Howard Marks thinks that the drop in oil prices could finally expose low lending standards and provide better value in the markets.» Read More
Fed Keeps Rates the Same: Continues Easing (CNBC via Reuters) "The U.S. Federal Reserve said on Tuesday the economic recovery was still too slow to bring down unemployment, reaffirming its commitment to purchase $600 billion in bonds to stimulate growth and create jobs.
In a statement that contained little acknowledgment of a recent uptick in the economic data but focused squarely on high unemployment, the Fed characterized the U.S. expansion as 'continuing,' a modest upgrade from its November description of the recovery as 'slow.'"
Fed Announcement: Alternate Coverage (NetNet) "Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. (Sigh. You could learn similar facts, stated in more accurate and less tedious language, at your neighborhood tavern.)"
Treasuries Drop on Fed Announcement (Bloomberg) "Treasuries plunged, pushing the 30-year bond yield to a seven-month high, as Federal Reserve policy makers said the U.S. recovery is continuing and maintained a $600 billion program of debt purchases.
The extra yield investors demand to hold 10-year notes over 2-year debt was the highest since April on speculation President Barack Obama’s agreement to extend tax cuts will win passage in Congress, supporting growth and stoking inflation. Retail sales rose more than forecast, and producer prices increased the most in eight months, government reports showed."
The Tequila Bubble may not be the most important economic story of the year—but, after reports of the coming bonus bloodbath , you may need all the interesting diversion you can get.
Particularly when said diversion involves premium liquor.
\(NetNet already covered Part One of the tequila bubble story . We now reaffirm our commitment to maintaining our coverage—because, in part, that distilled spirit is widely known for making the traders at your office go completely loco at the annual holiday party.\)
It's party time again on Wall Street.
For the past two years, the Grinch has reigned on Wall Street. Obviously no one was in the mood for parties in 2008, the year Wall Street supposedly died. And in 2009, many firms cancelled their official holiday parties for appearance's sake. No Wall Street firm was willing to risk the public getting hold image of bankers sipping Champagne at the Museum of Modern Art while the country sunk into the Great Recession.
Remember when you waited on tenterhooks when the Federal Reserve’s Open Market Committee was meeting. Would they raise rates? Lower them? Leave them unchanged? How should you trade the announcement?
These days are just plain boring. No one is shocked that the Federal Reserve will not alter its 0 to1 /4 percent federal funds rate target. And we knew all the back in November that quantitative easing was back on.
Even the Fed seems bored with its actions. Rather than opening their statement with an enumeration of policy actions, the Fed led with this: "Information received since the Federal Open Market Committee met in November confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment."
"No one can suck margin out of a deal faster than a banker."
This is typically said—with a wry smile—after a few cocktails.
Often by the bankers themselves.
It's an inside joke, of a kind, couched in banker speak. But the point is clear: Bankers are compensated handsomely for the deals they facilitate.
In London, that compensation is currently under fire, as Anita Raghavan reports in a New York Times DealBook post today.
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."
The surging power of activist investors is bolstered by a growing ally: public pensions and other big institutions.
Crude oil futures fell sharply, signaling traders that the selling is not over.
The Fed gave banks more time to meet a provision in the Volcker rule that bans them from betting with their own money through investments in risky hedge and private equity funds.