Weil on Finance: JPMorgan's Big Day
Good morning, Viewfinders. Here's a look at some of my breakfast reading.
Today may be the day for JPMorgan and the Justice Department
Several media outlets are reporting that the bank's long-awaited $13 billion civil settlement may be unveiled as soon today. But keep in mind, it isn't really a $13 billion settlement. Prosecutors lumped together a bunch of different settlements with various government agencies, some of which had little if anything to do with each other, so they could get as big a number as possible. Some of the $13 billion is non-cash. Plus, there still are many other investigations at JPMorgan that haven't run their course, including a criminal probe by federal prosecutors in California.
The anecdotal lead sentence on this story today by Bloomberg News reporters Nick Taborek and Mary Childs says it all: "Carl Giannone says he's given up hunting for quality stocks. Now he's simply riding the wave of upward momentum in the U.S. market." Joshua Brown of Fusion Analytics Research Partners calls the Fed's asset purchases "Bernankecare." The writers note that Fed policies are causing parts of the market to behave strangely: "Stocks of companies with weak balance sheets are rising twice as fast as stronger ones; junk borrowers get rates lower than their investment-grade counterparts did before the credit crisis; and initial public offerings are doubling on their first day of trading."
Geithner's move to private equity
Andrew Ross Sorkin looks at former Treasury Secretary Tim Geithner's move to the private-equity firm Warburg Pincus and asks: Conflict of interest? What conflict? "While his hands may not appear squeaky clean, it hardly seems fair to call them dirty," the New York Times columnist says.
Debunking myths about young companies' valuations
Aswath Damodaran, a New York University finance professor who blogs at Musings on Markets, has a good piece aimed at knocking down misconceptions about valuing young companies: "While it is true that there is more uncertainty about the future prospects of a young company than for a mature business, you can still make estimates of expected earnings and cash flows into the future and value the company, as I tried to do in these spreadsheets to value Tesla and Twitter. You can and should take issue with my assumptions and come up with your own values for both companies, but you cannot argue that these companies cannot be valued."
A nationwide Butterball shortage
Food in the news from the website Delish: "Butterball, the leading producer of those turkeys we all know and love, has a smaller stock of large fresh Butterball turkeys, 16 pounds or more, this year. The company assures customers and retailers, however, this is only for their fresh turkeys over 16 pounds and does not impact their supply of frozen or lower-weight fresh Butterballs. The shortage is limited to Butterball and does not affect any other turkey brands."
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Jonathan Weil at firstname.lastname@example.org