This week saw the conviction of a formerly high-ranking SAC employee for insider trading. But did he really do anything wrong.» Read More
Happy Friday, folks. The taper rally is on, the economy is growing, and vacations are days away. Who could ask for anything more?
The U.S. economy grew at a healthy—and stronger than previously estimated—4.1% annual rate in the third quarter, pushed up by consumer spending over the summer. (The Wall Street Journal)
Blackstone has built a rental-home empire across the U.S. in less than two years. (Bloomberg)
A blow-by-blow of how a New York City jury decided to convict SAC Capital's Michael Steinberg on insider trading charges. (The New York Times)
Hedge funds have turned to Washington political intelligence shops to give them an edge. But where's the line between insight and inside information? (Institutional Investor's Alpha)
Blackberry reported a massive quarterly loss as sales of its smartphones contracted and it booked asset impairment charges and inventory write-downs. (Reuters)
Distressed investors like David Tepper and John Paulson produced the juiciest hedge fund returns in 2013, beating out stock pickers and corporate activists. My CNBC.com story explains.
Top U.K. hedge fund manager Sir Michael Hintze echoed consensus market forecasts in a relatively bullish 2014 outlook piece for clients.
"I see more 'pot holes' than 'black holes,'" the founder of $12.6 billion CQS wrote. "Markets have run a long way and expectations are high, however, I think the overall direction of markets is probably upwards, albeit at a more moderate pace than in 2013."
Hintze highlighted several investment ideas for the coming year. One was floating rate and short duration bonds, such as asset backed securities like commercial mortgage-backed notes and senior structured loans, especially in Europe.
In a recent post I proposed that Scott Sumner, the premier market monetarist, expects too much of an inflationary effect from quantitative easing because his definition of money is too narrow.
Very briefly I'll run through the QE=inflation view. If you consider inflation to be a monetary phenomenon, more or less, than increases in the supply of money should result in higher prices (all other things being equal). If you also consider QE to be adding to the supply of money because it exchanges government bonds for bank reserves, then QE appears to be inflationary.
It's the second point that deserves another look: does QE really increase the supply of money? The answer to that, of course, depends on what you consider to be money. The definition of money, however, is notoriously hard to pin down. In fact, as Milton Friedman and Anna Schwartz argued, it may be impossible to pin down on an abstract level.
What we really want is not a "definition" of money that will apply to all and any circumstances. We want one that is relevant to the question we are asking. The definition that best helps us understand the particular aspect of the world and economics that we are looking at.
All eyes will be on Ben Bernanke on Wednesday as he appears in what's likely to be his final press conference as chairman of the Federal Reserve at 2:30 p.m. EST. Will he surprise markets but starting to curtail the government's bond buying program?
One fresh sign of a healthier economy—which helps make the case for a taper—is that U.S. housing starts surged in November to their highest level in nearly six years. (Reuters)
Conservatives have long complained that a war on Christmas is being waged by enemies of Christianity and traditional America. Whatever the merits of that complaint, it's clear that this year the Republicans are taking aim at Christmas.
No, they aren't demanding that public squares be cleared of crèches or that Santa be more representative of multicultural America. And they aren't frowning at those who insist on saying "Merry Christmas" instead of "Happy Holidays."
The GOP war on Christmas comes in a very different form. This year, the Republicans have fallen into the old habit of refusing to play Santa Claus.
Snow day! At least here in New York City we're seeing the kind of mild and soft snowfall that they consider a blizzard in our nation's capital. Here's what's we're obsessed with this morning.
China's Treasury holdings rise to $1.304 billion. That amounts to almost $4000 for every American or almost one and a third trillion dollar platinum coins.
JP Morgan, Deutsche ban multi-dealer chat rooms. Traders talking across banks in chat room fixed interest rates. Or tried to. Now they'll have to use snapchat.
A long-held perception is that hedge funds, especially those up big for the year, like to take it easy in December. Why keep risk on, the thinking goes, when you can guarantee a fat, marketing-friendly return for the year?
"Do I hope they are locking in their profits? I sure the hell hope so," said financial advisor Ed Butowsky of Chapwood Investment Management.
But anecdotal evidence, data and conversations with investors in hedge funds show most are standing by their bets this year and keeping risk on.
Take Philippe Laffont's Coatue Management. The technology and Internet-focused hedge fund manager with $7.51 billion in assets could sit on his 16.64 percent gain through November by lowering risk levels or shifting to cash.
But, according to investor materials, Coatue recently ramped up its market exposure from 31.79 percent "net long" in October to 47.57 percent in November, meaning the size of its long bets on stocks outweigh its shorts by even more. Laffont did this by increasing Coatue's long positions in Internet companies and decreasing its short bets on technology stocks (its top longs include Facebook, Google and CBS).
Happy Monday. One more week before most people head off for Christmas. But there's at least one big thing for Wall Street to deal with before descending into an eggnog-and-cookie-induced stupor: the Fed.
Regardless of the market's reaction to the Fed, there's historical precedent for a late December "Santa" stock rally. (Wall Street Journal)
Hedge funds believe in those late-year market gains, or at least guys like Larry Robbins of Glenview and Philippe Laffont of Coatue aren't scaling back risk to guarantee themselves a fat return for the year. We explain in a CNBC.com piece.
When the Federal Reserve unveiled the bond buying programs everyone now knows as quantitative easing, there were two complaints whose prominence was outmatched only by their erroneous assertions.
The first was that the Fed was printing money that would quickly debase the currency and lead to high inflation. The second, which followed a little while later, was that banks weren't lending out the reserves the Fed was giving to them.
We hear these things a lot less now. Most people can believe the evidence that QE didn't produce high inflation, even if they don't understand precisely why. And the notion that the amount of excess reserves in the banking system meant that banks weren't lending has been explained as nonsense to the satisfaction of anyone paying attention.
I'm afraid, however, that we're now in danger of the opposite errors rising to prominence. People who understand that QE isn't "money printing" and that banks don't lend out reserves (and aren't reserve constrained) are quite regularly falling into a false feeling of comfort about QE—a feeling made all the more dangerous because it is accompanied by a feeling of wisdom by those experiencing it. Some of the people most sophisticated about QE are fooling themselves.
Scoff if you like but bitcoin, despite its myriad defects and detractors, is getting an increasing level of focus in high finance.
Just a few recent examples:
In a recent analysis for clients, Bank of America Merrill Lynch called bitcoin a potential "major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers."
And Fidelity is now reportedly allowing clients to put bitcoins in their 401(k) plans, adding a little risk to the retirement picture, according to financial website MarketWatch.
John Carney is a senior editor for CNBC.com, covering Wall Street and finance and running the NetNet blog.
Jeff Cox is finance editor for CNBC.com.
Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.
Stephanie Landsman is one of the producers of CNBC's 5pm ET show "Fast Money."