Also Noted: Spotlight On... Tech trades hit hedge funds hard News From the Fierce Network:
Today's Top News1. Women executives face added burdens
Edith Hunt, Chief Diversity Officer at Goldman Sachs, has an interesting perch from which to comment on the state of women in banking. She thinks that overall the lot of women at big banks has improved and that the numbers tell the tale. As quoted by Business Insider, "I think we're looking for a point in time when senior management and boards of directors are coming to something that's approaching 40% [female]. I think when you get over 30%, you reach a tipping point where it's really not the woman speaking; it's just a person speaking—she happens to be female…We've made huge strides in terms of numbers but not as much as we need to get to." It would appear that boards are diversifying nicely, as is the rank and file. The real dearth of women remains at the high executive level. Within that elite group, women are still underrepresented, though we hold out hope that the situation will get better with every passing year. At this point, a woman who has made it to the C-suite of a top bank, while definitely an individual, still must carry the burden of being a pioneer. That unfortunately brings a lot of added baggage. If things go south, the media will inevitably couch the news as a setback for all women, which isn't fair. At some point, however, we'll hit the tipping point in the executive ranks that Hunt speaks of. The sooner, the better. For more: Read more about: Wall Street women, gender bias 2. Credit hedge funds under pressure
Credit funds have been hot over the past few years, as they feasted at the trough of the easiest trade in town: falling interest rates. But how life has changed in just a few short months. They're now the victims of what could be a profound rotation out of bonds as QE3 stimulus weakens. One of the victims: Deepak Narula, who rocketed to fame and fortune as head of Metacapital Management, which by some measures was the top performing hedge fund in 2012 with a gain of 41 percent. The firm's $1.5 billion flagship fund was unfortunately down 5.66 percent for the year through June 14, according to Reuters. The fund had a particularly poor May, during which it fell 7.26 percent. Other big-name hedge funds to take some similar hits include Brevan Howard, Bridgewater Associates and BlueCrest Capital Management. For hedge funds that were long on the most risk-sensitive bond products, the time to prove their mettle has arrived. There would appear to be two extremes. They can sit back and hope against hope that the market will reverse itself, or they can aggressively reverse course. All in all, the worst thing would be to short the market aggressively only to see the market recover. In any case, these are the moments that separate the great managers from the good managers from the mediocre managers. Good luck! For more:
Read more about: Credit Hedge Funds 3. Interest rate hike will realign the industry -- or not
Just how profound will the jump in interest rates be? To be sure, rates just might decline over the next week—or not. There's going to be a lot of volatility going forward. But the conventional wisdom at this point is that we're at an inflection point, one that will send rates higher over the long-term with massive consequences across the industry, not to mention the global economy. Wall Street has been through rate hikes before. Breakingviews offers an interesting walk down memory lane: "A sudden jump in interest rates 19 years ago inflicted mega damage. Determining who is getting clobbered is today's parlor game in New York, London and Hong Kong. From the start of 1994 to October, yields on benchmark 10-year Treasury bonds rose from 6 percent to over 8 percent, precipitated by an abrupt hike in interest rates by the Federal Reserve. In the past month, yields on the 10-year have increased from just under 2 percent to 2.6 percent. "Back then a jump in rates inflicted mega damage. Goldman Sachs partners even had to recapitalize their firm. Bank bosses are confident today, saying they're no longer holding inventory and ceded prop trading to hedge funds. If true, maybe they have regulators to thank." So are we in for a repeat of the carnage? That's doubtful this time, but that doesn't mean that the consequences will not be profound over the medium-term. Just about every sector in the banking and financial services industry, at the institutional and individual end user level, will be affected. We'll take a look at the potential effects in various posts over the next few weeks, which will no doubt show that there will be winners and losers and as always some unintended consequences. From the looks of things, this is going to be one wild ride. For more: Read more about: interest rates, bonds 4. U.S. Bank to reimburse military members
Company News: 5. CFTC charges Corzine, O'Brien
As expected, the CFTC has charged former MFGlobal CEO Jon Corzine with violations of law stemming from the futures brokerage collapse in 2011. In something of a surprise, the CFTC also charged Edith O'Brien, the assistant treasurer of MFGlobal for her role in the firm's demise. The agency brought charges (already settled) against the broker deal unit and the holding company. When the MFGlobal circus reached its zenith last year, Corzine and O'Brien were pitted against each other in tense battle of wills. So perhaps it is fitting that they were both charged. Corzine was charged, as previously reported, for his role as a "control person" who essentially let the crisis get so out of hand that customer funds ended up being used to satisfy the brokerages obligations. Some memorable quotes from other executives were included in the release. One said that the firm was "skating on the edge," without "much ice left." Another said that "we have to tell Jon that enough is enough. We need to take the keys away from him." In the last week of October 2011, with cash scarce, the firm repeatedly and unlawfully used customer funds for firm needs, ultimately leaving it nearly $1 billion short of customer funds. In that last week, Corzine "is alleged to have been aware of the firm's true low cash balance, even as he directed the firm to continue paying large obligations without inquiring how the firm could come up with the money to do so." The CFTC also seeks "full restitution and penalties" and trading and registration bans for Corzine and O'Brien. Critics of Corzine and other financial service executives who led failed institutions will only be partially supportive. They have long called for criminal charges to be brought against this group. Corzine might consider himself lucky that these charges were the most that prosecutors could manage. For more:
Read more about: Enforcement Action, MFGlobal Also NotedSPOTLIGHT ON... Tech trades hit hedge funds hard Not too long ago, hedge funds seized up some obvious trades: Short Blackberry and long Apple. Funds rushed in with a zeal matched recently by the Abe trade (short the Nikkei, long the Yen). Unfortunately, neither have turned out to be an unqualified success. That said, short interest on BlackBerry has been hitting new highs. These trades may turn out a lot better than it seemed just a while back. Article Company News:
©2013 FierceMarkets This email was sent to kumaresan.selva.blogger@gmail.com as part of the FierceFinance email list which is administered by FierceMarkets, 1900 L Street NW, Suite 400, Washington, DC 20036, (202) 628-8778. Contact Us Editor: Jim Kim Advertise Advertising: Jack Fordi or call 202.824.5040 Email Management Unsubscribe from FierceFinance Explore our network of publications: | |||||||||||||||||||||||||||
Friday, June 28, 2013
| 06.28.13 | CFTC charges Corzine, O'Brien
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment