Weil on Finance, P.M.: Harvard Hedge-Fund Fight
Hello, View fans. No long windups today. On with the links.
Food fight on the Harvard Law School blog
In one corner we have Harvard law professor Lucian Bebchuk and his academician friends, who wrote a paper debunking the myth (well, they said it was a myth) that activist hedge funds cause harm to companies and their long-term shareholders. In another corner we have Marty Lipton (who invented the poison pill) and his law firm Wachtell Lipton, who have been trying to debunk the professors' conclusions by attacking their methodology. Today Bebchuk and his crew struck back: "Wachtell’s memos raise some unwarranted criticisms as well as some relevant points that we ourselves discuss in our study. None of the points raised, however, provides a basis for Wachtell’s appeals for disregarding our empirical evidence and for relying on anecdotes and reported experiences." I'd take Bebchuk in this fight.
Janet Yellen? Larry Summers? What's the difference?
Not much, writes Suzanne McGee at the Fiscal Times. As for the market's rally on news that Summers was withdrawing his name from consideration to be the next Fed chief? Overdone: "Yes, the market had been anticipating that Summers, viewed as somewhat less of a dove on monetary policy, might move to tighten short-term interest rates more rapidly than would Yellen, and might be more aggressive when it comes to `tapering off' the Fed’s $85 billion in monthly purchases of fixed-income securities to support the long end of the bond market. But the reality is that near-term monetary policy under Yellen and Summers likely wouldn’t have been all that different. Whether Yellen, Summers, Kohn, Ferguson or some outside dark horse candidate succeeds Bernanke at the helm of the Fed, that individual is going to find that their freedom of action is rather limited."
Another bearish take on the bye-bye-Summers rally
Mark Hulbert at Market Watch calls this the "What, me worry? stock market." He writes: "Wall Street is now fully ensconced in that alternate reality in which all news is interpreted as a reason to rally. It's nice while it lasts, but it probably won't end well." On a related note, LinkedIn now trades for almost 22 times revenue for the past quarters. But who's counting?
Dodd-Frank like "rearranging the deck chairs on the Titanic"
Here's a good roundup at Corporate Crime Reporter of a conference sponsored by Better Markets, where the panelists included Columbia law professor John Coffee. Five years after the collapse of Lehman Brothers, "we now have to realize that we are seeing administrative paralysis," Coffee said. “Every administrative agency that has put out a broad rule has had to cut it back, sometimes cutting it back 50 percent or more. The agencies are not only paralyzed, they are inundated. They are unable to meet the pace set by Congress. Beyond that, they are extremely risk averse right now. They are focusing on the trivia rather than the broader issues.” It is so not surprising that the Dodd-Frank rules have turned out this way.
So this is what can happen when interest rates rise
The investment bank Jefferies Group, now owned by Leucadia National Corp., said fiscal third-quarter earnings fell 83 percent to $11.7 million, mainly due to declining bond-trading revenue. Where is Helicopter Ben when Wall Street needs him?
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)