Sunday, September 30, 2012

And Now For Something Completely Different: In Battle for Dominance, Traders Turn to Life Coaches

Charm school for sharks?  Not exactly....In the take-no-prisoners world of foreign exchange dealing, asking traders to look inside themselves and confront their inner demons may seem a forlorn endeavor.  Yet some banks are turning to performance coaches to give their traders an edge in the battle to make money in the $4.5 trillion dollar a day FX market.

But while some dismiss techniques to develop a "clear-headed space" in which to trade as touchy-feely gimmickry, many are keen to embrace any tactic to outwit other market participants, whether human or machine.

"I talk about performance enhancement rather than psychology. It makes it a bit more approachable for guys who have still got a bit too much testosterone and ego," said trader performance coach Steve Ward.  With trading margins squeezed and banks cutting jobs, former physical education teacher and sports performance coach Ward had expected business to dry up.  In fact, the last year has been one of his busiest ever….

More?  Check out

US investors yanked $300B out of equity markets in last two years

Great Caesar's Ghost!   The US individual investor is taking his money and running for the exits.  Everyday shareholders can’t compete with high-frequency trading or the regulations coming out of the Dodd-Frank rules, which ironically were enacted to inspire confidence in the market the NY Post reports.

Skittish investors have yanked more than $300 billion out of US equity markets in the last two years, with a drawdown of $4.47 billion last week alone.  That’s despite the huge climb in the Dow Jones industrial average since its depressionary low of 6,547 in March 2009.

A huge signpost on the road out of equities was the announcement late last week that Fidelity — the home of rock-star stock pickers like Peter Lynch — now has more than half of its customers’ $1.6 trillion assets in bond funds….

Read all about it at

Dr Boom, Doom and Gloom: I'm Bearish On Stocks, Gold (And Everything Else...)

According to BI Marc Faber is still convinced that there's a 100 percent chance of a global recession and that stocks are due for a big sell-off.  While Faber favors gold, he thinks that it too is due for a correction after staging a huge rally. 

It has a huge rally from around – the low was at $1,522 last December and we are now over $1,700 and I think we need a correction here. In fact, I am now bearish about practically all assets near term I think we’re entering a correction time where there will be some disappointments, where stock markets, from the recent times can easily drop 20%.

However, Faber's bearish stance isn't so bearish that he has dumped everything.
I’m not 100% in cash, for the simple reason that I could be wrong, but in general I think that people that have a heavy exposure to assets being that equities, or gold, or other commodities. I think they will face some profit taking here....

Grim News: More Wall St. layoffs coming

Just in time for the holidays more layoffs are on the way for the big banks, according to prominent bank analyst Glenn Schorr. The Nomura analyst in a recent report warns that many banks, which are still overstaffed, need a more liberal wielding of the ax to squeeze out more profits in the coming years, amid a global market that continues to look sluggish.

“While overcapacity is weighing on returns under the current environment, most bank managements have been in the camp that the industry is currently experiencing a cyclical rather than secular downturn,” Schorr writes. “So they’ve been slow to do too much on the head-count front,” the bank analyst said regarding layoffs.  According to Schorr’s research, big banks like JPMorgan, Credit Suisse, UBS and Barclays have actually added jobs over the past three years. Goldman Sachs and Morgan Stanley have only slashed about 1 and 2 percent of their work forces, respectively……


They're b-a-a-a-c-k! Yield hunt pushes funds into CLOs, CDOs

Fund managers are increasingly eyeing riskier exotic assets, some of which haven't been in fashion since the financial crisis, as yields on traditional investments get close to rock bottom, according to Reuters.

Returns from investments in "junk" bonds, government guaranteed mortgage securities and even some battered euro-zone debt are plunging in the wake of global central bank policies intended to suppress borrowing costs.  In particular, the Federal Reserve's latest move to juice the U.S. economy by purchasing $40 billion of agency mortgage-backed securities every month is forcing some money managers who had previously been feasting on those securities to get more creative. The only problem is they may be getting out of their comfort zones and taking on too much risk.

To keep performance high, credit-focused managers are moving back into some of the risky assets that got tarnished during the financial crisis like collateralized loan obligations, or CLOs, securities cobbled together from pools of corporate loans. But unlike the past when managers amped up returns by buying CLOs and risky "subprime" securities with borrowed money, leverage levels are remaining low at least for now….

Read all about it at

Saturday, September 29, 2012

Weird's Deep Thoughts (Saturday Noon Inspiration Edition) 'Zombie Economy' May Give Markets a Start in October

Traders expect October to give the markets a scare, starting with news on the economy and jobs in the week ahead, according to CNBC.

After a surprisingly good performance in the third quarter, the thinking is the stock market is ready to pull back, especially after a few choppy sessions and a new batch of data that should continue to show a slow-moving, ‘zombie like’ economy.   Stocks logged the best third quarter performance since 2010. For the quarter, the Dow surged 4.32 percent and the S&P 500 soared 5.76 percent.

The coming week could provide plenty of excuses to take profits, beginning with Monday’s ISM manufacturing data, again expected to show weakness in the sector….

Read all about it at

Three Strikes or Is Apple Losing Its Sense of Direction?

If Apple prides itself on a smartphone that, as Steve Jobs put it,  ”just works,” why does the company keep releasing its device with meaningful flaws, the WSJ asks.

Strike One: The iPhone 4 launch was besieged by criticism that its antenna design caused reception problems. Consumer Reports even said it couldn’t recommend buying the device. Apple offered free bumpers or, eventually, $15 to buyers of the device after a class action settlement.

Strike Two: The iPhone 4S came with Apple’s new voice assistant Siri, which it advertised heavily as the key feature of the new device. But Siri didn’t work very well.

Strike Three: Now, after the map fiasco with iOS 6 — the operating system that powers the new iPhone 5 — Apple CEO Tim Cook has apologized.  Trouble is, it may not have been user experience that drove Apple’s maps move. Rather, it appears to have made a business decision to replace maps functionality provided by a rival, Google.....

Friday, September 28, 2012

Libor Poker: The old new way to game Wall Street.

NY Magazine’s Kevin Roose writes: It’s tempting to think of today’s Wall Street as a technocracy with a thin human overlay. Brokers flashing hand signals on exchange floors were long ago replaced by humming server farms. The white-shoe deal-making of years past has given way to a global, diverse, hardwired marketplace that, in many ways, is more science than art.... 

This summer’s LIBOR-rigging scandal shattered that image. The London Interbank Offered Rate—the critical benchmark used to set interest rates on trillions of dollars’ worth of financial products, including most people’s mortgages and student loans—was exposed as a moving target, all too manipulable by a small handful of opportunistic traders. E-mails revealed a clique of culprits passing around compliments (“When I retire and write a book about this business your name will be written in golden letters”) and trading favors (“Come over one day after work and I’m opening a bottle of Bollinger!”) in exchange for shifting the LIBOR in each other’s favor.

What appeared to be just another dully named variable immaculately conceived by some mainframe turned out to be a product of good old-fashioned boys’-club culture, essentially run on the honor system.…. According to a confidential International Organization of Securities Commissions paper, made public last week by Bloomberg News, more than half the world’s benchmark interest rates—the ones used to issue credit cards in China and mortgages in Mumbai—are set in much the same manner as LIBOR, with minimal transparency and plenty of opportunity for exploitation. ..

Read all about it at

1,175 Rich People Reveal How They See What's Happening In The Economy

According to BI there's a collection of new surveys out revealing how wealthy people see the economy, so we've put it together here for you in a quick rundown.  The takeaway we came to was this — rich people are really worried about the overall economy, but most are confident they'll be okay through the storm, or "the new normal" depending on what you want to call it.
Now for the data. Let's start with Merrill Lynch's Affluent Insights Survey. 

They polled 1,000 Americans over the age of 18 with over $250,000 of investable assets. They especially targeted people in Atlanta, Chicago, Dallas, Detroit, and South Florida. The most interesting thing about Merrill's findings was that:

44 percent of people think that our current economy malaise is a "new normal."  Of those 44 percent, a whopping 94 percent think they have what it takes to come out of it ahead.

Wait...wait...there's more at:

Bank of America Coughs Up $2.43 Billion to Settle Suit Over Merrill Deal

From Dealbook: Bank of America announced on Friday that it would pay $2.43 billion to settle a class action lawsuit related to its acquisition of Merrill Lynch, as the legal woes continue for the financial institution.

In 2009, shareholders accused Bank of America of making false and misleading statements about the health of the two companies. In part, the plaintiffs accused Bank of America of hiding a major loss at Merrill Lynch just shortly before shareholders were set to vote on the deal.
While Bank of America denied the allegation, it said it decided to settle to put the litigation to rest. 

As part of the proposed settlement, Bank of America also agreed to improve its corporate governance policies….

Apple Maps Apology: Tim Cook's Grand Slam

According TheStreet there is no company on Earth that knows how to spin a negative story into good positive vibes better than Apple (AAPL), and the company did it again on Friday.
Apple CEO Tim Cook released a letter on the company's Web site, apologizing for the poor mapping application the company released as part of iOS 6, its latest mobile operating system:

Not only does Cook pull a page out of Steve Jobs' playbook by apologizing (Jobs apologized for the iPhone pricing debacle), but he even mentions other mapping apps, such as Google's (GOOG), Microsoft's (MSFT) Bing, and even Nokia (NOK).

For the CEO of the most powerful tech company in the world to come out and apologize for a piece of software, then mention his competitors' products, is a sign of humbleness and an incredibly powerful statement. Apple previously put out a statement on Maps being a letdown, but Cook's words are extremely powerful and carry a significant amount of weight.

A statement like this can change people's perceptions of a company….

Hedge funds forced to play catch-up

According to FierceFinance it's getting to that time of the year when it's easy to panic if you're an underperforming hedge fund.

Credit Suisse, as noted by Reuters, says there are plenty of signs that hedge funds are ramping up risk in an effort to reverse their lagging returns. Through the end of August, hedge funds were up about 4.5 percent, compared with a 13.5 percent total return for the S&P 500 and 8.2 percent for the MSCI World Index. Hedge funds focused on credit strategies have been the best performers, with returns of more than 7 percent this year, thanks perhaps in part to a surge from European sovereign debt just recently.

Most hedge funds have benchmarks other than the stock market, you never want to admit being outperformed by broad market indexes. There's still time to recover. Credit Suisse's prime brokerage says hedge fund exposure to higher-risk stocks has reached levels not seen since the spring. Holdings in such stocks rose 40 percent in August and now represent about one third of hedge funds' net U.S. exposure….

Find out more: 

The many (nine?) lives of Goldman's partners

From efinancialnews: In the world of banking, being made a partner at Goldman Sachs is the "golden ticket". But what happens when these gilded roosters decide to fly the coop and join the wider world?

The title harks back to the halcyon days of Wall Street, when partners were also owners of their firms. This meant making money in the good times, and putting up money when things were not going so well.  After Goldman's IPO in 1999, partners still had to worry about making money, but less about losing it (at least not personally), and being made a partner lost some of its lustre. The chief executive of one headhunting firm said: “It certainly isn’t what it was before the IPO, but it is still a golden ticket.”

Today, being made partner is more like a form of Masai initiation ritual, albeit it in a Brooks Brothers button down. Goldman staffers with roughly 10 years at the firm under their belt will, every two years, hope to become one of approximately 90 freshly-minted partners joining the 350 to 400 existing partners. Those lucky few can expect immediate increases in pay, bonus and career prospects.  But what happens after that?

Traitor Trader

Facing jail, banker ready to ditch US

A former high-flying banker accused of covering up losses in his toxic mortgage portfolio to boost his bonus, said yesterday he didn’t want to face the legal music in New York and will fight extradition from the UK.  The Egypt-born banker, Kareem Seregeldin, who lives in England, said through his lawyer that he is even willing to give up his US citizenship to arrange a plea deal and serve his time in the UK.

Serageldin, the former global head of Credit Suisse’s CDO business, faces 45 years in prison on conspiracy, falsification of books and wire fraud charges filed in Manhattan federal court…

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Goldman Pays for Pay-to-Play

Goldman Sachs will pay $14.4 million to resolve regulatory claims that a former banker made improper campaign contributions to the treasurer of Massachusetts while seeking underwriting business, Bloomberg reports..

Neil Morrison, who was a VP in Goldman Sachs’s Boston office, worked for Treasurer Timothy P. Cahill’s unsuccessful gubernatorial campaign from November 2008 to October 2010, sometimes during his office hours, the U.S. Securities and Exchange Commission said in a statement yesterday. That constituted in-kind contributions and broke pay- to-play rules, the SEC said.
The settlement, which includes $4.6 million paid to Massachusetts, is the SEC’s first involving noncash contributions and is the latest since the agency began bolstering oversight of the $3.7 trillion municipal-bond market in 2010…..

Watch Your Back, Amazon. Real gifts to be sold on Facebook

From Reuters: Facebook Inc is taking one small step toward becoming an e-commerce platform by launching a feature for users to buy and send real gifts worth as much as hundreds of dollars.

As of Thursday, users can purchase and ship products from more than a hundred "Facebook Gifts" vendors with a few clicks on the company's website. The products include eyeglasses by Warby Parker, Starbucks coffee, and pastries from New York-based Magnolia Bakery.
Although it has sought to diversify its income sources, Facebook still relies heavily on display advertising. During the second quarter, more than 80 percent of its revenue of $1.18 billion came from ads…..


U.S. Libor Probers to Seek London Trader Interviews

U.S. investigators conducting a criminal probe of interest-rate manipulation have asked their British counterparts for permission to interview London traders, two people familiar with the investigation told Bloomberg.

The U.S. Department of Justice filed a request with the U.K. Home Office for access to dozens of bankers in conjunction with British prosecutors that are also investigating the rate rigging, said one of the people, who asked not to be identified because the proceedings haven’t been made public.
The move may indicate the U.S. wants to pursue criminal charges against individuals in the U.K. that could lead to extradition, said Bradley Simon, a former federal prosecutor in Brooklyn, New York. It “won’t deter them in the least” that U.K. prosecutors are also involved, he said.  “They don’t hesitate to charge non-U.S. citizens abroad and I know that this case is being investigated within the antitrust division of the Justice Department, which is known to take their cases very seriously….”

Read all about it at

Thursday, September 27, 2012

Goldman Settles Charges It Worked Illegally With Mass. Official

Goldman Sachs has agreed to pay $11.9 million to settle civil charges accusing one of its executives of providing campaign services to a Massachusetts official in return for bond business, the AP reports.

The Securities and Exchange Commission also charged former Goldman Sachs vice president Neil M.M. Morrison with trying to influence the awarding of state contracts through campaign work for former Massachusetts Treasurer Timothy Cahill.

Morrison campaigned for Cahill from his Goldman Sachs office using company phones and email between November 2008 and October 2010, the SEC said. The services weren't reported by Goldman Sachs, the SEC said. The company earned more than $7.5 million in fees from underwriting Massachusetts bond sales after Morrison's activities, the agency noted.

Accused rogue trader did not act alone

The lawyer for accused UBS rogue trader Kweku Adoboli said he did not act alone but learned his behaviour from colleagues at the Swiss bank who later "stabbed him in the back," Reuters reports.

Adoboli, 32, denies charges of fraud and false accounting that cost UBS $2.3 billion (1.4 billion pounds) His lawyer, Charles Sherrard, told Southwark Crown Court on Thursday that Adoboli's three colleagues on the Exchange Traded Funds desk had actively taken part in some of the fraudulent behaviour of which he is accused.

Sherrard made the comments as he began cross-examining John Hughes, who along with Adoboli was a senior trader on the four-man desk....

Read all about it at

5 Stocks Billionaires Are Crazy About

According to Seeking Alpha Apple  is the most popular stock among hedge funds and billionaires, and it is performing spectacularly. Despite Apple's successful performance hedge funds are underperforming the market third year in a row. The reason is simple. Equity hedge funds usually hedge around 50% of their long exposure. It just doesn't make sense to compare them to the S&P 500 index which is 100% long.

 So we came up with a better way of illustrating hedge funds' true stock picking ability and constructed an index that is 100% long. We launched the Insider Monkey Billionaire Hedge Fund Index at the beginning of this year. The index is based on the 13F disclosures of billionaire hedge fund managers and prominent investors.

1. Apple is the most popular stock among billionaire fund managers. More than 40% of the billionaires had a large position in Apple at the end of June. Apple is also the most popular stock among other hedge fund managers….

2. Google (GOOG) is the second most popular stock among billionaire hedge fund managers. The stock gained 13.6% so far this year. We are optimistic about Google as well. The stock's 2013 forward PE ratio is less than 15. It is slightly more expensive than Apple but the stock is the undisputed leader of the search business. It is expected to increase its earnings by nearly 20% per year over the next few years. We expect that Google will outperform the market over the next five years..

God Of The Dead Hedge Fund Mummified By Feds

From Forbes: What’s the Osiris Fund? For one thing, it appears to have been named after the ancient Egyptian god of the dead, often depicted as holding a crook and flail in his crossed arms.  Come to think of it, not a bad choice of names or images.  For one thing, the investment would prove more dead than alive and, for another thing, there seems to have been more than one crook at work here and far too many folks flailing about with the truth.

In any event, if you fell under the spell of the Osiris Fund Limited Partnership and its soothsayers, you were told that it was a hedge fund management company.  Yeah, sure…

Read all about it at

Former Programmer Demands That Goldman Cover His Legal Fees

Not as outrageous as it may seem.  From New York Times’ Dealbook: A former Goldman Sachs programmer charged a second time with stealing valuable computer code from the investment bank is fighting back, demanding that his former employer cover his mounting legal fees.

On Tuesday, the programmer, Sergey Aleynikov, sued Goldman in Federal District Court in New Jersey. He wants the financial firm to pay for the nearly $2.4 million in costs he has racked up defending himself in both an overturned federal case and a pending state proceeding by the Manhattan district attorney.

Those costs are likely to grow as the case by the district attorney, Cyrus R. Vance Jr., progresses. A grand jury has handed up an indictment, and Mr. Aleynikov is expected to be arraigned on Thursday, according to a person with direct knowledge of the matter, who spoke on condition of anonymity because the grand jury’s actions are private until the arraignment.  Mr. Aleynikov’s lawyer, Kevin H. Marino, has requested a $500,000 retainer fee as he and his partners at Marino, Tortorella & Boyle in Chatham, N.J., prepare Mr. Aleynikov’s defense….

Web Funding Boom Over as Fast as It Began

The falling stock prices of Facebook, Zynga and Groupon  are causing some investors to pull back from Web start-ups, the WSJ reports..

Jeff Tangney recently experienced the change firsthand. Mr. Tangney, CEO of Doximity Inc., a social network for doctors, said venture capitalists clamored to invest in his San Mateo, Calif., start-up earlier this year. At the time, the investors "encouraged focus on user engagement, not revenue," he said.

But when Mr. Tangney hit the fundraising trail last month with the goal of amassing $20 million, he got a different reception from investors. By then, Facebook had held its botched initial public offering and its share price—along with those of Zynga's and Groupon's—was quickly dropping.  In the aftermath, investor questions turned "a complete 180 degrees" and they wanted to know how Doximity would make money, said the entrepreneur….

Hard-up hedgies

Warning to all Mercedes dealers: hedge fund bonuses could be tight this year.  Many money managers are looking at lower pay — in the form of performance fees — as tepid returns for 2012 fail to make up for last year’s steep losses, the New York Post writes.

As of the end of the second quarter, only 43 percent of hedge funds had cleared a performance hurdle known as high-water marks over the past 12 months, according to data from fund tracker Hedge Fund Research.   For many, those that fail to hit their marks by the end of the year will forgo their usual fee of 20 percent of profits until clients have recovered from losses..

Last year was a rocky one with the lingering downturn, Europe’s debt woes and the historic credit downgrade of the US.  So far this year, the average hedge fund is up just 2.29 percent, compared with losses of 8.87 percent last year, according to HFR’s hedge fund index, suggesting that many funds are still trying to get their heads above water….

Hedge Fund CEO Pleads Guilty to Multi-Million-Dollar Fraud

The former CEO of the hedge fund management company Osiris Partners LLC admitted today to conspiring with others to defraud investors of more than $4 million, U.S. Attorney Paul J. Fishman announced.

Michael J. Spak, 44, of Chesterfield, New Jersey, pleaded guilty before U.S. District Judge Joseph H. Rodriguez in Camden federal court to an information charging him with conspiracy to commit wire fraud….

'Hedge Fund' Madam Strikes Deal

A New York madam with a client list full of "hedge funders" and other millionaires and billionaires has pleaded guilty to promoting prostitution, according to a NY Post report.

Anna Gristina accepted a plea deal from prosecutors that will keep her from serving any more time in jail. Gristina, who ran her prostitution business from her suburban Monroe, N.Y., home to stay close to her four children, spent four months on Rikers Island after her arrest in April before being freed when her bail was lowered.

When the 45-year-old was arrested, the New York Post reported that her business catered only to those with at least $1 million in the bank, including "hedge funders" and at least "two billionaires." She also reportedly met with employees of Morgan Stanley at the bank's offices, but no names of clients have trickled out….

Read all about it at

Wednesday, September 26, 2012

From Our Gilding-the-Lily Dept. : A Hedge Fund Manager Is Building An Ultra-Lavish Mansion For His Chickens

Whatever happened to Occupy Wall Street when we need them?  Seriously folks. London-based hedge fund manger Crispin Odey, the founder of Odey Asset Management, is planning to build a 775 square-foot Palladian-style chicken coop, the Telegraph's Harriet Dennys reports.

Here's how the Telegraph describes it...

The temple’s roof – adorned with an Anthemia statuette – will be fashioned in grey zinc; the pediments, cornice, architrave and frieze are in English oak; and the columns, pilasters and rusticated stone plinth are being hewn from finest grey Forest of Dean sandstone. Naturally, the doors will be painted in the Odey Asset Management founder’s favourite Hague Blue – “to match the doors around Eastbach Court”, according to the plans.  What's more is the stone for the project costs an estmated £130,000 (~$210,000), the report said…

Ex-Credit Suisse Banker Arrested in U.K.

U.K. authorities arrested a former Credit Suisse Group AG investment banker on Wednesday related to U.S. allegations that he and others at the Swiss bank conspired to inflate the values of mortgage bonds during the financial crisis, the WSJ reports

Kareem Serageldin, the former global head of the Swiss bank's Structured Credit Trading business, was taken into custody by the Metropolitan Police in London outside the U.S. Embassy on Wednesday, according to a person familiar with  the issues.

According to the report, Serageldin's arrest is related to allegations put forth in the U.S. back in February alleging that Kareem and others former traders at the Swiss bank conspired to overstate the prices on subprime bonds during the financial crisis….

US Bancorp, PNC banking sites face cyber attacks

Ouch!  Some US Bancorp and PNC Financial Services customers were having trouble accessing the banks' Web sites on Wednesday, as US financial institutions appear to be threatened by another round of cyber attacks, Reuters reports.

Wells Fargo & Co also faced lingering problems with its Web site after customers had intermittent access issues on Tuesday, a spokeswoman for the bank said.

US Bancorp is experiencing "unusual and high-traffic volume" on its site that is designed to slow down the system, bank spokesman Tom Joyce said. The problem is similar to what other banks have faced in the past week, he said. "We are working closely with federal law enforcement officials to address this issue," he said. Customers data and funds are not at risk, he added.

The attacks came after a posting on the Internet on Tuesday by an unknown person, calling for cyber attacks this week against Wells Fargo, US Bancorp and PNC. A similar posting last week warned of attacks against Bank of America Corp and the New York Stock Exchange...

Read all about it at

Wall Street to Slash Pay Instead of Jobs

Wall Street firms will reduce bonuses rather than cut jobs to control expenses this year, Betsy Graseck, a  Morgan Stanley analyst in New York told Bloomberg.  Compensation will probably drop from a year ago as banks attempt to avoid further headcount reductions, Graseck said today in an interview on Bloomberg Television’s “Surveillance” with Tom Keene and Scarlet Fu. Cuts will come from bonuses rather than base salaries, Graseck said.

Citigroup  and Credit Suisse Group AG were among lenders that lowered some bonuses by at least 30 percent last year amid a second-half slump in revenue, and firms such as Barclays and Morgan Stanley capped cash payments. Revenue from investment banking and trading in the first half of 2012 at the 10 largest investment banks dropped 7.5 percent from the same period in 2011…..Banks are also advertising fewer openings amid the cuts. Job postings for the sector dropped 21 percent to 7,540 in September from a year earlier, according to Bloomberg Industries....

Trader Whose Instant Messages Clearly Show Him (Allegedly) Engaging In Libor Manipulation Not Going Down Without A Fight

Dealbreaker’s Bess Levin writes: One thing that most people probably agree on is that having their instant messages, e-mails, and phone call transcripts end up court would be cause for at least a little embarrassment….. Of course, the humiliation gets ratcheted up a notch in the case of people who ‘haha’ (and in extreme circumstances “hahahah’) their own jokes* which, just for example, involve habitual Libor manipulation. RBS’ trader Tan Chi Min knows what we’re talking about:

“Nice Libor,” Tan said in an April 2, 2008, instant message with traders including Neil Danziger, who also was fired by RBS, and David Pieri. “Our six-month fixing moved the entire fixing, hahahah.”

And while having such an exchange become public would be tremendously awkward for most, you know what’s really ‘hahaha’ about this whole thing? That 1) Tan was the one who wanted people to read the above, which was submitted as part of a 231-page affidavit earlier this month and 2) He’s trying to use it as evidence that he didn’t deserve to be fired….

Read all about it at

Too Smart? A Hedge Fund's Complex Scheme May Cost It Millions

According to the NY Times hedge funds are supposed to be the smart money, but sometimes even they can be outsmarted.  Take the case of Mason Capital Management and the Telus Corporation, a large Canadian telecommunications company. Mason Capital, a New York and London hedge fund with about $8 billion in assets under management, has made a complex bet in Telus stock that looked shrewd at first, but that may now lose tens of millions of dollars.

Telus has two classes of shares, one that is voting and trades only in Canada and another that is nonvoting and trades in Canada and the United States. The nonvoting shares traditionally trade at a discount to the voting shares, but Telus is proposing to convert the shares on a one-for-one basis, giving a windfall to the holders of nonvoting shares.

Mason has taken a complex trading position in opposition to the proposal. In April, the hedge fund announced that it had acquired 19 percent of Telus’s voting stock, worth 1.9 billion Canadian dollars, or $1.8 billion….

Tuesday, September 25, 2012

‘Facebook’s IPO Was Not a Failure: Barry Diller

The Facebook initial public offering was not the failure it’s been made out to be, Barry Diller, chairman of IAC/Interactive told CNBC’s “Squawk Box” on Tuesday. Diller said it made sense for Facebook to get as high a price for the stock as possible.

“If you're going to sell stock and somebody wants to buy it at a price and that price is not a price you dictate, but demand dictates, sell it to them now,” he said of Facebook’s $38 offering price.

Diller said that most of the investors who bought at the IPO were probably speculating and not in the stock for the long-term. “In which case, they deserve whatever they get, good or bad,” he said. Facebook now needs to focus on future growth, Diller said, adding that Mark Zuckerberg is only running the company for the long-term...

Read all about it at

Blankfein: I’m No Socialist

From the WSJ Blogs: Goldman Sachs' CEO is a socialist, Gordon Nixon, the CEO of Royal Bank of Canada, said on Wednesday. Mr. Nixon was imagining newspaper headlines after Lloyd Blankfein told an audience in Toronto that he was, in fact, not a socialist. The exchange began after Mr. Blankfein launched into a passionate discourse over how the U.S. has become good at creating wealth but not redistributing it.

“The two goals of a financial system and an economic system … should be to expand the wealth of the world and to distribute it fairly,” he said during a question-and-answer session with Mr. Nixon. ”In the United States, over the last generation or two, we have been much better at generating wealth and much less good at distributing  it.”

At that point, Mr. Blankfein, who earned some $16.1 million last year, felt the need to tell his audience he isn’t a socialist.  “I am not saying… I am a socialist. I am not,” he said, stressing he doesn’t believe in wealth distribution over production....

Libor Poker: The New Old Wall Street Game

From New York Magazine: It’s tempting to think of today’s Wall Street as a technocracy with a thin human overlay. Brokers flashing hand signals on exchange floors were long ago replaced by humming server farms. The white-shoe deal-making of years past has given way to a global, diverse, hardwired marketplace that, in many ways, is more science than art. We think of threats to the system’s fairness and stability in terms of rogue algorithms and synthetic derivatives, not human frailty.

This summer’s LIBOR-rigging scandal shattered that image. The London Interbank Offered Rate—the critical benchmark used to set interest rates on trillions of dollars’ worth of financial products, including most people’s mortgages and student loans—was exposed as a moving target, all too manipulable by a small handful of opportunistic traders. E-mails revealed a clique….

European Markets Are Rallying On WSJ Report That Hints That Solving The Euro Is Further Along Than We Thought.

Euro-zone governments have begun discussions about creating a central budget for the currency union aimed at smoothing over some of the region's economic divergences, after Germany indicated support for the idea, European officials told the WSJ.

The discussions are part of a push toward a limited "fiscal union," after the economic crisis revealed fatal flaws in the setup of the common currency. Those limitations have manifested themselves in the recessions that have engulfed countries such as Greece, Portugal and Ireland after the 2008 financial meltdown, while strong economies such as Germany have recovered much faster….

Here's How Warren Buffett Decides To Invest In Something

Warren Buffett is a self-made billionaire. His successful investment business makes him one of the most respected men in the world.

Buffett attributes all of that to always being prepared.  Here are a few ways that you can be as prepared as Buffett when you make investment decisions:

Make sure you're getting the investment at a good price. This makes the investment safer in the long-run.

Ask yourself if the investment is long-term. The best investments give back over time instead of offering immediate gratification.

Research if the business is well-managed. Buffett scrutinizes decisions that management are making to ensure that even if the company falls on hard times, the best decisions will be made.

See if the business avoids debt. Buffett doesn't invest in companies that have too many debts to pay off....

For Apple Investors, a New Pick of the Crop

The 30-year-old administrative assistant said she has been buying more apples since she moved from a small eastern Chinese city two years ago to Shanghai to work for a U.S. company. "Chinese people are eating more and more fruit…as our lives get better," said Ms. Li, as she shopped in a grocery store. Indeed, wage income for urban households rose 13% in the first half compared with the year-ago period, according to China's National Bureau of Statistics.

As China consumes more apples, prices for the fruit are rising, driving up costs for juice makers. Above, a fruit stall in a market in Beijing.

Fresh apple consumption in China, which produces more than half of the global supply of the fruit, has soared 80% from the 2007-2008 crop year to the crop year ending in June 2012, according to the U.S. Department of Agriculture. That compares with growth of just 36% world-wide in the same period.

The surge is shaking up a small corner of the commodities world,….

Goldman Bids Farewell to a Silent Partner—For Now

According to the WSJ the first song to be played at David Viniar's retirement party should be "The Sound of Silence." Few executives on Wall Street have done more by saying so little in public as the departing chief financial officer of Goldman Sachs Group Inc.

Mr. Viniar's laconic demeanor means his decision to retire wasn't as eye-catching as the recent departures of alpha dogs such as Morgan Stanley's John Mack or the crisis-time defenestrations of Charles Prince at Citigroup Inc. and Kenneth Lewis at Bank of America Corp…..

New Canaan Shooting Suspect Was Former Bear Stearns, Lehman Banker

The New Canaan, Conn. believed to have shot and killed his wife on Friday before turning his weapon on himself was a former Wall Street banker previously employed at Bear Stearns, Lehman Brothers and Bank of America, according to reports.

James D. Owen, 48, had worked on mergers and acquisitions and mid-market financing for the telecommunications industry at The Bank Street Group until recently, according to Teri Buhl, who first reported on Mr. Owens’ Wall Street connections. Mr. Owen had also worked for Bear Stearns, Lehman Brothers and Banc of America Securities, according to Business Insider. The latter firm was an investment banking subsidiary to Bank of America.

New Canaan police responded to gunshots at Mr. Owen’s Park Street condominium at around 2:40 p.m. Friday, according to the New Canaan Advertiser, and found Mr. Owen and his wife, Billie Faigout-Owen dead. Police suspect that Mr. Owen shot his wife, then shot himself, according to the paper….

Fasten Your Seatbelts, More Bank Layoffs Coming:Whitney

Banks have been behind the curve in terms of downsizing, with their employees paying for it now through a rash of furloughs, analyst Meredith Whitney told CNBC.

The industry has seen a recent spate of big layoff announcements, including 16,000 from Bank of America alone.

Though banks already have jettisoned about half a million workers since the beginning of the financial crisis in 2008, Whitney said more are to come as the shrinking big institutions struggle to compete.

"The banks have been overstaffed for a really long time. If you think about all of the other industries that have gotten more competitive, more profitable, the banking sector and the insurance sector have been laggards behind it, and they employ a lot of people," Whitney said.  New banking regulations, particularly the Dodd-Frank financial reform bill, have seen the banks shrinking in order to avoid the too-big-to-fail syndrome that caused the industry to push the country into recession….

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Monday, September 24, 2012

Smith Barney, RIP

Morgan Stanley yesterday officially laid to rest Smith Barney, the 75-year-old iconic Wall Street brokerage brand according to a NY Post report.

The investment bank run by CEO James Gorman owns a majority 51 percent share of a joint venture with Citigroup’s prominent brokerage firm Smith Barney, which it purchased during the height of the banking crisis.

However, top officials at Morgan Stanley opted to nix the legendary brand in favor of a new name: Morgan Stanley Wealth Management…

Layoff Watch 2012: Is Goldman Is Going To Axe 100 Partners?

The Sunday Times in the U.K. reports that 100 of Goldman Sachs's well-paid partners will soon be headed for the exit.

The cuts are said to save the bank up to $2 billion, the Investors Chronicle reports, citing the Sunday Times article, which is hidden behind a paywall. 

The details of the cuts are expected to be revealed in the coming weeks by Michael Sherwood, the co-chief of the bank's London operation, the Investors Chronicle report said.

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Tightwad Hedge fund swindler could be returned to prison

Thirteen months after convicted hedge fund swindler David Mobley Sr. was released from federal prison, he's facing a possible return for not paying a dime of his $77.3 million restitution to investors.

The 56-year-old Naples, Florida man was arrested last month on charges he violated terms of his three-year supervised release, which require him to pay back hundreds of investors he duped through his Maricopa International Investment offices.  He is scheduled to be in court today for a final revocation hearing before U.S. District Judge John Steele, who sentenced him in October 2001 on eight counts of fraud, money laundering and tax evasion; 12 charges were dropped as part of a plea deal.

In all, 360 investors nationwide lost about $140 million...

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10 Reasons Why Investors Should Worry About Apple

Doug Kass, President of Seabreeze Partners, has a new post on RealMoneyPro titled The Bear Case For Apple.

"The upcoming quarter will be big for Apple," writes Kass. "The fastest ever rollout for iPhone 5 will be accompanied by higher-than-expected margins, as there are two separate cost-reduced models now. Soon everyone will know that, and if not fully in analyst numbers, it will be in buy-side expectations."

1.    1.  "Quality vs. price: Apple is now selling less or equal for more money." Kass argues that competitors have caught up with Apple in terms of technology.  As such, they are now only offering a similar or worse product at a premium price.  Kass doesn't think this is sustainable.
      2.  "The Oracle of Cupertino: Steve Jobs is no longer around to convince consumers that his products are magical."  Kass notes that there appear to be internal disagreements, and that Apple lacks a clear voice.....

Read more:

Another Rajaratnam Pal to Find Out If He’ll Go to the Slammer

Rajiv Goel, a former Wharton classmate and friend of Raj Rajaratnam who testified against the fund manager at his insider-trading trial, is due to learn whether he’ll be imprisoned or spared like other cooperators, Bloomberg told us.

U.S. District Judge Barbara Jones in Manhattan is scheduled today to sentence Goel, 54, in a case that is part of the largest crackdown on insider trading at hedge funds. The government and Goel’s lawyer described in court filings his assistance in the prosecution of Rajaratnam, the Galleon Group LLC co-founder who was convicted last year by a jury and is serving an 11-year prison term.

 “Goel substantially helped the government secure a conviction in one of the most significant and high-profile insider-trading cases in U.S. history,” Assistant U.S. Attorney Reed Brodsky said in a memo this month to Jones…

New from Ben Bernanke: An open, more forceful Fed

Say hello to the new normal.  In what might be his final years as chair of the Federal Reserve, Ben S. Bernanke is transforming the U.S. central bank, seeking to shed its reclusive habits and make it a constant presence in bolstering the economy, the Washington Post reports.

The new approach would make the Fed’s policies more responsive to the needs of the economy — and likely more forceful, because what the Fed is planning to do would be much clearer. A key feature of the strategy could be producing a set of scenarios for when and how the Fed would intervene, which would mark a dramatic shift for an organization that throughout its history has been famously opaque.

Bernanke has already pushed the Fed far along this path. The central bank this month pledged to stimulate the economy until it no longer needs the help, an unprecedented promise to intervene for years. That’s a big change from the Fed’s usual role…

Money Managers Take a Timeout From Stocks

It's nowhere near the two-minute warning for 2012, but some players are mulling whether to sit out the rest of the game, the WSJ says..

As 2012 heads to its final quarter, money managers who caught the year's rally are sitting on percentage gains well into the double-digits on stocks. As they look ahead to what could be a choppy few months, some are considering watching the rest of the year from the sidelines.

U.S. stocks are closing in on record highs, thanks in large part to the Federal Reserve and other central banks around the world, which have opened their spigots…

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Holy Crap! Facebook: Headed To $15?

Facebook shares have rallied 29% over the last three weeks, aided in no small measure by a confidence building appearance by CEO Mark Zuckerberg at the recent TechCrunch Disrupt conference in San Francisco.  On Monday morning, the stock will face a serious rest of its resiliency.

This weekend’s edition of Barron’s features a cover story that declares bluntly that Facebook is worth only $15 a share – that would be a 34% drop from Friday’s close at $22.86. Keep in mind, thought that the stock even after the recent rally is down almost 40% from the company’s $38 IPO price in May.  The reason for the bearish stance are familiar – I’ve written about them repeatedly myself – but remain deeply concerning.

For starters, Facebook remains an expensive stock.  Based on current Street estimates for this fiscal year, the stock trades for 47x earnings. Google on the same basis trades for about 17x. Apple? 16x. The situation is similar if you value the company on a multiple of revenues. FB trades at about 10x this year’s revenues. Google is at 5.7x. Apple trades at 4.2x.

Problem #2, which has been widely discussed, is the fact that a huge number of insider shares are going to be freed of lock-up restrictions in the months ahead, setting the stage for a huge increase in the stock’s float – and new pressure on the stock price.

Problem #3 is…

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Worms in Apple: Foxconn China Plant Closed After Worker Disturbance

Taiwan's Foxconn Technology Group closed its Taiyuan plant in northern China on Monday after it revealed a brawl involving approximately 2,000 workers began in dormitory facilities early in the morning. In a statement to CNBC, Foxconn confirmed that a personal dispute between several employees escalated into an incident escalated on Sunday evening at a privately-managed dormitory near its manufacturing facility in Taiyuan in Shanxi province.

"The dispute was brought under control by local police at approximately 3 a.m. this morning. According to police, some 40 individuals were taken to the hospital for medical attention and a number of individuals were arrested," it added.

Foxconn said the dispute is under investigation by local authorities, but it appears not to have been work-related.

The Taiyuan plant, which employs about 79,000 workers, makes parts for automotive electronics and assembles various electronic devices, (including the Apple 5 - our addition)  according to Foxconn spokesman Louis Woo....

The Seven Richest Bankers In America

When Forbes released its list of the 400 richest people in the United States earlier this week, there was a surprising dearth of bankers.  Only seven people's source of income was listed as either "banking" or "investment banking."   Somehow, though, the seven men on this list were able were able to get phenomenally rich….

#1 Andrew Beal, $8.4 billion; Rank in the Forbes 400: 41; Age: 59; Bank: Beal Bank
#3 (tie) David Rockefeller Sr., $2.7 billion; Rank in the Forbes 400: 151; Age: 97
#3 (tie) Warren Stephens, $2.7 billion; Rank in the Forbes 400: 151; Age: 55;  Bank: Stephens, Inc.
#4 Herbert Allen Jr. & family, $2 billion; Rank in the Forbes 400: 239; Age: 72; Bank: Allen & Co

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Grim News: A Wall Streeter Shot And Killed His Wife Before Killing Himself

Police identified the New Canaan couple killed in an apparent murder-suicide that took place in their apartment Friday shortly before 3 p.m.  The victims are James Owen, 48 and his wife, Billie D. Faigout-Owen, 52. Investigative journalist Teri Buhl is the first to report that Owen worked on Wall Street.

Buhl reports that he used to work at Stamford-based The Bank Street Group as a director.
Police said their preliminary investigation determined Owen shot his wife and then himself in the head...

Sunday, September 23, 2012

Wall Street 2.0: Has it really changed?

Kevin Roose writes: Times columnist Joe Nocera wrote that after the fall of Lehman, “everything changed,” including our common attitude toward debt and our willingness to address income inequality. But skeptical critics like Dennis Kelleher, the CEO of advocacy group Better Markets, say that Wall Street is much the same as it ever was, with big banks still engaging in risky and unethical behavior with impunity, threatening the stability of the U.S. economy.  Both the change-proclaimers and the cynics have arguments in their favor, so let's weigh the evidence.  Five ways the New Wall Street is different:

1. Smaller, leaner banks. Since the end of 2006, AIG and the five U.S. investment banks that compose the so-called "bulge bracket" (Goldman Sachs, JPMorgan Chase, Citigroup, Bank of America, and Morgan Stanley) have lost nearly $600 billion in market value....

2. No more prop trading. Before Lehman, most investment banks were structured on the mullet model — a patina of old-fashioned business in the front (an old-line M&A business and flow trading operation) and a risky, lucrative party in the back (proprietary trading desks). The Volcker Rule changed all that...

3. Muted celebrations…..

Specter of China 'Hard Landing' Haunts Global Economy

As market euphoria begins to wane over the Federal Reserve's latest stimulus, investors are now forced to confront growing worries about China, whose powerhouse economy appears increasingly vulnerable to a dreaded "hard landing" scenario some have long warned about, Cnbc reports.
Dour figures and warnings from major companies have raised growing concerns about the world's second-largest economy. The developments mark a stark turnabout from just a few years ago, when its ability to weather the fallout from the 2008 crisis made China the envy of most G7 economies.

Until recently, most investors have been fixated on the woeful state of affairs in the U.S. and the euro zone, where the European Central Bank unfurled its answer to the Fed's massive quantitative easing to staunch a debt crisis that threatens to rend the 17-nation currency bloc asunder.  Now, a raft of negative data is dogging what some observers called "the leading dragon" of the global economy. It's calling into question whether China can save the global economy with outperforming growth….

Apple to Judge: More Damages Please Sir

Apple asked a judge to award an extra $535 million in its U.S. patent case with Samsung Electronics Co.  in addition to its requested permanent injunction against sales of Samsung’s infringing products, those good folks at Bloomberg told us.

Cupertino, California-based Apple sued Samsung in April 2011, and Samsung countersued as part of a battle being waged on four continents over a smartphone market valued by Bloomberg Industries at $219.1 billion. The companies have also sued each other in the U.K., Australia and South Korea.  In August, Apple won a jury verdict of more than $1.05 billion against Samsung after a finding that Samsung infringed six of seven patents for the mobile devices.

Apple is requesting an enhancement of $135 million under the Patent Act and $400 million under the Lanham Act, for a combined total of $535 million, compared with $268 million from the verdict under both statutes, court papers show….

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