Here at Dealbreaker, we’re enjoying tremendously The Wall Street Journal series, “The World the Crisis Created,” or: “Where Are The People Who Torpedoed The World Economy (Or Profited Handsomely From It) Now?” There have been some heartwarming tales: John Thain and Alan Schwartz are still at it, Tim Geithner and Adam Applegarth have retreated to the security of private equity, Jimmy Cayne and Ben Bernanke are enjoying retirement, Kyle Bass is still talking about China, Neel Kashkari had a conversion experience and Nouriel Roubini is still neck-deep in babes…
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Almost 50% of existing mortgages are up for renewal in 2018
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Households set to feel pinch of higher rates, economist warns
The indefatigable ability of Canadians to shoulder an ever increasing mountain of debtis being tested.
Oil Hedge Fund Manager Says $300 Oil ‘Not Impossible’
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Andurand says on Twitter lack of investment risks price spike
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Higher prices aren’t a threat to the economy, Andurand says
Pierre Andurand, one of oil’s most prominent hedge fund managers, said the current reluctance of energy companies to invest in new production meant $300 a barrel was “not impossible” within a few years…
Oil Hedge Fund Manager Says $300 Oil ‘Not Impossible’
It’s great when posts just write themselves, and I can tell you, right now, in the first sentence, that this is going to be one of those posts.
Back in January, I wrote something here called “Norway: Future Shithole Country“. In case it wasn’t obvious (and it should have been because, you know, I explicitly stated it in the article), the allusion to “shithole” was a humorous jab at Donald Trump, not an expression of some deeply held prejudice I harbor against Norway, a place which is exceedingly unlikely to ever fit anyone’s description of a “shithole”…
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McClatchy’s loan deal with hedge fund roils CDS market
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Publisher’s deal comes as regulators step up scrutiny of CDS
It seemed like a sure-fire bet: short the debt of a highly leveraged newspaper company that’s losing money. And for a while, it worked as investors piled up almost $500 million of wagers by buying credit-default swaps on the publisher, McClatchy Co.
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Government employees may get to invest 50% savings in stocks
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Regulator mulls raising cap to 75% for private-sector savers
India’s $2.3 trillion equity market has surged in recent years, and is about to get a new endorsement — from the nation’s pension regulator…
India’s $35 Billion Government Pension Fund Sees Stock Boost
Believe it or not, a Chinese conglomerate is reportedly no longer interested in pursuing a comically protracted and idiotically controversial deal to acquire a fund of funds owned by Anthony Scaramucci…
Anthony Scaramucci To Announce Triumphant Return To The Hedge Fund Business
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Investors barely reward companies that top profit estimates
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RBC data show market will be fine as long as growth continues
It’s probably time to declare peak earnings. Does that mean the stock market’s doomed?
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Borrowing against pledged stock hit $26.3 billion at end-2017
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Firms involved are illiquid, so risk to brokers ‘is not small’
Hong Kong’s Securities and Futures Commission is consulting brokers about risks stemming from a rapid run up in margin lending.
Outstanding margin loans — borrowing against pledged stock — hit HK$206 billion ($26.3 billion) at the end of 2017, a nine-fold increase since 2006, Deputy Chief Executive Officer Julia Leung told reporters on Monday. The regulator is worried such lending poses a risk given that many of the firms involved are illiquid and it may take a while for brokers to recover their money in case of a liquidation, Leung said…
WASHINGTON (Reuters) – U.S. President Donald Trump has postponed the imposition of steel and aluminum tariffs on Canada, the European Union and Mexico until June 1, and has reached agreements for permanent exemptions for Argentina, Australia and Brazil, the White House said on Monday…
Trump postpones decision on metals tariffs for Canada, EU, Mexico
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Analysts to gain promotions more quickly, firm memo shows
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Banks have been increasing perks to retain young employees
Morgan Stanley plans to raise some salaries and offer quicker promotions as part of its years-long push to improve conditions for junior bankers, according to people familiar with the matter.
America’s Mortgage Market Is Still Broken
By · CommentsTen years after the 2008 crisis, crucial flaws need fixing.
Regulators have done a lot to reform the financial system since the 2008 crisis, but they still haven’t fixed the market where the trouble started: U.S. mortgages. It’s an omission they need to put right before the next crisis hits.
For more than a century, the name “Goldman” has been a byword on Wall Street for elite. The best of the best. The most farsighted and forward-thinking. To be awarded the coveted title, “partner,” was to have your life changed; to be deprived of it forever mind-warping and embittering.
Now, there is a new reward to be sought:
Goldman Sachs Sends Supersonically-Rotating Corpse Of Founder Into Orbit
After a two-year sales plunge in New York City commercial real estate, signs are emerging that a bottom could be near.
Brokers are optimistic that more deals will take place in 2018, pointing to an expected economic boost from the new law cutting corporate taxes, as well as an uptick in signed contracts in the fourth quarter, which could lead to an increased number of deals completed this year…
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Goldilocks lists creditors as defendants in Singapore suit
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Dissident shareholder succeeds in bid to stop Monday’s AGM
Noble Group Ltd.’s dissident shareholder Goldilocks Investment Co. listed a raft of hedge funds and banks, including Goldman Sachs Group Inc. and Deutsche Bank AG, as defendants in its legal battle against the commodity trader, as the fund presses on with a bid to stop its debt-for-equity swap…
Goldman, Hedge Funds Drawn Into Noble Group’s Legal Battles
Bank of America lost the nearly $300 million it lent to the then-chairman of South African mattress company Steinhoff International Holdings. This happened because said then-chairman put up his shares in Steinhoff as collateral, and then used the loan to buy more Steinhoff shares, all of which are now almost worthless on account of the accounting scandal at said mattress company…
Brian Moynihan Learns How Not To Lose Money On Single Stock-Backed Loans
End of Days For Markets?
By · CommentsWall Street is buzzing over Amazon’s impressive March quarter results.
Analysts are growing more confident over the prospects for many of Amazon’s new businesses including subscription services, advertising and cloud computing.
The e-commerce juggernaut reported better-than-expected first-quarter earnings results Thursday. It also gave profit guidance for its second quarter significantly above Wall Street expectations…
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Advice comes as Goldman sees upside risks to Fed rate forecast
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JPM doesn’t share market ‘fixation’ on flattening, 3% 10-year
The moves in stocks lately are just strange — but there’s still a logical approach to investing for the expected end of “easy money,” according to JPMorgan Chase & Co…
Jes Staley Really Showed Us
By · CommentsLast month, we had a little fun with Barclays CEO Jes Staley. Staley, who was at the time enjoying a very unusual instant of grudging appreciation from shareholders, has spent the better part of two years trying to turn the bank around by turning its investment bank around. While this appeared to be working, some skeptical Wall Street Journal columnists and snarky bloggers suggested that for all of the apparent success, of which there was some but not much, trying to save Barclays’ I-bank made no sense, both because Barclays sucks at investment banking, and also Barclays having an investment bank at all makes no sense. To which Jes Staley says,…
Asian shares edge higher as tensions ease, earnings rise
By · CommentsSYDNEY (Reuters) – Asian shares rose again on Monday as tensions in the Korean Peninsula eased and first-quarter earnings shone, although some investors pondered whether this sunny outlook could dim in the near future…
Asian shares edge higher as tensions ease, earnings rise
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CEO Gupta expects 2018 net interest margin of at least 1.85%
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Nomura analyst says 13% ROE came in earlier than expected
DBS Group Holdings Ltd., Southeast Asia’s largest lender, delivered a decade-high return that came along with above-expectations quarterly profit. The stock gained over 2 percent…
DBS Shares Gain to Record After Quarterly Profit Beats Estimates
Wells Fargo Shareholders Too Numb To Raise A Fuss
By · CommentsLast year, Wells Fargo investors were angry. How angry? Well, after the cavalcade of scandals that sullied the former banking Boy Scout’s name and abruptly cut short its CEO’s career, angry enough to withhold a whopping quarter of their votes from some of the board members who’d presided over the disaster. Take that!
Last year (and the early going of this year) have also been bad, but the nightmare of 2016 appears to have inured Wells’ bedraggled stockholders to pain. Plus, unlike in early 2017, there’s been some good news of late, although the bank can hardly take much credit for that windfall from the Treasury Department. No matter: Whatever the reason, Wells Fargo’s owners aren’t putting up a fight anymore…
Hedge Funds Throw Record Bets on Rising Gasoline Prices
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Futures for the motor fuel are at their highest since August
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U.S. gasoline demand hit the highest level ever this month
Money managers are going all in on gasoline…
Brookfield Property Partners LP has made a $14.8 billion offer to acquire the shares of mall owner GGP Inc. that it doesn’t already own, according to people familiar with the matter.
Brookfield has offered to pay $23 a share for the remaining 66% of GGP, half in cash and half in equity, some of the people said. GGP investors could choose either cash or 0.9656 of a limited-partnership unit of Brookfield Property for each share, subject to proration that keeps the consideration of cash and units from each exceeding $7.4 billion…
Brookfield Property Makes $14.8 Billion Offer to Acquire Remainder of GGP
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Sweden, Finland could halt tax treaties on Portugal incentives
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North/South divide shows EU discrepancies on social security
After a lifetime of long Swedish winters and hefty tax bills, Dan Wikstrom’s dream of a comfortable retirement in the sun has come true. Not in a Caribbean tax haven, but in Portugal, a far more convenient four-hour flight away…
‘Europe’s Florida’ Sparks Rift as Portugal Lures Rich Pensioners
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FSA’s Berg says refinancing is real threat to mortgage system
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Banks are capable of meeting Basel III capital demands: Berg
Denmark’s mortgage industry needs to stop complaining about the cost of complying with new capital rules for banks and focus on more pressing challenges, according to the country’s top financial regulator…
Danish Mortgage Lenders Told to Stop Whining About Capital Rules
You’ve been honing your pitch. Practicing your answers to the likely questions in the mirror. Poring through your deck, making sure every little thing is perfect. You think you’ve got a billion-dollar idea. Maybe it’s a blockchain play. Or a way to trick poor young people into playing the stock market. Or a crowd-sourced algorithmic-trading venture. Or a way to have autonomous cars not kill people.
The potential for a state and municipal fiscal and public pension crisis is a defining issue for the next downturn. Underfunding guarantees problems. The question is whether the next downturn crystallizes a crisis.
This morning a commentary on pensions caught my eye. I learned that Steve Westly, a former voting member of public pension fund CalPERS’ board, was concerned about a pension crisis. And he was tweeting about it. Westly was also the California state Controller from 2003 to 2007. So he knows a thing or two about the state’s finances.
Technological disruption poses serious threats to incumbent businesses. Here are two examples from Artificial intelligence and Walmart’s earnings showing how this disruption occurs.
I was reading the news this morning and ran across a post on Artificial Intelligence on the BBC News website. And it got me to thinking about technology and the opportunities and threats technological disruption can pose to incumbent businesses. Now, the BBC article was talking mostly about politics and psychology. But I think the ‘threat of AI’ has implications for businesses too. Let me see if I can tease apart some of this in this morning’s daily…
Deutsche Bank said on Thursday that it would shrink its operations in the United States and Asia and focus on Europe, effectively abandoning its ambition to be a member of Wall Street’s big leagues.
The decision, after years of losses, scandals, and management turmoil, ends a 20-year quest by Germany’s largest bank to compete eye to eye with the likes of Goldman Sachs and JPMorgan Chase…
Deutsche Bank Abandons Wall Street Ambitions, and Focuses on Europe
Investors are dumping U.S. stock funds at one of the fastest paces in a decade as rising market turbulence erodes confidence in the nine-year-old bull market.
U.S. equity mutual funds and exchange-traded funds recorded $2.4 billion in outflows for the week ended April 18, according to the Investment Company Institute. That followed $41 billion in outflows from these funds in February—the biggest monthly exodus since January 2008, ICI data show. Overall, investors have yanked $67 billion out of these stock funds since the start…
Stock Funds Suffering Big Outflows as Rattled Investors Rush to the Exits
Places To Avoid For Commercial Real Estate Investment
By · CommentsRecently I have indicated I see a lot of problems in asset markets despite the economic acceleration in Europe, Japan, and the US. Commercial real estate is a problem that I want to highlight briefly since I believe it will be a locus of distress in the next global downturn.
Recently I have indicated I see a lot of problems in asset markets despite the economic acceleration in Europe, Japan, and the US. For example, there is a liquidity mismatch in high yield bond and leveraged loan markets and technology shares are priced for perfection. Commercial real estate is also a problem that I want to highlight briefly since I believe it will be a locus of distress in the next global downturn…
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Digital banking startup raises $250 million from investors
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Plans global expansion; targets 100 million customers by 2023
In one of the biggest fundraising rounds for a European fintech this year, Revolut Ltd., a U.K. startup that provides digital banking, received $250 million…
Digital-Banking Startup Revolut Is Worth $1.7 Billion With New Funding
For Fintech to truly evolve, some have argued, the industry needs to mature quickly from a wild bunch of disruptors to a professional cabal of financiers who understand money and fetishize security as risk management.
In addition to the long-held bias against Fintech’s perceived lower asset and credit quality, there have been too many recent examples of hacking, laundering and a general sense of overconfidence leading to incompetence. These days, it would behoove any digital money platform to recruit trusted names from the old-school world of finance to invest and/or participate in their growth. If you’re pitching a model predicated on professionalism, security and basic trust, find a way to bring in some old dude known on The Street for possessing those qualities…
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Strategists return to steepener trades, bets on shorter rates
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Front-end yields are near top of trading range, Citigroup says
Australian bank funding rates have started to turn lower, giving traders the confidence to return to long positions in the front-end of the local rates market.
Good Tuesday. Here’s what we’re watching:
• Earnings are dragging stocks lower.
• The yield on the 10-year Treasury note broke through 3 percent.
• A new study found that female and male C.E.O.s tend to earn similar levels of compensation.
• What does Eddie Lampert have in mind for Sears?
• A thought experiment with Amazon’s pay and profits…
Washington Moves to Soften a Big Bank Capital Rule: DealBook Briefing
The price of investing is falling at a record rate.
The average asset-weighted fee paid on U.S. mutual funds and exchange-traded funds declined by about 8 percent to 52 cents per $100 invested last year, according to a report from Morningstar Inc. The drop was the biggest in the research firm’s data going back to 2000.
Good Thursday. Here’s what we’re watching:
• Deutsche Bank is finally, and drastically, shrinking itself.
• Facebook can afford to clean up its act.
• Is the problem with I.P.O.s a ‘middle-market tax’?
• On today’s earnings calendar: Amazon, Microsoft, PepsiCo and Lazard…
Three Reasons Deutsche Bank Didn’t Exit Wall Street Earlier: DealBook Briefing
Sequoia Capital is making fast progress in its bid to raise what will be the largest U.S.-based venture fund.
Investors have committed roughly $6 billion to the venture-capital firm’s new global growth fund, according to people familiar with the situation...
Sequoia Capital’s Growth Fund Tops $6 Billion in Record Haul
Silicon Valley Wants to Cash In on Fasting
By · CommentsSeveral startups are working to commercialize the tech world’s latest health craze.
Like most of the health fads that catch on in Silicon Valley, this one broke through thanks to word-of-mouth—and a Medium post. Entrepreneur Sumaya Kazi extolled its virtues to 650,000 readers, while venture capitalist Phil Libin and others preached about it to anyone who would listen. Their miraculous idea was in fact a very old one: eating nothing at all for long stretches of time. Monthly Google searches for “intermittent fasting,” which has become a catchall term for various forms of the practice, have risen tenfold over the past three years, to as many as 1 million. That’s about as many as “weight loss” gets, and more than “diet.” Now comes the next step, as businesses try to turn various forms of the craze into profit…
Sohn 2018 Was A Wake For The Golden Era Of Hedge Funds
By · CommentsSo, the 2018 Sohn Investment Conference definitely happened yesterday.
In some respects, it was like Sohns of the past: The venue was packed with hedge fund types and their hangers-on, Avery Fisher Hall sparkled, CNBC still showed up to film the whole thing and a lot of money was raised for the vital fight against childhood cancer.
And yet, in many more respects, Sohn 2018 was very different from previous versions: the troika of hedgie legends that made Sohn “Sohn” was visibly missing a member, the ideas overall felt tamer, the program as a whole felt looser, limper and considerably less “star-studded.”…
The chief executive of Sears is its largest shareholder and a major lender to the company. Now, he wants to be its savior, after the retailer tried — unsuccessfully — to find buyers for some of its more valuable brands.
The chief executive, Edward S. Lampert, said the hedge fund he controls would be willing to buy Sears’s real estate holdings, its appliance-parts business and the Kenmore appliances brand, among other assets. The proposed deal, outlined by Mr. Lampert to the Sears board in a letter released Monday, would infuse the company with new funds as it tries to pay down billions in debt…
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Debit spending continued to grow at faster clip than credit
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Visa CFO: Consumers look ‘pretty strong’ as they spend more
You can thank the millennials.
San Francisco housing has entered into a new reality. Tech money and foreign cash continues to flood the market and pushing prices to astronomical levels. The typical San Francisco crap shack now will cost you $1.42 million, a new record high with condos going for $1.15 million. The city is entering into escape velocity of gentrification. You have older Taco Tuesday baby boomers with rudimentary tech knowledge that bought decades ago living next to a new generation of wealth and tech savvy professionals. You see this as well in Los Angeles. Some real estate “experts” barely have a working understanding of tech but definitely know how to navigate to Zillow to view their inflated prices. San Francisco is such an odd case study. A city that outwardly states it supports the poor but when you look at prices even making $100,000 a year makes you part of a new high income poor – at that income level a sizable amount of your net income is going to go to simply paying for housing unless you want to be part of the mega commuting culture that is now emerging in California. What is going on in San Francisco?…
Deals rarely look as good on paper as they do in a chief executive’s head. Comcast’s $31 billion offer for the British satellite broadcaster Sky just about passes financial muster. Investors expecting a higher bid from Rupert Murdoch’s 21st Century Fox, with backing from the Walt Disney Company’s boss, Robert A. Iger, are betting on the triumph of sentiment over spreadsheet.
Walmart Is Close to $12 Billion-Plus Deal for Flipkart
By · CommentsWalmart Inc. is close to finalizing a deal to buy a majority stake in India’s leading e-commerce company for at least $12 billion and may complete the agreement in the next two weeks, according to people familiar with the matter.
BlackRock may have found a simple solution to its gun dilemma. The fund manager, led by Laurence D. Fink, will offer new products allowing individuals and institutions to invest in market indexes without putting money into manufacturers and retailers of firearms. Coupled with a plan to engage public gunmakers and sellers directly, the decision moves Mr. Fink closer to fulfilling a promise that BlackRock’s business benefit society alongside the bottom line.
It was only a matter of time that people started using their homes as ATMs. It is clear that the housing cheerleaders are drinking a mega dose of housing Kool-Aid and somehow think that people are immune from repeating past mistakes. But here we are seeing cash-out refis hitting pre-crisis levels. And this assumption is based on the underlying mentality that yes, a home is really worth that amount and now people are locking in these high price levels. But guess what? You have to pay that money back on your glorified crap shack. This was one of the many reasons for the last housing bubble where people believed the hyped and went into deeper debt because of this notion that a home was an ATM with a roof on it. The overall tone is incredibly housing positive even though there are major issues in the housing market. For example, the homeownership rate is near generational lows and much of the household formation since the bubble burst has come in the form of rentals. Now homes are being used as ATMs. What can go wrong?…
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China will soon allow foreign firms to own majority of JVs
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BofA is said to focus on expanding debt services in China
Amid all the excitement about China’s plan to open up its securities market, one U.S. banking giant is playing it cool.
A Colorado civic group is spearheading an effort to buy The Denver Post, which on Sunday excoriated its owner, a New York hedge fund, in its opinion section by saying, “Denver deserves a newspaper owner who supports its newsroom.”
The group, Together for Colorado Springs, said it had begun contacting potential investors in the state, who have so far pledged $10 million to the effort…
Colorado Group Pushes to Buy Embattled Denver Post From New York Hedge Fund
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Two years straddling national votes tend to be good for stocks
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Modi faces a ballot due by 2019, with majority at stake
Indian stocks have been roughed up along with most markets in recent months, but there could soon be reason to cheer. National elections are due by 2019, and modern history shows that tends to be a good thing for investors.
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Region accounts for more than 40% of bank’s net new inflows
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Shares soar after revenue and earnings beat analyst estimates
Asia is getting richer and that’s fueling growth thousands of miles away at Credit Suisse Group AG.
Wells Fargo Said to Be Target of $1 Billion U.S. Fine
By · CommentsFederal regulators are poised to impose a $1 billion fine on Wells Fargo for years of selling unnecessary products to customers, the toughest action by the Trump administration against a major bank.
The penalty, part of an expected settlement on Friday between the bank and two regulators, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, will punish Wells Fargo for forcing customers to buy auto insurance policies they did not need and other misdeeds, according to four people briefed on the regulatory action…
Wells Fargo Said to Be Target of $1 Billion U.S. Fine
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‘Difficult’ to invest in dollar debt due to cost: DB Financial
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Insurer demand for longer local bonds pressures long yields
South Korean insurers are increasingly looking at long-dated bonds at home as rising hedging costs hurt their appetite for foreign assets, putting downward pressure on lengthier won debt yields.
Lotte Group’s retail unit is selling 22 of its stores in Beijing to China-based grocer and hypermarket rival Wumei Holdings Inc. for 256 billion won ($237 million), the Chosun Ilbo newspaper reported, without saying where it got the information.
Lotte Shopping Co. has taken a sales hit in China over the past year after the group provided land for South Korea’s deployment of the U.S. missile defense system known as Thaad. As geopolitical tensions around the system rose, most of the retailer’s outlets in China were forced to suspend operations over alleged fire-safety violations…
Lotte to Sell 22 Beijing Stores to Wumart Operator, Chosun Says
Panattoni Breaks Ground on 815 KSF Warehouse in TN
By · CommentsPanattoni Development Co. has begun construction on a fully preleased, 815,670-square-foot industrial property in northern Tennessee. The building will be occupied by Dorman Products, which will use the new facility as its largest U.S. distribution center.
Panattoni expects to complete development of the structure by the end of 2018. Stonemont Financial Group is partnering to fund the project, with additional construction financing provided by Pinnacle Bank…
JV Arranges $109M Refi of Multi-State Facilities
By · CommentsCushman & Wakefield has come through for Industrial Properties America III LLC, a joint venture of investors advised by JP Morgan Asset Management and IDI Logistics. The commercial real estate services firm recently arranged $108.6 million in refinancing for the borrower’s 2.2 million-square-foot national industrial portfolio. The financing, secured by Cushman & Wakefield Senior Director Richard Henry, Executive Director Brian Linnihan and Executive Managing Director Mike Ryan, came in the form of a floating rate loan.
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Ant relies on asset-backed securities but issuance is sliding
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Golden days of easy money from debt market over, analyst says
Billionaire Jack Ma’s Ant Financial, the world’s biggest fintech firm, may have a problem…
China Consumer Loan Giant Ant Financial Threatened by Debt Slump
Financial Services Firm Inks New DC-Area HQ Lease
By · CommentsFinancial services company H. Beck Inc. has signed a 23,000-square-foot lease to move its headquarters into Research West I in Rockville, Md. The tenant plans to occupy its new space in the 122,500-square-foot Washington, D.C.-area office building in August 2018. Realty Capital Partners owns the property, according to Yardi Matrix.