Friday, 15 Aug 2014 | 12:33 PM ET

George Soros loads up on bearish market bet

Posted By: Kate Kelly

Soros Fund Management, the large family office that manages assets for billionaire George Soros, raised its protection against a U.S. stock market drop dramatically, sparking concerns that the powerful investment firm is expecting a big fall in equities.

During the course of the second quarter, which ended June 30, Soros Fund Management's position in puts—the right to sell at a certain price at an appointed time in the future—in a popular exchange-traded fund tracking the S&P 500 rose to 11.29 million shares, which appears to be a multiyear high for the investment manager. (During the first quarter, the size of that position was just 1.6 million puts, meaning that the second quarter marked a 606 percent increase.)

Based on some simple math, and assuming Soros still held the puts and that they were in the money (meaning they would generate gains if they were exercised today), the notional value of the bearish position is roughly $2.2 billion.

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  Thursday, 14 Aug 2014 | 12:23 PM ET

Why Russia, Iraq to have 'little impact' on market

Posted By: Jeff Cox

Investors are showing little reaction to the events in Ukraine and the Middle East, taking their cue from a Federal Reserve unlikely to show much concern despite the seriousness of both trouble spots.

An analysis from Goldman Sachs helps explain why the market has displayed only momentary reactions to the ongoing dispute between Russia and the separatists in Ukraine, and actually rallied the day President Barack Obama announced targeted airstrikes against ISIS rebels in Iraq.

Economists Michael Cahill and David Mericle believe investors will continue to dismiss the threats:

The current US air strikes in Iraq are unlikely to have a significant impact on defense spending or oil prices, unless the scale of the conflict changes considerably. Evidence from past U.S. conflicts that were similar in scale also suggests little impact on confidence and at most mixed evidence of a flight-to-safety effect in financial markets. The exchange of sanctions with Russia--a relatively minor U.S. trading partner--is also likely to have only a modest impact on the U.S. economy. Of course, both situations are highly unpredictable.

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  Wednesday, 13 Aug 2014 | 11:46 AM ET

Uh-oh: Trouble is brewing again in the repo market

Posted By: CNBC.com staff
Getty Images

The collapse of repurchase agreements—"repos" as they are known on Wall Street—signaled the beginning of the financial crisis, and there's trouble brewing in the market again.

Banks are retreating from repos as new regulations tighten controls on the types of risks they're allowed to take and make the trade more expensive, according to a report in The Wall Street Journal.

The practice involves short-term funding in which a hedge fund raises cash by selling securities to banks, which in turn sell to a third party—usually a money market fund—that then sells the bond back at a higher price and pockets the profit. While the process worked well for years, it collapsed when liquidity concerns surfaced at former Wall Street titans Bear Stearns and Lehman Brothers in 2008.

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  Tuesday, 12 Aug 2014 | 4:42 PM ET

That time Nassim Taleb debated a parody account

Nassim Nicholas Taleb, New York University professor and author
Jerome Favre | Bloomberg | Getty Images
Nassim Nicholas Taleb, New York University professor and author

If you follow @ProfJeffJarvis on Twitter, you know that he is a "thinkfluencer," which isn't a real word, nor is it a real Twitter account. Highly entertaining? Yes.

Apparently, Nassim Taleb, author of "The Black Swan," did not take the time to look at @ProfJeffJarvis's avatar (see:beer helmet) or read his biography. Closer inspection surely would have tipped him off that he was being goaded by a parody account.

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  Tuesday, 12 Aug 2014 | 12:26 PM ET

Icahn's fix for 'major asset bubble'? Activists

Posted By: Jeff Cox
Carl Icahn
David Grogan | CNBC
Carl Icahn

Carl Icahn sees U.S. markets in a "major asset bubble," and he says the only solution is for activist investors like him to keep companies honest.

In a blog post, the head of Icahn Enterprises boasted of his performance and said inept CEOs and aggressive Federal Reserve policies are creating treacherous times for investors.

"There are numerous challenges we are facing today whether it be monetary policy, unemployment, income inequality, the list can go on and on… but the thing we have to remember is there is something we can do about it: Shareholders, the true owners of our companies, can demand that mediocre CEOs are held accountable and make it clear that they will be replaced if they are failing," Ichan said in a Tumblr post that appeared on Yahoo Finance.

Public perception that activist investors only take short-term positions in companies is untrue, he added, asserting that shareholder vigilance is essential to protect investors.

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  Tuesday, 12 Aug 2014 | 3:26 PM ET

'Perma-bear' Schiff's funds have been on a roll

Posted By: Jeff Cox
Peter Schiff, CEO of Euro Pacific Capital, speaks at a panel discussion at the SALT conference in Las Vegas May 14, 2014.
Rick Wilking | Reuters
Peter Schiff, CEO of Euro Pacific Capital, speaks at a panel discussion at the SALT conference in Las Vegas May 14, 2014.

Call Peter Schiff a gold-bug perma-bear all you want, but he must be doing something right.

Despite his reputation as a perpetual Cassandra whose principal market call has been to buy gold and bet against the U.S. dollar, funds operated by Schiff's firm, Euro Pacific Capital, have been doing very well against their competitors over the past several years.

In fact, Euro Pacific's International Value Fund ranks in the top percentile against its 797 competitors, according to Morningstar rankings. It has done so while avoiding the U.S. market, which is on a 190 percent tear since the March 2009 financial crisis lows. Euro Pacific has most of its funds in privately managed and brokerage accounts and is a relative newcomer to the mutual fund industry, but the results provide a glimpse into how Schiff's strategy has performed.

"He's been called a perma-bear. Meanwhile, the last five years we've been fully invested in stocks," said Andrew Schiff, Peter's lower-profile brother. "Yeah, he's bearish on the U.S. economy, because we're a borrow-and-spend debt-fueled economy. He doesn't like that. He thinks it's a one-way street that's going to end badly. It doesn't mean he's a perma-bear."

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  Friday, 8 Aug 2014 | 1:57 PM ET

Inflation a 'key concern' for these companies

Posted By: Jeff Cox
A Walgreens store is shown in Louisville, Ky.
Luke Sharrett | Bloomberg | Getty Images
A Walgreens store is shown in Louisville, Ky.

Sentiment on the ground isn't meshing with the official data when it comes to inflation.

Despite government numbers showing that inflation remains tame, companies increasingly are expressing worry that it is in the pipeline and posing a threat to profits.

"Inflation remains a key concern for management," Goldman Sachs strategist David J. Kostin and others wrote in a research note. "Companies noted the potential long-term impact of rising costs on margins despite hedges that reduce the near-term impact on profits."

Data show that overall, inflation pressures are largely absent from the current economic picture.

The consumer price index rose just 0.3 percent in June, the latest month, while the personal consumption expenditures index has been gaining at just a 1.6 percent pace, both considerably below the targets before the Federal Reserve would begin raising interest rates. There also are few wage pressures, with labor costs up just 0.6 percent in the second quarter and weekly wages tracking at a 2 percent annualized increase.

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  Friday, 8 Aug 2014 | 11:38 AM ET

Cryptocurrency candidates: Bitcoin enters politics

Posted By: Kelly Kaler
Jin Lee | Bloomberg | Getty Images

Andrew Hemingway was introduced to bitcoin four years ago while working as a tech entrepreneur. At 32, he is now the Republican candidate for governor of New Hampshire—the youngest gubernatorial candidate in state history—and the first to accept bitcoin donations.

In May, a unanimous vote by the Federal Election Commission made it legal for bitcoin donations to be deposited into official campaign accounts. Donations are capped at $100 per person, per cycle.

"Every candidate has their base and their network ... I think by nature the currency trends significantly young and tech-savvy, so that's my base," Hemingway said. "My friends use bitcoin, their friends use bitcoin ... it's a part of a community."

About 20 percent of Hemingway's donations so far have come from bitcoins. If elected, he hopes to make New Hampshire the first state to accept bitcoin as payment for state taxes and fees.

"I would say certainly so far the earliest adopters in terms of candidates have been younger," Christopher David, CEO of bitcoin consulting company CoinVox, said of campaigns funded by the cryptocurrency.

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  Thursday, 7 Aug 2014 | 1:49 PM ET

Forget claims drop, the jobs market still stinks

Posted By: Jeff Cox

Thursday marked another day and another data point that at least on its face showed the Federal Reserve has plenty of incentive to start raising interest rates.

Weekly jobless claims tumbled to 289,000 for the period ending Aug. 2. More importantly, the four-week moving average, which smooths out volatility in the data, fell to 293,500, the lowest level since late-February 2006.

Back then, the Fed's targeted funds rate stood at a robust 6 percent. Today, the rate is set between 0 and 0.25 percent.

So isn't it past time for the central bank to get on the stick and start setting a rate that is more in line with economic reality, particularly that being expressed in the jobs market?

Not really, at least in the eyes of Chair Janet Yellen and the solid consensus she commands on the Open Market Committee, which sets the policy rate.

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  Thursday, 7 Aug 2014 | 3:17 PM ET

Survey says: Investors are getting pretty scared

Posted By: Jeff Cox

As world unrest surges and the stock market wobbles, investors have gotten nervous.

At least three separate sentiment polls indicate that stock market bulls have been corralled by the confluence of factors lining up against the market: Trouble in Ukraine and Middle East violence to name two, plus a seemingly endless slew of Wall Street calls for a long-overdue correction or worse.

Respondents to the weekly American Association of Individual Investors survey indicated their strongest levels of pessimism in almost a year. Bears outflanked bulls 38.2 percent to 30.9 percent. The level of negative market views was last eclipsed for the week of Aug. 22, 2013.

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