- J.P. Morgan to Pay Over $1 Billion to Settle U.S. Criminal Probe Related to Madoff (WSJ)
- Ford board aims to pin down CEO Mulally's plans (Reuters)
- Raising Minimum Wage Is a Bad Way to Help People (BBG)
- Japan Lawmakers Demand Speedy Pension Reform (WSJ)
- EU reaches landmark deal on failed banks (FT)
- In which Hilsenrath repeats what we said in August: Fed Moves Toward New Tool for Setting Rates (WSJ)
- Senators Vow to Add to Iran Economic Sanctions in 2014 (BBG)
- Centerbridge in $3.3bn LightSquared bid (FT)
- Banks, Agencies Draw Battle Lines Over 'Volcker Rule' (WSJ)
We’ve spent the last five decades learning to love our oppression, adoring our technology, glorying in our distaste for reading books, and wilfully embracing our ignorance. Huxley’s vision of a population, passively sleep walking through lives of self- absorption, triviality, drug induced gratification, materialism and irrelevance has come to pass. Only in the last two decades has Orwell’s darker vision of oppression, fear, surveillance, hate and intimidation begun to be implemented by the ruling class. We’ve become a people controlled by pleasure and pain, utilized in varying degrees by those in power. Stay tuned for our modern day Hunger Games after this commercial for your very own Duck Dynasty Chia Pet.
And so it is done (as we detailed here)... and due to be put in place as of April1st 2014 (rather ironically). The 100-plus-pages of rules and regulations prohibit two activities of banking entities: (i) engaging in proprietary trading; and (ii) owning, sponsoring, or having certain relationships with a hedge fund or private equity fund. But the kicker...
"requires banking entities to establish an internal compliance program designed to help ensure and monitor compliance with the prohibitions and restrictions of the statute and the final rule."
Great! Because self-regulation worked so well in the past for the financial services industry.
In the aftermath of the devastating, vicious, tax-deductible DOJ settlement with JPMorgan, its stock may have responded by soaring to new all time highs (unclear if it was JPM's prop desk - in violation of the Volcker and every other rule - doing most of the buying) but that doesn't mean the benefits go out equally to all. According to Reuters, while JPM's shareholders will reap the benefits of yet another year in which Jamie Dimon uses nearly $600 billion in excess reserves, aka excess deposits, to ramp product risk around the globe and corner assorted markets (until various unknown teapot tempests blow up in his face), JPM's employees - unable to manipulate every market as much as they want to, and as much as they have in the past now that every action by JPM is scrutizined - will be stuck with total all in compensation that is unchanged from last year. Oh the humanity.
With Ackman, Druckenmiller, Robertson, PTJ And Dimon On Deck, Here Are The Best "Robin Hood" Day 1 Hedge Fund IdeasSubmitted by Tyler Durden on 11/22/2013 08:57 -0400
Someone must have had an odd sense of humor to name a conference in which the most prominent US hedge funds appear, after Robin Hood - it seems in the New Normal the prince of thieves takes from the Middle Class and gives... to himself. Snyde remarks aside, yesterday was Day 1 of the Robin Hood investor conference, with such speakers as David Einhorn and Dan Loeb putting on their best book-talking face and pitching their currently marketable ideas (which they have put on long ago and are likely selling into strength). Below is a summary of the top recommendations from Bloomberg.
A new opportunity to play "What's wrong with this picture" arose recently, with Larry Summers’ recent speech at the IMF and Paul Krugman’s follow-up blog. The two economists’ messages are slightly different, but combining them into one fictional character we shall call SK, their comments can be summed up "...essentially, we need to manufacture bubbles to achieve full employment equilibrium." With this new line of reasoning, SK have completely outdone themselves, but not in a good way. Think Jamie Dimon’s infamous “that’s why I’m richer than you” quip. Or, Bill Dudley’s memorable “but the price of iPads is falling” excuse for increases in basic living costs. Dimon and Dudley managed to encapsulate in single sentences much of what’s wrong with their institutions. Yet, they showed baffling ignorance of faults that are clear to the rest of us.
If one was a foreigner visiting for the first time, one would think Space Available was the hot new retailer in the country. Thousands of Space Available signs dot the bleak landscape, as office buildings, strip malls, and industrial complexes wither and die. At least the Chinese "Space Available" sign manufacturers are doing well. The only buildings doing brisk business are the food banks and homeless shelters. However, reports like the recent one from SNL Financial – Branch Networks Continue to Shrink - are emblematic of the mal-investment spurred by the Federal Reserve easy money policies, zero interest rates, and QEternity... In a truly free, non-manipulated market the weak would be culled, new dynamic competitors would fill the void, and consumers would benefit. However, extending debt payment schedules of the largest zombie entities and pretending you will get paid has been the mantra of the insolvent zombie Wall Street banks since 2009.
- FHFA Is Said to Seek at Least $6 Billion From BofA for MBS Sales (BBG)
- Record Pact Is on the Table, But J.P. Morgan Faces Fight (WSJ)
- Magnetar Goes Long Ohio Town While Shorting Its Tax Base (BBG)
- Mini-Wall Street' Rises in Hamptons (WSJ)
- Obama to call healthcare website glitches 'unacceptable' as fix sought (Reuters)
- Starbucks Charges Higher Prices in China, State Media Says (WSJ)
- Cruz Is Unapologetic as Republicans Criticize Shutdown (BBG)
- Berlusconi struggles to keep party united after revolt (Reuters)
- SAC Defections Accelerate as Cohen Approaches Settlement (BBG)
While last week's relentless panic buying has been extensively commented on, it was last week's nearly 50% plunge in near-term stock vol that the major news as the world went from risk off mode to risk on. It wasn't just stocks whose volatility imploded: it was the implied near-term volatility of all asset classes that was hammered in the past three days. But while everyone is fascinated by the rapid VIX down move, it is what someone did on Friday by betting that VIX will double by February in a 24/29 VIX Call Spread, that was of note. The amount wagered: $6.7 million. Whether or not this was an outright trade, or a hedge (and if one listens to Jamie Dimon perjuring himself to Congress, any trade is a hedge, adding further to the confusion) is unknown, but it is not pocket change betting that the plunge in vol will be merely transitory.
Under the guidance of Jamie Dimon, adjudged by the mainstream media to be the greatest banker the world has ever known (hyperbole accepted), a late night Friday phone call (we assume not a drunk-dial) between Attorney General Eric Holder and JPMorgan's general counsel, confirms, according to the WSJ, that JPMorgan will settle their residential mortgage bond suits with the DoJ for $13 Billion - the biggest settelement ever for a single company. Bloomberg reports that an additional $2 billion was added during the negotiations last night. Who knows: perhaps Dimon feels the same about Holder as the rest of the population and made it quite clear, at a cost of another $2 billion. The final wording of the deal is to be finalized but as part of the deal the DoJ expects JPM to cooperate with the continuing criminal probe of the bank's RMBS issuance - which remain unresolved. The settlement is 'unsurprisingly' in line with JPM's expected litigation expenses for Q2/Q3 13 but it would appear they expect worse to come still as the total litigation reserve was recently increased.
JPMorgan Chase has had a bad year. Not only has the bank just reported its first quarterly loss in more than a decade; it has also agreed to a tentative deal to pay $4 billion to settle claims that it misled the government-sponsored mortgage agencies Fannie Mae and Freddie Mac about the quality of billions of dollars of low-grade mortgages that it sold to them. Other big legal and regulatory costs loom. JPMorgan will bounce back, of course, but its travails have reopened the debate about what to do with banks that are “too big to fail.” We now have a global plan, of sorts, supplemented by various home-grown solutions in the US, the UK, and France, with the possibility of a European plan that would also differ from the others. In testimony to the UK Parliament, Volcker gently observed that “Internationalizing some of the basic regulations [would make] a level playing field. It is obviously not ideal that the US has the Volcker rule and [the UK has] Vickers…” He was surely right, but “too big to fail” is another area in which the initial post-crisis enthusiasm for global solutions has failed. The unfortunate result is an uneven playing field, with incentives for banks to relocate operations, whether geographically or in terms of legal entities. That is not the outcome that the G-20 – or anyone else – sought back in 2009.
A quarter after Goldman reported the highest per employee comp since the record bonus period just after the Lehman bankruptcy, when the average employee of the firm's then 31,700 workers made $431,956, the firm which once ruled the world proudly with tentacles running every important global central bank, was forced to slash employee comp by a whopping 35%, from $3.7 billion, a comp margin of 44% in Q3 2012 and roughly the same last quarter, to a tiny $2.4 billion, or a comp margin of just 35.4%, resulting in average trailing 12 month per employee (of which it had 32,600 in Q3 2013) accrued compensation of just $380,368, the lowest since Q2 2012.
Q. How worried are you that one morning the bond market has moved against the United States?
A. It’s virtually assured, the question is when and how. I don't know if it will be two years of five years but it will happen. It is a matter of time, the United States can’t borrow indefinitely. Over hundred years bankruptcies of country after country who thought they could get away with it because they had the reserve currency and the military power of the world. We are going to have fiscal discipline. It’s imposed upon us or we do the right thing and do it to ourselves the right way.... America knows the way, it doesn't have the will.
- Spot the pattern: Senate Leaders Nearing a Deal (Politico), Senators say debt, shutdown deal is near (USA Today), Senate Leaders in Striking Distance of a Deal (WSJ), U.S. senators hint at possible fiscal deal on Tuesday (Reuters), Senate Debt-Limit Deal Emerging (BBG)
- U.S. debt ceiling crisis would start quiet, go downhill fast (Reuters)
- Uneasy Investors Sell Billions in Treasurys (WSJ)
- BOE’s Cunliffe Says U.K. Is Not in Grip of Housing-Market Bubble (BBG)
- Letta Mixes Tax Cut With Rigor in Post-Berlusconi Italian Budget (BBG)
- Japan Seeks to Export More High-End Food (WSJ)
- Burberry names Bailey CEO as Ahrendts quits for Apple (Reuters)
- China’s Biggest Reserves Jump Since 2011 Shows Inflow (BBG)
- Headline of the day: U.S. Risks Joining 1933 Germany in Pantheon of Deadbeat Defaults (BBG)
- As Senate wrestles over debt ceiling, Obama stays out of sight (Reuters)
- The "Truckers Ride for the Constitution" that threatened to gum up traffic in the capital was a dud as of Friday afternoon (WSJ)
- China New Yuan Loans Top Estimates as Money-Supply Growth Slows (BBG)
- Vegetable prices fuel Chinese inflation (FT)
- China Slowing Power Use Growth Points To Weaker Output Data (MNI)
- London Wealthy Leave for Country Life as Prices Rise (BBG)
- Gulf oil production hits record (FT)
- Every year like clockwork, analysts start out bizarrely optimistic about future results, then “walk down” their forecasts (WSJ)
- Weak Exports Show Limits of China’s Growth Model (WSJ)