According to Goldman Sachs strategists, the answer is fairly simple: Bet on companies that don't see so much turnover in their shares.» Read More
Julian Assange might be saying he’s got the goods on Bank of America , but Dick Bove’s not buying it.
The Wikileaks founder has been spreading word that he has documented misbehavior by BofA executives that he will disclose after the New Year.
While the nature of the bank’s misdeeds remains undisclosed, speculation of what exactly Assange has got tucked up his sleeve has caused some gyrations in the BofA stock price.
But anyone getting themselves upset over the possibility of another significant data dump from Wikileaks is worked up over nothing, says Bove, of Rochdale Securities.
“It may just be the case here that the sound is greater than the fury,” the analyst wrote in a note to clients. “It is highly questionable that Mr. Assange has new information about Bank of America.”
The New York attorney general’s lawsuit accusing Ernst & Young of helping Lehman Brothers disguise its financial condition for more than seven years paints a road map for a criminal case against Lehman Brothers executives.
The lawsuit claims that Lehman’s financial statements misstated its leverage. Indeed, the four causes of action against the accounting firm are all based on the idea that E&Y was “aware that the public was being misled.”
Three of those causes of action are made under the Martin Act, the powerful anti-fraud statute passed in 1921 that gives the New York Attorney General an edge over national regulators such as the SEC when it comes to securities fraud cases. After decades of dormancy, the statute was revived aggressively by Eliot Spitzer.
Perhaps most importantly, the Martin Act gives the Attorney General broad discretion in whether to file civil or criminal fraud charges. It’s good news for Ernst & Young that the attorney general is only filing a civil suit. But this could be bad news for former Lehman Brothers executives. If Ernst & Young is guilty of fraud for merely helping Lehman executives mislead the public, the Lehman Brothers executives are likely to find themselves faced with criminal charges.
When Banks Attack — And Wrongfully Targeted Homeowners Sue (New York Times) "When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words 'Together Forever,' that contained the ashes of her late husband, Robert. The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand. In an era when millions of homes have received foreclosure notices nationwide, lawsuits detailing bank break-ins like the one at Ms. Ash’s house keep surfacing. And in the wake of the scandal involving shoddy, sometimes illegal paperwork that has buffeted the nation’s biggest banks in recent months, critics say these situations reinforce their claims that the foreclosure process is fundamentally flawed."
Will China Buy Portuguese Debt? (Reuters) "The euro gained against the dollar and bounced from all-time lows against the Swiss franc on Wednesday, boosted by a news report that China was ready to buy significant amounts of Portuguese sovereign debt. The Jornal de Negocios daily reported China is looking to buy between 4 billion euros ($5.26 billion) and 5 billion euros of Portuguese sovereign debt to help the country ward off pressure in debt markets, though it gave no details of its sources. China's central bank declined to comment on the report which said the deal reached between the two governments will lead to China buying Portuguese debt in auctions or in the secondary markets during the first quarter of 2011."
Treasuries Down, on Sentiments of Economic Growth \(Bloomberg\) "Treasuries fell, extending their biggest monthly loss in a year, on speculation data showing the recovery is gaining momentum will fuel concern that debt supply will overwhelm demand as inflation accelerates. Five-year notes led losses before data that economists said will show sales of existing homes and gross domestic product increased. The Treasury is tomorrow scheduled to announce the sizes of two-, five- and seven-year auctions for next week. Ten- year yields have increased 41 basis points since Dec. 6, when President Barack Obama agreed to a two-year extension for tax cuts, widening the deficit and fueling bets that growth and inflation will quicken. "
Meredith Whitney's Nightmare Scenario: Muni Defaults, Layoffs & Social Unrest (CNBC) "A wave of defaults by state and local governments in the coming months will spark a selloff in the municipal bond market, hurting US economic growth and stocks and causing social unrest as governments are forced lay off workers and cut back on services, Meredith Whitney, well known financial analyst famous for predicting the financial crisis, told CNBC Tuesday. Responding to the uproar over her "60 Minutes" interview broadcast on CBS Sunday night, Whitney defended her prediction that at least 50 to 100 cities and towns could default on their debt as states and the federal government cut back on financial support. "
Attorney General Cuomo Files Suit against Lehman Auditor Ernst & Young (NY Times DealBook) "The New York attorney general on Tuesday sued Ernst & Young, accusing the accounting firm of helping its client Lehman Brothers “engage in a massive accounting fraud” by misleading investors about the investment bank’s financial health. The lawsuit, coming more than two years after Lehman collapsed and the global economy buckled, is the first major legal action stemming from the collapse of the investment bank."
"Madoff Aide Bongiorno Reports to Jail" \(Wall Street Journal\) "A longtime 'back office' employee of convicted Ponzi schemer Bernard Madoff reported to jail in Florida on Tuesday after a federal judge in New York revoked her bail." It further explains: "Ms. Bongiorno, who has been on home incarceration and subject to electronic monitoring in Florida, had difficulty meeting the conditions of a $5 million bail set last month. " And "Ms. Bongiorno is one of five former Madoff employees facing criminal charges in the case."
Deutsche Bank has just admitted criminal wrongdoing, and a agreed to pay a $553.6 million settlement to end a year's long dispute with the government over tax shelters prosecutors claimed were.
Under the terms of the deal, the bank will not be prosecuted for tax shelter schemes involving over two thousand customers between 1996 and 2002.
The agreement states the DB customers received "$29 billion in bogus tax benefits, mainly losses".
$149 million of $553.6 million are in civil penalties — with the balance going to make up for taxes and interest IRS was unable to collect during the period in question.
It looks like municipal bond investors have just stopped trusting credit ratings agencies.
Pennsylvania and Nevada both get a credit rating of Aa1-negative from Moody's . But while Pennsylvania pays just 0.2 percentage points above the broader muni market rate, Nevada is paying 0.8 above the average.
So Nevada is paying a 300 percent higher borrowing spread than Pennsylvania.
It would seem that investors now believe that ratings have become totally unglued from reality.
Namely, ratings don't reflect — in any rational way — the marketplace on a price/yield basis.
When ratings agencies — which are intended to monitor these issuers on an ongoing basis — are summarily ignored by the markets, it should be a warning sign to the agencies that their models are breaking down.
If credit rating agencies don't find a way to address the current disconnects, we can expect to see even greater gaps grow between similarly rated products. Interestingly, this could create arbitrage opportunities for regulated entities—like mutual funds and insurance companies—to seek out extra-yield while still buying highly rated debt.
Jamie Dimon is still the king of Wall Street.
Just in time for Christmas, Dealogic has released its annual investment banking league tables. And JPMorgan, which took the top spot last year, has won again.
Despite taking the top place again, JPMorgan's revenues were down 6% overall.
So here's where the banks stand. (Figures include both debt and equity underwriting, advisory and lending.)
• JPMorgan leads the pack in investment banking revenue for the second year in a row. JPM took in $5.2 billion in fees.
• Bank of America was second at $4.6 billion in revenue from similar services.
• Goldman Sachs came in third, with an even $4 billion in revenue from investment banking.
• Morgan Stanley was fourth, at $3.8 billion in revenue from banking services.
• Wells Fargo revenue from investment banking fees declined 13 percent.
The latest Internet meme circulating around New York — and elsewhere — is a Christmas list .
It is a — self titled — "Dream Wish List."
Here is a sampling of items:
•"Gold or Silver or Sparkly Christian Louboutins"
[A handwritten margin note indicates a cost of $795.]
• "A necklace like this:"
[Like all items on the list, a URL link is helpfully included. A handwritten note indicates a cost of $2400.]
• "Hermes Avalon Blanket — Orange — $1125"
And so on.
A few billionaire investors have scored, but the average hedge fund worker isn't likely to see a fat bonus this year.
Muni bonds had a great year but don't assume that the party will continue into 2015, says Alexandra Lebenthal.
Underneath the euphoria of an improving job market, there's one nagging statistic and it reveals the real job killer, says Peter J. Tanous.