Let's skip straight to the punch line: You know those two million fake deposit and credit-card accounts ginned up by Wells Fargo employees to meet sales quotes?
The ones that sent the bank's reputation from first to worst in record time?
The ones that are calling into question the firm's entire aggressive cross-selling business model?
And making people wonder if even Chairman and CEO John Stumpf's well-compensated head should roll?
Well, the bank had determined that the whole investigation into the practice was "not material" enough to disclose to investors in regulatory filings. Sure, at $185 million the legal slap is less than 2 percent of last quarter's net income and thus arguably not a "material" hit to the company's bottom line. But it sure is a material hit to the notion that Wells, Warren Buffett's favorite bank, is a choirboy compared with the rest of the big banks.
So in recapping a short week's worth of financial news, it's clear that the cross-selling of Wells Fargo's reputation for a boiler-room culture of oppressive sales quotas is the Trade of the Week. Don't try this one at home, folks.
This type of story is ever more shocking when it happens to what was otherwise considered a healthy and wholesome brand. As healthy and wholesome as, say, Chipotle was -- at least until something about the business started making people sick to their stomachs.
Speaking of Chipotle, Pershing Square's Bill Ackman made headlines again this week by taking a 9.9 percent stake in the burrito maker. Gadfly's Shelly Banjo and Tara Lachapelle were skeptical and called it a "recipe for indigestion." A Stifel Nicolaus analyst also was skeptical, saying the activist's position increased Chipotle's "tail operational risk." (I'm not sure if that was meant to be a joke about the main symptom of E. Coli, but if not I'm calling dibs on it right now.)
Though Ackman's other big bet is on Valeant Pharmaceuticals, and that company's Xifaxan drug sounds like the perfect chaser to anyone who's eaten a bad burrito and needs to medicate against "tail operational risk." So maybe all the pieces of the puzzle are coming together nicely for Ackman. Also, Chipotle and and an Alphabet moon-shot project are teaming up to -- I'm not making this up -- deliver burritos to college kids by drone. And what could possibly go wrong with a business model involving Chipotle burritos, drones and college kids with late-night munchies?
Speaking of things going wrong, something went terribly wrong with the stock market at the end of the week as benchmark indexes sank the most since people still cared about Boris Johnson. Higher interest rates and lost faith in central banker benevolence are being blamed. But me? I blame those pesky Bollinger Bands, natch.
This headline can't be helping investors' mood much: "North Korea Says Tested Nuclear Bomb, Can Miniaturize Arms." And I hate to start conspiracy theories, but it makes you wonder if maybe they tested their technique for miniaturizing arms on Donald Trump's hands?
This week we learned of one tricky trade that's proving hard to pull off in Ohio, as Polly Mosendz reported. It's the sale of a seven-story office building that was headquarters for the Longaberger Company and looks like a giant replica of the company's wicker baskets. I see two possible ways to resolve this. The first would be to ask North Korea to miniaturize the building to the size of a normal basket. But a more appealing outcome for the poor Cushman & Wakefield agent in charge of selling this ridiculous building would be to head directly to Wall Street and pitch it to the quants at Goldman Sachs and Morgan Stanley, who love to weave baskets holding all manner of securities and warring currencies and risk premia and everything else they find lying around markets. What better headquarters could these basket cases ask for?
Since it was a short week, we might as well wrap up the most important news outside of the financial pages as well. First, the New York Times is really flooding the zone on these creepy clowns that are scaring the pants off everyone in the Carolinas and even fright master Stephen King is reportedly creeped out.
And finally, speaking of creepy clowns, heretofore unknown columnist Dave Hon created quite a buzz by writing a piece headlined: "Why I'll never date a feminist." Leading feminists seemed to unanimously confirm his main thesis: He'll definitely never date a feminist.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the author of this story:
Michael P. Regan in New York at firstname.lastname@example.org
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