Weil on Finance, P.M.: Government Closes, Life Goes On
Greetings, View fans. Time for more fun with annotated links. Here you go.
The boom-bust-flip phenomenon
New York Times economics reporter Catherine Rampell has a good piece today about the housing market's resurgence and how corporate investors that bought at the trough are making a killing. Nice stat here, from Redfin, an online real estate listings site: "Of the 87,062 foreclosures in the last five years that were bought by corporate investors and have been flipped, about a quarter were sold for at least $100,000 more than what the investor originally paid."
Carl Icahn had Tim Cook over for dinner last night
Icahn said it was "a cordial dinner" with Cook, the chief executive officer of Apple Inc. (The intrigue!) "We pushed hard for a 150 billion buyback. We decided to continue dialogue in about three weeks." So in the old days of corporate raiders, big investors used to buy new stakes, call up companies and demand to be paid greenmail to go away. Now some of them are dubbed "activists," and they call companies and demand large share buybacks to go away. As long as Icahn gets paid, he'll be happy.
A New Jersey auditor gets whacked
Paul Gillis, who writes the China Accounting Blog, has a good piece about the Securities and Exchange Commission's settlement with a New Jersey accounting firm, Patricio & Zhao, which was banned from auditing U.S.-listed companies for three years because of shoddy work for a Chinese reverse-merger called Keyuan Petrochemicals. He notes the Public Company Accounting Oversight Board inspected the firm a few years ago and found lots of problems, "yet until yesterday the firm continued to audit U.S. listed companies. And it was the SEC, not the PCAOB, which pulled the plug" on the firm. Plus, "we don't even know if the PCAOB was in the process of jerking P&Z's registration," because of federal secrecy laws. "Congress needs to remove these restrictions and allow the PCAOB to warn the investing public of substandard audits," he writes. And he's right.
Jeffrey Gundlach becomes an ATM for bond-fund investors
From Alexis Leondis of Bloomberg News: "Jeffrey Gundlach's DoubleLine Total Return Bond Fund, which has beaten 97 percent of rivals over the past three years, had its biggest net withdrawals as investors continued to flee bonds for the fourth straight month. Clients pulled an estimated $2.1 billion from the $35.1 billion fund in September, according to research firm Morningstar Inc." They figure the Fed has to start tapering its bond purchases sometime, even if it waits until after Ben Bernanke leaves office.
Good thing we have the Onion on a day like today
The nation has survived the government shutdown's first day and the start of Obamacare. The Onion, America's finest news source, has a Q&A explaining how the new health insurance exchanges work. For instance, how will your day-to-day life be affected under this plan? Easy: "Imagine a world with one big safety net there to catch you. Now get out there and buy that motorcycle!"
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)