Credit Suisse’s turnaround is proving more painful than it could have been.
The Swiss bank’s fourth-quarter results were riddled with the kind of exceptional items and restructuring costs that were par for the course for a European investment bank rethinking its strategy. But even after stripping these out, and ignoring the bits that Credit Suisse is winding down, the bank would have failed to turn a profit…
An odd returns dispersion has occurred over the past months, a Credit Suisse report notes. Hedge funds generally had difficulty in August and September as the stock market faltered but when markets rebounded in October, many well-known hedge funds once again lagged the indexes.
Digital wallets and mortgage apps will vie with beer and cars for Super Bowl viewers as financial-services companies step up their advertising to cater to the changing preferences of millennials.
At least six financial brands have purchased air time for the television spectacle that attracts more than 100 million viewers, aiming to establish a place among more mainstream institutions by promising easy and convenient ways to manage your money. The Super Bowl featured just two financial-services ads last year and three in 2014…
LONDON — Countryside Properties, a British home builder that is majority-owned by the American private-equity firm Oaktree Capital Management, said on Monday that its initial public offering could value the company at 1.1 billion pounds, or about $1.6 billion.
Countryside said it expected to price its offering between 225 pence and 275 pence a share, valuing the company at £1.125 billion at the midpoint of the range…
In September 2014, Mark Hart, founder of Corriente Advisors, predicted on Real Vision that China would be forced to devalue the Yuan. Almost a year later, on August 11, 2015, China began to devalue the Yuan. In this exclusive follow-up interview over a year later, Hart explains why he’s expecting China to devalue the Yuan up to 50% further.
Trading volume has fallen by more than 40 percent in MBS
Fed now owns nearly a third of U.S. government MBS market
The U.S. Federal Reserve is squeezing a good deal of the profit out of mortgage bond trading, and Wall Street banks are increasingly heading for the exits.
Barclays Plc cut 20 jobs in its U.S. government-backed mortgage bond business in January as part of a broader bank reorganization that is cutting 1,200 jobs, according to a person with knowledge of the matter. Deutsche Bank AG and Societe Generale SA have also scaled back in the market in recent weeks, people with knowledge of those moves said…
Symantec announced Thursday that it had taken a $500 million investment from the investment firm Silver Lake Partners, as the company moves to focus on its core security software and services.
The company also disclosed that it would use both the proceeds from the Silver Lake investment and the cash that it received from selling its Veritas data storage unit for $7.4 billion to return money to shareholders. That will include both share buybacks and a special dividend of $4 a share…
Swiss property market risks rose in the final three months of 2015 thanks to an increase in outstanding mortgage loans. “Mortgage debt growth surpassed that of income at a rate not seen since 2010,” according to UBS Group AG…
GPIF must continue using asset managers, reports Kyodo News
Issue debated as part of fund’s sweeping structural changes
A push by the world’s largest pension fund for permission to bypass asset managers when doing business in Japan’s stock market has reportedly hit a wall.
The proposal to allow the Government Pension Investment Fund to directly buy or sell stocks was halted, Tokyo-based Kyodo News reported Thursday. Japan’s $1.2 trillion fund had been seeking clearance to act directly rather than hiring asset managers in order to reduce operating costs and boost the size of its investments…
It’s a subject we have broached gingerly, namely, David Einhorn and Greenlight Capital’sterrible awful no good very bad year. As it happens, we’re not alone in tackling that delicate subject, well, delicately. Or, in the case of those you might expect to be most exercised about the whole thing, at all…
Values increase 10.4 versus year earlier, Halifax says
Supply-demand imbalance continues to push up princes
U.K. house prices rose for a second month in January as inflation in the property market showed no sign of easing, according to Halifax.
The average cost of a home rose 1.7 percent from December to 212,430 pounds ($311,000), the lender said in a statement Thursday. From a year earlier, prices jumped 10.4 percent…
Forecasts for weak yuan challenged by small group of optimists
Goldman predicts PBOC will start boosting its reference rate
The way most currency forecasters see it, a weaker Chinese yuan is all but inevitable.
Thirty-nine of 45 strategists tracked by Bloomberg say the currency will drop against the dollar by year-end, while bearish option bets have swelled to a notional $443 billion as hedge fund managers from Bill Ackman to Crispin Odey positioned for declines. China’s record levels of debt, slowing economic growth and accelerating capital outflows make a compelling case for pessimism…
Remember, back in 2008, how Warren Buffett agreed to loan his friends at Goldman Sachs $5 billion to muscle through the financial crisis? And how McKinsey partner and Goldman director Rajat Gupta was on the call in which the details were discussed? And how he hung up the phone, counted to 23, and then called his friend Raj Rajaratnam with the news? And how Raj Rajaratnam then put said good news, which some might describe as material non-public information, to use at his hedge fund? Gupta presumably remembers all this, because he did 19 months on the inside for it. Now, he’s hoping a judge will reconsider the whole securities fraud conviction label, as he was apparently just telling Rajaratnam about the investment in a “two guys shooting the sh*t” type way, and not at all in the hopes of some sort of financial gain, the mere thought of which actually sickens him…
U.S. mortgage rates for 30-year loans fell to the lowest level since late April, reducing borrowing costs as the U.S. housing market enters its key selling season.
The average rate for a 30-year fixed mortgage was 3.72 percent, down from from 3.79 percent last week, Freddie Mac said in a statement Thursday. The average 15-year rate slipped to 3.01 percent from 3.07 percent, the McLean, Virginia-based mortgage-finance company said…
Economists lower terminal projections to 2.875% in survey
Policy makers anticipate a 3.5% rate when hiking cycle ends
Economists are deviating even more from the Federal Reserve in forecasting how high interest rates will rise, joining bond and futures traders in doubting the central bank’s projected policy-tightening path.
Analysts and strategists in a Bloomberg survey cut their forecasts for the Fed’s peak policy rate at the end of this tightening cycle, known as the terminal rate, to a median of 2.875 percent from 3.375 percent in a July poll. That compares with the Fed’s latest forecast of 3.5 percent published in December, down from 3.75 percent in June…
CreditLaurent Gillieron/KEYSTONE, via Associated Press
After a bitter face-off for more than a decade between Argentina and a group of disgruntled New York hedge funds, both sides have come to the negotiating table with fresh hopes of a resolution.
But the dispute, which has left Argentina largely cut off from international markets, still promised a few twists as a new round of talks took place this week in Manhattan…
Wells Fargo has agreed to pay $1.2 billion to put to rest claims that it engaged in reckless lending under a Federal Housing Administration program that left a government insurance fund to clean up the mess.
The bank, which is the nation’s largest mortgage lender, has been in talks with the government since 2012 over accusations that it improperly classified some F.H.A. loans as qualifying for federal insurance when they did not, and that it knew of the misclassification but failed to inform housing regulators about the deficiencies before filing insurance claims…
(Rewrites throughout with details from court filings)
Feb 1 (Reuters) – Brokerage firm RCS Capital Corp filed for Chapter 11 bankruptcy protection as part of a prearranged plan to restructure debt and give lenders control of its profitable Cetera investment advisory arm and take it private.
RCS Capital, founded by real-estate investor Nicholas Schorsch, ran into debt trouble after a string of costly acquisitions and deteriorating market conditions. An accounting scandal at a separate business run by Schorsch also dented investor sentiment…
Shanghai property gauge advances to one-week high after cut
Analyst forecasts more loosening measures to follow the move
Chinese property shares surged in the domestic market after the central bank cut the minimum mortgage down payment to the lowest in history, prompting expectations of more easing measures.
The Shanghai Stock Exchange Property Index, which tracks 24 developers listed on the city’s exchange, rose as much as 1.2 percent to a one-week high, the only group to advance on the the benchmark Shanghai Composite Index, which dropped as much as 1.8 percent. Guangzhou-based Poly Real Estate Group Co. surged as much as 3.8 percent to the highest in almost a month. Greenland Holdings Corp., the third-biggest developer by sales value last year, traded as much as 4.2 percent higher at a two-week high…
SAN FRANCISCO — The landscape for Silicon Valley may have become rockier over the last several months. But that has not stopped venture capital firms from raising new money to pour into start-ups.
The latest is Index Ventures, which announced on Wednesday that it had closed its eighth venture capital fund at $550 million, up slightly from the normal size for the funds earmarked for early-stage investments…
CHICAGO, Feb 1 (Reuters) – Oakland’s Outer Harbor Terminal filed for Chapter 11 protection on Monday, two weeks after one of its biggest tenants said it was terminating a 50-year lease with the northern California port.
Last month, Ports America, one of the largest marine cargo operators in the country, said it was shifting its business from the Oakland port to other cities along the West Coast, including Los Angeles and Long Beach…
Supply surge to `greatly influence’ performance, Santee says
More than 6,700 new units to be listed in Manhattan this year
Equity Residential said rents on newly signed apartment leases on Manhattan’s west side may be flat this year as competition mounts from a surge of new supply coming to the area.
“The performance of our Manhattan portfolio will be greatly influenced by almost 2,000 new units on the Upper West Side, which makes up almost 30 percent of total revenue for our New York Metro area,” David Santee, the company’s chief operating officer, said on a conference call Wednesday to discuss fourth-quarter earnings…
AIG’s stock rose more than 1 percent immediately following the report.(Get the latest quote here.)
In a letter to shareholders, the billionaire activist investor said: “It is abundantly clear to me there is only one sensible path for AIG to follow: become a smaller, simpler company,” on a path toward eventually becoming a non-systemically important financial institution (SIFI)…
The heads of Barclays Plc’s distressed-debt and investment-grade bond trading are both leaving the firm as the British bank cuts 1,200 jobs worldwide, according to a person with knowledge of the matter.
Dan Crowley, the distressed-debt head, and Anthony Bugliari, head of U.S. high-grade bond trading, are among a handful of people leaving the bank’s credit-trading unit, said the person, asking not to be identified because the information isn’t public…
Peter Hodson: One of the problems in the investment world is that many investors end up owning securities they do not understand. As the saying goes:…
Did you enjoy the first week of the year in the stock market? It was ugly out there, to say the least…
The owners of Turkey’s Via real estate investment company hired HSBC Holdings Plc to manage an initial public offering this year, according to four people with knowledge of the plans.
Finansbank AS brokerage unit Finans Yatirim will help sell to domestic investors, said the people, who asked not to be identified because the matter is confidential. Citigroup Inc. was also hired to manage the international sale with HSBC, two of the people said…
Kandarian says 2015 was a `challenging year overall’
CEO says retail split plan shows willingness to be bold
MetLife Inc., the largest U.S. life insurer, said fourth-quarter profit slipped 45 percent as investment results deteriorated in private equity and hedge funds.
Net income fell to $834 million from $1.52 billion a year earlier, the New York-based insurer said Wednesday in a statement. Operating profit, which excludes some investment results, was $1.23 a share, missing the average $1.36 estimate from 17 analysts surveyed by Bloomberg…
Buy The Dip? Hedge funds big buyers, looking for the “dip” turnaround point can be challenging and requires patience
Last week the primary buyers were hedge funds, who were net buyers for the fourth week in a row. In a January 19 report titled “Another week of buying the dip—but this time, driven by hedge funds,” stock accumulation from hedge funds was noted to be the largest since September 2010…
Bank accelerating disposals of unwanted assets under new CEO
Portfolio consists mainly of rate swaps, person familiar says
Barclays Plc agreed to transfer a portfolio of derivatives contracts to JPMorgan Chase & Co., as the U.K.’s second-largest bank speeds up the sale of unwanted assets to reduce its capital requirements.
The portfolio consists mainly of interest-rate swaps, many of which are backed by collateral that will transfer to JPMorgan, according to a person with knowledge of the terms of the deal, who asked not to be identified because the information isn’t public. Rates swaps are usually classified as less risky and capital consumptive than equity or credit derivatives…
The stock market slump has hit activist hedge funds particularly hard, raising the question of whether shareholder activism can survive a down market.
Activist hedge funds specialize in taking aim at troubled companies. The core idea is for the fund to push for a new strategy that will turn the company around or, more commonly, to instigate some event that crystallizes value, like a spinoff or a sale. In the rising stock market of the last five years, this was a wonderful strategy…
A recent report by investment research firm Cambridge Associates shows private equity and venture capital outperformed the S&P 500, the Russell 2000® small cap, and the Nasdaq Composite indexes for the first half of 2015. Key excerpts are below.
Three-month Treasury bill rate falls to negative 0.5 percent
Very adverse scenario posits harsh worldwide recession
As interest rates turn negative around the world, the Federal Reserve is asking banks to consider the possibility of the same happening in the U.S.
In its annual stress test for 2016, the Fed said it will assess the resilience of big banks to a number of possible situations, including one where the rate on the three-month U.S. Treasury bill stays below zero for a prolonged period…
LONDON — J Sainsbury, one of Britain’s largest grocery store chains, said on Tuesday that it had agreed on the terms of a bid to buy Home Retail Group in a deal that would value the acquired company at 1.3 billion pounds, or about $1.9 billion.
The transaction, if completed, would expand Sainsbury’s online business and make the company less reliant on food sales. Home Retail is the owner of Argos, which sells electronics, housewares and other products through its online operations and retail stores in Britain and Ireland…
Vonovia SE, fighting to win control of German landlord Deutsche Wohnen AG with a 8.6 billion-euro ($9.4 billion) hostile bid, secured 27.7 percent of its rival a week before the deadline.
That includes Vonovia’s stake of about 5 percent and acceptances from convertible bondholders representing 5.3 percent of Deutsche Wohnen stock, Vonovia said on its website on Tuesday. On Jan. 29, Deutsche Wohnen said it reserved the right to settle the convertible bonds in cash, meaning the holders won’t necessarily have any shares to tender…
Central Bank eases requirements as it steps up support
Minimum down payment required for second homes cut to 30%
China’s central bank said it will allow banks to cut the minimum required mortgage down payment to 20 percent from 25 percent for first-home purchases to the lowest level ever as it steps up support for the property market.
The eased requirements will be for buyers in areas without the purchase restrictions that are applied in some of the biggest metropolitan areas such as Beijing and Shanghai, the People’s Bank of China said Tuesday in a statement on its website. The minimum down payment for second-home purchases was cut to 30 percent from 40 percent, the central bank said…
CreditChristopher Gregory for The New York Times
WASHINGTON — Puerto Rico’s financial troubles are so complex and far-reaching that bankruptcy alone will not solve them, and might even make them worse, experts on financial distress told lawmakers in Washington on Tuesday.
Instead, they recommended appointment of a federal control board, saying it would have a better chance of resolving Puerto Rico’s debt in the short term and preventing the island from falling into debt again in the future…
Owners of Turkey’s Via real estate investment company hired Citigroup Inc. and HSBC Holdings Plc for an initial public offering this year, according to four people with knowledge of the plans.
Bayraktar Insaat AS, an Ankara-based builder owned by brothers Ali Bayraktar, Coskun Bayraktar and Mehmet Bayraktar, hired the two banks to manage the international sale, said the people, who asked not to be identified because the matter is confidential. Finans Yatirim, an Istanbul-based brokerage owned by Finansbank, will help sell to domestic investors, they said…
1MDB is subject of investigations in Malaysia, overseas
Malaysia AG dismissed some requests for action against 1MDB
Switzerland’s prosecutors are seeking legal assistance from Malaysia after a probe into a government investment fund revealed “serious indications” that about $4 billion may have been misappropriated from state companies in the Southeast Asian nation.
The Swiss Attorney-General’s office said in a statement Friday that during an investigation of 1Malaysia Development Bhd., four cases involving allegations of criminal conduct and occurring between 2009 and 2013 have so far come to light. It has been ascertained a small amount of funds were transferred to Swiss accounts of former Malaysian public officials, according to the statement. The Swiss authority is seeking help from the Malaysian attorney general to determine whether funds were misappropriated…
Horsehead Holding Corp, a large U.S. zinc producer, filed for Chapter 11 bankruptcy on Tuesday due to a slump in metals prices and a shortage of cash.
The Pittsburgh-based company is the latest victim of a commodity price crash that has claimed scores of U.S. energy exploration companies, miners and metals producers. Commodity prices have slumped due to an economic slowdown in China and other formerly fast-growing markets…
U.S. says arbitration can resolve disputes over flawed loans
Change could lead to increase in mortgage lending, MBA says
U.S. banks have complained for years that the risk of having to buy back flawed mortgages has discouraged them from lending. Now a regulator is offering a concession.
Under a plan announced Tuesday, mortgage lenders will be able to take disputes over home loans to an independent arbitrator. Fannie Mae and Freddie Mac, the mortgage-finance giants, will allow a third party to decide how grievances should be resolved after other options have been exhausted, the Federal Housing Finance Agency said in a statement…
Google, Qualcomm also participated in $793.5 million round
Funding will accelerate and scale production to get to market
Magic Leap Inc., the secretive startup working on a device that simulates reality, has raised a new round of funding led by Alibaba Group Holding Ltd., valuing the company at $4.5 billion.
Magic Leap added $793.5 million to its arsenal, the company said Tuesday. That will provide a long enough runway to get to sustainability and help accelerate bringing the company’s first product to the market, Chief Executive Officer Rony Abovitz said…
Jan 31 (Reuters) – RCS Capital Corp, a brokerage firm tied to real-estate investor Nicholas Schorsch, filed for Chapter 11 bankruptcy protection to reduce debt and as per the plan, its key lenders will assume control of the company.
The company listed total assets of $1.98 billion and debts of $1.39 billion, on a consolidated basis, in its bankruptcy filing…
Oaktree Capital Management LP is among lenders that have agreed to fund Quiksilver Inc.’s operations as it emerges from bankruptcy, according to people with knowledge of the matter.
Oaktree, which is set to take control of the reorganized company, committed to a $50 million loan, said the people, who asked not to be named because the investments are private. Bank of America Corp. and Wells Fargo & Co. will also provide $140 million in an asset-backed loan, the people said…
As price declines accelerate in Hong Kong’s housing market — ranked as the world’s most unaffordable after gains of more than 300 percent in past 12 years — the last slump in the late 1990s shows how vulnerable the city’s property can be to global events. Home prices plummeted almost 70 percent over a six-year period as the Asian financial crisis and a deadly SARS outbreak hammered investor confidence. Prices also sank in the early 1980s as concern over the future of the then-British colony prompted the government to peg the city’s currency to the greenback — thus tying the hands of policy makers from using interest rates to control property prices…
CreditAgence France-Presse — Getty Images
HONG KONG — A Chinese online finance company bilked investors out of more than $7.6 billion, spent lavishly on gifts and salaries and buried the evidence, according to local authorities who described the operation as an enormous Ponzi scheme.
The accusations throw a shadow over China’s online finance industry, a lucrative area for many global leaders in the sector, but one that the authorities say has also drawn a growing number of cases of fraud and flameouts…
As we outlined last week, the bursting of the bond bubble has begun.
CNBC and the financial media may spend 99% of their time talking about stocks, but bonds are the single most important issue for Central Banks.
When you consider everything in the context of the bond bubble, every Central Bank policy begins to make sense…
Approvals climbed to 70,837 from 70,424 in November, BOE says
Low interest rates, record employment fueling housing demand
U.K. mortgage approvals unexpectedly rose in December, indicating the housing market maintained its momentum going into 2016.
Approvals climbed to 70,837 from 70,424 in November, the Bank of England said on Monday. Economists had forecast a decline to 69,600, according to a Bloomberg News survey. Net mortgage lending was 3.2 billion pounds ($4.6 billion), down from 3.8 billion pounds the previous month…
CreditKrista Schlueter for The New York Times
SFX Entertainment, the company created four years ago to capitalize on the popularity of dance music festivals, declared bankruptcy on Monday, after a troubled year in which the company’s founder abandoned a takeover bid and its stock plunged by more than 95 percent.
The bankruptcy reorganization will take the company private, eliminate more than $300 million in debt from its balance sheet and install a new chief executive to replace Robert F.X. Sillerman, who founded SFX in 2012 with adream of creating a media empire around dance music…
There are a lot of competing narratives going around as to why Greece is in such trouble relative to the rest of the eurozone. A lot of this centers on whether Greek fiscal profligacy or poor credit controls by foreign banks was the main cause of the Greek debt crisis. Let me throw my hat into this ring with a few comments. What I write below will generally shade toward the problem being one of structural fiscal deficits and an ECB monetary policy that was inappropriate for the eurozone periphery as a whole and Greece in particular.
Even as the U.S. Federal Reserve raises borrowing costs, a big chunk of the rest of the world is doing the opposite, with Japan last week becoming the latest to adopt negative rates. With that move, 26 percent of the market value of the world’s companies worth more than $2 billion are based in economies being aided by extraordinary monetary stimulus. The rest remains in positive-rate territory — for now…
CreditKarsten Moran for The New York Times
Most money managers clamor for companies to provide detailed guidance on their next quarter, down to the penny — but not the world’s largest investor.
Laurence D. Fink, co-founder and chief executive of BlackRock, which with more than $4.6 trillion in assets under management makes it the world’s largest investor, sent a letter to 500 chief executives late Monday urging them for the first time to stop providing quarterly earnings estimates…
Owning a home with a yard and a picket fence has long epitomized the American dream. But, unfortunately, that dream is becoming increasingly off-limits to residents of the San Francisco Bay Area and, perhaps soon, many other areas of the country.
In San Francisco, single-family homes are being phased out under something called “Plan Bay Area,” a regional development plan written by unelected bureaucrats over loud objections from the people whose lives it will change.
The Plan calls for sharp limits on future housing and business development across the Bay Area. Nearly 80% of new housing and two-thirds of new jobs will only be allowed to develop in a scant 5% of the region…
General obligations receive more cash than sales-tax bonds
Growth bonds dependent on revenue exceeding projections
Puerto Rico is seeking to cut its debt load by 46 percent in its first offer to investors, a proposal that may face revisions as bondholders fight to get the most repayment.
The commonwealth unveiled its plan on Monday to reduce the island’s obligations and help restart an economy that’s failed to grow in the past decade. The proposal for a voluntary exchange would cut the island’s debt to $26.5 billion from $49.2 billion, put off all interest payments until the 2018 fiscal year and affect even general-obligation bonds, which have the strongest repayment pledge, according to a restructuring proposal posted on the Government Development Bank website…
Somehow disgcraced ex-SAC Capital principal Steve Cohen is almost back in the saddle again. All he has to do is quietly manage his $9 billion family firm Point72 Investments and wait out two years, and then he’s free to rejoin the hedge fund titans of Wall Street again. This despite Cohen’s SAC Capital pleading guilty on multiple fraud charges and agreeing to cough up $1.8 billion to settle the case with the Securities and Exchange Commission just a couple of years ago.
This post will build upon my previous post with the Cobra equation. In that post, I gave a model showing that the Fed is completely behind the curve of the business cycle. The Fed should not be raising rates at this point in the business cycle.
When to Normalize in Theory
In the model, aggregate profit rates have a somewhat circular movement through a business cycle. I say somewhat because in other business cycles, the circular movement looks more like a bouncing ball off of the effective demand limit…
Former JPMorgan bankers buy into lenders, medical-device firms
Fund vows not to mount proxy battles or public campaigns
If you can’t beat ’em, join ’em. Or at least closely replicate their strategy.
Douglas L. Braunstein and James C. Woolery, who, as Wall Street deal makers, spent years working with corporations to head off the demands of activist shareholders, announced Monday they had bought shares in six companies with an eye to producing “constructive engagement.”…
Hedge Fund AUM Up $77B In 2015, Doubling 2014 Amount
Key highlights for December 2015:
- Investor allocations drive hedge fund AUM growth in 2015 despite lacklustre returns of 1.45% – the lowest since 2011. Net investor allocations for the year came in at US$77.0 billion, more than twice the US$34.8 billion in inflows recorded in 2014.
January sales estimated at 3,000 units, lowest since 1991
Previous monthly low record of 3,786 units in November 2008
Hong Kong home sales slumped to the lowest in at least a quarter-century last month, Centaline Property Agency Ltd. estimated, adding to evidence that prices have further to fall.
Centaline estimated January sales of new and secondary homes would reach 3,000 units, the lowest monthly figure since it started tracking data in January 1991. The previous low was 3,786 units in November 2008, according to a Jan. 31 release…
Deutsche Bank’s Spencer says developers missed chance to sell
Low home sales are latest evidence prices may fall further
In a city that saw demand propel property prices to a record last year, the estimate that transactions reached a 25 year-low in Hong Kong shows how quickly sentiment has turned.
Call Chuck when there’s real money to be made.
Among Powerball ticket holders for today’s more-than-a-billion pot, count George Roberts, the ‘R’ of KKR & Co. “I always buy a ticket,” Roberts said Tuesday night at the Museum of American Finance annual gala. To be precise, he puts up the money and a buddy named Sam, who has worked for him for 26 years, buys the tickets…[Charles] Schwab said he’d buy a ticket only if the pot was really big — $2 billion or more…