Levine on Wall Street: Another Day, Another Mortgage Settlement
Morgan Stanley is an outlier.
"Morgan Stanley said first-quarter profit jumped 56% as strong results in the company's wealth management business were bolstered by an unexpected rise in fixed-income trading revenue" is not something you'll read about just anyone this quarter. Morgan Stanley had "strong performance in commodities and solid results in credit and securitized products, despite lower volumes across most fixed income businesses," and I guess one strategy for cutting back on fixed-income trading is to keep only the profitable businesses and get rid of the rest. Seems like that would be a more popular strategy.
Bank of America sure likes mortgage settlements.
"Bank of America Corp. is engaged in multibillion-dollar settlement talks with the Justice Department to end investigations into shoddy residential mortgage backed securities," and I was glad to see that I'm not the only person stunned that there can still be more of those investigations. Here is a disbelieving timeline from Businessweek, and here is Reuters with investors worried that the mortgages cases have "become a constant irritant, these things just don't seem to go away." Bank of America seems to pay $10 billion to settle government-sponsored-enterprise mortgage cases every year, and it just announced another $950 million mortgage settlement yesterday (which is itself controversial). The total so far is over $50 billion. My model of Bank of America is that it is a random number generator for paying mortgage settlements, with a bank attached.
NYSE's getting faster.
The New York Stock Exchange bought Algo Technologies Ltd. to build a faster matching engine, because if there's one thing that the zeitgeist demands right now it's faster algorithmic trading on stock exchanges. Wait no entirely wrong zeitgeist, my bad. But obviously there are parts of the world where exchanges are still expected to cater to the high-frequency traders who are their main users and revenue source, and those parts of the world still include the exchanges. Meanwhile I am a bit late to this but here is a speech by an SEC official, and a MarketWatch report on it, pointing out that the high-frequency trading problem of billions of orders placed and cancelled within milliseconds is mostly a myth: "For the second quarter of 2013, more than one third of all displayed quotes and orders in corporate stocks stayed in force for at least 5 seconds before they were canceled. And over 60% stayed in force for at least one half of a second, which is probably the lower bound of human-interaction time." Also Eric Schneiderman is doing some stuff.
Why the Bucks?
If I was a billionaire New York investor I'm not sure I'd want to buy a terrible basketball team in Wisconsin but perhaps that's why I'm not. Avenue's Marc Lasry and Fortress's Wes Edens are up for it. "The Bucks fit Lasry, whose specialty is investing in distressed companies," and I feel like you're supposed to invest in distressed companies so you can have a lot of money and then buy nice things in your free time but, again, my feelings on this matter must be wrong.
Hedge funds are terrible.
"Hedge funds posted their worst first-quarter results since 2008, according to financial data service Preqin," but this tells you nothing, because aggregate statistics like this fail to separate the good hedge funds from the bad ones. Wait, what?
Venture capital for the people.
The case for a universal basic income seems pretty overwhelming to me, but I am a blogger and it may be an idea that appeals especially to bloggers. Here Steve Randy Waldman makes the case on innovation and efficiency grounds. I am persuaded, but then, I was persuaded before I read this too.
Learn "how know-nothing sociopaths rule the business world." Enjoy "Boatloads of Bandwidth." Beware backtesting. A theory of shareholder voting. Another person maybe invented Bitcoin. (But Dorian Nakamoto still probably didn't.) "We're doing something with chicken that no one else is doing," and it's not even the Double Down. Video-game skills peak at age 24. "Free tickets for anyone that can prove they're a latex salesman." Muppet Christ Superstar. The answer to "Ever Wanted to See Bankers Strip?" is no.
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Matthew S Levine at email@example.com
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