MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Tuesday, May 22, 2012
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12:50 PM While not arguing against the reinstatement of Glass-Stegall, Andrew Ross Sorkin looks to explode the "myth" that it would have prevented the financial crisis. Bear Stearns, Lehman, Merrill Lynch, AIG, Fannie Mae and Freddie Mac had nothing to do with Glass Stegall, nor did making lots of dodgy loans. Comment!
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12:48 PM With the end of the post-IPO quiet period at hand, analysts are out with calls on Oaktree (OAK). The leading bulls are at Morgan Stanley which says the firm's "countercyclical" strategies make it a "natural complement" to Blackstone. Among the bears is KBW, which calls the stock inexpensive but says the opportunity for Oaktree to profit from distressed strategies "has moderated." Comment!
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11:36 AM A bull on mortgage REITs, Dividend Master nevertheless unloads American Capital Agency (AGNC) and American Capital Mortgage (MTGE). AGNC's and MTGE's share prices tower by about 10% over their book values ($29.06 and $21.78 respectively, as of 3/31). Expect secondaries soon to "monetize the premium." 7 Comments
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11:08 AM SEC Chairwoman Mary Schapiro tells the Senate Banking Committee that the agency will look into the "appropriateness and completeness" of JPMorgan's (JPM) financial reporting following its $2B+ trading losses. Schapiro was speaking at hearings to examine implementing derivatives reform. Comment!
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9:41 AM American Express (AXP) expands its push into the Social Network, going after the FarmVille crowd by rolling out a line of co-branded prepaid cards with Zynga. Users won't need a credit check, but will need to sign up for a Serve account, which can be funded from existing bank accounts, or debit/credit cards. Comment!
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9:14 AM Next targets for cost-cutting at MetLife (MET) may be its annuities and U.S. retail life insurance businesses, suggests Macquarie's Sean Dargan. "The company can achieve higher returns elsewhere," he says, and indeed the company appears to be focusing more on growth prospects in emerging markets. Comment!
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8:55 AM No capital has disappeared; JPMorgan's CIO losses just represent a shift in money from one entity to others. Among the those scoring gains either for themselves or clients are Goldman Sachs and Bank of America. Boaz Weinstein's Saba Capital is reportedly +16% in May after publicly recommending buying the security JPM was short. 1 Comment
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8:06 AM Late to the mutual fund game, Wells Fargo (WFC) looks to aggressively grow its $444B unit internationally, taking advantage as European firms pull in their horns. Key, says Morningstar, will be overcoming the perception that bank and insurance-run mutual funds are among the most expensive. Comment!
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7:43 AM CME Group has been eliminated from the bidding process to purchase the London Metal Exchange (LME), say sources, leaving just the ICE and Hong Kong Exchanges and Clearing as possible suitors. Comment!
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Monday, May 21, 2012
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6:54 PM Hampton Roads Bankshares (HMPR) is raising up to $95M through a combined $50M common stock private placement and a public rights offering at $0.70 per share. Shares -15.9% AH. 1 Comment
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5:12 PM Property insurer Old Republic (ORI) announces a partial leveraged buyout and planned spinoff of its Republic Financial Indemnity Group's stock which will establish RFIG as a separate publicly-held company. ORI +5.6% AH. 2 Comments
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4:43 PM Spain's banks are likely to have property-related losses in the €216-€260B range, says the IIF, which used the experience of Ireland's banks as a benchmark. The lenders have thus far reserved about €110Bm, and will generate more this year, but could need €50-60B in assistance from the government. 1 Comment
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2:29 PM Goldman Sachs downgrades XL Capital (XL -1%) to Sell, believing XL’s professional liability-heavy book, along with last year's hiring ramp-up, will make it difficult to see margin expansion despite moderately improved pricing. "Margin improvement at XL will lag peers with a lower expense load or without books of business that require fixing." Comment!
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1:35 PM JPMorgan's CIO losses can't be described "in any way as a hedge," says hedge fund giant Michael Platt, whose BlueCrest capital was on the other side of the trade. "It's a trading loss. They deliberately put the positions on." "They're not out of those positions," he says and will face further losses if Europe continues to deteriorate. 9 Comments
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1:19 PM The chairman of the CFTC confirms speculation that the agency is investigating JPMorgan's (JPM -2.6%) $2B+ trading losses, which are tied to credit derivatives. With several other government agencies probing the blunder, the words "broth," "cooks," "spoil" and "too many" spring to mind. Comment!
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12:51 PM Hedge funds and P-E firms have accumulated almost €60B to acquire loans from European banks that are looking to consolidate their ops, a PWC survey shows. Investors, most of whom are from the U.S., are particularly interested in loans backed by commercial real estate. 1 Comment
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12:24 PM The FDIC sues JPM, C, BAC, and DB in New York, acting as receiver for Strategic Capital Bank which claims $11M in losses in MBS-related losses. 3 Comments
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11:09 AM The NY Fed will carry out the auction of $1.67B of CDO's from Maiden Lane III on Thursday after delaying the sale last week because of additional information that hadn't "been made available to the bidders." The auction is one of two planned sales from Maiden Lane III. 1 Comment
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11:00 AM Mortgage REITs recover, led by a bounce Newcastle (NCT +3.4%) following its secondary, American Capital (AGNC +2.7%), and Annaly (NLY +1.8%). The sector got "Einhorned" last week when he called it expensive, noting yield-desperate Japanese owned 9% of REITs and were beginning to pull money out. 1 Comment
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10:09 AM More Dimon (now in the Q&A): "It isn't a Greek default that is a problem, it is Greece leaving the euro," as this starts to give the rest of Club Med ideas. As for the suspension of the buyback, he says the CIO loss knocked the bank off the "glidepath" to Basel III. Comment!
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