from The Great Debate:

What’s a leveraged ETF and what makes it dangerous?

May 30, 2014


Larry Fink is sounding the alarm. The chairman and CEO of $4.4 trillion asset manager BlackRock is worried about leveraged ETFs (exchange-traded funds). Fink thinks they could “blow up the industry.” His statement is a little unclear, but the industry he's referring to is probably ETFs themselves, not the global financial system.

from Counterparties:


May 29, 2014

US economic growth has gone negative for the first time in three years. Revisions to the estimate of first quarter GDP, out this morning, put growth for the first three months of the year an annual rate of -1%. The initial estimate, released at the end of April, had the economy growing just barely, at an annual rate of just 0.1%.

from Counterparties:

Eating cheap

May 23, 2014

Whatever you're spending on this year's Memorial Day barbecue, you can expect next year’s to be even more expensive. The USDA forecasts that beef prices will rise between 5.5% and 6.5% by the end of 2014, after already increasing just under 10% so far this year. Overall food prices are projected to rise at between 2.5% and 3.5%.

from Counterparties:

China’s other internet IPO

May 22, 2014

The Chinese internet IPO you haven’t been waiting for is finally here., whichBloomberg Businessweek’s Bruce Einhorn calls “the closest thing to a Chinese version of”, priced its $1.8 billion offering at $19 a share, above the initial $16 to $18 range. It opened today on the NASDAQ at $21.75 and gained 10% in its first day of trading, valuing the company at approximately $30 billion.

from Counterparties:

Glocalization hits home

May 21, 2014

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For a select few real estate markets, “location, location, location” is taking on a new meaning. Price is no longer a block by block or neighborhood by neighborhood consideration. There is, says James Surowiecki, an emerging global market for real estate. The case study is Vancouver, which has the median income of Reno but the costly property prices of San Francisco:

from Counterparties:

Suisse Crime and Punishment

May 20, 2014

Credit Suisse is the first bank in decades to admit to criminal charges. It has pleaded guilty to helping Americans evade taxes and agreed to pay a $2.5 billion fine.

from Counterparties:

Job insecurity

May 19, 2014

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Even positive news about long-term unemployment is depressing. 3.4 millionAmericans have been out of work for more than 27 weeks, a million less than last year. (27 weeks is the widely used definition of long-term joblessness.) Despite its recent decline, there’s still more long-term unemployment in the U.S now than in any pre-recession period since data-keeping began in 1948.

from Counterparties:

Testing Stress Test

May 12, 2014

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The Tim Geithner legacy project – which began in January 2013 – is entering its third phase: memoir release. Stress Test: Reflections on Financial Crises is out today. Phase one, receiving a glowing review from the president, and two, establishingfavorable consensus opinion, were completed before Geithner even left his role as secretary of the Treasury.

from Counterparties:

Buying a tax break

May 8, 2014

The UK tax rate on profits made from UK patents is just 10%. The nominal US corporate tax rate is 35%. Because of that, US pharmaceutical company Pfizer has spent the last four months trying to acquire London-based AstraZeneca, the maker of heartburn drug Nexium and cholesterol-lowering Crestor. The problem, of course, is that neither AstraZeneca’s board nor the British government seems particularly fond of the tax-avoidance play.

from Counterparties:

Winning BID

May 6, 2014

Seven months ago, Dan Loeb sent an acerbic letter to Sotheby’s, disclosing he owned 9.3% of the auction house’s shares. The Third Point hedge-fund founder demanded several board seats, cost cutting, and the CEO’s resignation.