Finance NetNet


  Thursday, 11 Feb 2016 | 8:49 AM ET

And the top-ranked hedge fund for 2015 is ...

Posted By: Jeff Cox
London Skyline with Tower Bridge at twilight
TangMan Photography | Getty Images
London Skyline with Tower Bridge at twilight

The best-performing hedge fund in 2015 came from an unusual place: London.

That's according to Institutional Investor's Alpha's rankings of last year's best performing firms released Thursday. The analysis put Marshall Wace, a relatively little-known $22 billion firm in which KKR took a 24.9 percent stake last summer.

Another U.K.-based fund took second place. The Children's Investment Fund was "rewarded for several years of hard work revamping its relationship with investors following a year of bad performance and a rash of redemptions," according to the publication's analysis.

Rounding out the top five receiving "A" grades were Boston-based Adage Capital Management, Ken Griffin's Chicago-based Citadel, and the stellar Two Sigma fund, based in New York.

Read MoreInsana: Here's the problem with Citadel deal

The lowest-ranked funds were Brevan Howard Asset Management, Perry Capital, David Einhorn's Greenlight Capital and BlueCrest Capital Management.

See Institutional Investor's report here.

»Read more
  Wednesday, 10 Feb 2016 | 6:00 PM ET

European banks face more energy problems

Posted By: Jon Marino
Drilling in the Bakken shale formation outside Watford City, N.D.
Getty Images
Drilling in the Bakken shale formation outside Watford City, N.D.

European banks appear to face greater long-term exposure to problems in the energy sector compared to U.S. banks, many of which have already shored up capital reserves for half of their energy debt portfolio.

Numerous European banks have not yet seen their borrowers draw down much of the credit that has been allotted for them, or, even more perplexing to analysts and investors, aren't saying what their exposure to commodity-sensitive credit is, or what has already been committed.

At the Credit Suisse Financial Services Conference this week in Florida, several bank executives highlighted the total exposure of their balance sheets to energy debt, but also explained what percentage of that exposure is made up of outstanding paper.

Wells Fargo CFO John Shrewsberry highlighted the bank's $42 billion in total oil and gas credit in his presentation at the conference; 41 percent ($17.4 billion) is already outstanding. The lender already has prepared for losses in outstanding paper by setting aside $1.2 billion to offset credit losses.

The difference between Wells' energy exposure and many of its competitors is that much of the California-based bank's paper is non-investment grade. But the finance chief doesn't sound like he's sweating it.

"This is not new for Wells Fargo," Shrewsberry said at the event, and he noted "most of these loans are senior secured credit facilities."

»Read more
  Tuesday, 9 Feb 2016 | 4:09 PM ET

Fed tells banks to prepare for negative rates

Posted By: Jeff Cox

Negative interest rates in the U.S. may seem like a far-fetched idea, but the Federal Reserve is telling banks to prepare, just in case.

For the first time ever, the governing agency and U.S. central bank is requiring banks to include, in a round of stress tests commencing this year, to prepare for the possibility of negatively yielding Treasury rates. The scenario is purely hypothetical and not a forecast, according to a Jan. 28 Fed news release .

However, the development is part of a larger scenario of a world where zero rates are morphing into negative rates.

»Read more
  Tuesday, 9 Feb 2016 | 11:00 AM ET

At Goldman, traders are out and compliance is in

Posted By: Jon Marino
Lloyd Blankfein, chairman and CEO of Goldman Sachs.
Katie Kramer | CNBC
Lloyd Blankfein, chairman and CEO of Goldman Sachs.

Some Wall Streeters shake their fist at regulatory burdens imposed on the industry in the wake of the financial crisis. But a few finance pros have regulators to thank for their employment.

For now, at least.

Goldman Sachs CEO Lloyd Blankfein spoke Tuesday at the Credit Suisse Financial Services Conference in Miami, and highlighted the biggest drivers of hiring at the investment bank: the increased need for regulatory and compliance professionals, thanks to myriad new rules from Washington.

"We've also had headwinds, because of structural things, of increased head count and most of it is to support heightened compliance efforts," Blankfein said.

Read MoreEU banks face major cash crunch

He pointed out that Goldman's staff has increased by more than 3,000 since 2012. But, not everyone in the bank's compliance department should get too comfortable.

»Read more
  Monday, 8 Feb 2016 | 3:27 PM ET

Oil drop means cash crunch for EU banks

Posted By: Jon Marino , Seema Mody
A red traffic light is seen next to the headquarters of Germany's Deutsche Bank in Frankfurt, Germany, January 26, 2016.
Kai Pfaffenbach | Reuters
A red traffic light is seen next to the headquarters of Germany's Deutsche Bank in Frankfurt, Germany, January 26, 2016.

More than a dozen European banks facing exposure in excess of $100 billion to energy sector loans may need to sell assets to bolster against future losses.

Potential buyers of those assets include a mix of large private equity firms, a select group of pension investors, U.S. banks and hedge funds. Due to the recent decline in major European banks' shares and increasing scrutiny over the bad loans the banks hold, investors are starting to gravitate toward the idea of getting actively involved in European banking names.

"European banks are under pressure because they have to continually raise capital ratios" in order to offset troubled loans, Julien Jarmoszko, senior investment manager at S&P Capital IQ, told "We're seeing more restructuring being initiated."

The cash crunch is in part due to slower management of post-crisis and regulatory issues that European banks faced several years ago. It just happens to be coming home to roost at a crucial time, both in terms of banks' share prices and at a time when liquidity issues are threatening investors globally.

"U.S. banks were faster to raise capital, raised more of it, strengthened balance sheets and restructured faster" than their European counterparts, CLSA bank analyst Mike Mayo said.

Read MoreBank investors have suffered two lost decades

The four U.S. banks with the highest dollar amount of exposure to energy loans have a capital position 60 percent greater than European banks Deutsche Bank, UBS, Credit Suisse and HSBC, according to CLSA research using a measure called tangible common equity to tangible assets ratio. Or, as Mayo put it, "U.S. banks have more quality capital."

Analysts at JPMorgan saw the energy loan crisis coming for Europe, and highlighted in early January where investors might get hit.

»Read more
  Monday, 8 Feb 2016 | 1:08 PM ET

This could be the market savior this year

Posted By: Jeff Cox

In a year that looks increasingly dismal for stock market returns, companies may have to come to their own rescue.

Retail investors are bailing on stocks, pulling money from domestic equity funds every week in 2016. No wonder: The S&P 500 was down 8 percent year to date even before Monday's market plunge, a bad sign for a market that historically takes its full-year cue from how things transpire early on.

The good news is that companies appear willing to step into the void.

Read MoreGross: 'Shades of 2007' as central banks flunk

Share buybacks and dividend issuance collectively have been a major tailwind for the post-financial crisis bull market, which will turn 7 years old in a month if it can manage to hang on through the current volatility. Low historical valuations combined with cheap money have pushed corporations to return trillions to investors.

With the blackout period over for buyback announcements, Wall Street is expecting big things.

Early indications are that 2016 buybacks are "on pace to be one of the fastest starts on record," David Kostin, chief U.S. equity strategist at Goldman Sachs, said in a note his team sent to clients this weekend.

»Read more
  Monday, 8 Feb 2016 | 10:00 AM ET

Super Bowl star Von Miller bodes bad news for markets

Posted By: Jon Marino
Super Bowl MVP Von Miller #58 of the Denver Broncos celebrates with the Vince Lombardi Trophy after winning Super Bowl 50 at Levi's Stadium on February 7, 2016 in Santa Clara, California.
Getty Images
Super Bowl MVP Von Miller #58 of the Denver Broncos celebrates with the Vince Lombardi Trophy after winning Super Bowl 50 at Levi's Stadium on February 7, 2016 in Santa Clara, California.

Denver Broncos linebacker Von Miller beat up Carolina Panthers quarterback Cam Newton last night, racking up 2.5 sacks and a couple of fumbles on his way to the Vince Lombardi trophy and the Super Bowl most valuable player award.

If (very abbreviated) history is any indicator, investors this year may be as bummed out as Newton was at his postgame press conference. When an American Football Conference team wins the Super Bowl, and a defensive player like Miller is awarded the MVP, the S&P 500 loses more than 13 percent on average during the rest of the year.

»Read more
  Friday, 5 Feb 2016 | 3:07 PM ET

Lynn Tilton is stepping down from credit funds

Posted By: Jon Marino
Lynn Tilton, CEO of Patriach Partners.
Adam Jeffery | CNBC
Lynn Tilton, CEO of Patriach Partners.

Private equity investor Lynn Tilton is stepping down as collateral manager of all her credit funds, totaling more than $2 billion, after years of litigation with New York bond insurer MBIA.

Tilton will temporarily remain in charge of three credit funds, sequentially named "Zohar," until investors in those funds select a collateral manager. Tilton is not relinquishing her position as CEO of Patriarch Partners, the private equity firm she controls and in which all of the Zohar funds are heavily invested.

It also means that Tilton is withdrawing the bankruptcy filing for Zohar I, the first credit fund that she raised to support her private equity operations. Together, the funds assets total about $2.5 billion.

»Read more
  Friday, 5 Feb 2016 | 2:29 PM ET

So this is what 'full employment' looks like?

Posted By: Jeff Cox

For more than seven years, Federal Reserve officials have touted their progress toward achieving "full employment," with the most recent target a 4.9 percent unemployment rate.

With Friday's nonfarm payrolls report showing that the goal has been achieved, perhaps the Fed can raise the "Mission Accomplished" banner along with a welcome mat to the world of "full employment."

The jobless rate last reached this level in February 2008, following a run from June 2005 to April 2008 during which unemployment never eclipsed 5 percent. Getting a "4-handle" on the number — using Wall Street lingo — was supposed to represent jobs nirvana, the point at which the Fed finally would be able to declare victory and meaningfully begin to roll back its excessive easing programs that began in 2008.

But with the 5 percent goal line crossed, the jobs market remains a riddle. Consistent job creation has come with less robust gains in wages, and a seemingly positive report in most aspects was greeted with a strong sell-off on Wall Street.

In short, it was supposed to feel better than this.

Read MoreJobs report eliminates some pessimism over economy

Government numbers "don't show the quality of the jobs. They don't obviously pick up the anxiety that workers are feeling," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. Concerns over job security, particularly about being displaced by technology disruptors, "may also be adding to economic jitters and uncertainties," he added. LaVorgna said he believes the economy actually is near full employment, though it doesn't seem that way to many in and out of the labor force.

»Read more
  Thursday, 4 Feb 2016 | 6:08 PM ET

Negative rates in US? Here's why it could happen

Posted By: Jeff Cox

Less than two months after the Fed enacted its first rate hike in more than nine years, market talk already has turned to whether the central bank's future may not be more hikes, but rather negative rates.

Intensifying recession fears, volatile financial markets and moves toward negative rates by other central banks have triggered speculation over whether the Fed may have to reverse course on its tightening policy.

Negative rates in the U.S. would be a highly unusual move. However, several high-ranking Fed officials, including Chair Janet Yellen, Vice Chair Stanley Fischer and New York Fed President Bill Dudley all have indicated the move would be something they would have to examine should financial conditions tighten and threats to economic growth increase.

Read More Gross: 'Shades of 2007' as central banks flunk

"While not our baseline scenario, if the U.S. economy were to sufficiently weaken we believe the Fed could consider negative rates as a means to ease policy," Mark Cabana, rates strategist at Bank of America Merrill Lynch, said in a note to clients.

Cleveland Fed President Loretta Mester said Thursday she likely would not favor negative rates.

"As a policy maker, it's incumbent on me to look seriously at it. But I'm still a little reluctant to there," she said during a question-and-answer session in New York Thursday evening. "I think our financial system is quite complicated. I'm not sure what the effects will. I have a feeling it wouldn't be that effective."

»Read more

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