Bamboo Innovator

Investors Are Borrowing Like Crazy To Leverage Up Their Stock Market Bets

Investors Are Borrowing Like Crazy To Leverage Up Their Stock Market Bets

Doug Short, Advisor Perspectives | May 25, 2013, 7:06 AM | 3,695 | 7

Note from dshort: One of my economic correspondents, James Ross, called my attention to the fact that the NYSE has released new data for margin debt, now available through April. I’ve updated the charts in this commentary to include the new numbers.

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Bond Turbulence Complicates Life for Japan’s Insurers

May 24, 2013, 8:27 a.m. ET

Bond Turbulence Complicates Life for Japan’s Insurers

By ELEANOR WARNOCK And KOSAKU NARIOKA

TOKYO—Japanese life-insurance companies, among the country’s biggest institutional investors, say market turbulence is making it harder to purchase Japanese government bonds—though recent yield rises may have made domestic debt more attractive.

Yields have gyrated since the Bank of Japan early last month introduced an easing program by which it will buy JGBs equal to more than 70% of all new issuance this year. But very much contrary to the expectations of both the bank and market participants, the overall effect has been higher yields, amid concerns about the program’s effects on the market. Read more of this post

Shareholders? Fuhgeddaboudit! It’s that time of year when shareholders speak their minds at annual meetings. But that doesn’t mean the companies’ boards are always listening.

May 25, 2013

Shareholders? Fuhgeddaboudit!

By GRETCHEN MORGENSON

WE are nearing the end of proxy season, that once-a-year moment when shareholders can speak their minds, sort of, to the officers and directors overseeing their companies. But that doesn’t mean corporate boards always listen.

Consider what happened after the May 14 annual meeting of the CommonWealth Real Estate Investment Trust. Joseph L. Morea, a CommonWealth trustee, was up for re-election, and more than three quarters of the shares voted were cast against him. Under the company’s guidelines, this meant that he had to resign. CommonWealth, as is typical at many companies, requires that its independent directors resign if they don’t receive majority support from shareholders for their re-election. Read more of this post

With The Unwind Approaching, Here Are $18.6 Billion SAC Capital’s Largest Stock Positions

With The Unwind Approaching, Here Are $18.6 Billion SAC Capital’s Largest Stock Positions

Tyler Durden on 05/25/2013 16:46 -0400

Nearly three years ago, following the publishing of “Is The SEC’s Insider Trading Case Implicating FrontPoint A Sting Operation Aimed At S.A.C. Capital?” which exposed the key aspects of SAC’s insider trading strategy, and which linked SAC, and the hedge fund world in general, to expert networks three weeks before virtually anyone outside of the 2 and 20 (or 3 and 50 as the case may be) world had heard of them and before they became a household euphemism for insider trading, we expected the full rabid fury of the world’s best paid legal team to fall upon us. It didn’t, which meant only one thing: we were correct, or they had bigger fish (to avoid harpooning) on their mind. Turns out it was both. In the months and years following our publication, what we speculated has become fact, and as Vanity Fair’s Bryan Burroughs reports, some 71 people have now been convicted or admitted guilt in the case of the government vs Stevie Cohen. But the final blow against the formerly infallible hedge fund that redefined the concept of “information arbitrage”, and whose track record was almost as successful as that of Bernie Madoff, came from Blackstone, which as Reuters reported moments ago, has decided to pull all its money from SAC, which is the official end of SAC as an outside investment asset management operation. Read more of this post

What Detroit crisis? Pension fund trustees spend $22,000 of retirement system funds to hang out in Hawaii

What Detroit crisis? Pension fund trustees hang out in Hawaii

8:08am EDT

By Malia Mattoch McManus

HONOLULU (Reuters) – The city of Detroit may be facing a deepening financial crisis but that hasn’t stopped four trustees of its public pension funds from spending $22,000 of retirement system funds to attend a conference in Hawaii this week.

The trip 4,500 miles west to a four-star resort on the world-famous Waikiki Beach in Honolulu doesn’t sit well with the top officials now running Detroit’s finances under an emergency order from the state of Michigan. Emergency Manager Kevyn Orr has not ruled out a bankruptcy as the city struggles under a $15 billion debt burden, which is being strained further by its hefty pension obligations. Read more of this post

Chinese premier faces clash with local crime gangs; ‘In each of the other five provinces we studied, we found crime syndicates and underworld networks acting in a sort of symbiosis with local states’

Chinese premier faces clash with local crime gangs

May 24, 2013

John Garnaut

The good news for China, and economies such as Australia that rely on it, is that the new Chinese Premier has been conditioning his troops for a bracing round of market-oriented reforms.

”Reforming is about curbing government power, it is a self-imposed revolution, it will require real sacrifice, and it will be painful,” said Li Keqiang, setting the tone with his first comments as Premier on March 17. ”We need to leave to the market and society what they can do well.”

The bad news is that it was easier for Li’s predecessors to give power and resources away than it will be for him to take them back. The post-financial crisis mutation of the China model – rivers of credit, unfettered administrative power and appropriated household land – may have saved the economy in 2009 but it also entrenched a resource-extracting monster that will not easily be constrained. Read more of this post

A tussle in China over the Communist Party bowing to the Constitution; A movement in China to make the Communist Party subordinate to the national constitution has conservatives fighting back

A tussle in China over the Communist Party bowing to the Constitution

A movement in China to make the Communist Party subordinate to the national constitution has conservatives fighting back.

By Peter Ford, Staff writer / May 24, 2013

BEIJING

It is hard to imagine bloggers and tweeters in most parts of the world working themselves into a lather of intellectual excitement about “constitutional government.” Yet in China last Wednesday, the phrase was a trending search term on the country’s most popular social media platform, Sina weibo, yielding nearly 6 million results. By Friday, official censors had deleted nearly three quarters of those comments, in a sign that the subject is of more than academic interest. Indeed, it poses a question central to China’s future: Could the ruling Communist Party maintain its grip on power if it respected the national Constitution? Read more of this post

Beware of ‘Bargain’ Stocks; Why a Low Share Price Alone Doesn’t Make for a Good Value

May 24, 2013, 6:14 p.m. ET

Beware of ‘Bargain’ Stocks

Why a Low Share Price Alone Doesn’t Make for a Good Value

By LIAM PLEVEN

Bargain hunters shopping for underpriced U.S. stocks in the ongoing rally could end up with less than they bargained for. The pool of large-company stocks with prices that are lower than they were at the end of 2012 is getting perilously small. All but 40 of the stocks in the Standard & Poor’s 500-stock index are up so far this year. Just 35 others are up by less than 5%. The S&P 500 has jumped 16%, not including dividends, so far this year. U.S. stocks held firm Thursday despite a 7.3% drop in Japan, though the S&P lost 1.1% for the week. That so few stocks are in the red so far this year suggests the stragglers are unlikely to catch up to the overall market soon, experts say. For investors, that makes the discount bin a potentially risky place to buy. “I don’t believe the laggards are going to arise from the dead any time soon,” says Kim Forrest, a senior equity analyst at Fort Pitt Capital Group in Pittsburgh, which manages about $1.3 billion. Value investors like Ms. Forrest hunt for stocks of companies that are underappreciated and undervalued. It is an approach championed by Warren Buffettand many other bargain hunters. But a low share price isn’t the same thing as a good value, particularly if the weakness reflects some fundamental problem facing a company or its industry. Read more of this post

China’s consumers look for alternatives for their savings and their smartphones, at the expense of state firms

Updated May 24, 2013, 7:03 p.m. ET

China’s Consumers Fight Back, Explore Options

By TOM ORLIK And PAUL MOZUR

BEIJING—On a freezing winter evening, Philip Chow jumped a long taxi line at Beijing’s airport by using an app on his smartphone that signaled to drivers he would pay a tip for a quick pickup. The app, called Didi Dache—Honk Honk, Catch a Cab—is among the latest examples of a new force sweeping China: consumer power. Chinese households are signaling impatience with government controls that cut against their interests. They have started to win important victories, not just finding ways around artificially low fare levels that reduce the number of taxis on Beijing’s streets, but also alternatives to high cellphone costs by state-run telecom firms and low interest on their savings in state-run banks. Read more of this post

Guns and sugar: More governments are insisting that weapons-sellers invest in side deals to help them develop their industries. This is a bad idea

Guns and sugar: More governments are insisting that weapons-sellers invest in side deals to help them develop their industries. This is a bad idea

May 25th 2013 | NEW YORK |From the print edition

IMAGINE that Apple could sell iPhones in Brazil only if it ploughed 20% of its projected revenues there into local technology firms. That may sound absurd, but this is what happens when governments buy arms from foreign contractors. In procurement it is standard to supplement the main deal with a side contract, usually undisclosed, that outlines additional investments that the winning bidder must make in local projects or else pay a penalty. Welcome to the murky world of “offsets”.

The practice came of age in the 1950s, when Dwight Eisenhower forced West Germany to buy American-made defence gear to compensate for the costs of stationing troops in Europe. Since then it has grown steadily and is now accepted practice in 120 countries. It has its own industry newsletter and feeds a lively conference circuit. The latest jamboree, hosted by the Global Offset and Countertrade Association, was held this week in Florida. Defence executives, officials and middlemen gathered there amid forecasts that the industry could double in size over the next few years. Yet its very structure serves to mask a build-up in the unrecognised financial liabilities of companies. It also, critics argue, fosters corruption, especially in poorer parts of the world. Read more of this post

China’s SOEs face poor profit prospects

China’s SOEs face poor profit prospects

English.news.cn   2013-05-24

BEIJING, May 24 (Xinhua) — With China’s state-owned enterprises (SOEs) posting growth of just 5.3 percent from January to April this year, prospects for the SOEs’ profitability in 2013 remain poor, analysts said. The SOEs saw their total profit growth slow to 5.3 percent year on year to reach 689.13 billion yuan (111.32 billion U.S. dollars) in the first four months, according to the Ministry of Finance (MOF). The growth rate was lower than the 7.7-percent increase recorded for the first quarter and average growth of 5.8 percent in 2012, official data showed. The SOEs lost their position as the country’s most profitable sector in 2012, when China COSCO Holdings Co., the country’s largest shipping company, lost 9.56 billion yuan after a deficit of 10.45 billion yuan for 2011. Read more of this post

Phil Mathews, the Sydney-based hedge fund manager of Sabre Fund nominated by Barron’s as the best performing manager in the world, is under investigation by the corporate watchdog ASIC

Hedge fund manager under investigation by ASIC

PUBLISHED: 16 HOURS 9 MINUTES AGO | UPDATE: 4 HOURS 47 MINUTES AGO

Exclusive | Reclusive hedge fund manager Phil Mathews, who made his fortune punting on speculative energy stocks, is under commercial pressure and his trading practices are being investigated by the corporate watchdog.

Phil Mathews’ $1 billion oil win

Alan Kohler10 Jun 2008, 7:35 AM1

Phil Mathews, the Sydney-based fund manager nominated by Barron’s as the best performing manager in the world, seems to have made a billion dollars in May alone from oil futures. It looks like he is now personally worth as much as $2 billion as a result of his incredible oil bet. That would make him Australia’s 13th richest person, just ahead of Lang Walker and behind John Gandel, except the BRW rich list editors haven’t discovered him yet. His Sabre Fund ended April with $906 million; it is now worth around $2 billion. He has told me that the three funds he manages are now worth around $3 billion. About two-thirds of the money in the funds is believed to be in his name. Read more of this post

With almost two-thirds of Australia’s top 100 companies listed on the stock exchange have subsidiaries in tax havens or low-tax jurisdictions, there are fears the structures are being used to minimise tax

Island allure: The tax secrets of big business

May 25, 2013

Georgia Wilkins and Ben Butler

With many of Australia’s largest companies owning offshore subsidiaries in exotic locations, there are fears the structures are being used to minimise tax. ‘The rules… were developed for the industrial age’ said Assistant Treasurer David Bradbury. Very few Australians will have heard of Burdekin Investments, one of the thousands of low-profile post-box companies that makes its home at Ugland House, a resort-style office building in George Town, the capital of Caribbean tax haven the Cayman Islands. It keeps a much lower profile than its parent, Australia’s biggest company, Commonwealth Bank, whose logo is proudly borne by the group’s branches on shopping strips across the country. But thanks to tax authorities and governments desperate to plug budget gaps, tax-haven companies such as Burdekin are getting more attention. There have already been investigations into the tax paid by technology multinationals in Britain and Australia, and this week the US followed suit, with the powerful Senate permanent subcommittee on investigations inquiring into the tax affairs of Apple.

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Newstapa, also known as the Korea Center for Investigative Journalism (KCIJ), is at the center of a storm of controversy after it published the first list of 245 Koreans who own offshore front companies

2013-05-23 17:07

‘Newstapa’ rocks nation

By Kang Hyun-kyung

Newstapa, also known as the Korea Center for Investigative Journalism (KCIJ), is at the center of a storm of controversy after it published the first list of Koreans who own offshore front companies.

The independent Internet news provider is the only Korean media outlet which is part of the global project, “Secrecy for Sale: Inside the Global Offshore Money Maze,” spearheaded by the International Consortium for Investigative Journalism (ICIJ). Read more of this post

China Plans to Reduce the State’s Role in the Economy? Prime minister Li Keqiang’s speech to party cadres contains some of the boldest pro-market rhetoric they have heard in more than a decade

May 24, 2013

China Plans to Reduce the State’s Role in the Economy

By DAVID BARBOZA and CHRIS BUCKLEY

SHANGHAI — The Chinese government is planning for private businesses and market forces to play a larger role in its economy, in a major policy shift intended to improve living conditions for the middle class and to make China an even stronger competitor on the global stage.

In a speech to party cadres containing some of the boldest pro-market rhetoric they have heard in more than a decade, the country’s new prime minister, Li Keqiang, said this month that the central government would reduce the state’s role in economic matters in the hope of unleashing the creative energies of a nation with the world’s second-largest economy after that of the United States. Read more of this post

Myanmar’s currency has plunged more than 7% over the past month to the lowest since it was floated last year, raising concern about economic stability in Asia’s newest democracy

Saturday May 25, 2013

Kyat slumps as imports flood into Myanmar

YANGON: Myanmar’s currency has plunged more than 7% over the past month to the lowest since it was floated last year, raising concern about economic stability in Asia’s newest democracy.

The drop coincides with a construction boom in Myanmar’s commercial capital, Yangon, which is fuelling demand for dollars as builders import equipment and materials, part of a scramble by investors to tap one of the world’s last frontier markets after an easing of sanctions by Western countries.

Money changers such as Kyaw Naing say people are hoarding dollars, expecting further rises, in the first major bout of currency speculation since Myanmar emerged from military rule in March 2011 and introduced political and economic reforms. Read more of this post