This is a good one! And I thought only Goldman Sachs traded ahead of clients! Read here. So, a guy named Nilesh Shroff was front running trades. I know, big deal, but this is not 1999 anymore. People won’t stand for this crap anymore. At least the FSA took some action after three strikes. . . .
When clients told him to buy particular stocks, he bought those stocks for the firm first, causing the price to increase before he executed the customers’ trades. If the customer order was to sell, he first sold on behalf of the firm, decreasing the price.
Here is the latest interview from CNBC’s Closing Bell. Big credit to Michael Yoshikami of YCMNET Advisors who was great to be paired with. Great to see some young blood!!!
We cover utilities, staples, and the issue with Chinese steel demand. ENJOY!
Today in the Washington Post David Sokol wrote about how we are being gamed by the government. Read the whole article here. Here is the juicy part:
If you liked what credit default swaps did to our economy, you’re going to love cap-and-trade. Just read Title VIII of the bill, which lets investment banks, hedge funds and other speculators participate in the cap-and-trade market. They don’t have emissions to cut; they have commissions to make.
Now, I am up for making money no matter what the market does, but I would prefer good versus evil. Credit Default Swaps (CDS) never made much sense to me because it allowed people to buy insurance on stuff they didn’t own. Now, you may say that buying a put option on a stock you don’t own is the same thing, but put options cause a companies ability to issue debt to blow up. Options are also regulated and despite the pits of traders you see on TV, they are ‘orderly’. After all, we keep them in a pit!
Cap and trade will do nothing but give hedge funds and investment banking houses the ability to speculate on a new ‘green’ world while driving up prices to the consumer and killing off industrial companies. In the end, I really don’t look forward to making money off these side bets as they blow up entire industries. Maybe the bill won’t pass. . .
Check out my recent research piece on Seeking Alpha here.
On the front page of the Financial Times yesterday (sorry, I gave up reading the Wall Street Journal when it went mass market) the headline was “Oil at $60 for first time in six months.”
How wonderful! I was long oil using commodity ETFs/ETNs since December when the price was in the 30s. Thus I expected the price to be up 50-80%. This is where I hit the empty well.
The bottom line is that I will be moving on and not dealing with ETF’s that can’t perform as the marketing people suggest. There are a million excuses why the slippage happens, but my clients don’t care and neither do I.
You can read the whole article here. Bottom line is that never have we been more confused on the question of inflation or deflation. I attempt to explain what the issues are and what is at stake.
Prices go down, people lose jobs, interest rates disappear and the economy crumbles. The first time we saw it in the U.S. was back in 1836 when the railroads went bust, credit was squeezed, and cash was impossible to get. The money supply shrank by 34 percent! The next era of deflation occurred during the Civil War, and the last time we experienced it was during the 1930s, and we all know how that worked out. Deflation creates an environment where there is no incentive to invest and grow anything but a Victory Garden.
Let me know if you have any comments. Feel free to post them directly on NMBJ’s website.
Ok, this is a skit from SNL, but it underlines the public reaction to this farce we are calling the stress tests. Today we are starting to see the secondary offerings from banks. Apparently, investors would rather dilute the stock than have government involvement. I get that, but dilution and bad management is not a bet I want to place. Still short and hating it.
Ok, I know I have been hard on banks, but just read this piece below from the Wall Street Journal.
One question mark hanging over the tests is whether they will be perceived as tough enough. From the start, some economists and bank analysts argued that the Fed’s worst-case economic scenario was overly rosy. Since the Fed informed banks of the preliminary test results, the government appears to have softened somewhat as banks pushed back.
Among other things, regulators accepted banks’ bullish arguments about their profit outlooks. The Fed initially planned to use banks’ lackluster 2008 revenues as a jumping-off point to predict future incomes, according to people familiar with the matter. But many big banks logged robust first-quarter profits and argued that should serve as the “run rate” for the stress-test period.
Any bank needing more capital will have until June 8 to develop a plan and Nov. 9 to implement it. The banks must also review their management and assure regulators that leadership has “sufficient expertise and ability,” to manage through the current environment.
We get right into into it. Check out the page on CNBC here. Bottom line is that we are not out of the woods yet and price momentum means nothing to another half million out of a job. We are entering the ‘dry’ season that goes from May through October. Not a great time to jump in. . . But, Scott was a great analyst to be interviewed with. I disagree with his points, but respect the work he puts into it.
I just did my first piece for www.investorwatchdog.com. For my first blog, I wanted to underline the issues with 401K fees. Our firm has tried to come up with a better mousetrap, but many of the fees involved are a necessary component. The best we can do is keep them low, be upfront, and educate the participants. So far, we have had no takers, which just goes to show some people really don’t want to know what is in the hot dog!
Exactly what does my 401K costs me in fees and expenses every year? Good question! Recently, 60 Minutes aired a segment on the problems with 401K plans-little advice, conflict of interest and lack of disclosure. The CBS Evening News followed with another look at the way the plans are structured, hidden fees, and lack of choices.
