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Frontrunning: July 23

Tyler Durden's picture




 
  • Here come the gates which we predicted in 2010: SEC Is Set to Approve Money-Fund Rules (WSJ)
  • Dick's cuts 400 jobs as golf now less popular (MW)
  • Kerry arrives in Israel, pushes for peace (Reuters)
  • Pay Penalty Haunts Recession Grads as U.S. Economy Mends (BBG)
  • Appeals Courts Issue Conflicting Rulings on Health-Law Subsidies (WSJ)
  • Rebel Stronghold Donetsk Holds Breath as Shellfire Mounts (BBG)
  • Business executive wins Georgia Republican runoff in U.S. Senate race (Reuters)
  • Five held in China food scandal probe, including head of Shanghai Husi Food (Reuters)
  • Jobs Hold Sway Over Yellen-Carney as Central Banks Splinter (BBG)
  • With sales sputtering, Apple's iPad looks to IBM alliance (Reuters)
  • Plane with first coffins of Malaysian airliner victims leaves Ukraine (Reuters)
  • Saudi Stock Opening Shut to Some as Hot Money Unwanted (BBG)

 

Overnight Media Digest

WSJ

* Two U.S. appeals courts issued conflicting rulings on subsidies for health coverage purchased on federal insurance exchanges, clouding a major part of Obama's health law. (http://on.wsj.com/1pb81yo)

* The Federal Reserve Bank of New York found that Deutsche Bank AG's U.S. operations suffer from a litany of serious financial reporting problems that the lender has known about for years but not fixed. (http://on.wsj.com/1jUoOXe)

* The U.S. barred flights to Israel's main international airport outside Tel Aviv for at least 24 hours after a rocket from Gaza landed nearby, angering Israel, which said the ban was a boon to Hamas's efforts to isolate the country. (http://on.wsj.com/1mCogQJ)

* The new rules by Securities and Exchange Commission are likely aimed at avoiding a repeat of investor stampede out of the $2.6 trillion industry that threatened to freeze corporate lending during the 2008 financial crisis. According to the plan, "prime" money funds whose shares are held by corporations and large institutional investors will have to abandon a stable $1-a-share price and float in value like other mutual funds. The plan also would allow all funds to temporarily stop investors from redeeming shares in times of market tumult or impose fees on them to do so. (http://on.wsj.com/1udyPmN)

* A group of cosmetics and fragrances workers at a Macy's store in Massachusetts are a big enough lot to try to unionize, the National Labor Relations Board decided in a ruling that could advance organized labor's quest to unionize subsets of workers in varied industries. (http://on.wsj.com/WAEFQe)

* Apple Inc reported a 12 percent profit growth and strong sales of iPhone. It sold about 35.2 million iPhones in the quarter, up 12.7 percent. But Apple struggled for the second consecutive quarter to sell iPads, with unit sales falling 9.2 percent after a 16 percent drop three months earlier. (http://on.wsj.com/UrjgHL)

* CIT Group Inc agreed to buy OneWest Bank NA's parent company for $3.4 billion in the largest full-bank acquisition announced since 2012. The takeover of IMB Holdco LLC, which is OneWest's parent company, will bump CIT's assets up to $67 billion. (http://on.wsj.com/1na529W)

* Blackstone Group has agreed to buy a majority stake in auto-repair shop chain Service King Collision Repair Centers from Carlyle Group LP with a view to fund the company's future growth. The deal values Service King at about $650 million. (http://on.wsj.com/1rzPuPB)

* Dick's Sporting Goods Inc is cutting hundreds of jobs in its golf division as fewer Americans hit the links. A spokeswoman for the PGA of America said more than 400 of its members who were employed as golf instructors at Dick's were notified Tuesday that they would be laid off. (http://on.wsj.com/WCcYHb)

* J.P Morgan Chase & Co is nearing a deal to sell half its stake in the portfolio of its buyout arm, One Equity Partners. J.P. Morgan is in advanced discussions with investment firms Lexington Partners LP and Carlyle Group LP's AlpInvest Partners unit, to sell half of the roughly $4.5 billion in investments One Equity manages for the bank. (http://on.wsj.com/1jUt9K9)

* William Ackman had promised a "death blow" against Herbalife Ltd, Wall Street instead gave new life to the nutritional-supplement company's stock. Ackman on Tuesday sought to prove once and for all his longstanding allegation that Herbalife is a fraud and a pyramid scheme. In a presentation, Ackman unveiled what he described as new evidence supporting his argument that the company is a "criminal enterprise." (http://on.wsj.com/1qzaUwQ)

 

FT

Brussels is considering whether to reopen draft antitrust settlement with Google Inc, a move that could pose regulatory challenges to the Internet giant's European operations.

ARM Holdings reported a royalty revenue rise of just 2 percent from chips shipped in products such as Samsung's and Apple's smartphones, and said it expected royalty revenue growth to reaccelerate towards a more normal level in the second half.

Respondents to a UK Treasury review have warned of potential risk to the UK and other non-euro states of losing their influence over financial legislation as a report cited significant benefits from access to the single market in financial services and the free movement of capital.

The Blue Note Milano became the first jazz club to list its shares on a stock exchange, and raised 1.4 million pounds by listing 40 of its shares on the Milan AIM Small-Cap Index.

Secure Trust Bank, which was spun out of the Arbuthnot Banking Group in 2011 and is its retail banking arm, aims to launch an invoice financing business this quarter.

 

NYT

* President Obama, citing a "skills gap" that prevents many unemployed workers from qualifying for new jobs, signed legislation on Tuesday to strengthen federal job-training programs. The new law seeks to impose more accountability on the federal-state training partnerships by requiring a "job-driven checklist" to ensure that federal money is used effectively and by providing data-driven tools to give workers better information about career prospects. (http://nyti.ms/1sOqeFL)

* On Tuesday, U.S. small-business lender CIT Group Inc said it would acquire the bank that rose from IndyMac's ashes - OneWest Bank Group LLC - paying $3.4 billion in cash and stock to its hedge fund and private equity owners. The deal illustrates how casualties of the financial crisis have moved on, and even prospered. (http://nyti.ms/1udFCNx)

* Despite widespread anger over the Malaysia Airlines plane's downing, European nations have shied away from measures that would further isolate Russia. At a meeting in Brussels, foreign ministers of the European Union's 28 member states agreed to draw up a new, broader list of targets for sanctions, including Russian individuals and entities, said Catherine Ashton, the European Union's foreign affairs chief. (http://nyti.ms/1nSXB2c)

* State attorneys general must investigate, and consider taking legal action against, e-cigarette companies that appear to be using some of the same advertising tactics that once drew young adults into smoking, a Kentucky deputy attorney general told his law enforcement colleagues gathered in Park City, Utah for a retreat to discuss emerging legal issues in states nationwide. (http://nyti.ms/1ty37g8)

* Top properties in Hong Kong are resisting market forces. While cooling measures have affected most real estate, the very rich are holding onto the city's most expensive homes.(http://nyti.ms/1txRxBv)

* For Apple Inc, the iPhone continues to be the device that makes the company tick. While top rivals like Samsung Electronics are starting to show weakness in phone sales, Apple sold 35.2 million iPhones in the third fiscal quarter, up 13 percent from the period a year ago. (http://nyti.ms/1p8NIic)

* Microsoft Corp Chief Executive Satya Nadella said the two most important trends for the company's future are mobile and cloud computing. But it is much better in cloud computing than in mobile. (http://nyti.ms/1lsY4Iv)

* Chrysler Group LLC said on Tuesday that it was recalling an undisclosed number of older Jeep SUVs to correct an ignition-related stalling problem similar to the flaw that has consumed General Motors Co this year. The recall could potentially cover 792,300 Jeep Commanders and Grand Cherokees worldwide that were manufactured between 2005 and 2007. (http://nyti.ms/1nSQK8W)

* Deutsche Bank AG's primary regulator in the United States, the Federal Reserve Bank of New York, has found serious problems with the bank's financial reporting procedures and oversight. (http://nyti.ms/1yZyoLQ)

* LinkedIn Corp made its second acquisition in as many weeks, agreeing to buy the marketing firm Bizo for about $175 million. Last week, LinkedIn bought Newsle, a start-up that searches the Internet for relevant articles. (http://nyti.ms/1rqTEI5)

 

Canada

THE GLOBE AND MAIL

* U.S. ambassador to Canada Bruce Heyman had little to say on Tuesday about a possible decision on the controversial Keystone XL pipeline project, but that didn't stop Canada's ambassador to the United States from bluntly stating there's no proof that the pipeline shouldn't be built. (http://bit.ly/1A4JPDx)

* U.S. flights to Israel were grounded on Tuesday by the Obama administration, fearing missile strikes at Tel Aviv's airport could imperil U.S. airliners and passengers. Air Canada also canceled its Tuesday evening overnight flight. (http://bit.ly/1p7mrg8)

Reports in the business section:

* Target Corp is pushing its suppliers in Canada to give it a 2 percent cost break to help the U.S. discounter turn around its struggling Canadian operations and win an increasingly tough retail battle. (http://bit.ly/WCzaRw)

NATIONAL POST

* Canadian Prime Minister Stephen Harper does not intend to testify in the trial of suspended senator Mike Duffy because he doesn't have any useful information to offer, his office said on Tuesday. The Royal Canadian Mounted Police laid 31 criminal charges against Duffy last week, and experts say Harper could be called to testify, although he could invoke parliamentary privilege to avoid the witness box. (http://bit.ly/WCAh3y)

* The federal New Democratic Party (NDP) wants the House of Commons to pay for the party's legal costs in a lawsuit it filed against the House board that monitors spendings of members of Parliament. The NDP made the request on Tuesday during a closed-door meeting of the Board of Internal Economy. (http://bit.ly/1x02lIU)

FINANCIAL POST

* Ulyanovsk in Russia will be home to Bombardier Inc's newest factory if a planned joint venture comes to fruition. But the escalating crisis in Ukraine and the threat of additional sanctions against Moscow could halt progress on those talks just as Bombardier gets set to grab a piece of the growing Russian aviation market. (http://bit.ly/Us3VGM)

* Canadian negotiators will meet with their Japanese counterparts next week in Ottawa for another round of talks on a free-trade agreement between the two countries. (http://bit.ly/1ueqe3n)

 

China

CHINA SECURITIES JOURNAL

- The risk of credit default may increase significantly as the number of bonds due to mature rises, along with the pressure of high yields and a slowdown in economic growth, the newspaper said in a commentary.

SHANGHAI DAILY

- Chinese consumers in Shanghai will be entitled to a no-questions-asked refund for products bought online, according to a new local law approved by the Shanghai People's Congress. China's e-commerce sector has been booming, creating the need for greater consumer protection online.

CHINA DAILY

- In the wake of typhoon Rammasun, the strongest typhoon to hit southern China in four decades, 800,000 people have been resettled and 240,000 are in urgent need of basic necessities, local authorities told the paper.

 

Hong Kong

SOUTH CHINA MORNING POST

-- A radar station that is sitting on public land at the top of Tai Mo Shan in Hong Kong has been secretly handed to the People's Liberation Army, according to lawmaker Kenneth Chan Ka-lok, who is threatening to take the government to court for keeping the public in the dark. (bit.ly/1pCIKvL)

-- Twelve mainland airports will be hit by widespread delays until the middle of next month because of what are believed to be PLA military exercises. China's civil aviation regulator said that flights in and out of airports, including in Shanghai, Nanjing and Wuhan, would be affected. (bit.ly/Ur1sfT)

-- Confidence among Hong Kong's small and medium-sized enterprises is improving but investment sentiment has fallen for two consecutive quarters, a new survey for the Hong Kong Productivity Council shows. (bit.ly/1pbuQSq)

THE STANDARD

-- Next Media Ltd boss and strident Beijing critic Jimmy Lai Chee-ying said he did nothing wrong in donating some HK$40 million ($5.2 million) to pan-democrats, including five legislators, insisting it was his own personal money to hand out and not received from foreign governments. (bit.ly/1wY2jBc)

-- Retail rents at top-tier districts in Hong Kong may fall up to 8 percent this year amid a slowdown in sales and high rents. Cushman & Wakefield Executive Director Michelle Woo said cautious sentiment and high rents in Central, Causeway Bay and Tsim Sha Tsui are forcing retailers to leave. (bit.ly/1nSz5hP)

-- China Telecom launched its 4G service covering 16 mainland cities, offering monthly plans ranging from 59 yuan ($9.51) to 599 yuan. (bit.ly/1kb3Qnp)

HONG KONG ECONOMIC JOURNAL

-- Macau is expected to post another month of decline in gaming revenue, down 2 to 4 percent year on year in July to between 28.5 billion patacas ($3.57 billion) and 29 billion patacas, according to analyst estimates.

Britain

The Times

RBS IN THE DOCK OVER CLAIMS IT MISLED MPS

(http://thetim.es/1pCr8jw)

Royal Bank of Scotland has been heavily criticised for misleading MPs over its contentious division for struggling businesses.

WEIR'S NOT FINISHED WITH ITS PLANS FOR EXPANSION

(http://thetim.es/UqRKdb)

Weir Group, which tried and failed to tie up with Metso, has since been weighing whether to bid for Outotec , another Helsinki-listed company in much the same market of producing industrial pumps for the mining industry.

The Guardian

MEDIACITY LEADS TO SALFORD BECOMING THE UK'S PROPERTY HOT SPOT

(http://bit.ly/1o7GKgZ)

Property values in the Greater Manchester city of Salford have risen faster than in any other town in Britain since the start of 2014, as the area continues to benefit from the relocation of the BBC and other broadcasters to the waterfront MediaCity development.

EU REPORT FINDS NO EVIDENCE TO SUPPORT SWEEPING IMMIGRATION REFORMS

(http://bit.ly/1nkxfKx)

A government review looking into freedom of movement across the EU has not recommended any sweeping reforms to immigration rules in a report likely to disappoint Conservative Eurosceptics.

The Telegraph

EUROPE BRACED FOR ANY GAS CRISIS AS RUSSIA SANCTIONS ESCALATE

(http://bit.ly/UqRLOs)

Europe has enough spare capacity in liquefied natural gas to meet a large part of the region's needs if Russia retaliates against the latest EU sanctions by restricting gas supplies.

ESPIRITO SANTO HOLDING FIRM PLACED IN RECEIVERSHIP

(http://bit.ly/1rq7fz8)

The Espirito Santo family's holding company has been placed in receivership. Luxembourg's district court said it had agreed to a request from Espirito Santo International that it be placed under "controlled management".

Sky News

UK PREPARES FOR EU RULING ON ENERGY STATE AID

(http://bit.ly/1sMCfeK)

The European Commission is likely to announce its ruling after several months examining a form of subsidy guaranteeing long-term prices to companies for supplying renewable energy sources.

BANKS FACE 1.5 BLN STG HIT FROM PPI CLAIMS DELUGE

(http://bit.ly/1rn55At)

Britain's largest high street banks will announce next week that they are setting aside more than 1 billion pound ($1.71 billion)in additional provisions to compensate customers who were mis-sold payment protection insurance.

The Independent

PAUL FISHER: "THE BANK DELIVERED THE RECOVERY"

(http://ind.pn/1rIk4nK)

Paul Fisher, who has left the Bank of England's Monetary Policy Committee after five years, defends decisions made at the height of the crisis in an interview.

ROYAL MAIL FRETS OVER AMAZON THREAT TO PARCELS BUSINESS

(http://ind.pn/1rIk4nK)

Shares in Royal Mail today touched their lowest level since October's privatisation as it delivered the gloomy news that revenues at its crucial parcel division are being threatened by strong competition from Amazon.

 

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
MBA mortgage applications for week of July 18 at 7:00

ANALYST RESEARCH

Upgrades

Allscripts (MDRX) upgraded to Buy from Hold at Jefferies
Intuitive Surgical (ISRG) upgraded to Buy from Hold at Stifel
Intuitive Surgical (ISRG) upgraded to Outperform from Market Perform at Raymond James
Kimberly Clark (KMB) upgraded to Equal Weight from Underweight at Barclays
Lennox (LII) upgraded to Buy from Neutral at Goldman
Microsoft (MSFT) upgraded to Neutral from Underperform at BofA/Merrill
Microsoft (MSFT) upgraded to Outperform from Sector Perform at Pacific Crest
Munich Re (MURGY) upgraded to Overweight from Neutral at JPMorgan
Prologis (PLD) upgraded to Hold from Sell at Stifel
Spansion (CODE) upgraded to Buy from Hold at Jefferies

Downgrades

21st Century Fox (FOXA) downgraded to Market Perform from Outperform at Cowen
Brinker (EAT) downgraded to Sector Perform from Outperform at RBC Capital
Cubist (CBST) downgraded to Market Perform from Outperform at JMP Securities
DuPont (DD) downgraded to Neutral from Overweight at JPMorgan
FirstMerit (FMER) downgraded to Neutral from Overweight at JPMorgan
Hexcel (HXL) downgraded to Hold from Buy at Canaccord
Juniper (JNPR) downgraded to Neutral from Buy at BofA/Merrill
King Digital (KING) downgraded to Neutral from Buy at BofA/Merrill
Lexmark (LXK) downgraded to Underperform from Market Perform at Raymond James
Liberty Property (LPT) downgraded to Market Perform from Outperform at Wells Fargo
Liberty Property (LPT) downgraded to Neutral from Buy at UBS
Lufthansa (DLAKY) downgraded to Neutral from Buy at Nomura
McDonald's (MCD) downgraded to Neutral from Outperform at RW Baird
McDonald's (MCD) downgraded to Neutral from Positive at Susquehanna
New Oriental Education (EDU) downgraded to Hold from Buy at Jefferies
New Oriental Education (EDU) downgraded to Perform from Outperform at Oppenheimer
Nintendo (NTDOY) downgraded to Hold from Buy at Jefferies
Time Warner (TWX) downgraded to Market Perform from Outperform at Cowen
Timmins Gold (TGD) downgraded to Market Perform from Outperform at Cowen
United Technologies (UTX) downgraded to Market Perform from Outperform at Wells Fargo
Viacom (VIAB) downgraded to Market Perform from Outperform at Cowen
Xilinx (XLNX) downgraded to Market Perform from Outperform at BMO Capital
Xilinx (XLNX) downgraded to Market Perform from Outperform at William Blair
Xilinx (XLNX) downgraded to Neutral from Buy at BofA/Merrill

Initiations

Actavis (ACT) initiated with a Buy at Deutsche Bank
Aimco (AIV) initiated with a Neutral at Mizuho
American Realty (ARCP) initiated with a Perform at Oppenheimer
AvalonBay (AVB) initiated with a Neutral at Mizuho
Brandywine Realty (BDN) initiated with a Neutral at Mizuho
Columbia Property Trust (CXP) initiated with a Perform at Oppenheimer
Douglas Emmett (DEI) initiated with a Buy at Mizuho
Endo (ENDP) initiated with a Buy at Deutsche Bank
Envision Healthcare (EVHC) initiated with a Market Perform at Wells Fargo
Equity Residential (EQR) initiated with a Neutral at Mizuho
Essex Property Trust (ESS) initiated with a Buy at Mizuho
Gentherm (THRM) initiated with an Overweight at JPMorgan
HCP Inc. (HCP) initiated with a Buy at Mizuho
Health Care REIT (HCN) initiated with a Neutral at Mizuho
Hospira (HSP) initiated with a Hold at Deutsche Bank
Jazz Pharmaceuticals (JAZZ) initiated with a Buy at Deutsche Bank
Mallinckrodt (MNK) initiated with a Buy at Deutsche Bank
Mellanox (MLNX) initiated with an Outperform at Imperial Capital
Mid-America Apartment (MAA) initiated with an Outperform at Oppenheimer
Mylan (MYL) initiated with a Buy at Deutsche Bank
Parkway Properties (PKY) initiated with a Neutral at Mizuho
Perrigo (PRGO) initiated with a Buy at Deutsche Bank
Retail Opportunity Investments (roic) initiated with a Neutral at Citigroup
Salix (SLXP) initiated with a Hold at Deutsche Bank
Teva (TEVA) initiated with a Buy at Deutsche Bank
Trinseo S.A. (TSE) initiated with an Equal Weight at Barclays
Valeant (VRX) initiated with a Hold at Deutsche Bank
Ventas (VTR) initiated with a Buy at Mizuho

COMPANY NEWS

Apple (AAPL) said it sold sold 35.2M iPhones in Q3
Safeway (SWY) received subpoena from U.S. DEA concerning the company’s record keeping, reporting and related practices associated with the loss or theft of controlled substances
Broadcom (BRCM) said it will wind down the cellular baseband chip business
Unwired Planet (UPIP) filed a lawsuit against Microsoft (MSFT) for breach of contract
Ballard Power Systems (BLDP) received a purchase order from New Flyer Industries for the delivery of Ballard's first next-generation FCvelocity-HD7 fuel cell power module to a North American bus manufacturer
Puma Biotechnology (PBYI) reported positive top line results from Phase III PB272 trial
Chrysler (FIATY) recalled older-model SUVs over ignition switch concerns

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Apple (AAPL), Thermo Fisher (TMO), Juniper (JNPR), Broadcom (BRCM), Customers Bancorp (CUBI), MarketAxess (MKTX), Air Products (APD), Evercore Partners (EVR), W.R. Grace (GRA), TE Connectivity (TEL), Check Point (CHKP), BE Aerospace (BEAV), STMicroelectronics (STM), Flagstar Bancorp (FBC), Linear Technology (LLTC), Merchant Bancshares (MBVT), Cathay General (CATY), Rush Enterprises (RUSHA), ViewPoint Financial (VPFG), Trustmark (TRMK), Xilinx (XLNX), FMC Technologies (FTI), ACE Limited (ACE), Vascular Solutions (VASC), Xoom (XOOM), Exponent (EXPO), Meridian Interstate Bancorp (EBSB), ZixCorp (ZIXI), IDEX Corp. (IEX), Discover (DFS), Manhattan Associates (MANH), Covanta (CVA), iRobot (IRBT), Electronic Arts (EA), Hawaiian Holdings (HA), VMware (VMW), Cubist (CBST)

Companies that missed consensus earnings expectations include:

Microsoft (MSFT), Potlatch (PCH), Praxair (PX), Whirlpool (WHR), JAKKS Pacific (JAKK), ClickSoftware (CKSW), Unisys (UIS), Fulton Financial (FULT), Eagle Materials (EXP), Forward Air (FWRD), Intuitive Surgical (ISRG), Bridge Capital Holdings (BBNK)

Companies that matched consensus earnings expectations include:

Pacific Premier (PPBI), First Midwest (FMBI), First Busey (BUSE), F.N.B. Corp. (FNB), UMB Financial (UMBF), Eagle Bancorp (EGBN), Ameris Bancorp (ABCB), Pzena Investment (PZN), Pzena Investment (PZN), Total System (TSS)

NEWSPAPERS/WEBSITES

DuPont (DD) to lay off 'low single digits' of employees, Bloomberg reports
Pepsi (PEP) called on by Calstrs to give Trian place on board, FT reports
GM (GM) for years changed auto ignitions over stalling, WSJ reports
StubHub (EBAY) accounts targeted by cyber thieves, AP reports
YouTube's (GOOG) Chris LaRosa quits as music head, WSJ reports
JPMorgan (JPM) in advanced talks to sell half its stake in buyout arm, WSJ says
Repsol (REPYY) exploring bid for Talisman Energy (TLM), Bloomberg reports
Google (GOOG), Spotify didn't talk about a deal, Re/code says

SYNDICATE

BofI Holding (BOFI) files to sell $50M in common stock
Farmland Partners (FPI) files to sell 3.72M shares of common stock
La Jolla (LJPC) files to sell common stock
Medical Transcription Billing (MTBC) 4.08M share IPO priced at $5.00
MeetMe (MEET) announces proposed public offering of common stock

 

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Wed, 07/23/2014 - 07:50 | 4992098 buzzsaw99
buzzsaw99's picture

the cloud. sign me up bitchez. [/sarcasm]

Wed, 07/23/2014 - 08:42 | 4992250 SWRichmond
SWRichmond's picture

An annual survey by the Sports & Fitness Industry Association earlier this year revealed the fifth consecutive drop in the number of U.S. individuals who reported playing golf on a course at least once, down 2.5% over the year before.

It's about goddamned time Americans manned up and stopped chasing a stupid fucking white ball around while wearing expensive clothes.  Sell your golf clubs, buy a rifle, and learn to shoot it.

Wed, 07/23/2014 - 07:56 | 4992112 Cognitive Dissonance
Cognitive Dissonance's picture

Gates and withdrawl fees on institutional money market fund during times of financial panic? At first I was outraged, but then I realized people, and institutions/companies, that hold their short term money in these funds no longer should be protected from the actual systemic risk. Let the buyer beware.

Wed, 07/23/2014 - 08:00 | 4992125 overmedicatedun...
overmedicatedundersexed's picture

cog a little testy this am (me), but with so many uneducated in finance, the MM was always a safe place for stupid people, why do you want them to suffer the systemic risk?

Wed, 07/23/2014 - 08:14 | 4992177 Cognitive Dissonance
Cognitive Dissonance's picture

Because some/part of the systemic risk comes from trying to artificially protect everyone from systemic risk. For example, FDIC insurance removes any thought the average person has towards bank 'risk' simply because the risk is transferred to the government/taxpayer. This in turn removes some of the consequences those running the banks incur when they take on more risk. Thus FDIC actually increases the systemic risk. Same goes for MM funds.

The article discusses how these rules would only apply to large MM funds, such as those which require a minimum of $1 million investment. But this actually increases the risk to smaller mom and pop funds in a round about way. So this half hearted way of supposedly exposing those who can shoulder the risk in fact increases systemic risk for all.

If the government is not going to actually regulate the system the best thing is to allow everyone to experience and deal with the 'real' system, not some make believe 'risk free' world that doesn't really exist.

Wed, 07/23/2014 - 08:33 | 4992222 overmedicatedun...
overmedicatedundersexed's picture

cog, yep i see it, but remember TBTF, with them still protected I figure whats good for the goose, all our problems come down to unequal protection under "law" and crimes and criminals who are above it. it leaves us with these disagreements when we try to put logic into a criminal setting..just saying..

Wed, 07/23/2014 - 08:40 | 4992242 Cognitive Dissonance
Cognitive Dissonance's picture

I agree. So..........allow 'citizens' to experience the risk and they will slowly but surely begin to really see how unequal the system is, at least when it comes to "We the People". True revolution comes next.

Of course the TPTB fully understand this, thus the constant kicking the can. "We the People" will be mostly shielded from consequences right up until system failure. But by then most of the wealth of "We the People" will be extracted and we will return to the tried and true feudal system.

This is not what I wish for. But that is where we are headed. And this is what we get for hiding our heads in the sand, begging for another pull on the teat to kill the pain of life.

Wed, 07/23/2014 - 08:50 | 4992268 SWRichmond
SWRichmond's picture

If banks are so "systemically important" that they "must" be saved always and as a matter of "national security" then they should be utilitized and run like electric utilities were in the 70's.  No rock star exectives "doing god's work", no fist-pumping bonuses...jobs at banks should be boring, moderate-paying, and glamourless.

Want to know who is "systemically important"?  People who actually do useful work.  The enitre fucking system is balanced on the backs of people who actually work.

 

 

Wed, 07/23/2014 - 09:10 | 4992322 Cognitive Dissonance
Cognitive Dissonance's picture

Back in the 50's and 60's that was pretty much what it was like. There was much less risk in banking because most of the loans made by a bank were held by the bank until maturity. Those living closer to the earthquake zone built better loans as well as serviced them.

Wed, 07/23/2014 - 11:26 | 4993053 TeethVillage88s
TeethVillage88s's picture

On Money Market Funds, my father got involved back in the 1970s or early 1980s. Correct me if I am wrong, but didn't some or a lot of MMFs invest in CDs, US Treasuries, so they were pretty secure and it was very rare for any negative fluctuation?

MMF Rules change just reflects how municipal bonds back up huge municipal debt and how ZIRP may become NIRP.

The Vast Stupidity of Wall Street in the 1990s put together a plan that is "Felony Stupid"

1) Individual Saving Accounts with no interest rates to grow damages a whole generation OR maybe All Generations in teaching there is no safety or value in saving money
2) Fixed Income People are forgotten
3) S&Ls and small community banks are less profitable and are disappearing in a kind of "There Can Be Only One" Highlander type competition with TBTF Banks
4) Small businesses are decreasing at a swift rate compared to population growth
5) Fed's Main Dealers do not invest in the Economy or Create Jobs proof that ZIRP & QE was never a plan for new Jobs
6) Monetary Policy & Fiscal Policy do not jump start the economy, banks & corporations are not investing in CAPEX or "Good Capital Formation" that expands domestic business Enterprises.

And was thinking how do the Banks get richer when Inflation hits us from all this money floating around right now.

I guess Household Debt will increase and Banks will take more of our cars, boats, and houses. More property will belong to rich foreigners and to wealthy elites.

Wed, 07/23/2014 - 08:46 | 4992259 overmedicatedun...
overmedicatedundersexed's picture

it's cruel to be kind..for all the wrong reasons..

Wed, 07/23/2014 - 07:59 | 4992118 dobermangang
dobermangang's picture

Golf is still popular.  People just can't afford to play.  Young people are strapped with huge student loans and can't find good full time jobs.  Many have to work 2 or 3 part time jobs.  Old folks can no longer live off their retirement investments.  They are not making any interest thanks to the FED.  Food prices, energy costs and extremely higher health insurance rates are destroying any left over disposable income.  No money left for golf or other hobbies.  The tropical fish industry is also being hit hard in the last few years.  People can't afford to keep their aquariums.  It's becoming a hobby for the rich.

http://www.turfnet.com/page/news.html/_/construction-play-number-of-golf...

Wed, 07/23/2014 - 08:48 | 4992263 GetZeeGold
GetZeeGold's picture

 

 

One would think people with 29.5 hr/wk jobs would have all kinds of time to play golf. I would think that golf courses would be swamped.

 

Hell....you might even get to meet the President.

Wed, 07/23/2014 - 09:04 | 4992302 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

I think that more professionals are actually hitting the gym, running and cycling. Golf is a waste of time. 

Wed, 07/23/2014 - 08:01 | 4992126 agstacks
agstacks's picture

From the article I read on Reuters it sounds as though the proposed changes will make large Prime MM funds float their share price.  It said the little guy would be exempt from this rule.  What is not clear is if the gate can be lowered on the small guy.  I cahsed out of my 401k in 2012, but with a new company I added another 15-20k in equities up until last winter when I chased out and moved to a fixed MM. My company was bought out again and I have another opprotunity to get at that cash now if I want.  A bird in hand...??

Wed, 07/23/2014 - 08:06 | 4992147 overmedicatedun...
overmedicatedundersexed's picture

ag, get at that cash? unless you want to write a big check to .gov, you will end up keeping it as safe as can be in another MF GLOBAL, IRA/401k, ready for corzineisation.

Wed, 07/23/2014 - 08:22 | 4992189 NoDebt
NoDebt's picture

ZH got a shout-out from CNBC this morning.  Andrew Ross Sorkin mentioned the DB derivatives article from yesterday.  Not exactly in a friendly way, but "they sure do get some good information," he said.  

So, just a reminder, nobody on CNBC knows about or frequents ZH.  OK?

Wed, 07/23/2014 - 08:38 | 4992235 buzzsaw99
buzzsaw99's picture

hey kernan, go blow a goat

Wed, 07/23/2014 - 09:35 | 4992437 Cacete de Ouro
Cacete de Ouro's picture

Short Dicks (DKS). Is this some sort of Japanese joke?

Wed, 07/23/2014 - 14:27 | 4994195 mkhs
mkhs's picture

Careful there, buddy.  You'll end up on google's penis enlargement ads list.

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