Posts Tagged
‘Wall Street’
by ilene - August 31st, 2009 11:10 am
On the bright side, maybe there’s a high level government job waiting for him.
Courtesy of John Carney at Clusterstock
These days it is a pretty sure bet that Chris Flowers regrets telling investors in his private equity funds that "every single investment" would make money. His largest fund is said to be down between 60% and 70%, and some secondary market buyers assign shares in it no value at all.
William Cohan has an extraordinary piece in Fortune on the rise and fall of Flowers, the former Goldman Sachs wonderboy (once the youngest partner ever) who became one of the biggest names in banking by buying Japan’s Shinsei bank for $1 billion in 2000 and IPOing it four years later for $10 billion. But these days his reputation is under fire as the banking system tries to recover from the ruinous 2008.
"He did one great assisted transaction in Japan," one unnamed banker tells Cohan, "and off that he raised $7 billion. The great failing in private equity is to assume that you can repeat the past. I think he just assumed, for instance, he could repeat Shinsei over in Germany. Big mistake."
That person is referring to the $1.5 billion tender offer Flowers big fund made to acquire 24.9% of Hypo Real Estate Holding, a Munich-based commercial real estate lender. Flowers paid a 25% premium to where the shares were trading before the deal was announced. Just four months later Hypo had to turn to the German government for assistance. The German government ended up owning 90% of Hypo, drastically diluting Flowers’ stake. These days his investment in the bank has probably dropped in value by 87%.
But what may have hurt Flowers’s reputation even more than his investment losses is the role he played in Bank of America’s acquisition of Merrill Lynch. Flowers, while at Goldman Sachs, had helped put together the merger of NationsBank and Bank of America. In early 2008, when Merrill looked to raise capital, Flowers poured through its books but concluded the asking price was too high. But when the crisis hit on September 11, Flowers found himself back at Merrill as an adviser to Bank of America.
Flowers issued a "fairness opinion" on the deal, endorsing the 70% premium Bank of America paid for the shares of Merrill Lynch. He was repeatedly invoked in the press conference announcing the deal. Ken Lewis, Bank of America’s CEO,…
Tags: Bank of America, Banks, Chris Flowers, Financial Crisis, Financial Services, Merrill Lynch, Wall Street
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by ilene - August 28th, 2009 8:24 pm
In the end, it appears, panic buying, like panic selling, is all too human. Joshua M. Brown explains. And, welcome Joshua, thanks for contributing to our Favorites! - Ilene
Courtesy of Joshua M Brown, The Reformed Broker
Yes it happened, deal with it
I talk to a ton of traders, portfolio managers, brokers and high net worth investors, both on and off Wall Street. Most of them have engaged in a bit of panic buying at some point this summer as the 50% rally in US stocks surprised many smart players.
Panic buying is what happens when you run money for a living and you feel like you’re missing a huge upside move. To make up for lost performance, your purchases get more aggressive than usual.
For all I know, the rally could end today and it will still be one for the record books. Lots of people weren’t ready for it.
This post is dedicated to the guys and gals who were able to adjust, despite what their quant models, economic indicators or magic Roubini email blasts were telling them. The quotes below are real, if paraphrased, and came from a variety of my contacts and friends (love you guys, don’t hate me!).
The Reformed Broker presents:
The Five Stages of Panic Buying!
1. Denial (Late March/ Early April)
“Ha, another Bear Market rally…wait til the foreclosure/ new home sales/ confidence data comes in! Right back to 6500, maybe lower…bagholders”
“Dude, the stress tests are coming out next month. B of A may be done-ski. Sell the May 10 calls, you’ll never have to cover.”
2. Anger (Mid-April)
“What the f@&% do you mean the goddamn banks are cheap based on normalized earnings? They will never ever earn anything again, ever! Idiot!”
“You gotta be kidding me with these retailers running now. RETAILERS? Are you nuts? They’re FINISHED!”
“If one more consumer discretionary name rallies on a less-than-expected loss, I’m gonna kick this Bloomberg down a flight of stairs.”
3. Bargaining (May-June)
“Okay, I can stomach picking up some large cap tech and I’ll nibble – NIBBLE! – at discount retailers, but I will absolutely NOT buy Goldman Sachs at 130.”
If China would just pull back 5 to 7% I’d get in, but I can’t chase it here…except Sohu, and I guess a little Baidu and I’ll just take a quarter position in China Mobile just in case. But I’m not chasing here.”
“(whispered) Dear market god, please stop the tape. Just give me one…
Tags: 50% rally, Five Stages of Panic Buying, lost performance, Panic Buying, Wall Street
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by ilene - August 27th, 2009 3:40 pm
Courtesy of John Carney at Clusterstock
Goldman Sachs has issued a memo to clients blasting the Wall Street Journal’s article on the "huddles."
"A ‘huddle’ is not a forum for sharing stock or sector ‘tips,’" Goldman writes in a memo first published by Bess Levin at DealBreaker.
It seems very clear that Goldman clients–the ones not invited to huddles–must have been raising questions about why they were being left out. The most damaging aspect of the article was the possibility that some "most-favored" clients were getting information or advice that conflicted with what Goldman was telling ordinary clients got. For example, clients coaxed to go long asset backed securities might be peeved if there was some secret Goldman huddle where top clients were told to short.
Goldman is now on the record denying that this occurs.
Here’s the memo that Bess obtained.
Tags: Analyst Research, Financial Services, Goldman Sachs, Scandals, Wall Street
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by ilene - August 27th, 2009 10:58 am
Welcome to Vincent of Clusterstock!
"Americans are heading home as Britain plans a 50 percent tax rate for those who earn more than 150,000 pounds ($248,000) a year and employers cut benefits for workers living abroad, reducing the allure of London. That comes a year after the U.K. said foreigners who have lived in the country for more than seven years must pay 30,000 pounds annually or give up the special status that shields overseas income from British taxes." Elle Macpherson Can’t Counter London Gloom as Americans Flee, Bloomberg.
Courtesy of Vincent Fernando
Tags: Banks, Bonus, Economy, Financial Crisis, regulation, Wall Street
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by ilene - August 24th, 2009 11:53 am
Courtesy of Edward Harrison at Credit Writedowns
You have probably noticed a change in tone at Credit Writedowns since about June, but a lot more in the past month or so. Once mildly bullish due to the deeply oversold levels this Spring, I have become increasingly alarmed at the unjustified strength of the recent market rally.
My most recent post explaining my concern, “Major selloff coming?” kind of gives you the timeline. I really would like to be bullish, but I have major issues with this rally on both a technical and fundamental basis:
Technicals
- The technicals all point to stock markets in the U.S., Europe and Emerging Markets as being overbought. This has been the case for at least two months now. As the market continues up without a pullback, you have to be concerned that any pullback will be violent.
- There has been an enormous multiple expansion, which is usually what occurs in the middle to latter stages of a secular bull market, not in the beginning of one. It certainly makes one think this is a bear market rally and not a secular bull move.
- I have said that the massive liquidity dumped into the system is not going to fuel inflation when capacity levels are at historic lows in the U.S. There is absolutely no pricing power, either for businesses or workers. But, all that money is going somewhere eventually. Right now, it looks like it’s going into asset prices. Liquidity is seeking return.
Fundamentals
- If you look at the deflationary pressures, they are almost all still at work: poor employment markets, producer price inflation at record low levels (Germany down 7.8% through July y-o-y for example), overcapacity in Europe, China and Asia, back breaking debt levels, etc, etc.
- But, then, where is the demand? It’s not there. The consumer is not going to be jumping in here. A lot of the uptick in the economy is inventory-related, not consumption-driven. So either former exporters, government or business will have to pick up the slack.
- And let’s not forget my favourite whipping boy, the financial sector. In the U.S., there are a lot of toxic assets on balance sheets, while leverage and equity capital ratios are still poor. That speaks to the need for continued deleveraging and low loan growth in the financial services sector.
So while a snap-back rally was inevitable given how oversold things had become in March, this rally has been a bit over the top. I am…
Tags: bearish, Equities, Jeremy Grantham, overpriced, Stock Market, Wall Street
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by ilene - August 20th, 2009 1:48 am
Here’s a unique perspective on China’s continued economic growth by Ellen Brown. Indirectly, she highlights the flaws in our own response to the credit crisis - a source of outrage - making China, not known for freedom and justice, look good.
Courtesy of Ellen Brown at Web of Debt
“The banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. They frankly own the place.”
– U.S. Senator Dick Durbin, Democratic Party Whip, April 30, 2009
While the U.S. spends trillions of dollars to bail out its banking system, leaving its economy to languish, China is being called a “miracle economy” that has decoupled from the rest of the world. As the rest of the world sinks into the worst recession since the 1930s, China has maintained a phenomenal 8% annual growth rate. Those are the reports, but commentators are dubious. They ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Economist Richard Wolff skeptically observes:
We now have a situation in the world where we have a global capitalist crisis. Everywhere, consumption is down. Everywhere, people are buying fewer goods, including goods from China. How is it possible that in that society, so dependent on the world economy, they could now have an explosive growth? Their stock market is now 100 percent higher than at its low — nothing remotely like that hardly anywhere in the world, certainly not in the United States or Europe. How is that possible? In order to believe what the Chinese are saying, you would have to agree that in a matter of months, at most a year, no more, they have been able to transform their economy from an export-based powerhouse to a domestically focused industrial engine. Nowhere in the world has that ever taken less than decades.”
How can China’s stimulus plan be working so well, when ours is barely working at all? The answer may be simple: China has not let its banking system run roughshod over its productive economy. Chinese banks work for the people rather than the reverse. So says Samah El-Shahat, a presenter for Al Jazeera English who has a doctorate in economics from the University of London. In an…
Tags: Banks, capitalism, CHINA, Ellen Brown, government, Main Street, the Chinese solution, Wall Street
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by ilene - August 19th, 2009 2:38 am
Courtesy of Jesse’s Café Américain
"…market is ahead of reality…worry about things particularly going into Ramadan on the 22nd (of August)…there are things gathering around here (the NYSE) that are kind of esoteric, but we could perhaps see historic trading over the next eight weeks…potentially a very exciting period." Art Cashin, 18 Aug 2009
Larry Summers, Tim Geithner, and Ben Bernanke have managed, once again, to place the economy on the edge of a chasm by pandering to Wall Street, which has a narcissistic short-term obsession with stuffing its pockets at any risk or cost, while the corporate media distracts the public with an outrageous parade of disinformation, delusion, and distraction.
The world markets are entering a period of high risk and volatility. No one knows for certain what will come. Professional traders are preparing for it by managing their risks. We are as well.
Tags: Ben Bernanke, Economy, Larry Summers, Stock Market, Tim Geithner, Wall Street
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by ilene - August 18th, 2009 5:45 pm
Click here for a FREE, 90-day trial subscription to our PSW Report!
Courtesy of 
Lawrence Delevingne at Clusterstock
Mohamed El-Erian has called the recent Wall Street rally a "sugar high." Now, he says U.S. stocks have hit a wall.
The chief executive of bond-king PIMCO said on Reuters TV that U.S. stocks had topped out because valuations have shot up too quickly.
Reuters: Asked if U.S. stocks have hit a wall, El-Erian told Reuters Television: "I think we have, and I think what you are seeing is a massive tug of war going on."
World stock markets fell Monday, with the Dow Jones industrial average .DJI declining 2 percent and China’s Shanghai Composite Index .SSEC falling 5.8 percent, shaking off recent optimism amid doubts about the sustainability of a solid economic recovery.
"On the one hand, pushing stocks higher are powerful technicals, the fact that very low yields on the front end have pushed cash out of the money market segment and into the risk assets," El-Erian said. "But on the other hand, the fundamentals are such that valuations are ahead of fundamentals. What you have seen over the last couple of days is a recognition that fundamentals matter."
Watch the interview here.
See Also:
Mohamed El-Erian: July Rally Was A "Sugar High"
PIMCO’s El-Erian Explains The "New Normal"…And It Blows
PIMCO’s El-Erian Bristles At Being Called One Of The "Chosen Ones" (VIDEO)
Tags: El-Erian, Financial Services, Investing, Markets, PIMCO, Recession, Stock Market, stocks, Wall Street
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March 10th, 2010 10:50 am
The Gold Bubble
Courtesy of RICK BOOKSTABER
This represents my personal opinion, not the views of the SEC or its staff.
I am not going to spend time here talking about how the price of gold is off-the-wall, that it is not just a bubble in the making, but a bubble waiting to burst. I don’t want to waste your time on that point.We all know it is a bubble.
George Soros has said “The ultimate asset bubble is gold”. Many of the top asset managers, such as Tudor and Paulson, are piling on; Paul Tudor Jones recently said gold “has its time and place, and now is that time.” The banks are echoing this view with their research. Goldman has a research piece that looks f...
more from Ilene
November 17th, 2009 10:53 am
Courtesy of Tyler Durden
Dear FINRA,
We know you are busy, we also know you are hell bent on intercepting IOI manipulation as per Mr. Jon Kroeper's recent media appearances. Which is why we kindly request that you get back to us at your earliest convenience with information on how many of the IOIs disclosed below are, in fact, "natural." We will make this a recurring topic on Zero Hedge until such time as you respond to our information request. You can contact us at outsourcefinra@zerohedge.com
We appreciate your prompt attention to the matter
Zero Hedge staff.
more from Tyler
March 11th, 2010 10:49 am
Stock Market Commentary: New Highs for Tech and Small Caps
Courtesy of Fallond Stock Picks
Small Caps and Tech continued their good form. Technicals continue to support the move higher for Small Caps (Russell 2000) with new highs for the MACD and +DI line. The Russell 2000 would have to give up 25 points (or 4%) just to test breakout support at 650.
The prior underperformance of the semiconductors was undone with today's 2% gain.
more from Chart School
March 19th, 2010 9:29am
Well now we're officially cashed out!
As I always do before options expiration I reviewed our Buy List, which, this quarter, is a list of 37 stocks we've been playing since late December and, sadly, after reviewing 37 of our favorite investments very carefully this week - I could only conclude that cashing them out was the only decision I could be comfortable with this week. Of 66 trades we had on our 37 stocks, 64 are winners with an average return since 2/8 of 28% - since most of the trades were designed to make 40% for the year - it just seems silly not to take the money and run now, on March 19th.
You are not supposed to have 64 out of 66 winners in 6 weeks, you are not supposed to make 3/4 of what you anticipate for the year in 6 weeks - that is NOT how the markets are supposed to work! When the ma...
more from Goddess
September 16th, 2009 8:19 am
Tuesday was good and bad for the Oxen Report. Our short sale of the day worked very well for us. I chose Ultrashort Proshares Oil and Gas for our short sale of the day due to my expectation...
more from David
By Andrew Wilkinson
September 16th, 2009 9:25 pm
Today’s tickers: BPOP, LNCR, EEM, XLK, XL, PALM, LIZ & MI
BPOP - The ‘popular’ bank popped up on our screens this afternoon after a large-volume risk reversal was established on the stock. The massive trade was likely the work of an investor with knowledge of commercial banks as approximately 60,000 contracts were exchanged on BPOP amid a more than 12% rally in shares of the underlying to $2.60. It appears the trader purchased 30,000 now in-the-money October 2.5 strike calls for an average premium of 33 cents apiece. He funded the purchase of the calls by selling 30,000 puts at the January 2.5 strike for 43 cents each. The investor received a net credit on the transaction of 10 pennies per contract. The motivation is perhaps that this individual is swimming with the rising tide of financial names today and expects a far larger...
more from Andrew
March 16th, 2010 9:28 am
By Ilene
Let's take a look at Insider Buying and Selling over the last week or so. These are screen shots from Finviz - the significant buys against a green background first and significant sells against the pink background second. All the buys fit into my screen shot but the sells did not. Click here to see all the sells.
Note that the largest buy in the group, for KITD was at a price of 9.73 (KITD is currently at 11.54). The buy was part of an Equity Offering rather than an open market purchase. Tuzman Kaleil Isaza's (KITD's Chairman and Chief Exec. Officer) history of buys is http://www.insidercow.com/
more from Insider
September 13th, 2009 11:08 pm
This post is for live trades and daily comments.
To learn more about the swing trading portfolio (strategy, membership etc.), please click here
- Optrader
...
more from OpTrader
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