Wednesday, 22 Oct 2014 | 9:16 AM ET

Weird econ: How a $40B trade deficit helps US

Posted By: Jeff Cox

Here's where a $40 billion trade deficit comes in handy.

Because the U.S. has such a sharp imbalance between what it imports and exports, expected global weakness ahead likely won't have a severe effect on domestic economic growth, according to a report this week from Goldman Sachs economists.

In fact, Goldman held firm to its forecast that the U.S. will significantly outperform much of the developed and emerging world—a 3 percent rise in gross domestic product for 2015 against an expected gain of just one percent or so for Japan and the euro zone. Goldman has cut its forecast for non-U.S. growth by half a percentage point but is holding fast to its expectations for the U.S. itself in the longer term even though it recently reduced its third-quarter GDP outlook.

"At a time when domestic growth drivers are clearly picking up, we see several reasons for optimism," Goldman economists Jan Hatzius and David Mericle said in a report for clients.

»Read more
  Tuesday, 21 Oct 2014 | 6:07 PM ET

Blackstone backs 'utility scale' wind, solar power

Posted By: Lawrence Delevingne
Eyematrix | Getty Images

Mega investment firm Blackstone Group announced a partnership Tuesday to develop large North American wind and solar projects.

Blackstone will team with renewable power developer Solops to create Onyx Renewable Partners. Onyx will be a new affiliate of Blackstone portfolio company Fisterra Energy and will be owned by funds managed by Blackstone on behalf of its private equity investors. Solops founder Matt Rosenblum will be Onyx's CEO.

"Onyx will expand Blackstone's and Fisterra's existing global footprint, add new renewable generation to our nation's grid and create value for all stakeholders involved," Sean Klimczak, a senior managing director who oversees Blackstone's power investments, said in a statement.

Read MorePower from ocean tides: Don't laugh, it's real

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  Tuesday, 21 Oct 2014 | 4:07 PM ET

David Tepper takes short position against the euro

Posted By: Jeff Cox
David Tepper, founder of Appaloosa Management
Adam Jeffery | CNBC
David Tepper, founder of Appaloosa Management

Hedge fund titan David Tepper is dipping his toes into the currency waters.

The head of Appaloosa Management, said he's taking a position against the euro, a move that comes amid shifting sands in the global forex market.

Speaking at the Robin Hood Investors Conference in New York, the billionaire head of the $20 billion firm said he anticipates the European Central Bank loosening policy ahead as the region seeks to stave off yet another recession.

»Read more
  Tuesday, 21 Oct 2014 | 2:34 PM ET

Next worry—surging corporate debt levels

Posted By: Jeff Cox

Corporations are piling on debt, but investors don't seem to be worried, drawing comparisons to the kind of complacency that helped drive the financial crisis.

Nonfinancial business debt surged to $11.7 trillion in the second quarter, a 6.3 percent gain that was the third-biggest move since 2007. Total corporate debt was $7.4 trillion, a 6.8 percent annualized increase, according to the Federal Reserve.

Companies have been loading up on debt during the Fed's five-year run of near-zero interest rates on short-term debt. They've used it in some part for capital expenditures but have been especially aggressive at share buybacks and dividends, moves that reward shareholders during a time when the S&P 500 stock index has surged more than 190 percent from its March 2009 lows.

But worries are beginning to crop up that the debt party faces an unhappy ending particularly if growth slows and the Fed follows through on plans to end the quantitative easing monthly bond-buying program that has pushed its balance sheet past $4.5 trillion and coincided with the stock market rise.

»Read more
  Tuesday, 21 Oct 2014 | 3:02 PM ET

Dan Loeb talks up Amgen stake; shares rise

Posted By: Lawrence Delevingne

Hedge fund manager Dan Loeb recommended Amgen's stock on Tuesday, causing its shares to rise about 4 percent on the news.

Loeb, head of hedge fund firm Third Point, spoke of the company at the Robin Hood Investors Conference in New York. Third Point also simultaneously sent a letter to investors discussing the position. Amgen is not a new stake; Third Point held 450,000 shares as of June 30, according to a regulatory filing. But Third Point is now "one of the company's largest shareholders," according to the letter.

"We believe the obscured fundamental value and investor skepticism that have led to Amgen's valuation discount can be easily unlocked," the letter said.

It listed three "immediate" actions Amgen could take to add value: "focusing its R&D efforts;" "providing long‐term margin guidance demonstrating a commitment to reducing a bloated cost structure" and "creating clarity on additional shareholder returns."

»Read more
  Tuesday, 21 Oct 2014 | 1:56 PM ET

Larry Robbins has four big stock ideas

Posted By: Lawrence Delevingne
Larry Robbins
David Grogan | CNBC
Larry Robbins

Larry Robbins of Glenview Capital Management unveiled four new stock picks Tuesday at the Robin Hood Investors Conference in New York.

The hedge fund manager suggested people place long bets on Community Health Systems, VCA Antech, Realogy and Fidelity National Financial, according to a person familiar with the presentation.

The conference, which is closed to the press, features top investment managers and raises money for Robin Hood, a hedge fund-heavy charity that fights poverty in the New York metropolitan area.

Others to present at the event Tuesday include David Tepper of Appaloosa Management, Carl Icahn of Icahn Enterprises, David Einhorn of Greenlight Capital and Dan Loeb of Third Point.

Read MoreEinhorn: Picked up 'a bunch of things,' see opportunities now

»Read more
  Tuesday, 21 Oct 2014 | 8:44 AM ET

Ugly October: 'Hedge' funds don't live up to name

Posted By: Lawrence Delevingne
A trader works on the floor of the New York Stock Exchange.
Getty Images
A trader works on the floor of the New York Stock Exchange.

Hedge funds designed to protect against falling and volatile markets have made a strong pitch to investors: Trust us with your money, and we'll make lots of it for you when years of relatively smooth, positive stock returns inevitably end.

The beginning of the end—or at least a temporary market pullback, depending on whom you ask—finally came in October and market gyrations increased. The S&P 500 is down nearly 3.5 percent and the CBOE Volatility Index, or VIX, is up nearly 14 percent for the month as of Monday.

But short-selling experts, volatility arbitrage specialists, macroeconomic forecasters and other funds designed to profit from choppy or down markets have mostly underwhelmed in October, according to early performance estimates obtained by CNBC.com.

"It's brutal," said a frustrated hedge fund researcher at a money management firm for wealthy families who asked not to be named. "So far I'm not really impressed by anybody."

»Read more
  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.

»Read more
  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."

»Read more
  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."

»Read more

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  • Jeff Cox is finance editor for CNBC.com.

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

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