With a record of poor shareholder returns, why do the TBTF banks (JPM, C, BAC) even exist, writes Sheila Bair. Capital markets certainly wouldn't finance such "unstable behemoths" if it weren't for their de facto government backstop. Jamie Dimon can provide a better return to shareholders by recognizing his bank is worth more in smaller pieces. [View news story]
But many smaller banks were closed down. Bigger ones are always bailed out. When ML was bailed out in 2008 (it had just been bought by BAC), they used the money to pay huge bonuses for 2008 even though ML was losing money. The point is that banks can go down and should be allowed to go down. This is why they should be smaller, not TBTF. You don't want the system to depend on any particular bank. Taking risk should be limited not because taking risk is bad but because the banks take risk with the money of their depositors. If they want to take risks, they should set up investment funds and invest there but that would be pure equity investment. Of course, they don't like the idea.
Engadget's review of Samsung's (SSNLF.PK) Galaxy S III is positive, but far from glowing. The device's performance, camera, and display are praised, but its software, which Samsung has heavily emphasized, is found lacking, and the site declares HTC's One X a better high-end Android option. The Verge is more enthusiastic, calling the S III a "technological triumph." Though Samsung currently looks unstoppable in the Android market, it's worth remembering HTC looked the same way a year ago. [View news story]
This shows the kind of progress that you see when some market is truly competitive. I suspect this implies that profits will come down over time as the competition heats up even more.
Is the “cult of the equity” dead? Institutional investors have slashed their equity holdings over the past decade. Stocks have not been this far out of favor in over a half a century. “Ultimately what is going on is that fundamental tenets of capitalist society are being questioned,” says Allianz's Andreas Utermann. This is stunning in light of overwhelming evidence that, in the long run, equities outperform. From 1900 to 2010, they beat inflation by 6.3% a year in the U.S., compared with only 1.8% for bonds. [View news story]
"Is the “cult of the equity” dead is stunning in light of overwhelming evidence that, in the long run, equities outperform''. What kind of crap is that? In many companies shareholder money is just used to pay huge amounts to executives. What is stunning is that people still buy some shares - check the latest ''can't lose'' IPO of FB and then check all the hype before the IPO from the geniuses at CNBC and others like them.
Want to buy banks? Look at some of the regionals, says Dick Bove. The big universals are dealing with a multitude of issues that impede their competitiveness, while community banks are being weighed down by regulations that are driving them out of the business. Firms in the middle tier however, are growing their key commercial and industrial lending portfolios while their competitors have had to pull back. His picks: US Bancorp (USB), PNC Financial (PNC) and Capital One (COF). [View news story]
Bove is totally clueless. He wanted to built ''huge banks''. I think he claimed that the JP loss was ''nothing'' or something like that. He, like most people like him, is a salesperson for the industry, not somebody to listen to.
Speaking on the issue of increased financial regulation, Goldman's Jim O'Neill asks rhetorically: “Is it really that entirely desirable to have financial stability at the expense of everything else? I sort of think you want your investment bank to be a little unstable.” - pure Goldman gold. [View news story]
He is right that they should be able to take risk. BUT only if they risk their own money and not the customer deposits. Of course, they always use the customer deposits even when it is illegal (check MF Global) + whenever they get in trouble they run to Washington and claim that they are TBTF and to save the world the government needs to bail them out. If they want to take risk, they should set up funds that are separate from the firm and trade there risking their own equity. You can bet that is not very interesting for them for the most part.
Did S&P tip that Spain's Popular might be next in line for a bailout, asks the WSJ's David Enrich. He notes the bank is mentioned in the same breath as Bankia regarding government support in the S&P downgrade report. Enrich on the Bankia chronology: "Last summer, IPO. Last month, 'well capitalized.' Last week, €10B hole. Today, €19B bailout." [View news story]
Sh** happens, few billion here and there, who's counting. Ze Germans will pay.
Another thing is that nobody knows how this company will be run. There is one dominant shareholder and he can run it anyway he wants. What if he views it as an empire and not just a company that optimizes profits. Check what happened with AOL - a company not that different in my (no sufficiently informed) view. I am just very skeptical.
Look, if it cost $5, there would be plenty of buyers. It is finally the price in my view. It looks like a stock that should cost $5 to $10 and if you want to be aggressive maybe $15 but $38 is crazy. I wouldn't buy it even at $5 but then I am not a believer in that type of business model.
Central bankers are keeping it low-key for now, writes Saxo Bank's Steen Jakobsen, but they're surely realizing they've fallen behind the curve. China is slowing precipitously, the rest of Asia is suffering from a cutoff in credit as EU banks pull back, and, of course, there's Europe. The central banks aren't going to sit on their hands forever. He's buying GLD, GDX, and HYG. [View news story]
Gold looks so cheap ... it must be the CB's manipulation. I am convinced that there have been large interventions. I was thinking that QE3 will be about $1 trillion of mostly mortgage backed securities announced in June or July. I am starting to change my mind in terms of what the FED is likely to announce. I think that nominal GDP targeting is more likely. The two are more or less the same but the difference is that if the FED announces nominal GDP targeting, they could simply say: We are not going to do anything, we are positive on the economy and only do something if there are global risks. Basically, a backdoor QE. This maybe the path of least resistance. Also, then they could print as much money as they want and not just some miserable trillion or so. I think Rickards (the guy who wrote ''Currency Wars'') talks about that. We are likely to see some sort of globally coordinated QE by all big CB's and the geniuses working there.
What a scam in terms of price. I bet there will be many lawsuits given the information that was not given to the general public and only to ''special'' clients.
Risk, Dinosaurs And The Lucky Sperm Club: JPMorgan Is A Joke [View article]
Is there any information on what are the losses at that desk by now. I hear amounts as high as $6-$7 billion. I don't know if it will get there but wouldn't be shocked. I think that given the market, $5 billion is the minimum they would suffer. Apparently, according to the WSJ, they have other very risky positions unrelated to the one discussed by the CEO. These are very big positions and the market has pretty much crashed. I wonder if they could lose another $5-$10 billion there. Frankly, I don't have any idea. Also, these maybe positions that they don't mark to market, so losses will be realized when they sell or if there are defaults on the portfolio, which is likely given the European situation.
The real nightmare scenario for the EU power elite is what if Greece exits EMU and thrives, says BNY's Simon Derrick. If Greece leaves, devalues, collapses, and then quickly rebounds (a la Iceland, though it was never part of the eurozone), the other struggling states (and their electorates) are sure to take notice. [View news story]
Greece is very likely to exit the EUR soon or get a parallel currency, which is effectively the same. The population will start receiving pay in the local currency and the standards of living will drop 75% easily. That will make them more competitive of course and they maybe able to start exporting some things. Prospering is a totally different issue as Greece doesn't have any manufacturing, research or other productive economic base that can be used to build prosperity. It is just a backwards country that is plagued by corruption and exiting the EUR will not change that.
Italian PM Monti hits the tape, telling Dow Jones a majority of the EU states favor common eurobonds. Unfortunately, tweets ZH, the ones that oppose them are the ones that pay the bills. [View news story]
Majority wants it ... of course they are bankrupt ones.
With a record of poor shareholder returns, why do the TBTF banks (JPM, C, BAC) even exist, writes Sheila Bair. Capital markets certainly wouldn't finance such "unstable behemoths" if it weren't for their de facto government backstop. Jamie Dimon can provide a better return to shareholders by recognizing his bank is worth more in smaller pieces. [View news story]
Engadget's review of Samsung's (SSNLF.PK) Galaxy S III is positive, but far from glowing. The device's performance, camera, and display are praised, but its software, which Samsung has heavily emphasized, is found lacking, and the site declares HTC's One X a better high-end Android option. The Verge is more enthusiastic, calling the S III a "technological triumph." Though Samsung currently looks unstoppable in the Android market, it's worth remembering HTC looked the same way a year ago. [View news story]
Is the “cult of the equity” dead? Institutional investors have slashed their equity holdings over the past decade. Stocks have not been this far out of favor in over a half a century. “Ultimately what is going on is that fundamental tenets of capitalist society are being questioned,” says Allianz's Andreas Utermann. This is stunning in light of overwhelming evidence that, in the long run, equities outperform. From 1900 to 2010, they beat inflation by 6.3% a year in the U.S., compared with only 1.8% for bonds. [View news story]
Want to buy banks? Look at some of the regionals, says Dick Bove. The big universals are dealing with a multitude of issues that impede their competitiveness, while community banks are being weighed down by regulations that are driving them out of the business. Firms in the middle tier however, are growing their key commercial and industrial lending portfolios while their competitors have had to pull back. His picks: US Bancorp (USB), PNC Financial (PNC) and Capital One (COF). [View news story]
Speaking on the issue of increased financial regulation, Goldman's Jim O'Neill asks rhetorically: “Is it really that entirely desirable to have financial stability at the expense of everything else? I sort of think you want your investment bank to be a little unstable.” - pure Goldman gold. [View news story]
Did S&P tip that Spain's Popular might be next in line for a bailout, asks the WSJ's David Enrich. He notes the bank is mentioned in the same breath as Bankia regarding government support in the S&P downgrade report. Enrich on the Bankia chronology: "Last summer, IPO. Last month, 'well capitalized.' Last week, €10B hole. Today, €19B bailout." [View news story]
Facebook Shares: Click Dislike [View article]
Facebook Shares: Click Dislike [View article]
Central bankers are keeping it low-key for now, writes Saxo Bank's Steen Jakobsen, but they're surely realizing they've fallen behind the curve. China is slowing precipitously, the rest of Asia is suffering from a cutoff in credit as EU banks pull back, and, of course, there's Europe. The central banks aren't going to sit on their hands forever. He's buying GLD, GDX, and HYG. [View news story]
Facebook Shares: Click Dislike [View article]
Risk, Dinosaurs And The Lucky Sperm Club: JPMorgan Is A Joke [View article]
Why I 'Liked' Facebook [View article]
The real nightmare scenario for the EU power elite is what if Greece exits EMU and thrives, says BNY's Simon Derrick. If Greece leaves, devalues, collapses, and then quickly rebounds (a la Iceland, though it was never part of the eurozone), the other struggling states (and their electorates) are sure to take notice. [View news story]
Italian PM Monti hits the tape, telling Dow Jones a majority of the EU states favor common eurobonds. Unfortunately, tweets ZH, the ones that oppose them are the ones that pay the bills. [View news story]
Gold Will Outperform Stocks, Bonds, And Real Estate [View article]