Bill Gross thinks conditions are ripe for a liquidity crisis, and he points a finger at his old firm for its potential to be at the center of the storm.» Read More
One thing that seems to have escaped everyone’s notice here is that Goldman Sachs —the reviled villain of Wall Street—is actually serving the two traditional functions of an investment bank by doing this deal with Facebook.
The momentum is picking up against the health care repeal vote. The Congressional budget office issued a statement saying they estimate the repeal would increase the deficit by $230 billion by 2021.
This statement came to no surprise by those following the debate. Many Democrats have already been saying this. But now that the genie is out of the bottle. I decided to ask Congress Michael Burgess \(R-TX\) a physician and member of the Health Subcommittee on this thoughts on the upcoming vote.
Goldman Sachs' plan to offer clients up to $1.5 billion in Facebook equity has many on Wall Street wondering if the vampire squid has a secret plan to force the social network to go public.
“Maybe it’s just envy talking—we would have killed to be in this deal—but part of me wonders if Goldman is pulling a fast one on Facebook,” an executive at a rival Wall Street firm told me last night.
Americans are passionate about shopping and the latest data makes it clear that they are embracing the online model in record numbers.
Can malls survive the onslaught in online shopping? The opportunity to eat at your desk and shop simultaneously?
Here's what you should be reading this morning.
1. 53 things I learned from Stocktwits founder Howard Lindzon. #1: make friends through violence.
2. Was the first Wikileaks really started in 1964 ?
3. Quora is quickly overtaking Twitter .
4. It's quite possible we could have10% unemployment forever .
Felix Salmon raises some interesting questions about Goldman Sachs' stake in Facebook.
The basic question he asks regards the letter and spirit of the Volcker Rule, which prohibits banking institutions from engaging in proprietary trading and other investments as principals.
Salmon writes "I’m not saying that the Facebook investment is illegal — for one thing, the details of the Volcker Rule have yet to be fully hashed out, which means it doesn’t yet have the full force of law. But this does look like it violates the spirit of Dodd-Frank."
The Volcker Rule, of course, is intended to limit the risk exposure of bank holding companies.
[CNBC via Reuters] "New U.S. claims for unemployment benefits rose more than expected last week, but a decline in the four-week average to a fresh low in more than two years indicated the labor market improvement remained intact. The number of people still receiving benefits under regular state programs after an initial week of aid fell 47,000 to 4.10 million in the week ended Dec. 25. That was in line with market expectations, and the prior week's number for the so-called continuing claims was revised up to 4.15 million from 4.13 million. The number of people on emergency unemployment benefits fell 133,625 to 3.58 million in the week ended Dec. 18, the latest week for which data is available. A total of 8.77 million people were claiming unemployment benefits during that period under all programs."
Showdown Looms as Gov't Bumps Against Debt Ceiling [CNBC] "As Republican lawmakers threaten a showdown over the federal debt limit, bond investors are calculating when they should start to get nervous. The answer: early March, and probably, really worried in April. Wall Street economists, looking at recent seasonal spending and revenue trends, estimate the $14.3 trillion debt limit will be reached toward the end of March or sometime in April if Congress fails to raise it before then. Hitting the limit could force shutdowns of federal offices, as happened in 1995, threaten payments for Social Security and other federal benefits, or even cause a default on federal debt payments."
C'mon, it's Friday eve, power on through. Plus, I've been up \(way\) longer than you, and not complaining. So, here's what happened while you were sleeping, sunshine:
Goldman and Facebook: A Brave New World — Of Corporate Surveillance (Bloomberg) "Goldman Sachs employees receive a warning when they try to log onto Facebook at work. The message says that “access to this site is logged and audited” and that usage at the New York-based firm is restricted to 'legitimate business.'"
"Treasury Drops Short Sale Requirements" (CNBC) CNBC's Diana Olick on changes to the Home Affordable Foreclosure Alternative program: "As more and more homeowners dipped underwater on their mortgages last year and didn't qualify for loan modifications, the Obama Administration launched a program to help them out."
Goldman's Facebook Deal: Open Questions \(Reuters\) "Goldman Sachs’ old-school Facebook deal brings a new set of challenges. The bank is raising up to $1.5 billion from clients to invest in the social network while putting in $450 million itself. Like Morgan Stanley’s reported deal with online coupon service Groupon, it looks like classic merchant banking. With hot firms in the driver’s seat, however, the banks could find themselves in for a wild ride."
"Currency traders that seek profits by borrowing in nations with low interest rates to fund purchases in countries with higher yields are losing more money than at any time in at least a decade."
So begins a Bloomberg News story , dated yesterday.
When I took my first job at an investment bank many years ago I didn't know anything.
It was back in those early years that I first heard the term 'carry trade'. I remember that when I first heard the concept it sounded like the most romantic and mysterious thing in the world.
Like I said, I didn't know anything.
Back then I was humble and inquisitive: So I asked a trader about how it worked.
Goldman Sachs and Morgan Stanley would cease to exist under "living wills" drawn up to show how banks would handle bankruptcy in a crisis.
Oil's free fall could continue, with U.S. crude futures breaking $50 in the near future.
Last year saw a big shift in institutional investors in Greece, as it changed from developed to emerging market, according to eVestment.