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  Friday, 19 Sep 2014 | 9:18 AM ET

Nobel winner Fama: Active management 'never' good

Posted By: Lawrence Delevingne

Eugene Fama, the University of Chicago investing researcher who won the Nobel Prize in economics last year, once again warned investors against the lure of active management.

"The question is when is active management good? The answer is never," Fama said to laughs Thursday at the Morningstar ETF Conference in Chicago.

"If active managers win, it has to be at the expense of other active managers. And when you add them all up, the returns of active managers have to be literally zero, before costs. Then after costs, it's a big negative sign," Fama added.

»Read more
  Thursday, 18 Sep 2014 | 1:46 PM ET

Economy weak due to 'stupid' policies: JPM's Kelly

Posted By: Lawrence Delevingne
David Kelly
JP Morgan
David Kelly

A top Wall Street market observer thinks the government is hurting the economic recovery by unfairly constraining banks and continuing bad policies.

David Kelly, chief global strategist at JPMorgan Funds, used housing as a prime example in a speech Thursday.

"The reason housing is still weak in the United States is because of the combined efforts of the federal government and Federal Reserve to help," Kelly said at the Morningstar ETF Conference in Chicago. "The federal government ... is on a witch hunt after the large banks because they decided to assign to the large banks all the blame for what happened in 2008."

Read MoreIt's time to be 'very selective': BlackRock pro

The result, Kelly said, was an unnecessarily weak lending environment.

»Read more
  Wednesday, 17 Sep 2014 | 2:12 PM ET

CalPERS hedge exit may be the first of many

Posted By: Kate Kelly
Don Bayley | E+ | Getty Images

The $300 billion California Public Employees' Retirement System's move this week to divest itself of $4 billion in hedge fund holdings is galvanizing a debate among many other pension managers.

"It's a discussion that's going on everywhere in our industry right now, given the high fees and what's going on with hedge funds," Steve Yoakum, executive director of the $40 billion Missouri teachers retirement funds, said in a telephone interview with CNBC on Tuesday.

CalPERS, which according to an annual tally by Pensions & Investments is the second-largest pension fund in the country, has long been a trendsetter.

The California retirees fund, which invests in private equity, fixed income, and stocks, among other things, was one of the first big retirement funds to put money into commodities in 2007, for example, and ushered in an influx of other pension-fund investments in the asset class—only to pull back on those investments after a number of years where the fund failed to make money.

»Read more
  Wednesday, 17 Sep 2014 | 11:30 AM ET

Here's the first 'correction' call...for 2015

Posted By: Jeff Cox
Adam Jeffery | CNBC

Credit Suisse has entered Wall Street's correction derby, but in a way different from its peers.

In a somewhat peculiar good news-bad news scenario, the firm's bad news is that a correction—of sorts—is coming for the stock market. The good news is that it won't happen until 2015, and probably later in the year. It's the first correction call for next year.

A note the firm's strategy team sent out Wednesday morning outlines a scenario that overall is fairly bullish—the year-end forecast for 2014 is now 2,050 for the S&P 500, up slightly from 2,020, and the 2015 target is 2,100.

However, that 2015 level is expected to close off from a high of 2,200 that the market will hit in midyear.

»Read more
  Tuesday, 16 Sep 2014 | 1:56 PM ET

The Fed's muddied message causing market mess

Posted By: Jeff Cox
Vehicles pass the Marriner S. Eccles Federal Reserve building in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images
Vehicles pass the Marriner S. Eccles Federal Reserve building in Washington, D.C.

Maybe this is what happens when a central bank becomes too transparent.

After years of nearly complete clarity regarding policy, the Federal Reserve suddenly has investors and economists scrambling to decipher whether just a few words will be removed or changed in a statement Wednesday that likely will run about 850 words in total.

Should those words—"a considerable time," in particular—go away, most market participants believe that will signal a hike in interest rates sooner than the market had expected. Should they stay, conversely, that will mean the U.S. central bank will stay on a path of near-zero short-term rates well into the future, and maybe even beyond current market expectations.

Consequently, Fed Chair Janet Yellen has fashioned quite a tightrope to walk when the Open Market Committee delivers its post-meeting statement, and when she follows with an afternoon news conference.

»Read more
  Thursday, 18 Sep 2014 | 10:03 AM ET

It's time to be 'very selective': BlackRock pro

Posted By: Lawrence Delevingne
Russ Koesterich, BlackRock
YouTube
Russ Koesterich, BlackRock

A top Wall Street investment expert doesn't see a stock or corporate bond crash coming anytime sooneven if it's tough to spot cheap assets and slow economic growth is likely to continue.

"Does this mean we should all just move to cash? I don't think so," Russ Koesterich, BlackRock's chief investment strategist, said Wednesday evening at the Morningstar ETF Conference in Chicago.

"It does mean you have to be very selective. It does mean you should have more modest expectations for what your returns are going to look like over the next five or 10 years where valuation really matters, but I don't think that this suggests that stocks or, let's say high-yield (bonds), are about to crash."

»Read more
  Wednesday, 17 Sep 2014 | 1:02 PM ET

No inflation, no problem. US not turning into Japan

Posted By: Jeff Cox
Tetra Images | Getty Images

Inflation may have taken a break in the U.S., but the country hardly seems perched to be the next Japan.

Data from August suggest flatlining price pressure in a year that has seen inflation fall well below the mid-2 percent range that some on Wall Street had expected in 2014. So-called core inflation, which strips out food and energy costs, was flat for the first time in nearly four years, and the consumer price index more broadly indicated just a 1.7 percent annualized increase. Prices actually declined 0.2 percent including food and energy.

"The widespread softening in core prices in recent months leaves us with no choice but to conclude that underlying price pressures are weaker than we thought they would be," Paul Dales, senior U.S. economist at Capital Economics, said in a note.

It's a trend that, extrapolated just a bit, might suggest the U.S., rather than witnessing inflation that goes with economic growth, actually could be closer to Japan-style deflation that has haunted the country for the past two decades.

Read MoreUS consumer prices fall in August

Not so, Dales said in a subsequent interview.

»Read more
  Monday, 15 Sep 2014 | 5:46 PM ET

Ackman to use dual share class for European IPO

Posted By: Kate Kelly
Bill Ackman
Kerima Greene | CNBC
Bill Ackman

Hedge fund activist Bill Ackman has never been shy about using his shareholder rights to demand change from company management teams. But as CEO of his own soon-to-be public company, he'll use a dual share-class structure that has traditionally been considered unfriendly to investors—albeit with a twist.

As part of the planned offering of Ackman's foreign offshoot, Pershing Square Holdings, on the Euronext exchange in Amsterdam in October, the company has created two sets of shares, say people familiar with the company's prospectus: One that will be sold to the public in Europe, and a second that will be controlled by a nonprofit organization in Canada.

»Read more
  Tuesday, 16 Sep 2014 | 8:00 AM ET

‘Monumental failure’ of today's colleges: Survey

Posted By: Stephanie Landsman

Colleges not preparing students for the workforce has been the perception for a long time—but now there's data to back that up.

A Gallup-Purdue University study describes a huge disconnect between what college presidents think students need to launch successful postgraduate careers and what the schools are actually delivering.

The survey, which involved more than 30,000 students, tackled topics such as internship experience, availability of mentors, enthusiastic teachers, special projects and extracurricular activities.

The biggest sticking point: Internships.

»Read more
  Monday, 15 Sep 2014 | 12:10 PM ET

One place you won't get Alibaba: The big ETFs

Posted By: Jeff Cox
Alibaba headquarters in Hangzhou, China.
ChinaFotoPress | Getty Images
Alibaba headquarters in Hangzhou, China.

Alibaba's blockbuster debut as a publicly traded stock has been everywhere leading up to Thursday's rollout. One place it won't be, though, is in a lot of investor portfolios.

That's because the e-commerce giant won't be included in the biggest exchange-traded funds that normally would list a company like Alibaba.

Because it is incorporated in the Cayman Islands and will only have American depositary receipts listed in the U.S., it will be ineligible for big indexes like the ones run by MSCI and FTSE.

While its exclusion from widely followed ETFs is unlikely to deter investor enthusiasm for Alibaba once the initial public offering hits Friday, it could have longer-term ramifications.

»Read more

About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.

 

  • 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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