A market priced for perfection will start to wilt when investors realize things aren't particularly perfect.» Read More
Public Trading in Private Companies (CNBC via New York Times) Looking to buy stock in Facebook or Twitter—even though those companies are privately held? Well, look no further than the secondary trading markets! It sounds exciting, doesn't it? Just remember: Your shares are illiquid. And--oh, yeah—there is the small matter of the S.E.C. inquiry into the practice itself. Good luck! (Today's Wall Street Journal also reports on the same story .)
Non-US Banks Profit from Easy Fed Credit \(Financial Times\) Here's a story that should come as a surprise to know one: Non-US financial firms benefited from Fed credit programs. But what may come as a bit of a shock is the scale: Non-US Banks received more than half of the lending from TAF—the Term Auction Facility —which was the largest of the crisis bailout programs. FT Reports: "Some of the world's strongest banks have profited from an emergency credit facility set up by the US Federal Reserve to shore up confidence in the global financial system, according to a Financial Times analysis of data released by the Fed." And then there is the small matter of collateral quality: "In the summer of 2008, TD [a Canadian bank] was borrowing $1bn from TAF at rates of between 2 and 2.5 per cent. For that borrowing it used the lowest quality - and hence highest yielding - collateral acceptable to the Fed. More than 80 per cent of its collateral had a triple B credit rating at a time when such bonds yielded about 7 per cent. TD could therefore have made a notional gross spread of about $4m a month during 2008."
The Big Thaw: New York Digs out from Blizzard (NY Post) "The snow may have stopped falling, but the mess continues. A day after the big blizzard socked the city with over 20 inches of snow, both Kennedy and Newark airports are set to reopen at 6 p.m., officials said. Kennedy Airport was closed at 8 p.m. Sunday after thousands of flights had been canceled throughout the day. Newark closed just after 10 p.m. LaGuardia Airport, the smallest of the three major New York City airports, remained closed indefinitely. Hundreds of people were stuck this morning at the three airports."
AIG Secures Private Financing \(Wall Street Journal\) AIG announced today that is has secured $4.3 billion in financing from commercial banks. The funds will replace money lent by the New York Fed, as AIG prepares t repay its government loans. AIG traded at a 52 week high, flirting with the $60 per share mark in afternoon trading. "The government-controlled insurer said it has established $3 billion in new bank credit facilities, split between a 364-day line and a three-year facility, under which banks have agreed to make loans to AIG. In addition, AIG's property and casualty insurance subsidiary, Chartis Inc., entered into a one-year, $1.3 billion letter of credit facility. The new funding is being provided by 36 banks and will be available to AIG once the company pays down and terminates its secured credit facility from the New York Fed, which was established when the government bailed out the insurer in September 2008. "
Ninety-Eight banks that received TARP funds are still in trouble, based on their third quarter financial results. The number of troubled banks has risen from 96 the prior quarter. A 2 percent increase in the number of problematic banks may not sound like an impressive jump in risk — but it certainly isn't an improvement either.
This new data comes to us today from an analysis released by the Wall Street Journal .
And the takeaway point may be this: These numbers represent an important counter-narrative from the official line of cautious optimism.
Nicole Lapin, of CNBC's Worldwide Exchange, explains what she's long and what she's short this week.
Remember when you waited on tenterhooks when the Federal Reserve’s Open Market Committee was meeting. Would they raise rates? Lower them? Leave them unchanged? How should you trade the announcement?
These days are just plain boring. No one is shocked that the Federal Reserve will not alter its 0 to 1 /4 percent federal funds rate target. And we knew all the back in November that quantitative easing was back on.
The prospects of a Municipal Meltdown are on nearly everyone's list of potential nightmare scenarios for 2011, but whose opinions can we trust?
Since we've already learned (the hard way) that the professional ratings agencies are hopeless, how about a different approach to municipal credit insights? What if we turned to Zagat for a state-by state outlook? Can't be much worse than the non-anticipatory, bought-and-paid-for research we're relying on now...
Here's how those Zagat-style muni bond reviews might look...
Google n-grams shows the rise of public awareness of hedge funds. What seems clear, to me, is that hedge funds are getting far more attention than they deserve and investment banks not enough, given their relative importance to the broader economy.
It’s eye opening to reflect that the Basel III requirements are the joint production of more than 500 representatives from 27 nations, including top regulators and central bankers. They met dozens of times this past year. They produced 440 pages of new rules.
But those rules are just as open to regulatory arbitrgage—a fancy phrase for gaming the system—as ever.
Let’s take a quick example of how a banks can easily shrink the amount of regulatory capital they need for a loan, and subsequently increase their overall leverage. \(For real finance nerds, read the OECD paper from which this example is borrowed.\)
10 Fun Reads for Today:
1.Top Ten Finance Feuds of 2010 from The Reformed Broker including Whitney Tilson vs Netflix and Bob Prechter versus reality.
2. I don't know if this is good or bad for Playboy stock, but Hefner gets engaged to a 24 year old . Mazel Tov!
3. VC Bijan Sabet's best products for 2010 .
4. For everyone who really hates me: Why I'm an Optimist .
5. I'm sure a lot of you got an iPhone for Christmas. Here's essential iPhone resources .
6.This is a relief: Delinquencies will decline in 2011 . Take that foreclosuregate!
7.Can this really be true? Is Jessica Simpson a billionaire ?
8. For everyone who is trashing the US and capitalism, knock yourself out on the most important statistic there is .
9. Another important statistic: This is called a V-shaped recovery in jobs.
10. And finally, if education is so great then why didn't you ever learn where pasta really came from?
Ready to be offended? The Taiwanese news animators have created this video re-imaging the Nativity in contemporary America. Mary and Joseph live in a trailer park. In a tangled bit of Chinese nationalism, Mary is impregnated by a Chinese food delivery man. At various points, we catch glimpes of Oprah Winfrey, Julian Assange and a naked Charlie Sheen running through a hotel lobby.
In short, if you are easily offended, don't watch. Otherwise, enjoy this insight into how we're seen abroad.
Ray Dalio's fund slumped in August and some investors blame the strategy of such funds for the volatility that slammed stocks and commodities.
For all the talk about the 250,000 jobs a month the economy is creating, workers' real wages are going backward.
Volatility could probably last anywhere from three to four months, Brian Jacobsen of Wells Fargo said.