Hedge fund managers aren't concerned about the sharp price drops of Fannie Mae and Freddie Mac stock this week while waiting for a bigger payday.» Read More
Congress may have amnesia. Little more than five weeks have passed since the election, and the Senate is preparing the biggest pork feast this side of the Mississippi.
We're talking some serious BBQ folks: the 1,924 page omnibus bill has 6,000 earmarks in it. I've been told by sources that "Uncle Harry" is pushing them to pass this pig-packed bill before the end of the year, some anticipating to stay this weekend in order to do it. Interesting how some members who fought tooth and nail for their jobs in November are about to spit in the face of their constituents who voted for a more fiscally responsible Congress. I wonder if any of the newly anointed "fiscal conservatives" will vote yes on this bill.
One of the Senators leading the charge to change Uncle Sam's free spending ways is Senator Bob Corker \(R-TN\), a member of the Banking Committee. On Wednesday, the Senator along with Senator Claire McCaskill \(D-MO\) introduced an Amendment to cap federal spending as a percentage of GDP. I decided to talk to Corker about the budget appropriation bill.
A sigh of relief went out as authorities announced new insider trading charges against five people Thursday.
“I’m just glad it’s not anyone who is anyone,” a hedge fund manager explained.
Those charged—four consultants and an employee of Primary Global Research—are not closely connected with either the hedge fund world or Wall Street’s investment banks.
“It’s good news every time they arrest someone who isn’t running money, someone who isn’t primarily engaged in trading securities,” another manager explained.
Because of the ongoing probe, however, most of the fund managers or employees we contacted didn't want to be quoted on the record. They may be relieved that today’s bust didn’t involve them or their friends—but they didn't want to attract the attention of the authorities either.
Walter Shimoon is one of the suspectsarrested on Thursdayin connection with the government's latest insider trading crackdown.
According to Shimoon's profile on an online networking website, he is employed by a tech company called Vista Point Technologies, located in the San Francisco suburb of Milpitas, CA
Shimoon lists his current position as "VP Business Development for Asia & Americas".
Much of this information—job title, sector, and location—may be relevant to the complaint.
Keith Hennessey has posted on his website a copy of the 9-page Financial Crisis Primer that the Financial Crisis Inquiry Commission sent to the president and congress, to meet the statutorily mandated December 15 deadline.
Hennessey, one of the four Republicans on the commission, voted against the commission’s decision to extend the deadline from December 15 to January of 2011. His grounds for doing so were valid and important: the law requires the report to be submitted on December 15 and it doesn’t authorize the commission to extend its own deadline. By voting to extend, the commission was deciding to willfully violate the law.
The SEC has just charged Jonathan Star Bristol, an attorney for the former financial advisor Kenneth Ira Starr, with aiding and abetting Bristol's multi-million dollar fraud. The SEC alleges that Starr's crimes involved more than $25 million in stolen funds.
The charges stem from Bristol allowing his clients to use trust accounts as "conduits" for stolen money.
According to an official SEC communication : "The SEC alleges that Starr and two entities he controls — Starr Investment Advisors LLC and Starr & Company LLC — have made unauthorized transfers of money in client accounts that ultimately wound up in Starr’s personal accounts.
Morgan Sze—reportedly the highest paid trader at Goldman Sachs—is said to be leaving.
Think about this:
1) Goldman Sachs is the most profitable firm on Wall Street.
2) Most of Goldman's profits come from trading .
3) Morgan Sze is reported to earn more than all other players in the most profitable area of the most profitable shop on The Street.
This is a big story about a big guy.
So where is Morgan Sze going—and why?
Spanish Borrowing Costs Rise (Bloomberg) "Spanish 10-year bonds declined, pushing yields close to their highest in two weeks, after Spain’s borrowing costs rose at its last debt sale for this year amid mounting concern over the country’s credit quality. German 10-year yields were within three basis points of the highest since May 3 even after a report showed the euro-region’s manufacturing and services industries slowed more than economists forecast in December. Moody’s Investors Service said yesterday it may downgrade Spain’s credit rating, citing the cost of rescuing its banks. European Union leaders begin a two- day meeting in Brussels today to discuss the creation of a permanent crisis-fighting mechanism."
As EU Summit Begins, Divisions Remain (Reuters) European leaders sought to paper over deep divisions on how best to resolve the debt crisis ahead of a summit on Thursday, and Spain and Portugal came under renewed pressure to get their finances in order. German Chancellor Angela Merkel said she had settled a dispute with Jean-Claude Juncker, the chairman of the Eurogroup of countries, over the idea of issuing euro area bonds, but differences still looked likely to arise at the summit. 'Jean-Claude Juncker and I had a long telephone conversation and cleared up the issue a while ago,' Merkel said in an interview with Germany's Bild newspaper published on Thursday. 'With so much at stake, the emotions sometimes get involved.
'Juncker, who is a strong advocate of issuing so-called E-bonds, which Merkel says are unnecessary and would dent Germany's credit standing, also said the disagreement was resolved, but has hinted he could raise the proposal anyway.
Violence Erupts in Greece during Austerity Protest (New York Times) "Thousands of Greeks took to the streets of the capital on Wednesday for a protest against a fresh wave of austerity measures which was marred by violence as a general strike brought international travel and public services to a standstill. The walkout — Greece’s seventh general strike this year — grounded flights, kept ferries in ports, halted train services and shut down government offices and schools while leaving hospitals to operate on emergency staffing and causing a news blackout as journalists joined the action. Public transport was operating for most of the day to enable Athenians to attend demonstrations in the city center."
CNBC's Diana Olick on Negative Equity \(CNBC\) "There was a lot of talk last week about how negative equity, now at 22.5 percent of all homes with mortgages, according to CoreLogic, will affect the housing recovery. Then mortgage rates popped up to 5 percent overnight, thanks to the 10-year Treasury, and more folks voiced concern over today's potential home buyer and his or her ability to take advantage of this low-priced housing market. Owing more on your mortgage than your home is currently worth doesn't necessarily mean you can't afford your monthly mortgage payment or that you're going to go about your day any differently, other than feeling a little financially depressed. While it may make some more likely to walk away or 'strategically default,' most won't."
Salmon's basic thesis is this: that "the leverage-is-good meme simply refuses to die"—even though we should know better by now, especially n the wake of the last financial crisis.
He makes some excellent points about the article.
And his critique does make you wonder about the broader prevailing ethos surrounding debt on Wall Street in general.
To wit: Do all former leverage junkies live in perpetual danger of relapse?
The Consumer Price Index for Urban Consumers—commonly referred to as the CPI-U—increased 0.1 percent in November, on a seasonally adjusted basis. The number was released earlier today by the Bureau of Labor statistics.
What—if anything—does that data point tell us about the broader economy?
Earlier today, I spoke with Dr. Robert Shapiro to help us put that number into context, and to provide a broader economic perspective.
Dr. Shapiro was Under Secretary of Commerce for Economic Affairs during the Clinton administration, and the principal architect of President Clinton's 1992 economic program.
"What we know from this number is what we knew without this number: Namely, the recovery is abnormally slow, unusually fragile, companies can't raise prices in that environment. Demand is not strong enough to support higher prices," Shapiro said.
JPMorgan's chief U.S. equity strategist, Tom Lee, said that a "construction boom" seems imminent and should boost stocks.
Global investment management firm Pimco underperformed its peers last month, according to estimates by data tracker Morningstar, following internal strife at the company.
A lot of people think of it as an Old Boys Club but the truth is, Wall Street likes to hire 'em young, says former trader Raj Mahal.