Davidson Kempner continues to make money by focusing on beat up loans—despite the general perception that bonds have little to offer investors.» Read More
Evoking a little Jack Nicholson, Steve Forbes told me the tax bill is "as good as you're going to get."
If a tax increase had been allowed to take place in January—the alternative to extending the current tax policy — “the US economy would have taken a real hit,” Forbes told me as my guest host on Worldwide Exchange this morning.
“The fact that the Republicans got a reduction in the death tax from 55 percent to 35 percent I think made the deal even better,” he said, adding that, “I’m a little surprised that some Republicans are scoffing at it.”
Did a request for information involving a mortgage note lead to a credit score downgrade for a Bank of America client?
Barry Ritholtz is reporting this morning that a Bank of America customer attempted to research who owned his mortgage and got a major surprise—a 40 point drop in his credit score.
According to the report on TheBigPicture.com, the customer in question held a jumbo mortgage, made timely payments, and banked with Bank of America.
If this story proves out, it may turn into a major headache for BofA.
Before we unpack the implications, two quick points.
It looks like it is going to be an ugly bonus season on Wall Street.
Diamonds may be a girl's best friend, but for the ultra wealthy, they're an investment of a lifetime where the right gem could return staggering results.
Over the last couple of years, we've seen one record breaking auction sale after the other. Just recently, London dealer Laurence Graff obliterated all records with the $46 million sale at Sotheby's auction house for a 24.78-carat pink diamond.
"The Graff Pink" as it is now called is the most expensive jewelry ever sold at auction. I decided to sit down with Henri Barguirdjian President and CEO of GRAFF to talk about not only this latest acquisition, but how the luxury jewelry is doing this holiday season.
Fed Reviews QE2 at Last Scheduled Meeting of 2010 (Yahoo Finance via AP) Many investors believe policies will remain unchanged—but will focus on modifications in language to signal future actions. "Since the Fed announced its second round of stimulus on Nov. 3, stocks have risen. That's encouraging for the economy because larger stock portfolios make people, especially the wealthy, more inclined to spend. On the other hand, rates on mortgages have risen, defying one of the Fed's stated goals of the bond-buying program. The average rate on a 30-year fixed mortgage has climbed to 4.61 percent. It's up sharply from 4.17 a month ago, the lowest rate in in some 40 years of recordkeeping. And "Since the Fed announced its second round of stimulus on Nov. 3, stocks have risen. That's encouraging for the economy because larger stock portfolios make people, especially the wealthy, more inclined to spend."
Spanish Bonds Down (Again); Borrowing Costs Rising (Bloomberg) "Spanish government bonds fell for a seventh day as the country paid higher costs to sell more than 2.5 billion euros ($3.3 billion) of securities and prepared to issue more debt later this week."And: "The yield on the 10-year Spanish bond rose eight basis points to 5.57 percent at 12:27 p.m. in London. The 4.85 percent security due October 2020 fell 0.58, or 5.8 euros per 1,000-euro ($1,346) face amount, to 94.61. German 10-year yields were one basis point lower at 2.96 percent, while two-year yields fell two basis points to 1.04 percent."
Distressed Assets Funds Trade Madoff Settlement Claims \(DealBook New York Times\) "The lawsuits filed by the trustee seeking money for Bernard L. Madoff’s fraud victims may be a blow for the defendants — but they are catnip for an obscure breed of Wall Street traders speculating on the outcome of the enormous Madoff bankruptcy case. In recent months, hedge funds and other investment firms have been quietly contacting Madoff victims whose loss claims have been approved by the trustee, Irving H. Picard. These funds — specialists in beaten-down assets known as distressed securities — are offering to buy those claims immediately for cash, but at a sharp discount from their face value. With the latest round of big-ticket lawsuits, however, that quiet market has started to sizzle."
It's time to wonder if the decades long war by the government that has allegedly been waged in favor of making financial products and services more competitive might have been a mistake.
Time after time the government has intervened in practices that it has deemed anti-competitive. This happened in the 1970s, when the government effectively got the New York Stock Exchange to abolish fixed trading commissions. It happened in the 1990s, when the government cracked down on NASDAQ market makers. In 2002, corporate bond trading went onto "screens" on the TRACE system after years of pressure from securities regulators.
Tough Blow for the President—Federal Judge Rules 'Central Plank' in Health Law Unconstitutional (Wall Street Journal) "A federal court ruled Monday that a central plank of the health law violates the Constitution, dealing the biggest setback yet to the Obama administration's signature legislative accomplishment. In a 42-page ruling, U.S. District Judge Henry E. Hudson said the law's requirement that most Americans carry insurance or pay a penalty 'exceeds the constitutional boundaries of congressional power. 'The individual mandate 'would invite unbridled exercise of federal police powers,' wrote Judge Hudson, of the Eastern District of Virginia. "At its core, this dispute is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it's about an individual's right to choose to participate."
Tax Cut Package Poised to Sail Through Senate \(Reuters\) "President Barack Obama's bipartisan tax plan was on its way to passing its first test in Congress on Monday but a major Wall Street firm warned that damage to America's strained finances would outweigh any short-term economic boost. The $858 billion package, which would keep lowered income-tax rates from expiring at the end of the year, picked up 62 votes in the 100-seat Senate. Voting continued but the tax measure had effectively passed a procedural hurdle and will now go to a full vote in the chamber on Tuesday or Wednesday."Next stop: The House.
A concurrence by a brilliant judge on the 9th Circuit Court of Appeals may be a warning to federal authorities that they are over-stepping their bounds in pursuit of insider trading.
On the face of it, the concurrence has nothing to do with insider trading. Instead it involves the reversal of a jury verdict in a case where a CFO was criminally convicted of securities fraud by recognizing revenues in violation of GAAP. But it's hard not to notice that Judge Alex Kozinski's concurring opinion resonates with implications for the insider trading dragnet underway inside the federal Attorney General's office in Manhattan.
Even while the federal government is apparently cracking down on expert networks and other types of independent research firms that offer customers an inside track on various economic sectors, sell-side research firms are pushing ahead with these same types of promises. The twist, however, is that they aren't promising the inside track on companies traded on US equities markets.
Instead, they are touting their access to important decision-makers and data holders in China.
Several firms offer junkets for customers to places like Macau, where customers are told they will be introduced to people with access to markets and information unavailable to the typical US based investor.
Typically, the firms involved aren't the big, bulge bracket Wall Street firms. But the practice of making these kind of introductions and offering access to non-public information about China is increasingly wide-spread in the second and third tier firms, according to a person familiar with the matter.
With investors and traders constantly seeking an informational "edge" over competitors, this is apparently becoming a part of the ordinary business of some sell-side firms.
Merck and Wells Fargo are over-owned while Ford is under-owned by mutual funds, according to third-quarter analysis from Citigroup’s Tobias Levkovich.
Each quarter, Citi compiles its list of mutual fund stock holdings. While Microsoft continues to be most owned, there are some surprises in the list.
Hedge funds have seen the worst start to the year since the financial crisis, as returns in January and March were both in the red.
The Fed indicated to Citi that it would get more time to fix "stress test" planning problems before rejecting its capital plan.
Goldman Sachs reported quarterly earnings and revenue that topped analysts' expectations on Thursday.