Scoff if you like but bitcoin, despite its myriad defects and detractors, is getting an increasing level of focus in high finance.» Read More
Hedge funds are poised to close out a strongly profitable year, even though smaller firms are under pressure as investors still have the jitters over an unpredictable market.
Industry veterans refuted rumors that have passed our way regarding a strong flow of redemptions as managers close out their books for 2010.
In fact, the $2.34 trillion dollar hedge fund business saw $26.6 billion of inflows in the third quarter as part of a net increase of $120.9 billion, according to data from Bank of America Merrill Lynch. That equates to a 5.45 increase in total assets under management.
The SEC is investigating Citigroup amid allegations that Citi pressured an independent manager to include particular assets in a mortgage deal, among other claims.
Jake Bernstein and Jesse Eisinger explain in their ProPublica article :
"The deal was a collateralized debt obligation named Class V Funding III, which was completed in late February 2007. The CDO was made up of pieces of other CDOs that were themselves backed by risky slices of subprime mortgages. The deal was managed by Credit Suisse Alternative Capital, a division of the Swiss banking giant. Independent managers such as Credit Suisse were charged with picking the best assets for the CDO. Citigroup arranged and marketed the deal to investors."
"Robo-signing" is a big topic in Washington this week with two Capitol Hill hearings addressing the scandal. First up was the the Senate Banking Committee, where Chairman Christopher Dodd called the crisis the "tip of the iceberg.” Today we get the House's hearing on the issue.
Congresswoman Shelley Moore Capito \(R-WV\) is Ranking Member of the subcommittee for Housing and Community, which is holding a hearing entitled "Robo-Signing, Chain of Title, Loss Mitigation and Other Issues in Mortgage Servicing.” I asked her what she plans to ask the panel’s witnesses. We also addressed her thoughts on the effect of Dodd-Frank regulatory reform on housing the the financial sector.
Golf and finance go together—as everyone knows.
There's something about the quiet of nature, the fresh air and sunshine—and the competition —that just seems to bring financial services types together.
And one guy, Sam Evans at Steve Cohen's SAC Capital, gets to do it virtually all day long. According to a Reuter's article published today:
"Unlike his co-workers, the hundreds of traders and analysts who work at Steven Cohen's $12 billion hedge fund, Evans does not stare at computer screens, map out stock charts or work the phones for information on the markets all day. Rather, he spends much of his time negotiating the greens—quite literally. Evans, 49, who joined Cohen's Stamford, Connecticut-based firm in August 2009 after more than 20 years as an institutional stock broker, is SAC Capital's unofficial golf pro. Evans job isn't so much helping SAC Capital portfolio managers and others at the fund with their strokes, as it is helping them gain a better understanding of some of the companies Cohen's hedge fund puts money into."
Sweet gig, right?
Think of making partner at Goldman like becoming a Made Man in a Scorsese film: "It's the highest honor they can give you. It means you belong to a family and a crew."
So when the boss of bosses —the capo di tutti capi —comes down to congratulate you, it's Kind of a Big Deal.
Such was the case yesterday when Lloyd Blankfein went down to the trading floor to congratulate the new Goldman partners. According to Katya Wachtel at Business Insider : "Traders and associates saw their boss wandering around the floor— in a shirt and tie, no jacket —and, as in times past, were pretty excited to see him."
And, as Wachtel further points out:
In a piece that is sure to rile up the critics of government spending and borrowing, Yale professor Robert Shiller argues that governments should be taking advantage of historic lows in real long term interest rates by massively increasing borrowing and spending.
"[L]ow long-term real interest rates appear to reflect a general failure by governments over the years to use the borrowing opportunities that the inflation-indexed markets present to them. This implies an arbitrage opportunity for governments: borrow massively at these low \(or even negative\) real interest rates, and invest the proceeds in positive-returning projects, such as infrastructure or education.
The situation in the municipal bond market turned seriously ugly. Muni bond ETFs and muni bond funds have taken a beating. And, if Meredith Whitney is to be believed, it's going to get far worse as cash-strapped cities and towns start defaulting on their debt.
It may be hard to believe, but not that long ago some of the smartest market watchers were actually claiming that muni bonds were relatively risk free—because the bonds have a long history of low default rates.
Felix Salmon, the Reuters blogger who once won an award from the American Statistical Society for "Excellence in Statistical Reporting," joined with investigative reporter Jesse Eisinger in early 2008 to complain that muni bonds were being rated too low by credit ratings agencies. Their idea was that ratings agencies were purposefully over-stating the risk of muni bonds in collusion with monoline bond insurers in order to force cities and towns to pay for bond insurance to get better ratings.
Perhaps the biggest irony in global economics right now is the double-standard applied to economic planning.
When the Federal Reserve in the United States tries to ease our economic slump through quantitative easing, we hear cavils about debasing the money supply and distorting the economy. But when the Chinese government, which has inflated its money supply far faster than the US, endorses price controls on consumer goods to tame inflation it gets praised for its action.
Earlier this week, China's State Council announced that it may impose price caps on "important daily necessities ." This is a quite typical reaction of a government that has adopted an inflationary monetary policy but wants to avoid the unavoidable consequence of higher prices.
Ireland Seems Likely to Receive Assistance from EU & IMF (Financial Times) "The EU-IMF technical mission is expected to examine the books of Ireland’s main banks to assess what scale of financial assistance might be required. One senior banker said he expected this work to be concluded by the end of the weekend. EU financial officials said the conditions of the bail-out package would be outlined sometime next week."
The Federal Reserve just issued notice that the 19 banks that were subject to stress tests in May of 2009 will have to perform another round of stress testing.
Officially, the new stress tests are only mandatory for banks that plan to increase their dividend or conduct stock repurchases. But the Fed makes it pretty clear that all 19 banks should submit “comprehensive capital plans” by January 7 of next year.
“SCAP BHCs are encouraged to have their capital plans filed by January 7, 2011, irrespective of whether they intend to undertake any capital distributions,” the Fed writes.
John Carney is a senior editor for CNBC.com, covering Wall Street and finance and running the NetNet blog.
Jeff Cox is finance editor for CNBC.com.
Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.
Stephanie Landsman is one of the producers of CNBC's 5pm ET show "Fast Money."
Scoff if you like but bitcoin, despite its myriad detractors, is getting an increasing level of focus in high finance.
Call it mistress inflation: The recession is over and she's going to want a much more expensive gift this year, says Todd Schoenberger.
Wall Street was thinking it had a friend in the Fed until at least May. That calculation suddenly has begun