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The DOJ’s unprecedented failure to prosecute big finance
Capital Markets
<p>“Justice is the end of government. It is the end of civil society.”</p> <p>- Federalist No. 51<br /> Executive Summary<br /> President Obama channeled the rhetoric of the Occupy Movements, blaming the worldwide financial collapse on “the reckless speculations of the bankers." Large financial institutions, banks, investment houses, and Hedge Funds are alleged to have knowingly committed fraud. Attorney General Eric Holder explained the challenge facing the newly minted Financial Fraud Task Force in 2009.</p> <p>We face unprecedented challenges in responding to the financial crisis that has gripped our economy for the past year. Mortgage, securities, and corporate fraud schemes have eroded the public's confidence in the nation's financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street Unscrupulous executives, Ponzi scheme operators, and common criminals alike have targeted the pocket books and retirement accounts of middle class Americans, and in many cases, devastated entire families' futures. We will not allow these actions to go unpunished...This task Force's mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening.</p> <p>Despite Attorney General Eric Holder’s heated rhetoric promising to hold Wall Street accountable, an investigation into the Department of Justice's handling of the 2008 financial crisis found that:</p> <p> The Department of Justice has not filed a single criminal charge against any top executive of an elite financial institution.<br /> Attorney General Holder, Associate Attorney General Thomas Perrelli, Associate Attorney General Tony West, and Deputy Associate Attorney General Karol Mason all came to the DOJ from prestigious white-collar defense firms, where they represented the very financial institutions the DOJ is supposed to investigate.<br /> Top DOJ officials played prominent roles in his 2008 campaign. Holder co-chaired the campaign with Tony West, the DOJ’s third highest official.<br /> No other modern administration has staffed the DOJ with big money fundraisers. Holder bundled $50,000 for Obama’s 2008 campaign, while Perrelli, West, and Mason all bundled $500,000 for the campaign. West also helped raise an estimated $65 million in California.<br /> Washington's “Revolving Door" is at work in the DOJ. Top Iustice officials came from and returned to law practices where they defend the financial institutions the Do] is tasked with prosecuting.</p> <p>DOJ - Historical Narrative<br /> The Obama Administration's relationship with Big Finance is not just Washington as usual. In 2008, Obama's largest private source of campaign funding came from Goldman Sachs Group Inc (NYSE:GS) executives. Candidate Obama outraised McCain on Wall Street - around $16 million to $9 million. Although Obama told Wall Street executives, "My administration is the only thing between you and the pitchforks," it appears as though the President may be shielding Big Finance from anything like a severe accounting.</p> <p>While the Justice Department is at present dominated from the top with corporate attorneys, whose links to the very financial institutions they are charged with investigating create conflicts of interest, Presidents George H.W. Bush, Bill Clinton, and George W. Bush hired experienced prosecutors and attorneys to prosecute the financial titans who caused the Savings &amp; Loan, Enron, and WorldCom crises.<br /> Financial fraud pro</p>
Daily Scan: Shenzhen tanks 6.7%; Europe edges up
Capital Markets
<p>Updated throughout the day</p> <p>September 14</p> <p>Good evening everyone. Despite a small pop at the open, Chinese shares ended the session deep in the green today largely thanks to yesterday’s mixed data as well as the upcoming Fed decision. As always, China managed to drag down the rest of Asia again, though Hong Kong proved surprisingly resilient to its neighbor’s clutch:</p> <p> Hang Seng Index: +0.27%<br /> Hang Seng China Enterprises Index: +0.11%<br /> SHCOMP: -2.67%<br /> SZCOMP: -6.65%<br /> Nikkei 225: -1.63%<br /> TOPIX: -1.20%<br /> Straits Times Index: -0.32%</p> <p>European markets meanwhile are doing much better with the FTSE 100 climbing 0.58%, the DAX jumping 0.26%, and CAC edging up 0.21%. Here’s what else you need to know:</p> <p>Malaysia pumps $4.6b into stock market. The Malaysian government is spending 20 billion ringgit ($4.6 billion) on boosting shares and is cutting taxes for manufacturers. The ringgit lost 20% of its value against the dollar this year and a 9% fall in its stock market. BBC</p> <p>Japan industrial production falls short of estimates. The land of the rising sun’s industrial output fell -0.8% last month, worse than the preceding month’s -0.6% reading and missing estimates of a -0.6% fall. Investing</p> <p>Aussie PM challenged for leadership. Australian PM Tony Abbot has been challenged for his job by senior minister Malcolm Turnbull, who says the country needs a "new style of leadership". BBC</p> <p>UK’s second biggest party picks left-wing leader. Jeremy Corbyn has become the leader of the UK’s Labour Party. Initially a rank outsider, the socialist bagged 60% of the vote on a wave of grassroots support. Runner-up Andy Burnham, has been named shadow Home Secretary. Independent</p> <p>Egypt forces kill Mexico tourists. Egyptian security forces killed at least 12 people after mistakenly opening fire on a caravan of tourist vehicles in the country’s Western Desert late Sunday night.10 others were injured. New York  Times</p> <p>Japan’s Mount Aso erupts. A volcano on Japan's southern-most main island of Kyushu has erupted, sending up huge plumes of grey ash and smoke. Mount Aso is one of the most active peaks in Japan but is also a popular hiking spot. ABC</p> <p>China factory output and fixed-asset investment data misses estimates. China’s been punching in some disappointing data lately and here’s the latest. The nation’s industrial production grew 6.1% from the year before in August, slightly better than July’s 6% climb but well below forecasts for a 6.6% rise. Fixed-asset investment meanwhile jumped 10.9% year-on-year in January to August, lower than January to July’s 11.2% climb and slower than what analysts had expected. Retail sales came in strong though, surging 10.8% from the year before and besting the 10.5% growth posted in July. Wall Street Journal</p> <p>Germany </p>
Weekend Scan: Fed meets to set rates; Fedex reports quarterly earnings
Capital Markets
<p>The top news of the week won't come until Thursday afternoon, when the Federal Reserve will reveal its latest interest rate policy. Until then, market watchers will have the earnings of Fedex to chew on. The air freight company is considered a bellwether of the economy. The Estimize consensus for the fiscal first quarter: $2.46/share, up fro $2.10 a year earlier, on revenues  of $12.273 billion, up from $11.7 billion in 2014.</p> <p>Will they or won't they? The Federal Reserve Board meets  on Sep 16-17; Chair Janet Yellen will hold a news conference after the release of the FOMC policy statement at 2:00 p.m. ET. Markets are split on whether the Fed will hike interest rates 25 basis points, the first hike since 2008. The economy is expanding and job formation looks good. But the dollar is strong and China is faltering and various economic data in the U.S. continue to disappoint. What's a central bank to do? The move, if it comes, would pack a powerful psychological punch even though interest rates remain abnormally low.</p> <p>Germany initiates temporary border controls. The Interior Minister Thomas de Maiziere said migrants couldn't choose their places of refuge and began enforcing border controls with Austria after 13,000 migrants arrived on Saturday. Germany is expecting 800,000 migrants this year. BBC</p> <p> Flavia Pennetta wins women's grand slam. The Italian player snagged her first Grand Slam and announced her retirement. The No. 26 seed defeated Serena Williams in a stunning upset to advance to the finals. MarketWatch</p> <p>Died: Moses Malone, NBA Hall of Famer.  At the age of 60. Known as "Chairman of the Boards," Malone was a three-time MVP winner. Wall Street Journal (paywall)<br /> You won't believe this:<br /> The secret sex life of a feared al Qaeda operative. Anwar al-Awlaki, the American-born jihadist, preached strict Islam but the FBI caught him again and again patronizing prostitutes. After Osama bin Laden, he was one of the most feared al Qaeda leaders.  New York Post</p> <p>&nbsp;</p> <p>Photo: Brooking Institute</p>
Barclays to allow charities to accept bitcoin -- but why?
<p>British bank Barclays has announced that it would allow charities to accept bitcoin, reports Coindesk.</p> <p>Banks have been jumping into bitcoin as some kind of savior for financial services and the monetary system. Banks, the ultimate intermediary, are hawking the anti-intermediary.</p> <p>But the truth is, they just haven't found any really great uses for it yet. The best case for it so far has been Silk Road. And, well, we know where that led. Argentina is another case where bitcoin is gaining traction -- the monetary unit there is so subject to inflation, who would want to hold it for more than a nanosecond?</p> <p>It's just not clear why a donor would prefer to donate to a charity via bitcoin. Does anyone have any thoughts?<br /> Photo: Antana</p>
A walk down memory lane: New York 1977-82, a carefree time
Lifestyle, 4:01
<p>&nbsp;</p> <p>This Sunday’s NY Times Magazine has articles on nostalgia for the period 1977-1982 (roughly). The pieces are all about the arts and gay life and the interesting turmoil before the origins of AIDS were well understood.</p> <p>But that side of NYC ignores the majority of us who, even though interested in and diverted by the arts scene, worked in office buildings as accountants, lawyers, bankers, ad people, and business managers. Some of us remember the time fondly for different reasons than the artists that The Times depicts. (Personal confession: I was in my 30s, in love, lived in Manhattan, and had a good job, so what was not to like?)</p> <p>From an economic point of view—particularly the economics that impacts one’s life and work, 1977 to 1982 was a unique time. NYC had required state assistance to pay its debts in 1976. The City’s elites therefore had lost some swagger. Hugh Carey had come to office as Governor, oddly not knowing how the machine had worked under Nelson Rockefeller, and uncertainty reigned. Abe Beame, a nice little man, had been mayor from 1974 to 1977. He had been ineffectual and was replaced by the bumptious Ed Koch, who seemed to give N’Yorkers renewed optimism.</p> <p>Nevertheless, stagflation reigned in the nation, and Jimmy Carter appeared incapable of dealing that or with the standoff in Iran. He used the word economic “malaise”.</p> <p>In context, things did not seem right economically, and neither the city nor the nation was booming. But important things were happening nevertheless, especially in the field of women’s rights, where women were moving forward both socially and in the workplace, at unprecedented speed. There were all kinds of pushes and pulls within the women’s movement, but its power and thrust were the symbols of the late 1970s.</p> <p>For those of us out in the world earning a living and coming home to our families, it was an ambiguous time. For families living in the suburbs and commuting, it was the beginning of the time of prevalent divorce and family break-up. For those who, like me, went through that process early, it was a time when love could be found everywhere. AIDS was not yet a significant restriction, harassment in the workplace did not include consensual sex or flirting that might lead to it, and offices often were more congenial and less competitive places.</p> <p>Work ended around 6 or 7 pm most days for most people. No one carried a cell phone or pda. There was time for love or family—or even a hobby, perhaps. Most of us did not make as much money as we would make after 1982, but the pressure of work was less.</p> <p>The blackout of 1977 is remembered for the violence in a few neighborhoods, but in most neighborhoods, it was a time of cooperation, not looting. The Indian guy who ran our corner store stayed open late and sold every flashlight, battery, etc., he had—at regular prices, no gouging.</p> <p>1982 indeed was a transformational year. It was the year that greed become fashionable and changed NY. The Reagan Administration favored greed, in August the stock market, after close to a decade of doldrums, took off upwards, and greed was in the air everywhere. Law firm partnerships stopped being as congenial, workplaces became more cut-throat. As I told a client over dinner one evening that year, ‘The Great God Mammon is on the loose.”</p> <p>In retrospect, I guess I was right. And mammon has been more influential ever since.</p> <p>The bookends of the assistance for NYC and the blackout on one end, and the ascendancy of Mammon, fear of AIDS, and sexual harassment restrictions in the workplace on the other, made 1977-1982 a special little time. And those of us who were in love in tho</p>
NFL players get financial advice from Morgan Stanley
Lifestyle, 4:01
<p>Not everyone can be Tom Brady, in looks, skill, or paycheck.</p> <p>For the less fortunate pro-football players, it pays (literally) to be financially savvy. A player on an NFL practice squad makes a minimum salary of $6,600 per week during the 17-week regular season, reports Markets Wired. An annual salary of $112,200 isn't bad, but NFL players can get cut during the season without guarantees. And being on a practice squad is no long term career path.</p> <p>Morgan Stanley and former athletes Bart Scott and Antoine Walker have started a financial education program explicitly for pro-athletes looking for a little guidance. Financial education is important for anyone, but it's key for young athletes and prospects not ready for careers that typically last less than four years, says Drew Hawkins, managing director and head of Morgan Stanley's Global Sports &amp; Entertainment division. A six-figure paycheck is huge for a young 20-something, until it's gone before he's 30. Teams agree. The Seattle Seahawks, Jackson Jaguars, and some NCAA programs are already partnered with the wealth management firm to guide their players.<br /> Photo: Thomson20192</p>
Nouriel Roubini would like to soothe weary Fashion Weekers in his brand new hot tub
Lifestyle, 4:01
<p>Nouriel Roubini has always been known as a ladies’ man. His old Tribeca loft was decorated with plaster vulvas and he once told the New York mag that he was “a 10 girls to one” kinda guy.</p> <p>Things have changed in the past few years however. New York City’s Department of Buildings forced him to remove his giant rooftop hot tub – ending an era of al fresco hijinx for him – and his legendary bacchanalias have mysteriously kept off the rags.</p> <p>He has a new tub now though, as well as a pretty clever way to lure him some fun, according to Page Six:<br /> “Dr. Doom” Nouriel Roubini, who is equally known for his model-packed hot tub parties at his Manhattan apartment as for his market predictions, is generously offering his pad for soothing “special meditation sessions” — plus a dip in the tub — during New York Fashion Week.</p> <p>Famed economist Roubini — whose boisterous hot tub bacchanals have been a steaming source of anger for his East Village neighbors — will be hosting a meditation session with the Path at his triplex penthouse on Tuesday, followed by a promised plunge in his hallowed Jacuzzi.</p> <p>According to an e-mail sent out by the Path, which teaches ancient meditation techniques, “The sit will take place at sunset, and everyone who joins will be invited to stay after to enjoy gorgeous views and a new rooftop hot tub.”<br /> Oh, and he wants you to pay $20 for the pleasure too.<br /> Photo: International Monetary Fund</p>
Celebrities join Cantor and BGC in remembering 9/11
Lifestyle, 4:01
<p>Cantor Fitzgerald and BGC Partners hosted their annual Charity Day last Friday and while you might think red carpet events attract celebrities, this was something else.</p> <p>Margot Robbie, 50 Cent, and A-rod were among the many A-listers who manned the phones and took trades in New York, while over in London, Emilia Clarke, Tom Hardy, and Samuel L. Jackson helped Sir Ben Kingsley, HRH the Countess of Wessex, and many others raise cash.</p> <p>Here are a few pics from the event’s Twitter page:</p> <p>Thank you to all who make this such a special day each year! #NeverForget Contribute at<br /> — Cantor Charity Day (@CFCharityDay) September 11, 2015</p> <p>Always a pleasure to have @cturlington at #CFCharityDay! @everymomcounts</p> <p>— Cantor Charity Day (@CFCharityDay) September 11, 2015</p> <p>A huge ? to @cocorocha for joining us at @BGCCharityDay in support of @solvekidscancer! #CantorRelief #NYC</p> <p>— CantorRelief (@CantorRelief) September 11, 2015</p> <p>[email protected] is making a difference on the trading floor for @UNICEF at #BGCCharityDay in #NYC! #CantorRelief</p> <p>— CantorRelief (@CantorRelief) September 11, 2015</p> <p>Number 13 working hard from the #CFCharityDay trading floor to support @MLBPlayersTrust &amp; #HanksYanks! @AROD<br /> — CantorRelief (@CantorRelief) September 11, 2015</p> <p>And here's a video from </p>
Video: Watch Jake Gyllenhaal play a grieving banker in 'Demolition'
Lifestyle, 4:01
<p>While most of them are examples of fantastic story-telling, Wall Street movies have been following pretty much the same formula the past few years. Rich guy does sketchy things financially and gets his comeuppance – “Wall Street” (technically), “Wolf of Wall Street,” the upcoming “Wizard of Lies” – or rich guy does sketchy things to people and somewhat gets away with it – “American Psycho,” “Arbitrage,” “Margin Call.”</p> <p>Well, here’s something a little different.</p> <p>Starring Jake Gyllenhaal and Naomi Watts and directed by Dallas Buyers Club’s Jean-Marc Vallee, “Demolition” follows the life of Davis Mitchell, a successful investment banker who’s handling the sudden loss of his wife in pretty interesting ways. Check it out:</p> <p>Vallee says it’s his most “Rock and Roll” movie to date, and let’s face it; Gyllenhaal’s been on a tear lately.</p> <p>This should be good.<br /> Photo: Wired Photostream</p>
Returns per asset class 2015 YTD [chart]
Capital Markets
<p>A chart by Deutsche Bank AG (NYSE:DB) (ETR:DBK) (FRA:DB) highlighting the returns per asset class 2015 YTD</p> <p>H/T Barry Ritholtz<br /> Returns Per Asset Class 2015 YTD</p> <p>This story originally appeared in ValueWalk.<br /> Photo: Allan Ajifo</p>