Wall Street banks may appear to be offering higher salaries to junior employees, but the increase may not be as generous as it looks.» Read More
Part of the appeal of investing in hedge and other private funds is their inherent exclusivity.
If you've got money with one, it's shorthand for being rich and, in the eyes of the government, sophisticated enough to understand the added risks. In other words, private funds seem sexier to some than pedestrian investments like stocks and mutual funds.
But access to those funds may get much more exclusive.
The Securities and Exchange Commission is considering changing how a so-called accredited investor is defined. In doing so, it's facing pressure from outside groups to dramatically increase the minimum savings and income requirements to invest and adding other measures of financial sophistication, like being a chartered financial analyst or having an advanced business degree. If approved, the changes would slash the number of people who the government deems wealthy and sophisticated enough to invest in hedge, private equity, venture capital and other private funds and investments.
"The new rules could significantly reduce the number of accredited investors. That would narrow the amount of eligible U.S. investors for hedge funds and others," said Steve Nadel, a private funds-focused partner at the law firm Seward & Kissel.
Forget the headlines, forget the charts: Despite the loopy stock market behavior recently, investors are downright apathetic about the way things are going.
If you looked at the values of the S&P 500 over the past 30 days, little has changed. The stock market index opened at 1,976 on July 21; it opened just 5 points above that level Wednesday. In between, though, the market turned and churned.
During that period, the index hit a low of 1,909 on Aug. 7, and many market experts predicted this was the onset of the correction that just about everyone on Wall Street has been predicting this year, even though the decline was barely 3 percent.
It wasn't to be, however, as investors quickly took advantage of the slump and again pushed the market close to record territory.
All of the reaction has been reflected fairly well in the Chicago Board Options Exchange's Volatility Index, or VIX, which measures market fear as gauged by put (right to buy) and call (right to sell) options. The gauge actually has declined slightly over the past 30 days and is off 12.4 percent for the year.
Not so long ago, Russ Holton was married, making a six-figure income and looking at a promising career ahead.
Now, seven years later, he's divorced, interviewing for $12-an-hour jobs and trying to further his education and stay afloat in a jobs market that is creating in excess of 200,000 positions a month but few that provide an opportunity to live the life to which he had become accustomed.
"I'm not finding what I'm looking for," Holton, a 45-year-old resident of Mason, Ohio, said during a phone interview that provided a break during a day of job hunting. "I just interviewed for a job that pays $12 an hour. I felt really stupid. For 12 bucks an hour, that's not right.... It's a different world right now."
While it may be a different world, it's a familiar story.
Each month the Bureau of Labor Statistics reports the number of new nonfarm payroll positions created, and for the past year the average has been 209,000. That's not a spectacular number, but it is at least in line with historical trends and has contributed to bringing down the unemployment rate from 7.3 percent to 6.2 percent during the period.
Behind those numbers, though, has been a disconcerting brew of statistics—aside from the much-cited decline in labor force participation—that shows the jobs market is far from full health. Part-time jobs continue to grow almost as quickly as full-time positions, the average duration of unemployment is still about eight months and, perhaps most disturbingly, post-recession job creation remains skewed toward lower-wage positions.
Even as retail investors shy away, Wall Street is still making a dash for trash.
In fact, the recent exodus of funds from high-yield bonds has only whetted the appetite of institutional investors, who are using the slump in junk prices as a buying opportunity, according to an analysis from the Wall Street Journal.
The mom-and-pop crowd ditched a net $13 billion in junk bonds for the four weeks preceding August 6, a trend that has pushed firms like Alliance Bernstein even deeper into the market.
"Investors who panic in these sell-offs—it's the wrong thing to do," Alliance's Gershon Distenfeld told the Journal.
After close to a year and a half of pumping money into the stock market, mom-and-pop investors have spent most of the summer in hiding.
Since May, money has been streaming out of mutual funds that invest in the stock market—particularly those that are focused on U.S.-based equities. Domestic equity mutual funds surrendered some $26.6 billion in May, June and July, according to data from Morningstar that reflects investor unease over a confluence of factors facing the market.
"Investors certainly have been given enough reason to be cautious," said Art Hogan, chief market strategist at Wunderlich Securities. "Every day, we wake up to a new or intensifying geopolitical problem, whether it's Russia, Ukraine, Pakistan, which could be building up as a problem. We have issues with Ebola—there's a multitude of concerns at the time, even when the market is just a percentage point or two of its record highs."
Consequently, investor behavior has changed.
Tom Conheeney, the longtime president of SAC Capital and top lieutenant to founder Steve Cohen, is stepping down Monday from the No. 2 spot at the former hedge fund's successor company, Point72, a company insider said.
Conheeney will be replaced as president by Douglas Haynes, a former McKinsey executive, the source said. Haynes joined Point72 in February as managing director of human capital. Point72 manages the assets of Cohen and certain employees and family members.
The surprise exit raises questions about Conheeney's standing at Point72. He joined SAC Capital in a less senior capacity in 1999.
David Tepper wasn't joking when he said it was "nervous time" for the stock market.
The billionaire head of the Appaloosa Management hedge fund rattled the markets in May, when he told attendees at the SALT Conference in Las Vegas that he was paring back his equity positions.
"I'm not saying go short, I'm just saying don't be too fricking long right now," he told attendees in remarks that went viral and immediately sent a shiver into the market.
Judging by his most recent quarterly filings with the Securities Exchange Commission, Tepper wasn't trying a sleight of hand, wherein he would try to get investors to sell so he buy at reduced prices.
Read MoreTepper on the market: 'Nervous time'
No, he was selling. Tepper, who made an eye-popping $3.5 billion in 2013, shed multiple positions.
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.
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.
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.
CNBC's Patti Domm and Jeff Cox discuss the jobs report and the current dilemma of long-term unemployment.
CNBC's Patti Domm and Jeff Cox discuss the recent GDP numbers and what factors have been affecting it.
Investors give and investors take away, and nowhere has that been more true lately than in value stocks.
Wall Street banks may appear to be offering higher salaries to junior employees, but the increase may not be as generous as it looks.
Investors may be warming up to the stock market, but they're taking the safe way in.
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