Worry?
- What Falling Milk Prices Say About an Economic Slowdown
- Bad Day for BATS—and for High-Frequency Trading
- Obamacare, the Individual Mandate and MMT
- A Defense of Crony Capitalism
- The Buckaroo and the Demand for Money
- New York Housing Market Could Still Collapse: Analyst
- Why the Social Security Tax Fight Is Stupid
Call: 201-735-4638
Text Message: 917-740-8477
- Greece Pours $22.6 Billion Into Nation's Four Biggest Banks
- Spain's Debt Costs Near Danger Level: Is Bailout Next?
- US Markets Will Be Watching Europe—And Jobs Report
- India's Tumbling Rupee Roils Convertible Bond Market
- European Companies Plan for Greek Unrest and Euro Exit
- Japan's Marubeni Nears $5 Billion-Plus Gavilon Deal
- Public Pensions Faulted for Bets on Rosy Returns
- Greece to Leave Euro Zone on June 18: Wealth Manager
- Italy 2-Year Borrowing Costs at Peak Since December
- Euro Bond Wins Supporters, but Details Remain Vague
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