Opinion

Ben Walsh

from Counterparties:

Retweet to Wall Street

Ben Walsh
Sep 13, 2013 22:04 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com. After a series of coy comments stretching back to December, yesterday Twitter announced it had filed for an initial public offering. We know this because the company tweeted so, not because the registration documents, or the company’s financial disclosures, are publicly available.

Under the the JOBS Act that President Obama signed into law on April 2012, Twitter’s IPO documents don’t need to be made public until 21 days before the company starts meeting with potential investors.

The filing is not, as it has been variously described, a secret IPO. It’s more of a confidential negotiation process, made possible by the JOBS Act. Matt Levine points out that during Twitter’s extra-quiet period, the SEC can request changes to the company’s filings, which should in theory mean fewer last minute addendums to its prospectus.

Groupon’s founding CEO Andrew Mason pointed out that a little less public scrutiny won’t necessarily mean worse information for investors:

No, it’s not secret – a guide to Twitter’s confidential IPO filing

Ben Walsh
Sep 13, 2013 17:54 UTC

Twitter filed for an initial public offering: we know this because the company tweeted so, not because the registration documents, or the company’s financial disclosures, are publicly available. Twitter didn’t even have to tweet what it did: its not legally required to say that it has filed registration documents with the SEC (it did that voluntarily).

When did the process of filling IPO documents become confidential?

Here’s how the JOBS Act alters the IPO process:

    Its changes only apply to companies with less than $1 billion in annual revenue. Anything more, and the standard IPO process applies: registration documents, including a prospectus and financial details like revenue and profit, are public as soon they are filed with the SEC; and amended with increasing detail as the company gets closer to selling its shares.

    These companies (referred by the law as emerging growth companies) are allowed to file their IPO registration documents confidentially with the SEC.

Inflation is too low; how does it get too high?

Ben Walsh
Sep 13, 2013 13:30 UTC

“Inflation can be too low as well as too high.” That was Fed governor Jerome Powell’s warning back in June. The data show that, based on the Fed’s own target of 2%, inflation is too low:

An interesting question is why post-crisis inflation has been so low, and what causes high inflation. Here’s a rundown of some of the debate.

Low inflation doesn’t seem to be for lack of effort

Mike Konczal made an important point in June. “Inflation is collapsing in 2013”, he wrote, despite the fact that “the Federal Reserve took extraordinary actions at the end of last year to hit its inflation target… The fact that inflation is falling even when more action is being taken should have us questioning whether a 4% move would have any traction”.

from Counterparties:

Golden delicious

Ben Walsh
Sep 10, 2013 22:03 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Apple has decided that there can, in fact, be more than one. The company announced today it is releasing two new iPhone designs: the iPhone 5S and the 5C.

The 5C starts at $99, with contract. In another first for Apple, the 5C comes swathed in variable shades of high molecular mass petrochemical polymers (aka plastic). The more expensive 5S, which starts at $199 with contract, also breaks new visual ground by coming in a golden, vaguely champagney color last seen in mid-1990s Mercedes sedans.

Chart: Selling the headline, buying the complete transcript

Ben Walsh
Sep 6, 2013 17:22 UTC

At the G20 today, Russian President Vladimir Putin spoke about about Syria. His comments were reported by Bloomberg “will provide assistance if the U.S. launches military action against the country [Syria]“, under the headline “U.K. Stocks Drop as Putin Says Russia Will Help Syria“.

Both the FTSE 100 and the S&P 500 dropped as the story was published at about 9:45 EST. At its lowest, the S&P fell 20 points, or about 1.2%, and the FTSE 100 fell 55 points, or about .8%.

The full context of Putin’s comments seemed to be less worrying to international stability than they initially appeared, and in fact were in line with his previous comments on Syria. As this was digested, both markets recovered.

from Counterparties:

G20 economic questions

Ben Walsh
Sep 5, 2013 22:00 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Under normal circumstances, the most important things to happen at a G20 meeting are cordial handshake photo ops. (Here’s our roundup of April’s meeting.) This G20 gathering, hosted by Russia in St. Petersburg, is already looking quite different. Here’s our guide to the major themes being discussed at the G20:

Syria:

Reuters’ Timothy Heritage reports that the split between the US and Russia over Syria is likely to overshadow a meeting that was supposed to be focused squarely on jumpstarting the global economy. The Council on Foreign Relations’ Stewart Patrick says that as a result, this G20 will be the “summit of compartmentalizing... focus on economic recovery while ignoring the elephant in the room”. Sort of the international relations version of how you get along with your family.

from Counterparties:

The BoE orders a 7 and 7

Ben Walsh
Aug 28, 2013 22:06 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Bank of England governor Mark Carney has delivered “a radical change of monetary policy in the world’s sixth largest economy”, says the FT’s John Aglionby. For the first time, the BoE will tie its monetary policy to the unemployment rate.

Unemployment, currently at 7.8%, will have to fall below 7% for the bank to even begin thinking about raising interest rates, Carney said: “When unemployment reaches 7% the MPC [Monetary Policy Committee] will reassess the state of the economy and the appropriate stance of monetary policy”. In addition, Carney set a goal of bank capital ratios reaching at least 7% by the end of 2013; Barclays, Lloyds, and RBS are in total $41 billion short of that mark.

from Counterparties:

The Rocky road away from QE

Ben Walsh
Aug 26, 2013 22:18 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Hanging over this year’s Jackson Hole gathering is the same policy question that has been kicked around in economic circles all summer: How quickly and aggressively should the Fed slow quantitative easing?

Caroline Baum thinks this WSJ headline says it all: “At Fed conference, everyone knows how to make an exit”. The problem, the WSJ’s Victoria McGrane reports in the story that follows, is that while opinions are everywhere, agreement isn't.

from Counterparties:

Enforcement season

Ben Walsh
Aug 20, 2013 22:35 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Phil Falcone has been forced to say he was wrong. The hedge fund manager has settled charges with the SEC that he improperly put investor money to personal use, and the SEC struck a hard bargain: an admission of wrongdoing, a $17 million fine, and a five-year ban from the securities industry, which will probably force him to liquidate his fund. He will be allowed to continue to run his bankrupt wireless network company.

Falcone’s case is the latest in a veritable spree of regulatory enforcement. The SEC’s charges against hedge fund manager Steve Cohen may be on hold, but only because the Justice Department is busy prosecuting its case against Cohen’s firm, SAC. And despite agreeing to a $410 million settlement over energy manipulation charges, at least eight federal agencies are still investigating JP Morgan; the DOJ is also now looking into JPMorgan’s energy market behavior.  The SEC is examining JP Morgan’s Chinese hiring practices, and the bank recently said its regulatory costs might hit $6.8 billion above its current reserves.

from Counterparties:

The London small fry

Ben Walsh
Aug 15, 2013 22:14 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

It “is not who is being charged, but who isn’t". That’s Stephen Gandel’s assessment of the most interesting part of the US government's case against two JP Morgan employees connected to the bank’s $6.2 billion London Whale loss. Reuters’s Emily Flitter and David Henry write that while the government is charging Javier Martin-Artajo and Julien Grout with fraud, "the complaints make only passing reference to their former bosses". Conspicuously unmentioned are Ina Drew, who ran the Chief Investment Office, and Achilles Macris, who oversaw the now infamous derivative position.

David Benoit’s who’s who in the whole saga does give Martin-Artajo and Grout top billing, but it’s unlikely that would have been the case before the charges were filed. CEO Jamie Dimon, Drew, and Bruno Iksil -- nicknamed the "London Whale" for his role in accumulating those outsized derivative positions -- have been far more prominent figures in l’affaire baleine. Iksil has negotiated a non-prosecution agreement with authorities and will be testifying against his former colleagues.

  •