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Author Archives: Felix
Blogonomics: Glam Media
Sam Gustin has an interesting profile of Glam Media’s Samir Arora today, saying that he’s in a battle with iVillage to become "the Web’s most popular site for women". But really Glam Media behaves in many ways much less like … Continue reading
Posted in blogonomics
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When a Curve Steepener Loses $800 Million
In exceptional times such as these, I can understand how highly leveraged credit funds with a large risk appetite could end up losing a lot of money. But this is ridiculous: A $3bn London hedge fund lost more than a … Continue reading
Posted in bonds and loans, hedge funds
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Extra Credit, Thursday Edition
The World’s Scariest Chart: US household debt to GDP. Can’t Grasp Credit Crisis? Join the Club How Apple Got Everything Right By Doing Everything Wrong Casino stock returns in Q1: Not pretty. Extraordinary adventures with the Fed: "Its own resources … Continue reading
Posted in remainders
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Chart of the Day: Mastercard vs Visa
When Mastercard went public in May 2006 its opening price was $40.30 per share; today it’s over $200. What are the chances that something similar is going to happen with Visa? About zero: (Incidentally, American Express is worth about $48 … Continue reading
Fannie and Freddie: The End of the Punishment is Nigh
Justin Fox, like me, welcomes OFHEO’s actions with regard to Freddie Mac and Fannie Mae this morning. But he wants the new extra liquidity to be temporary: If government, and government-sponsored enterprises like Fannie and Freddie, don’t increase their risk-taking, … Continue reading
Posted in regulation
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Bear Raid in the UK
Many people believe that Bear Stearns was brought down by a classic "bear raid" – where a rumor gets started, snowballs, and becomes self-fulfilling. In nervous markets, someone who shorts a bank and then starts a rumor that it’s in … Continue reading
Meriwether Decimates his Partners’ Capital, Again
Bloomberg reports: JWM Partners LLC, the investment firm run by ex-Long-Term Capital Management LP chief John Meriwether, lost 24 percent in its $1 billion fixed-income hedge fund this year through March 14, according to two people with knowledge of the … Continue reading
Posted in hedge funds
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Bear Stearns Shareholder Math
A lot of the back-of-the envelope sums surrounding the Bear Stearns shares assume that Bear’s employees, who own 30% of the outstanding stock, are likely to vote against a deal. But given that New York City’s comptroller has already started … Continue reading
Rant of the Day: Jezebel’s “Dear Ben” Letter
Sophisticated financial analysis it isn’t; heartfelt, however, it is. Moe Tkacik went on the rampage yesterday afternoon, speaking for the unmoneyed everywhere when she told Ben Bernanke to, well, I’ll let her say it: Fuck the Street. Please, Ben Bernanke, … Continue reading
Posted in economics
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Liquidity Returns
Alea doesn’t like it, but I actually find this reassuring: The Federal Reserve is draining U.S. banking reserves temporarily via overnight reverse repurchase agreements, the Federal Reserve of New York said on Wednesday… Such a move typically puts upward pressure … Continue reading
Posted in fiscal and monetary policy
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Whither the Discount Window Stigma?
The WSJ headline today implies great dilemmas on Wall Street. "Firms Wrestle With Loans’ Stigma", it says, explaining: Wall Street firms were reluctant to borrow from the program Monday out of concern it could be seen as a sign of … Continue reading
Posted in banking, bonds and loans, fiscal and monetary policy
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Fannie and Freddie Get a Little Room to Breathe
OFHEO, the regulator in charge of Fannie Mae and Freddie Mac, has designed to loosen a key capital requirement which has been restraining the mortgage giants: To support growth and further restore market liquidity, OFHEO announced that it would begin … Continue reading
Posted in housing
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Bear Stearns’s Share Price: It’s Not Speculators
That confounding Bear Stearns share price! Unsurprisingly, my explanation yesterday for why BSC was trading well above the offer price doesn’t seem to have persuaded everybody (or, frankly, anybody, really). It was mentioned by DealBook, but the "first best explanation" … Continue reading
Extra Credit, Wednesday Edition
Charting The Banking Crisis – A Boomerang Demo: Two wonderful charts. Amid Brokers’ Woes, Investor Accounts Are Mostly Protected Not a bailout: James Hamilton gets it right. More Dissents at the Bernanke Fed: On the usefulness of public hawks. Can … Continue reading
Posted in remainders
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Battle of the Housing Bears
Barry Ritholtz doesn’t like Alex Tabarrok’s "happy talk". Is he talking about this? If the financial markets can predict where and when house prices will stabilize, then credit conditions can quickly return to normal, the economy can expand and house … Continue reading
Posted in housing
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The New Committee to Save the World: Success!
Today’s 75bp rate cut came as no surprise to anybody: if anything, markets were expecting something even bigger. And when markets started trading on Monday morning, the Fed’s interventions and policy changes on Sunday were well known. Which means that … Continue reading
Posted in fiscal and monetary policy
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How Risky are the Fed’s Actions?
Jeff Cane today cites with approval Edmund Andrews: On Sunday, Fed officials raised the stakes by offering investment banks a new loan program without any explicit size limit. These moves, along with a $30 billion credit line to help JPMorgan … Continue reading
Posted in fiscal and monetary policy
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Bernanke Shows a Tiny Bit of Restraint
After a busy weekend, Ben Bernanke is clearly tired of giving the markets absolutely everything they want. Instead, he’s just giving them nearly everything they want. Today’s 75bp cut is actually a 100bp cut in the discount rate, at least … Continue reading
Posted in fiscal and monetary policy
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Explaining the Bear Stearns Share Price
If you head over here, David Neubert has a slightly cryptic explanation of why Bear Stearns shares are trading in the $7 range. After IMing with him, I think I’m clear on what he’s saying, so let me try to … Continue reading
Posted in banking, bonds and loans, stocks
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Open Questions About the JP Morgan-Bear Stearns Deal
Karen Donovan has a good story up about the complex deal to buy Bear Stearns, and all the high-powered legal advice which went into it. For all that legal firepower, however, the agreement seems pretty precarious: "Everything about this deal … Continue reading
Krugman Shouts “Fire” in a Crowded Theater
Paul Krugman has really picked up his game on the blogging front over the past couple of weeks, and I like the fact that he feels comfortable throwing ideas out there. But this morning, in a post headlined "Shouting “fire” … Continue reading
Lehman: Looking Strong on the Repo Front
If you thought a price-to-book league table was arcane, wait till you see what Heidi Moore has come up with: an excess-liquidity-and-other-unencumbered-collateral-to-total-repos league table! I’m impressed. As Heidi explains, the proximate cause of Bear’s collapse was the fact that its … Continue reading
Posted in banking
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The Price-to-Book League Table, Revisited
In today’s earnings report, Lehman Brothers reported that its book value rose one cent to $39.45 per share. The stock is doing great this morning, up $6 or so to $37.80, which puts Lehman on a price-to-book ratio of 0.96. … Continue reading
How Important is JP Morgan’s Option to buy Bear Stock?
There’s one detail of the WSJ’s weekend narrative which is worth its own blog entry: the way in which the deal to buy Bear Stearns was structured. The lawyers seem to have tried very hard to make the deal airtight, … Continue reading
The Scramble to Save Bear
The WSJ has been talking to Bear Stearns directors, JP Morgan executives, Fed officials, and others, and has a wonderful narrative of exactly what happened this weekend, complete with a fantastic lead quote. The overarching impression is of both banks … Continue reading
Posted in banking, regulation
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