Tuesday, 21 Oct 2014 | 10:09 AM ET

Fed to big banks: Clean up your act or you're done

Posted By: Jeff Cox

The mood may have been polite and diplomatic, but the message was not.

At an otherwise docile gathering Monday, New York Fed President William Dudley and Fed Gov. Daniel Tarullo delivered a message to high-ranking Wall Street executives that bad behavior won't be tolerated. Dudley in particular said big financial institutions operate under a cloud of suspicion and have continued bad behavior even after suffering more than $100 billion in fines and triggering a multitrillion-dollar bailout after the financial crisis.

"As a consequence, the financial industry has largely lost the public trust," Dudley said, according to remarks released by the New York Fed.

A number of big Wall Street names attended the closed-door session, as reported by the Wall Street Journal. Among those in attendance were Morgan Stanley CEO James Gorman, JPMorgan Chase general counsel Stephen Cutler and executives from Goldman Sachs and Credit Suisse.

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  Monday, 20 Oct 2014 | 3:05 PM ET

Bogle: Pimco shows why active funds don't work

Posted By: Jeff Cox
Jack Bogle
Peter Foley | Bloomberg | Getty Images
Jack Bogle

Pimco executives need only look at the firm's own performance if they want a lesson in the perils of active management, Vanguard founder Jack Bogle said.

In the latest salvo of a surprisingly public debate between two of the biggest names in fund management, Bogle said the underperformance of Pimco's flagship Total Return mutual fund provides a timely reminder that for most investors, index funds are the way to go.

Pimco's $201.6 billion TR—the largest bond fund in the world—has lagged its benchmark for three of the past four years and has lost about 30 percent of its assets under management over the past 16 months or so, according to Morningstar. The firm has, however, beaten the Barclays U.S. bond benchmark on a three-, five-, 10- and 15-year basis.

"They all peak at different times. They peak and they go down," Bogle, speaking about individual active-fund performance, said in a CNBC.com interview. "Pimco has been pretty good, but they also have reverted to the mean."

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  Monday, 20 Oct 2014 | 12:31 PM ET

Blame U.S. problems on Europe, JPM's Erdoes says

Posted By: Kate Kelly
Mary Callahan Erdoes, Chief Executive Officer, J.P. Morgan Asset Management.
Heidi Gutman | CNBC
Mary Callahan Erdoes, Chief Executive Officer, J.P. Morgan Asset Management.

Mary Callahan Erdoes, chief executive of JPMorgan's $1.7 trillion asset-management unit, argues that weakness in Europe has been the dominant driver behind the recent volatility in U.S. stock markets.

Since CNBC's Delivering Alpha conference in July, when she stated that Europe looked "fine" and that the U.S. was poised for "a great run," the main change in the broad market picture, Erdoes wrote in a new statement penned late Friday, is "reduced prospects abroad" at the moment.

"The U.S. profit and growth outlook hasn't changed much," Erdoes added, but weak overseas markets "have unsettled equity markets. Markets are repricing to this new reality" and are "now much closer to fair value."

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  Monday, 20 Oct 2014 | 12:19 PM ET

Doug Kass: I'm still short IBM and Coke

Posted By: Jeff Cox
Douglass Kass
Amanda Gordon | Bloomberg | Getty Images
Douglass Kass

As Doug Kass sees it, "IBM" just as easily could stand for "I need Buffett's Money."

The head of Seabreeze Partners Management believes the company more formally known as International Business Machines is experiencing a fundamental growth problem that is making Warren Buffett's investment in the company look unwise.

Specifically, he thinks IBM is facing an innovation challenge in which the company's base as a leader in data management is under fire from cloud computing, an arena in which it is not suited to play.

What's more, he also believes the Oracle of Omaha is in trouble with his investment in Coca-Cola.

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  Monday, 20 Oct 2014 | 7:00 AM ET

Banks are lending again, but mostly to rich people

Posted By: Kayla Tausche

For five years, U.S. consumers have been undergoing a massive debt reduction: Paying off credit cards, paring back spending and building up funds for a rainy day. Investors, though, have been looking to see whether Wall Street banks are lending for a positive sign that the economic recovery is picking up steam.

Last week, investors got a sign—though not quite as positive as they may have hoped. For banks like JPMorgan Chase and Bank of America—which each reported "core" loan growth in the single-digit percent range—the uptick in borrowing came from high net-worth clients in their brokerages, not from the consumer banks.

"Households have focused on improving their financial position, even with historically low interest rates," said Marty Mosby, director of bank equity strategies at Vinings Sparks Asset Management.

Loan balances serve as a barometer of consumer sentiment: It takes confidence in one's job security and personal finances to borrow for a big purchase or a new venture. Data from the third quarter showed wealthier clients tended to have more of that confidence.

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  Saturday, 18 Oct 2014 | 1:00 PM ET

The depressing truth behind the jobs 'recovery'

Posted By: Carleton English

Unemployment is below 6 percent for the first time since 2008, but it's not quite time to uncork the champagne when it comes to the jobs picture.

Wage growth in the U.S. has been flat for decades, providing an ugly counterweight to an ostensibly improving part of the economy.

September's positive jobs report, which saw the unemployment rate fall to 5.9 percent, was celebrated on Wall Street, but a growing chorus of experts suggests that the jobless number alone may not be enough to measure the health of the labor markets. New research suggests there should be more attention paid to income trends.

If your most recent raise felt underwhelming, there is compelling data confirming that your wallet is being squeezed by inflation and stagnant wages. Growth in wages peaked in 1973 and has steadily declined since. In fact, today's wages have the same purchasing power as they did in 1979, according to a report by the Pew Research Center.

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  Friday, 17 Oct 2014 | 12:11 PM ET

Whoa! Pimco takes on Bogle over active management

Posted By: Jeff Cox
Jack Bogle
Shannon Stapleton | Reuters
Jack Bogle

Talk about your heavyweight fights: Bond giant Pimco is taking aim at investing legend Jack Bogle.

In a rejoinder distributed Friday, the Newport Beach, California-based firm disputed comments Vanguard founder Bogle made recently indicating that index investing was as preferable on fixed income as it is in equities.

Pimco managing director James Moore, in a paper titled "Sorry, Mr. Bogle, But I Respectfully Disagree. Strongly," seeks to dispel conventional thinking in the long-running active vs. passive debate.

Essentially, Moore's arguments comes down to five points:

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  Friday, 17 Oct 2014 | 12:14 PM ET

Small caps rake in big bucks; top week in 14 years

Posted By: Jeff Cox

A volatile week for financial markets has produced at least one clear winner.

Small-cap stocks, previously Wall Street's biggest laggards, took on a leadership role as the market bent and swayed in a storm of tumult that provided unpleasant reminders of the financial crisis.

While major indexes including the S&P 500 and Dow Jones industrial average sustained huge swings that resulted in comparatively modest losses, the Russell 2000—the primary index for small caps—had risen an impressive 3.7 percent as of Friday morning trade.

The performance was especially impressive considering the barometer had actually entered official correction territory—down more than 10 percent from its most recent high—as investors abandoned the space.

Money flows drove the performance, with one exchange-traded fund in particular reaping the benefits.

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  Friday, 17 Oct 2014 | 11:39 AM ET

NBA's Bucks add third hedge fund owner in Dinan

Posted By: Lawrence Delevingne
Jamie Dinan
Jacob Kepler | Bloomberg | Getty Images
Jamie Dinan

The big "bucks" keep flowing from Manhattan to Milwaukee.

Billionaire investor Jamie Dinan, founder of York Capital Management, has joined fellow hedge fund managers Marc Lasry of Avenue Capital and Wes Edens of Fortress Investment Group as a "substantial" owner of the NBA's Milwaukee Bucks.

Dinan became an owner in July, but it was first disclosed in a news release Thursday night announcing a separate group of new partial stakeholders. They include "community leaders and philanthropists" who the Bucks hope will represent a "bold new model of private, community and potentially public partnership."

"Marc, Wes and I are thrilled to have the Partners for Community Impact group join us on our quest to make the Bucks organization the best in basketball," Dinan said in a statement. "Since I joined as an owner in July, I have already seen the huge strides we have taken on making the Bucks an integral part of the Milwaukee community."

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  Thursday, 16 Oct 2014 | 5:24 PM ET

Steve Cohen made nearly $2 billion in 2014: Source

Posted By: Lawrence Delevingne
Steve Cohen
Simon Dawson | Bloomberg | Getty Images
Steve Cohen

Steve Cohen is still minting money.

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  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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