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Showing posts from December, 2011

Did Pensions Get Clobbered in 2011?

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William Selway of Bloomberg reports, U.S. State, Local Pensions Drop 8.5%:
U.S. public pension-fund assets fell in the third quarter by the most since 2008 as stocks sank amid concern that Europe’s debt crisis would curb economic growth, Census Bureau data showed. Assets of the 100 largest public-worker plans decreased $237 billion, or 8.5 percent, from the prior quarter to $2.53 trillion by Sept. 30, the bureau said today in a report. It marks the first decline since the second quarter of 2010 and the biggest since the last three months of 2008, when holdings slid 13 percent during Wall Street’s credit crisis. The setback may strain state and local governments that have set aside more money to cover retirement benefits. That’s pressured governments already coping with diminished tax collections and has propelled efforts to reduce benefit costs. The asset decline was driven by losses in stock holdings, which slipped $134.7 billion to $769.6 billion, the Census Bureau said. The value of…

Winning the Battle at Princeton?

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Michael Lewis, author of my favorite book on Wall Street, wrote an interesting comment for Bloomberg, Princeton Brews Trouble for Us 1 Percenters:
To: The Upper Ones, From: The Strategy Committee, Re: The Alarming Behavior of College Students The committee has been reconvened in haste to respond to a disturbing new trend: the uprisings by students on elite college campuses. Across the Ivy League the young people whom our Wall Street division once subjugated with ease are becoming troublesome. Our good friends at Goldman Sachs, to cite one example, have been forced to cancel their recruiting trips to Harvard and Brown. At Princeton, 30 students masquerading as job applicants entered a pair of Wall Street informational sessions, asked many obnoxious questions (“How do I get a job lobbying the U.S. government to protect Wall Street interests?”), rose and chanted a list of charges at bankers from JPMorgan and Goldman Sachs, and, finally, posted videos of their outrageous behavior on YouTub…

Differential Accumulation and Threat of War?

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My good friend Jonathan Nitzan sent me a paper he wrote with Shimshon Bichler on Differential Accumulation:
The Flip-Flops of Oppressive Tolerance Early in 2011, we received a surprising invitation from the Financial Times Lexicon. A reader had suggested that an entry on differential accumulation be added to the Lexicon, and the online content developer asked us if we would be willing to write it. Our first thought was that this must have been a mistake. The FT speaks for capital. Like all mainstream financial media, its theoretical-ideological baseline is staunchly neoclassical (plus ‘distortions’ to account for the disobedient facts). Occasionally, it allows the odd piece by a soft-Keynesian, but that tends to be the far-left marker. Rarely if ever would you read in this newspaper a real critique of capitalism, let alone one that goes to the root (unless you include in this category Op-Ed pieces by Wall-Street-warriors-turned-social-activists and other converts specializing in the ‘s…

Dangers Of Machine Readable News?

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Themis Trading reports on the dangers of machine readable news (h/t, Jack Dean at Pension Tsunami):
The above chart is not the May 6th flash clash. It is an intraday chart of Constellation Energy from yesterday. If you ever wanted an example of how machine readable news and trading bots can wreck a stock in a matter of minutes, then look no further than the above chart. Let’s reconstruct the events as they happened:11:58 – Headline crosses that “US sues to block Excelon acquisition of Constellation Energy “. CEG is trading at $38.93 at the time of headline.
12:03 – CEG is halted due to a circuit breaker popping when the stock drops 10%. CEG last trade before the halt was $35.03
12:08 – CEG reopens and shoots straight back up to $38 on heavy volume.
12:10- Headline crosses saying “US settles with Excelon”In the time span of 12 minutes, two distinct headlines ripped a stock up and down 10%. Some may say that the circuit breaker did what it was supposed to do and “allowed cooler head…

US Economy, a Bubble About to Burst?

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Jim Rogers, CEO, Rogers Holdings, feels that the US economy is a bubble which would burst at some stage. He added that his view is bearish on emerging markets, including India. Watch the interview here or just watch it below.

I like Jim Rogers, and agree with him, ignore ratings agencies, they are bad for your financial health. But he is totally wrong on the US economy, it remains and will remain the most important economy for many years and only those who believe in the myth of decoupling think otherwise. And US bonds, the most misunderstood asset class, will do just fine. No bubble there either.

I am increasingly optimistic on the US economy which is clawing back from the devastating effects of the housing meltdown and the ensuing 2008 financial crisis due to credit derivatives based on toxic mortgages. Employment gains are meager but they will pick up in 2012 as confidence creeps back into the economy.

Will there be other bubbles? You bet there will. In a world where banksters get m…

Merry Crisis, Happy New Fear?

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Celebrating Christmas in Montreal with my humble father who recently turned 80 and close friends, but miss rest of my family in Athens, Greece, especially my three musketeers above. Nothing brings me more joy than spending time with them.

Below, a Christmas message from Athens showing us the true meaning of Christmas. And while Athens is making due with next to nothing, in Montreal we are wasting taxpayers' money clearing imaginary snow (watch clip below, h/t, Jason) Only in Quebec! That would make a fantastic scene to a sequel from my all-time favorite French comedy, Le dîner de cons (watch trailer below). Think I am going to watch it again, need a good laugh this time of year.

Wish all of you a Merry Christmas, Happy Holidays and a Happy, Healthy and Peaceful New Year. Don't worry, 2012 won't be the end of the world, and we will move past eurofatigue. Keep buying the dips and remember, it's all about La Dolce Beta! Enjoy your holidays, don't overeat, drink too much…

Volatility Minces Returns?

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Beverly Goodman at Barron's reports, Volatility Minces Returns:
Where have all the stockpickers gone?Even John Paulson has apologized.It's no secret that 2011 was a tough year. But investors who sought refuge in hedge funds—especially those thought to excel in choppy markets—were sorely disappointed. Not to mention none the richer.As of Nov. 30, the 2,000 hedge funds tracked by Hedge Fund Research are down, on average, 4.5%, trailing the Standard & Poor's 500 by almost four points. "This is only the third year since 1990 that the hedge-fund index has ended on a decline," says HFR president Ken Heinz. The news is a little better on an asset-weighted basis, which weights the bigger funds more, so it is a better measure of how most investors did. On this basis, the HFR index is down 1.84%, which, of course, still trails the S&P. In case you are thinking this means bigger is better when it comes to hedge-fund investing, don't bust out your checkb…

Supreme Court Grinches Steal Christmas?

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The Supreme Court of Canada dropped the ball, once again. Drew Hasselback of the Financial Post reports in the Montreal Gazette, Supreme Court rejects national securities regulator plan:
The federal government's ambitious plan to set up a single national securities regulator has been dealt a severe blow by the Supreme Court of Canada, which ruled Thursday that Ottawa's proposed legislation is unconstitutional.In a ruling that is bound to disappoint Ottawa, Ontario, and several business groups, the Supreme Court held that oversight for the investment industry fits squarely within the "property and civil rights" powers that are assigned to the provinces by the Constitution Act of 1867.Ottawa had tried to claim control over the securities business by invoking its regulatory power over trade and commerce, but the Supreme Court ruled that the federal government's plan overstepped the constitutional boundaries that case law has erected over time to prevent Ot…

2011, The Year of Stasis?

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Kip McDaniel of aiCIO wrote an editorial comment, 2011, The Year of Stasis:
It is both cliché and seemingly essential in editorial circles to say that we (whoever ‘we’ are) are currently at an action-packed point in time where everything is changing and nothing is as it was 12 months ago. The reason for this is simple: Stasis does not move magazines off newsstands or entice advertisers to place ads in those magazines.
The people who run magazines, therefore, have a financial incentive to say capital is quickly changing hands (for every time capital changes hands, there is an opportunity for a magazine), regardless of the claim’s necessity or veracity—which makes the argument I’m about to force upon you somewhat at odds with my own self-interest.The past year was essentially one of stasis in the pension/E&F/asset management industry. Yes, there were pockets of movement and change—Jeff Scott (formerly of the Alaska Permanent Fund) and Chris Ailman (of the California State Teachers’ R…

Clawing Back Wall Street Pay?

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Donal Griffin of Bloomberg BusinessWeek reports, Tougher Wall Street Clawbacks Needed, NYC Comptroller Says:
New York City Comptroller John C. Liu, who oversees $108 billion in pension funds, said Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley should target senior executives’ pay to prevent improper or risky practices. Liu filed shareholder requests with the three New York- based banks to toughen their so-called clawbacks, which allow the firms to reclaim pay awarded to employees who acted improperly. The lenders, which now limit clawbacks to individual wrongdoers, should target supervisors as well, Liu said in a statement today. The city’s pension funds held $483.3 million in shares of the firms through Dec. 19, according to the statement. Perverse incentives and bad compensation practices helped cause the financial crisis by encouraging Wall Street employees to disregard risk in the pursuit of profit, according to a study last year by the Counci…