RSS Feed
Twitter
Facebook
Email
HomeCambridge Place Drops Napalm on Wall Street
Posted by Larry Doyle on July 12th, 2010 7:10 AM |
To this point in our economic crisis, Wall Street and Washington have utilized the ‘perfect storm’ excuse to cover themselves from investors’ cries of negligence, incompetence, and potentially corruption. Despite those cries, America has seen few, if any, credible and comprehensive legal complaints brought on behalf of investors. Select investor suits have largely been adjudicated on behalf of the defendants, those being Wall Street banks and brokers, under the mantle that sophisticated investors are responsible for all investment analysis and live with the consequences. Will Wall Street always be accorded the cover of ‘caveat emptor’? If so, then our markets are a much riskier proposition than most investors would appreciate.
I have been surprised to this point that more investors have not filed suit against Wall Street banks for willful and wanton misrepresentation of risks in the underwriting of an array of securities. Well, I am surprised no longer as a large mortgage investor, Cambridge Place Investment Management based in Concord, MA, recently dropped a napalm bomb on Wall Street. (more…)
Stephen Roach Provides a Wealth of Sense on Cents
Posted by Larry Doyle on July 9th, 2010 10:23 AM |
The Wall Street Journal just released a fabulous interview with Stephen Roach, chairman of Morgan Stanley Asia and soon to transition to Yale University. Roach has always been one to speak his mind, but he strikes me as being even more forthcoming in this interview. What does Roach have to say? Let’s navigate, Stephen Roach: The Alan Greenspan of Asia?,
On the likelihood of a “double-dip” in the U.S.:
Roach: I’d give it a higher probability than most, maybe 40% at some point over the next year. We have a weak recovery, weak labor market, weak consumer purchasing power…and a consumer that’s unable to rely on property and credit bubbles to support consumption anymore. So if you have a disappointing consumer and any kind of unexpected shock you could go down again. […] Double-dips are not as infrequent as you might think…Weak recoveries leave you vulnerable to shocks. (more…)
IMF Hedging on Global Recovery
Posted by Larry Doyle on July 9th, 2010 7:08 AM |
Do we truly need to focus on developments within the emerging economies of Asia or sub-Sahara Africa? I mean, you are probably thinking that we have enough on our plates right here at home to spend anytime thinking about economic developments half a world away. Why do we need to care, and why do we need to be aware of global economic developments? For the very simple reason that in a global economy overwhelmed by massive debts and limited pools of private and sovereign credit, what happens over there very clearly impacts us right here at home.
On this note, let’s review an International Monetary Fund report released yesterday. The IMF writes, World Recovery Continues, But Risks Increase:
…despite the stronger than expected first half recovery, the IMF warned that uncertainties surrounding sovereign and financial sector risks in parts of the euro area could spread more widely, posing difficulties for both financial stability and the economic outlook. (more…)
What Does Rick Davis Think About Yesterday’s ICSC Report?
Posted by Larry Doyle on July 8th, 2010 4:17 PM |
When I see any economic data addressing consumer retail activity, I immediately think of Rick Davis and his fabulous work at Consumer Metrics Institute. On that note, and given yesterday’s strong upward move in the market driven largely by a positively perceived ICSC report, I went straight to the source and asked Rick for his thoughts. I had the following exchange today:
Rick,
Any quick comments or thoughts on the report released by the ICSC? I
know that the report captures same store sales which makes for a big
disqualification and is not properly captured but any thoughts you may
have are always deeply appreciated.
Thanks.
Larry (more…)
Is Washington Enacting Financial Regulatory Reform or Merely ‘Studying’ It?
Posted by Larry Doyle on July 8th, 2010 1:27 PM |
How often have you experienced a situation in which somebody tries to project an air of leadership while truly dodging an issue? In the course of my career, I have witnessed this reality all too often. When and why does this occur? Typically, managers who are weak and overly political play this card. Washington plays this game all the time. The Obama administration has made an art of forming committees to study issues.
Our ‘so called’ leaders would like to project themselves as real leaders doing the people’s business, meanwhile they are beholden to other constituencies. God forbid they actually take a stand and show their true mettle. So we witness our politicians agreeing to ‘study’ issues, which is more often the equivalent of putting issues on the back burner or letting them die on the vine. Who wins? Lobbyists. Who loses? Average Americans. Who tries to save face? Our political cowards. (more…)
Kevin Dillon Meet Peter Sivere
Posted by Larry Doyle on July 8th, 2010 7:10 AM |
A recent headline in my local newspaper highlights a whistleblower case involving JP Morgan and an employee named Kevin Dillon. The article, JP Morgan Employee Files Whistle-Blower Lawsuit, details how Dillon was rebuffed while he attempted to report alleged accounting improprieties by a Texas based hedge fund, Highland Capital Management. This fund has a prime brokerage relationship with JP Morgan.
Dillon has brought suit against JP Morgan for alleged mistreatment as a result of his blowing the whistle. Dillon and JP Morgan are certainly not the only individuals and firms involved in an employee dispute over procedures and treatment. So, why am I writing about this case? For the very simple reason that Mr. Dillon will hopefully read my commentary and know that he is not the first individual involved in a whistleblower dispute with JP Morgan.
Regular readers of Sense on Cents may recall the story of Peter Sivere, a JP Morgan employee who blew the whistle on his employer for allowing after hours trading of mutual funds by a high profile hedge fund. In the process of performing his duties, Sivere engaged attorneys from the SEC. What happened in the midst of engaging these attorneys? (more…)
Baltic Dry Index Submerges
Posted by Larry Doyle on July 7th, 2010 12:39 PM |
What happens when consumer demand drops off a cliff as it has over the last quarter? Shipments of goods and raw materials will likely follow. How are those shipments measured? Let’s check in on trends and developments within the Baltic Dry Index.
The Financial Times highlights the fact that the BDI is submerging precipitously and writes today:
…worrying signals about the global recovery remained. The Baltic Dry Index, a gauge of dry bulk commodity shipping costs seen by many as a leading indicator for growth, fell for a 29th successive session to its lowest level for more than a year.
Here is a chart of the BDI relative to gold over the last 18 months:
That recent submersion of the BDI is clearly sending a strong signal as to the grinding halt of the global economy.
Can you spell disinflation if not outright deflation? Start with BDI and go from there. In fact, given these developments in the BDI, I would expect that gold may have further downside from current levels.
LD
Please subscribe to all my work via e-mail, an RSS feed, on Twitter and Facebook.
