Wall Street’s Hall of Shame welcomes new members 20 Mar 2008 The club which includes such luminaries as Jay Cooke, Michael Milken and Charles Barney now counts Jimmy Cayne and the Bear Stearns board among its new inductees. Unfortunately, despite the lessons of history, membership is still expanding.
Regulators must act against market manipulation 19 Mar 2008 Dangerous market volatility has stirred watchdogs worldwide to make noises about cracking down on short selling. Tough talk about rumourmongering is welcome, if overdue. But if some hardnosed action doesn t follow, freewheeling traders will call their bluff.
US economic pig now Fed and watered 18 Mar 2008 Bernanke is slopping nearly $450bn of new liquidity into the market's trough and is watering it with a 0.75% rate cut. But the US economic pig needs a diet and exercise, not more truffles. Until real interest rates are positive, the economy will remain in poor shape.
Markets too eager to celebrate over mortgage giants’ plan 18 Mar 2008 That s the only way to read the positive reaction to regulator Ofheo s relaxing Fannie and Freddie s capital constraints. Ofheo seems to be hoping that promises from the agencies not to gear up will encourage investors to pony up more capital. That seems a tad optimistic.
Visa blowout won’t unblock battered IPO market 18 Mar 2008 The credit card giant s megaIPO priced above its target range amid heavy demand. But those hoping the largestever US debut will unblock the moribund new issue market may be disappointed. Wall Street woes and investor risk aversion will weigh on the market for some time.
UK mortgages go crunch in the fright 17 Mar 2008 UK mortgage lenders are less willing to lend and are raising sharply the average spread they charge borrowers. The gloomy implications for the housing market, consumer finances and UK growth are clear including, no doubt, to the Bank of England.
Equity take-unders show investors in denial 17 Mar 2008 Bear Stearns and Alitalia both got takeover offers far below their last share prices. Why were equity holders so optimistic? Ignorance, hope and belief in nuisance value all play a role. And when governments are paying, shareholders may have to expect less.
The Orient offers best hope for M&A bankers 16 Mar 2008 With the disappearance of the LBO, merger activity is plummeting in the US and iffy in Europe. Not in Asia. Crossborder, even hostile, deals like Ping An's Fortis deal and Sinosteel s Aussie bid are on the rise. It s time for bankers to ask for a relocation package.
Boutique bandwagon will get more crowded 14 Mar 2008 Frank Quattrone, the onetime Silicon Valley darling, is aboard and Michael Zaoui, the Morgan Stanley rainmaker, may hop on soon. Small advisory shops tend to proliferate during big bank upheaval. Although a few thrive, most peter out before a full business cycle completes.
Losses of 40% will make SWFs wary of bank rescues 14 Mar 2008 Sovereign funds have put $50bn of equity into struggling Western banks. The shares are down by over a third. High dividends will cut their losses, but the debacle should be enough to deter SWFs from being so helpful the next time the begging bowl goes round.
SEC loophole helps Halcyon float 13 Mar 2008 You can't blame the hedge fund firm for selling to an alreadylisted Spac. Speed and certainty made the deal attractive with IPO conditions treacherous. But as with all Spac purchases, Halcyon hasn't been through the usual SEC disclosure rigmarole. Investors should take note.
Freddie and Fannie should raise more capital 13 Mar 2008 If they have called the housing market right, they may not need more. But that s a big if. And with capital tight, they can't easily help the US mortgage market their public mission. Raising new equity would dilute shareholders. But if it's spent wisely, they could benefit.
Buy credit, sell equities 13 Mar 2008 Even after Tuesday s big rally, credit spreads are priced for Armageddon. Stocks are well down from their 2007 highs, but don t discount anything worse than a mild slowdown. That looks optimistic. The technical problems in the credit market have a created a big opportunity.
Financiers should be made to study history 13 Mar 2008 The current crisis might have been less severe if bankers, traders and fund managers knew more about previous bubbles. To qualify as financial professionals, they should have to pass exams quizzing them about the South Sea Bubble and the crash of 1929.
Domestic sovereign wealth funds make no sense 13 Mar 2008 South Korea is considering merging stateowned companies into a holding company, modelled on Singapore's Temasek. However, sovereign wealth funds investing domestically cannot act on the arms length basis that is possible abroad. It is better to privatise where possible.
Did the Fed torpedo Carlyle Capital? 13 Mar 2008 Some on Wall Street argue the Fed s new $200bn Term Securities Lending Facility caused Carlyle s lenders to demand more collateral, so they could trade it for government bonds. That s farfetched. But a similar drama could unfold for other types of mortgage funds.
CPDOs 13 Mar 2008 Constant proportion debt obligations were supposed to help keep CDS markets stable. Instead, they've made matters much worse.
Should the US government insure muni bonds? 12 Mar 2008 It might bring in some welcome revenues. But Rep. Barney Frank s proposal that the federal government get into the muni bond insurance business doesn t solve any problems. Better to eliminate the dualrating system for munis. That would remove the need for as much insurance.
Socially responsible investors should learn from short sellers 12 Mar 2008 Al Gore is riding the SRI investing boom. But like most other dogooders, his $5bn fund is longonly. That may sound more righteous than shorting stocks. But SRI funds with the courage of their convictions should bet against the irresponsible, too. That might help their returns.
WaMu shareholders deserve their rights 12 Mar 2008 The giant thrift wants to raise capital and Tosca, a big shareholder, rightly wants a slice. But WaMu shouldn t give the hedge fund or anyone a sweetheart deal. A rights issue would spread the pain and potential gain fairly among all its shareholders.