GO
Loading...

NetNet

More

  Monday, 30 Jun 2014 | 11:16 AM ET

Fed chief moves in; there goes the neighborhood

Posted By: CNBC.com staff
Janet Yellen, chair of the U.S. Federal Reserve.
Getty Images
Janet Yellen, chair of the U.S. Federal Reserve.

Federal Reserve Chair Janet Yellen and former FBI Director Robert Mueller both live in the same, uppity Washington, D.C., neighborhood. Guess whose security detail is causing more trouble for neighbors?

That's right, it's the central bank chief and her guards with "doughnut bellies," as one neighbor described the entourage that's upsetting fellow Hillandale residents, according to a report Monday in The Wall Street Journal. Neighbors complain that Yellen's detail has unsettled the gated development. Their security trucks and offensive blue uniforms also have upset what had been a relatively calm setting, in a city used to excessive accommodations for VIPs.

Former FBI lead "Bob Mueller, who you would think would have a much more dangerous job dealing with terrorists all over the world, had people who were businesslike, didn't socialize, and waited for him outside the gate," one unidentified resident told the newspaper. "Now we have this group, overweight, wearing the most ridiculous blue uniforms with the most ridiculous blue caps, and they have guns that are visible."

»Read more
  Monday, 30 Jun 2014 | 7:00 AM ET

2039: An investment space odyssey

Posted By: Lawrence Delevingne
Still of Hal 9000 from the motion picture 2001: A Space Odyssey
Source: Metro-Goldwyn-Mayer | YouTube
Still of Hal 9000 from the motion picture 2001: A Space Odyssey

Investing was far different in 1989.

American mutual funds managed just $980 billion, about one-fifteenth of their assets today. Index and exchange-traded products didn't exist. Alternatives like hedge, private equity and venture capital funds were relatively secretive, niche vehicles for a privileged group of wealthy individuals and big institutions. Financial advisors charged hefty fees to put clients in a mix of stocks and bonds and mail them monthly progress reports.

In short, a lot has changed.

The next 25 years are likely to prove just as revolutionary, according to leading investment industry experts. Actively managed mutual funds could be a relic thanks to instantaneous access to computer-driven index funds. Algorithms may replace many financial advisors. Once exotic, exclusive "alternative" funds seem poised to go mainstream, often available with the click of a mouse. Call it the robot era of investing.

"In 2039, it will be common for investors to have their portfolios managed by algorithms rather than by humans," said Andrew Lo, a professor of finance and the director of the Laboratory for Financial Engineering at the MIT Sloan School of Management. "The algorithms will incorporate individual or institutional preferences, constraints and lifetime goals in a seamless and optimal fashion to maximize the chances of achieving those goals."

Lo believes that investors will stop choosing between mutual funds that allocate to small- or large-cap stocks, for example, and instead send comprehensive personal data to an online financial management portal. That software will analyze both short- and long-term financial needs and design the most efficient investment plan to meet them. The program robot will then execute the plan automatically, providing updates to the investor and adjustments to the portfolio as needed.

In other words, investors will be offered tools that provide holistic, automated solutions, not do-it-yourself products. Or as Lo puts it, "Meet the financial equivalent of HAL in '2001: A Space Odyssey'!"

»Read more
  Thursday, 26 Jun 2014 | 2:40 PM ET

Don't worry! The market only looks boring

Posted By: Jeff Cox
Trader on the floor of the New York Stock Exchange, May 21, 2014.
Getty Images
Trader on the floor of the New York Stock Exchange, May 21, 2014.

Investor wariness of stock market volatility may only appear to be low.

Traditional measures of market complacency show it at levels rarely seen since before the financial crisis—and headed toward historic troughs. Most notably, the CBOE Volatility Index has been on a consistent downtrend throughout 2014, despite an unexpectedly weak economy in the first part of the year and almost daily geopolitical disruptions.

Forget standard volatility though, for a minute.

Looking at implied volatility rather than historic volatility gives a different picture of market expectations. (Historical volatility measures daily price movements while implied volatility looks at expected price changes.)

Options traders are expecting implied volatility to rise on many of the stocks in the blue-chip Dow Jones Industrial Average.

»Read more
  Friday, 27 Jun 2014 | 2:21 PM ET

Dark pools in crosshairs after Barclays charges

Posted By: Jeff Cox
Chris Ratcliffe | Bloomberg | Getty Images

Efforts to reform dark pool stock trading likely got a lift from accusations this week leveled against Barclays.

While industry insiders don't see an existential threat to dark pools, many think the high-profile case against the British bank will act as a clarion call for change.

"This Barclays thing is probably the spark that will start to clean things up," said Joe Saluzzi, co-founder of Themis Trading and an aggressive advocate in reforming the current trading climate. "Dark pools got out of control."

In a complaint filed by New York Attorney General Eric Schneiderman, Barclays stands accused of using its private trading system to benefit high-speed traders at the expense of other investors. The civil fraud case also alleges that the bank used marketing materials to falsely portray its system as set up to protect investors from predatory trading behavior.

»Read more
  Friday, 27 Jun 2014 | 11:06 AM ET

Ex-Mt. Gox chief cites break-in for bitcoin theft

Posted By: CNBC.com staff
Mark Karpeles, chief executive officer of Tibanne Co., poses for a photograph with a bitcoin in the office operating the Mt.Gox K.K. bitcoin exchange in Tokyo, Japan.
Tomohiro Ohsumi | Bloomberg | Getty Images
Mark Karpeles, chief executive officer of Tibanne Co., poses for a photograph with a bitcoin in the office operating the Mt.Gox K.K. bitcoin exchange in Tokyo, Japan.

Mark Karpelès has advice for anyone looking to start a bticoin trading platform: Hire security.

The former head of the Mt. Gox exchange—once the most prominent place to trade the cryptocurrency—should know. Mt. Gox lost 850,000 of its clients' bitcoins, and he believes the 200,000 or so recovered since the theft are as good as it's going to get.

Karpelès blames the initial theft on a slew of occurrences: Aggressive hacking attacks, along with physical break-ins at the company's Tokyo offices, and an employee who ran off with electronic data.

"If anyone wants to start a bitcoin exchange, I would say, 'Be sure to have 24-hour security guards,'" Karpelès told the Wall Street Journal.

»Read more
  Tuesday, 24 Jun 2014 | 3:06 PM ET

The 'Black Swan Index' is on a scary flight higher

Posted By: Jeff Cox

Where some investors see nothing but rolling green fields and placid summer lakes, others see black swans circling high above.

Such is the picture painted when comparing the widely followed Chicago Board Options Exchange Volatility Index—the market's "fear" gauge— and its sister measure, the Skew, aka the "Black Swan Index," which charts, well, lots of fear. (The black swan is a metaphor for a highly unusual occurrence and took on added significance in the market following Nassim Taleb's 2007 book, "The Black Swan.")

While the VIX is closing in on historic lows and has tumbled nearly 20 percent year-to-date meaning there is a high level of complacency among investors the Skew has surged in June, rising more than 12 percent for the month.

Taken together, the two measures reflect an interesting dichotomy among investors.

»Read more
  Thursday, 26 Jun 2014 | 12:18 PM ET

Post-DOMA, same-sex couples struggle with finances

Posted By: Kayla Tausche
Edith Windsor, the woman at the center of the U.S. Supreme Court decision granting gay couples federal marriage benefits, attends the gay pride parade in New York last year.
Mike Pont | FilmMagic | Getty Images
Edith Windsor, the woman at the center of the U.S. Supreme Court decision granting gay couples federal marriage benefits, attends the gay pride parade in New York last year.

Since the Supreme Court struck down a ban a year ago, getting married has become a whole lot easier for same-sex couples. Managing their finances, though, remains a challenge.

When the Supreme Court repealed the Defense of Marriage Act in June 2013, roughly 215 financial planners were certified by the College for Financial Planning to advise on issues pertinent to same-sex couples. Although that number of Accredited Domestic Partnership Advisors (ADPA) has more than doubled in the last year, enrollment in these programs may have tapered off.

"Many potential students may have thought that there was no further need for alternate planning," said Gregg Parish, professor of estate planning at the college. "Nothing could be further from the truth."

A recent Wells Fargo survey found that two-thirds of respondents in legal same-sex marriages still did not understand fully how federal and state laws affect them.

»Read more
  Thursday, 26 Jun 2014 | 10:34 AM ET

Even if Brazil wins World Cup, it loses: Bankers

Posted By: Lawrence Delevingne
Children play football in the street in the poor neighbourhood of Itaquera, adjacent to the 'Arena de Sao Paulo' stadium, on June 21, 2014 in Sao Paulo, Brazil.
Getty Images
Children play football in the street in the poor neighbourhood of Itaquera, adjacent to the 'Arena de Sao Paulo' stadium, on June 21, 2014 in Sao Paulo, Brazil.

Emerging markets experts are bearish on investing in Brazil regardless of the World Cup—but say fiscal reforms from a new administration could have a big effect.

"There's no upside for this government, even if everything goes well," Drausio Giacomelli, head of emerging markets research at Deutsche Bank, said Wednesday at the New York Society of Security Analysts Latin American Capital Markets Conference.

"It's not about (if Brazil wins the World Cup), it's about what it exposes: a government that's unable to deliver what they say the people need for education, for transportation, infrastructure in general," he said. "They can give stadiums ... but not what matters."

Brazil plays Saturday against Chile in the first game of the Cup's knockout round.

»Read more
  Tuesday, 24 Jun 2014 | 12:40 PM ET

Wall St. pros weigh in on costs of climate change

Posted By: Lawrence Delevingne
Henry Paulson
Peter Kramer | NBC | Getty Images
Henry Paulson

A small but elite group of former financial executives have issued a stern warning on the economic costs of climate change in an effort to get the business community and others to take action.

"Our economy is vulnerable to an overwhelming number of risks from climate change," former Treasury Secretary Hank Paulson said in a statement announcing his new "Risky Business" report Tuesday.

"These risks include the potential for significant federal budget liabilities, since many businesses and property owners turn to the federal government as the insurer of last resort. But if we act immediately, we can still avoid most of the worst impacts of climate change and significantly reduce the odds of catastrophic outcomes—but the investments we're making today will determine our economic future."

»Read more
  Tuesday, 24 Jun 2014 | 11:08 AM ET

Could inflation be the new subprime?

Posted By: Jeff Cox

When Fed Chair Janet Yellen essentially dismissed inflation as a threat last week, she sought to calm investors' fears but in doing so also raised an unpleasant specter of the not-too-distant past.

To some, the central bank chief's assertion that inflation threats were coming from "noisy" data—economist talk for volatile, one-off conditions not likely to persist—sounded at least a little like her predecessor, Ben Bernanke, who in March 2007 said problems in the subprime mortgage market were "contained" and unlikely to pose a larger, more systemic threat. The subprime market, of course, was in the early stages of a meltdown that spread across the financial system and triggered the worst economic downturn since the Great Depression.

"Do not be surprised if 'noisy' is now the new 'transitory,'" Tom Porcelli, chief U.S. economist at RBC Capital Markets, said in a note to clients.

"This is part of a larger message that came through in Yellen's press conference. That is that the Fed is not setting policy based on their best guess of where they believe the economy will be, but rather where the economy has been," he added. "In other words, instead of trying to shape the economy on a forward-looking basis through monetary policy, they are instead more likely to react to largely coincident-to-lagging developments. The potential for a policy mistake and a Fed that falls well behind the curve seems obvious."

For Porcelli and other Wall Street pros who issued warnings on Yellen's blithe inflation comments, the worry is that the Fed waits too long to give at least lip service to an inflation threat and ends up having its hand forced in tightening monetary policy and raising interest rates.

»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.

 

  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

NetNet TV

Wall Street