Fund Architects Commentary
FOOL ME ONCE...
Remember the Financial Crisis? Yeah, we do too. Heck, it’s only been seven years – even Wall Street’s memory isn’t that short. Or at least one would suppose. Um, one might be supposing wrong.
Shame on me.
At bottom, literally, of the near-collapse of the U.S. financial system back in ‘08 were loads of worthless mortgage bonds the Street’s worst and greediest had unloaded on investors, unsuspecting and otherwise. Essentially, this toxic waste represented the securitization of about $450 billion worth of non-performing home loans. Think anybody would ever be interested in that kind of wealth-busting garbage again? No way. Umm, way? Continue reading »
This just in: Bureaucrats discover that banks are in business to make money. Massive fines to follow.
True enough, the federal shakedown department, otherwise known as the Office of the Comptroller of the Currency, is grilling J.P. Morgan Chase & Co. about whether the big firm has been steering private-banking clients to its own investment products. Continue reading »
MICROSOFT OFFICE (SPACE)
So, there’s a new boss at Microsoft. Has been since February when the appetizingly-named Satya Nadella took over as CEO from Steve Ballmer. Mr. Ballmer, who’s now just rich for a living, took over the big chair from Bill Gates in 2000.
“Now we had a chance to meet this young man, and boy that's just a straight shooter with upper management written all over him.”
In his first major organizational move, the enterprising Mr. Nadella announced last week that pink slips are on the way to around 18,000 Microsoft employees. The move – which will give about 15 percent of the company’s workforce a bad case of the Mondays–represents the largest layoff in Microsoft’s history. Continue reading »
TOUR de FRAUD
So, last week, BNP Paribas SA — the mother ship of France’s banking industry — was tagged with an $8.9 billion fine for willfully evading U.S. sanctions against rogue nations. In the most abrupt “tomber en disgrace” since Lance Armstrong hit the ditch, the nearly 200-year old behemoth fessed up to criminal charges that it had falsified business records and engaged in elaborate schemes to conceal illegal transactions from regulators. Continue reading »
IF YOU MARKIT, THEY WILL COME
Ten years or so ago, a former TD Securities credit-trading executive – one interestingly named Lance Uggla – started a little outfit called Markit. Launched on the outskirts of London, in a barn no less, the good Mr. Uggla’s calling was to tap into the burgeoning credit-default-swaps market, which at the time was growing faster than Iowa corn.
People will come Lance.
Fortuitously enough, Markit eventually created the so-called "ABX" index, which famously became a way for banks to wager on the subprime-mortgage market ahead of and during the financial crisis. Since then, the company has figured out how to make money by charging its 3,000 or so clients fees for services and occasionally for licensing. Continue reading »
ALTS, ON THE ROCKS
So here we are at the investment bar…stocks are chasing all-time highs, bond yields are on ice, volatility’s spiking, and global geopolitical risks are bubbling over the rim. No surprise that today’s asset mixologist is creating more enticing cocktails by combining interesting alternative strategies with more traditional assets. And he better -- a simple concoction of stocks, bonds, and cash seems downright old fashioned in this modern setting. But adding a splash of financial alternatives by itself ain’t gonna’ win this flair contest…what we need is a shot of booze in our allocation mix. Continue reading »
MUCH ADO ABOUT NOTHING TO DO
If you missed the Treasury Department’s conference a few days back, money managers from around the U.S. assembled to talk about the bad “work” of the Financial Stability Oversight Council. The FSOC, as you’ve surely forgotten, is a marvel created in the Dodd-Frank quagmire that gives otherwise useless bureaucrats broad authority to “identify and monitor excessive risks to the U.S. financial system.” Continue reading »
You may have heard that Chinese e-commerce colossus Alibaba Group filed paperwork last week for an initial public offering. The deal, when it makes its debut on the NYSE or the Nasdaq, will set the value of the company between $135 billion and $250 billion. At the lower end, the Oriental behemoth will be worth as much as Facebook. On the high side, it’ll be on par with Wal-Mart. Say what? Continue reading »
US GDP for first quarter 2014 (1Q14) was reported at 0.1%, lower than analysts’ estimates of 1.1%. The harsh winter weather was the main attributor to the uninspiring growth rate. In Euro land, GDP growth continues to be positive and analysts are becoming more constructive on economic growth from many constituent countries going forward. Initial data from Japan suggests consumers may not have retreated from making purchases to the degree forecasted because of higher sales taxes taking effect as part of Abenomics. This dynamic could bode well for investors as Japanese policy makers continue attempting to structurally change their domestic economy. Continue reading »
So, last Thursday – from way back in the nether regions of the currency markets – Denmark’s central bank announced an increase in its deposit rate, i.e., the rate commercial banks receive for parking funds. Moves of this sort are generally no big deal, of course, but this one, no pun intended, is altogether interesting. Why? Cuz’ the move effectively brings to an end the Dane’s improbable experiment with an implausible idea: Negative interest rates. Continue reading »