Finance

Larry Kudlow Knows What The President Wants To Hear

Donald Trump has precisely one legislative achievement to show for his first 14 months in office, a gigantic tax cut that may prove a total disaster but will at least save him and his ilk many, many billions of dollars over the next few years. The fact that something so fantastically unlikely as comprehensive tax reform came to pass under this most unlikely and erratic of presidents was broadly the doing of one man: former National Economic Council director Gary Cohn. Cohn managed to shepherd this particularly unlovely piece of legislative sausage through the hard way: Getting this particularly fractious Congress to vote it into law, an especially impressive feat given the necessary ideological compromises involved in something like comprehensive tax reform, and its politically-poisonous r...

Nomura Unveils The ‘4 Triggers’ That Will ‘Burst The Data Bubble’

One of the narratives that is quickly becoming a driver of markets is the idea that a confluence of factors have conspired against market darlings like Facebook and Google. Not the least of these factors is politics. As we noted first thing this morning and as we detailed extensively over the weekend both here and elsewhere, the political environment is extremely charged right now, and the details around the Cambridge Analytica story suggest that Facebook is going to get thrown right back into the fray at a time when lawmakers are at their wits’ end. It’s entirely possible that between the Facebook drama, the Uber fiasco, and the focus on cryptocurrency regulation, the tech sector might be headed for a multi-pronged regulatory crackdown that could reverberate through markets thanks to the ...

Mark Zuckerberg’s Week Is Going From Nightmare To “Senator Warren Has A Question”

If, for whatever reason (like say, if you’re embroiled in an increasingly contentious legal battle with a porn star), you think you’re having a bad week, just remember that it could be worse. You could be down $9 billion in two days, which is the situation Mark Zuckerberg now finds himself in as the fallout from the Cambridge Analytica fiasco continues to weigh on Facebook. Just to be absolutely clear, this is rapidly morphing into a nightmare scenario for the company and reports about Cambridge Analytica’s alleged use of “honey trapping” and Ukrainian prostitutes aren’t helping. Although everyone knew it was coming, news that the FTC is set to open a probe hit shares hard first thing Tuesday morning. “The FTC takes the allegations that the data of millions of people were used without prop...

John Paulson Still Has Outside Capital Left To Return

(Getty Images) John Paulson currently manages $9 billion, less than $1 billion of which belongs to people who do not work for Paulson & Co. Seven years ago, he was capably (at times) running nearly $40 billion. So there’s probably not a capacity issue here. And yet: Paulson’s namesake firm, once one of the biggest in the industry, will return money to investors in some funds including the Credit Opportunities, said people familiar with the matter. Investors in that credit fund can transfer their capital to a separate pool or they’ll be forced to redeem. You remember Credit Opportunities? About yea high, made about 600%—and Paulson’s name—when the mortgage crisis hit? Like his somewhat less-successful all-in-on-gold fund, it’s now a JP-only enterprise. Is this a dry run for Paulson &...

Silicon Valley Is Begging For Wall Street-Style Regulation

Facebook shares are down more than 11% this week, after reports have accused the company of failing prevent the surreptitious misuse of data drawn from upwards of 50 million Facebook profiles by Cambridge Analytics, the political communications firm that helped deliver Donald Trump the White House. The latest scandal coming from Facebook has elicited vigorous responses by elected officials and regulators in the U.S. and U.K., with the Bloomberg reporting Tuesday that the FTC is investigating whether Facebook has broken the terms of a 2011 consent decree, which was imposed following revelations that Facebook was sharing data with advertisers without user permission. Many analysts are arguing that the market is overreacting to the news, and that the sharp decline in  Facebook’s share price t...

CIA Director Gary Cohn Was A Thing That Really Almost Happened

When Gary Cohn got the gig directing Donald Trump’s National Economic Council, we had the same feeling that you got when you acted as a reference for your college roommate’s first job; I love the guy, but he can’t be qualified for this gig. But Gary got some things done in the West Wing, and we were even almost sad to see him announce that he would be leaving, especially when we saw who was replacing him. It no longer seemed to matter that Gary wasn’t really an economist or that he had no real government experience. In this short bus of an administration, Gary was a very stable genius. We didn’t even blink too hard when rumors began to circulate that he might become White House Chief-of-Staff. In fact, that job seemed to be more of a fit, one that would allow him to hike up a leg outside T...

Goldman Sachs and the CIA? Gary Cohn was reportedly almost named top spymaster

Former National Economic Council Director Gary Cohn was almost named the head of the CIA, according to Politico, which cited three people closed to President Donald Trump. Politico said Cohn had talked to the president about leading the spy agency. Trump reportedly offered the job to Cohn informally, saying he thought he would be a good fit for the role. Cohn agreed to take it before Trump abruptly changed his mind and offered the role to Gina Haspel after tapping Mike Pompeo to succeed the fired Secretary of State Rex Tillerson, Politico reported. It is not clear why Trump decided to go with Haspel at the last minute, the report said. Cohn — the former No. 2 at Goldman Sachs — resigned as NEC director earlier this month over disagreements with Trump on the implementation of tariffs on ste...

Jimmy Cayne Never Wanted To Be A Bank CEO Anyway

Getty Images There are few unpardonable sins on Wall Street, almost no transgression or evidence of incompetence so serious as to preclude a second (or third or 10th or 150th) chance somewhere, often at your own hedge fund or private-equity firm. Just ask Vikram Pandit or Bob Diamond or Jon Corzine or, at a much less elevated level, literally anyone who has had a red flag about them brought to FINRA’s lack-of-attention. Sinking an icon of American finance, however, comes pretty close. Just ask Dick Fuld, who a decade after the financial crisis and ensuing death of his bank, Lehman Brothers, is running a multi-family office, or at least trying to. Don’t bother asking Jimmy Cayne, however: The former Bear Stearns CEO never got a second chance after leading the firm he’d worked at for four de...

Seeking downside protection, investors show interest in actively managed ETFs

One of the strongest trends of this 10-year bull market has been the shift to passive investing. Trillions in assets have flowed out of actively managed mutual funds and into passively managed exchange traded funds and indexed mutual funds. Last year was no exception, with just under $7 billion flowing out of actively managed funds, and $692 billion flowing into passively managed funds, according to year-end figures from research firm Morningstar. Only the popularity of actively managed bond funds, with $179 billion in inflows, saved active management from a third straight abysmal year. With interest rates rising and volatility up in the markets, however, investors may be shifting away from pure indexing toward more active management of investment risk. “It’s about downside pro...

Opening Bell: 3.20.18

Stocks Struggle After Tech Selloff; Dollar Rises: Markets Wrap [Bloomberg]Trading was mixed and muted in equities across both Europe and Asia following Monday’s selloff, which was sparked by a series of negative tech stories including Facebook Inc.’s data issues and a fatal accident involving an Uber Technologies Inc. self-driving car. U.S. stock futures drifted lower on Tuesday, with contracts for the Nasdaq 100 pointing to more tech declines. Metals were once again under pressure, but Bloomberg’s broader index of raw materials increased. Trade war threat is now Wall Street’s top economic fear, survey says [CNBC]Protectionism tops the list of worries on Wall Street, the survey shows, far outpacing concerns over inflation, terrorism and even the Fed itself.“The market has shifted from a fe...

Expect higher interest rates and smaller gain for stocks in 2018: CNBC survey

Look for higher interest rates and lower stock prices in 2018. That’s the message in the CNBC Fed Survey for March, in which participants also show building concern about additional Fed rate hikes this year. The average forecast sees the yield on the 10-year benchmark Treasury ending the year at 3.17 percent and rising to 3.54 percent next year, about a quarter-point higher than the forecast in December. “When the 10-year goes above 3%, we’ll finally realize the enormous burden we face servicing the national debt,” wrote Peter Tanous, chairman of Lynx Investment Advisory: The median respondent to the survey sees three rate hikes this year and two next year. But the second most-chosen answer is four this year and three in 2019, suggesting that the risks are to the up...

Some GDP Nowcasts

Figure 1: Real GDP growth, actual (bold black), forecast of NY Fed Nowcast 3/16 (green), Atlanta Fed GDPNow 3/16 (red), Goldman-Sachs 3/19 (red), Macroeconomic Advisers 3/16 (blue), Merrill Lynch 3/19 (blue), q/q SAAR. Source: CR, Macro Advisers, Goldman-Sachs. GDP growth in Q1 has been lower in the past years, few consistent with residual seasonality.