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The Good Guys

Posted by Larry Doyle on March 26th, 2009 3:00 PM |

Wall Street has become a very easy target for our politicians, our populace, and a large part of the world. Wall Street is Gordon Gekko and the “greed is good” approach, correct? People would just as soon run you over as help you up, correct? The entire Wall Street machine is littered with Masters of the Universe, correct?

Well, I know plenty of people on Wall Street who fit that bill but I know multiples more who are truly decent, caring, hard working people trying to make an honest living for their family.

One of the early lessons I learned on Wall Street was the fact that there is NO security in the securities industry. As such, I needed to be exceedingly careful in who I engaged and how I engaged them. As I have highlighted in my Career Planning tab above, reputation is everything. I readily admit that not everybody on Wall Street shares that opinion. Read the rest »


How Long Can You Tread Water?

Posted by Larry Doyle on March 26th, 2009 11:10 AM |

The other day, I provided a cursory overview of the details embedded in the recently proposed Public-Private Investment Partnership, Will Banks Truly Sell these Toxic Assets?

The main point I tried to highlight in that piece was the need for true price discovery for these toxic assets. A loyal reader provided tremendous insight in highlighting that the PPIP needs to assure that sellers are truly at arm’s length from buyers to insure that the price discovery process is real and fair.

There are potential concerns with this price discovery process highlighted in my piece Send in the Clown. Are the bank portfolios, located within the largest banks needing to sell toxic assets, attempting to prop the market higher? Read the rest »


Roubini and Birinyi on the Market

Posted by Larry Doyle on March 26th, 2009 8:42 AM |

I always keep a close ear for the market insights of any of our Economic All-Stars. Highly proclaimed NYU professor and economist Nouriel Roubini is decidedly bearish on the state of financial companies, the economy, and the markets. Bloomberg reports, Roubini Says Stocks Will Drop as Banks Go Belly Up.

Laszlo Birinyi is more tempered in his assessment but believes the market has come too far, too fast and is subject to some pullbacks. Please remember that we saw a market bottom in the S&P 500 at the 666 level (pretty scary, eh) on Friday March 6. We have moved up 22% in a very short time frame. Birinyi further offers that this market is less geared for long term investors and more for short term traders focused on picking individual stocks.

LD


Send in the Clown

Posted by Larry Doyle on March 26th, 2009 5:15 AM |

clownIn the process of a business transaction, have you ever encountered the sudden appearance of another interested buyer?  Where does this other mysterious buyer suddenly come from?  How is it that the new buyer appears at the most inopportune time? If you thought you were the primary buyer, do you feel as if your bid is being shopped? In business, this appearance of a supposed late buyer is known as “send in the clown!”

This part of the circus act is played out on Wall Street all the time. As we enter into the largest liquidation sale in the history of Wall Street, the big fellow with the red nose, floppy feet, baggy pants, and squeaky voice has just shown up, in the form of Citigroup and Bank of America’s bank portfolios.  Read the rest »


Billions in Municipal Losses Later…Sorry

Posted by Larry Doyle on March 25th, 2009 8:03 PM |

The municipal bond sector has always been conducive to a “pay to play” mentality. Picture a municipal executive, compensated in a high 5 figure range, making a decision on a multi-million dollar bond transaction in which Wall Street underwriters were generating millions in fees. If that scenario is not ripe for abuse, I don’t know what is. The “pay to play” game has been going on for years in municipal finance.

Well, with the launch and growth in municipal derivatives, it appears that the “games” likely continued. Wall Street firms certainly booked huge profits. Municipal executives very likely received under the table payments. Taxpayers  got screwed. Read the rest »


Did Wall Street Flip Off Treasury Today?

Posted by Larry Doyle on March 25th, 2009 4:55 PM |

The U.S. government was heavily involved in the bond market today. How did they do? They bought high and sold low. What happened?

The Fed announced last week that they would engage in buying hundreds of billions of government and mortgage securities in an attempt to move interest rates lower and spark consumer and corporate borrowing. Today, the Fed made their initial purchase under this program at mid-morning. Thanks to MB, I learned that Wall Street offered the Fed three times more bonds than it actually purchased. I gather that the Fed wanted to be extremely patient and diligent in their purchases. In any event, at mid-morning the Fed would have bought bonds near the market highs of the day.

Later in the day, Treasury issued multiple billions in 5yr notes. How did they do with this sale? Not very well. Wall Street backed up their bids an almost unheard of 5 basis points (.05%) to fully underwrite these bonds. What happened? Read the rest »


Will TARP Screw ARPS Even Tighter?

Posted by Larry Doyle on March 25th, 2009 1:37 PM |

screw1I have written extensively how Wall Street perpetrated a multi-billion dollar scam in the name of Auction Rate Preferred Securities (ARPS). For our newer readers, ARPS are securities funded by longer maturity underlying loans or preferred shares but marketed as short term cash or money market surrogates. How would that work? Wall Street ran very regular (weekly, monthly) auctions to provide liquidity for ARPS holders. The scam worked well until the overall market hit the skids and the Wall Street dealers backed away from providing liquidity to these supposed short term cash/money market instruments.

In the process of reviewing the underlying loans backing these deals, investors became aware of the long term nature of that collateral and thus their investment. While there is overwhelming evidence supporting the gross mismarketing of these securities, the SEC and FINRA have dragged their feet in rectifying this situation. Why? Great question.

I have highlighted that FINRA actually owned $647 million of ARPS as of year end 2006. That news is shocking to whomever I inform. Did FINRA sell their bonds? If so, to whom? When? What price? Did they front run an imploding market?

Could taxpayers via the TARP (Troubled Asset Recovery Program) actually get stuck making investors whole for a scam perpetrated by Wall Street? This fraud gets more bizarre at every turn. Welcome to the world of finance 2009.

I thank PT for sharing with me a story that broke yesterday: Read the rest »


Daniel Hannan Skewers Gordon Brown

Posted by Larry Doyle on March 25th, 2009 10:28 AM |

If you thought all British politicians were staid and reserved, let me introduce you to Daniel Hannan, a member of the European Parliament representing South East England for the Conservative Party. If a picture speaks a thousands words, this video clip is a full three part novel. Little doubt that Mr. Hannan is beyond exasperated with the current level of deficits and ongoing deficit spending in the United Kingdom. Well worth a listen and look see. Please share it with your friends via the ShareThis link located above near the byline.

                     


Goldman Sachs Tells Uncle Sam Go Away!!

Posted by Larry Doyle on March 25th, 2009 9:46 AM |

Like it or not, Goldman Sachs is widely considered to be the preeminent risk manager in the world. I would never blanketly endorse Goldman Sachs nor every one of their transactions or employees. Anything but. I am sure Goldman, like every institution in every industry, has some bad apples who will and have made some bad, if not outright illegal, moves. If so, the proper regulatory authorities should address, investigate, and if need be prosecute. I am here to write on a different topic. Goldman Sachs does not want Uncle Sam as a business partner. Whether Goldman wanted government money last Fall via the TARP (Troubled Asset Recovery Program) or not, the firm very clearly wants to return those funds soon.

Goldman Sachs is currently working with government officials to return $10 billion in TARP funds by late April. The firm will look to make this return after the U.S. Treasury completes its first round of bank stress tests. Other smaller banking institutions are looking to do the same. Read the rest »


Dr. Edwin Vieira’s Amazing Crystal Ball, 2006

Posted by Larry Doyle on March 24th, 2009 9:52 PM |

I will admit that I am not a student of the Great Depression, but I have started reviewing that period. Obviously I, like every American, hope our economy stabilizes and we regain our footing and return to prosperity. While the pragmatic optimist in me believes that can happen, the trader and risk manager in me tells me to review the Depression, understand the dynamics, assess the risks of our current period, and prepare accordingly.

I hope and believe people who have been reading my work for a while appreciate that I am not an alarmist.  Whether working on Wall Street as a trader and salesman or now writing for Sense on Cents, a measured, analytical approach has always generated the best results. In that vein, I discount speculators and salesmen who attempt to make a buck from heightened levels of anxiety. That said, the elevated levels of risk in our economy, markets, and global finance require an equally elevated sense of risk analysis and historical analysis.

Given some of the economic saber rattling emanating from China and the lessened fiscal support emanating from Europe, the threats of global protectionism are clearly growing. That scenario also occurred during the Depression.   Read the rest »


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Larry Doyle

Larry Doyle A Wall Street veteran's views and instincts on the markets, economy, and all things financial.







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