Famed investor Jim Rogers has been down on the investment banking industry for some time, and thinks there is even more reason to be negative, as a Bloomberg story reports. However, I think George Soros would take exception to the characterization of Rogers as “co-founder” of Quantum. Rogers most assuredly worked for Soros. Note that […]
Read more...At this juncture, the question of “Whither Merrill?” is largely rhetorical. We won’t know for certain until the fourth quarter results come in, and for all firms, those are likely to be telling. However, consider the following: Some securities analysts already estimate that based on further deterioration in the mortgage markets since September 30, Merrill […]
Read more...The New York Times got a hold of a hum-dinger: that Merrill Lynch’s CEO Stanley O’Neal had called G. Kennedy Thompson, the CEO of America’s fourth largest bank, Wachovia, last week to feel out a possible merger. Thompson’s reaction was cool, and his stated reason was that the Charlotte, NC bank was still digesting earlier […]
Read more...We’ve been having too much fun on other fronts to spend much time on Merrill’s stunning announcement of $8.4 billion in losses for the quarter, which came from a combination of operating losses and writedowns. The reason we’ve taken particular interest in this earnings announcement, aside from the magnitude of the red ink, is that […]
Read more...Well, I thought no one would do a deal with Bear, at least not a strategic investor sort (taking a trading position is another matter entirely). But the government controlled Chinese entity Citic appears to have done just that. Hopefully I will have more thoughtful commentary later (I am pressed for time now), but I […]
Read more...The prospective SIV bailout plan, officially called the Master Liquidity Enhancement Conduit (MLEC) or informally called The Entity, retreated a bit from the public eye yesterday as the perps, whoops, organizers, seemed to be focusing their energies on firming up arrangements so that they can announce progress and have the appearance of momentum. (if you […]
Read more...While it’s risky to opine about a plan described only in sketchy rumors, what we have seen so far about the possible bailout plan for structured investment vehicles, the entities responsible for the unresolved problems in the money markets, doesn’t give us a great deal of confidence that this program will come into being (see […]
Read more...In an interesting bit of synchronicity, the role of value-at-risk models has come into focus in the last couple of days. By way of background, VAR is a widely used risk management technique. It defines the level of risk by assessing the most one might lose in a set time period (typically one day) with […]
Read more...Forgive me for critiquing two Wall Street Journal articles in one evening, but the worst offender (this one) caught my eye second. It’s frustrating because this page one story, “U.S. Investors Face An Age of Murky Pricing,” attempts to explain the role of transparency, or more accurately, the lack thereof, in the recent credit market […]
Read more...The problem with being public is that your dirty underwear gets exposed, and if you are an investment bank, that means you have to talk about embarrassing losses. Morgan Stanley announced that it lost $390 million in a single day in August. And of course, it was those pesky quant traders. And even worse, Morgan […]
Read more...I am kicking myself that I didn’t come up with the proposal made by Brandeis professor Stephen Cecchetti in today’s Financial Times. His opinion piece, “A better way to organise securities markets,” is the single best idea for securities reform I have seen in a very long time. It is simple, elegant, and addresses many […]
Read more...Martin Wolf, the Financial Times’ economics editor, may have called the demise of securitization prematurely in his article, “Securitisation: life after death.” This is an odd piece for the normally thoughtful and pragmatic Wolf. On the one hand, he gives a succinct and colorful of assessment of the credit crisis, depicting it as yet another […]
Read more...The Wall Street Journal has broken the story that UBS will announce that it is writing down its fixed income book as much as 4 billion Swiss Francs, or roughly $3.4 billion, which will result in losses of 600 to 700 million SFr for its third quarter. Although this write-off is greater than those taken […]
Read more...A few days ago, we said we were willing to eat a bit of crow. Even though we had acknowledged some time ago that Bear might not survive the subprime mess as an independent firm, we also thought that no one with any sense would take a strategic position (taking a speculative bet is an […]
Read more...Even though I pointed out that Bear might be on a trajectory to losing its independence, I also expressed skepticism that anyone would be so daft as to want to buy the firm or worse, be a minority shareholder. It’s one thing to take a position as a trade, which is apparently the logic of […]
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