Tag Archive | "clients"

Opening Bell: 05.04.11

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U.S. May Pursue More Lenders After Suing Deutsche Bank on Loans (Bloomberg)
“We go where the evidence takes us, and if it takes us to the larger players on Wall Street, so be it,” Kanovsky said. U.S. Attorney Preet Bharara said it wouldn’t be a “fantastical stretch” for prosecutors to scrutinize other lenders.

Steep Drop Tarnishes Big Bets On Silver (WSJ)
George Soros’s big hedge fund, a firm operated by high-profile investor John Burbank and some other leading firms have been selling gold and silver, according to people close to the matter, after furiously accumulating precious metals for much of the past two years…Some others with stellar records—including Mr. Burbank, of Passport Capital, and Alan Fournier, of Pennant Capital—also have been passionate about precious metals, giving encouragement to individual investors to follow. Now they are selling, in each case for distinct reasons…[John] Paulson told investors Tuesday morning that gold prices could go as high as $4,000 an ounce over the next three to five years, as the U.S. and U.K. flood the money supply…Andrew Hall, a former star trader at Citigroup who runs hedge fund Astenbeck Capital Management LLC and trades for Phibro, a unit of Occidental Petroleum Corp., told his clients last month that gold and silver will continue to “march higher” unless evidence emerges of “an imminent rise” in interest rates.

Official: Portugal bailout to be $115 billion‎ (BusinessWeek)
“The government got a good deal, one that safeguards Portugal,” Prime Minister Jose Socrates said in a televised address to the nation. He did not take questions.

Portugal aid terms likely to spark 2-year recession (Reuters)
An official source told Reuters the austerity measures to be included in the deal, such as higher taxes, point to a “contraction of 2 percent in gross domestic product in 2011 and in 2012″. That will make it yet more challenging for the heavily indebted country, which has had some of the lowest growth rates in Europe for a decade, to ride out its crisis and return to financial health. The source told Reuters taxes will rise on cars and property and there will be cuts in deductions on health, education and housing.

US Becomes Net Exporter of Fuel (FT)
The US has become a net exporter of fuel for the first time for nearly 20 years as drivers struggle with high petrol prices.

4 Billionaires at Glencore (BBC)
When Glencore publishes its full flotation prospectus later this morning, it will show that there are four billionaires working for the world’s leading commodities, minerals and energy trader. These are led by the chief executive Ivan Glasenberg, who will be shown to be worth around $10bn. But it is the quartet of billionaires, plus many others worth more than $100m each, and hundreds who are millionaires, that makes Glencore quite extraordinary.

U.S. Regulators Face Budget Pinch as Mandates Widen (NYT)
On a recent trip to New York to tour a trading floor, a group of employees from the commodities watchdog rode Mega Bus both ways, arriving late to their meeting despite a 5:30 a.m. departure. The bus, which cost $30 a person round trip, saved the agency roughly $1,000 over Amtrak…The money squeeze comes as Wall Street regulators take on added responsibilities in the wake of the financial crisis, including monitoring hedge funds, overseeing the $600 trillion derivatives market and other tasks mandated by the Dodd-Frank law.

Euro Approaches 18-Month High Versus Dollar Before ECB Decision (Bloomberg)
The 17-member common currency strengthened against all but one of its most actively traded peers as a report showed European services and manufacturing growth accelerated in April. The Dollar Index declined toward the lowest level since July 2008. New Zealand’s dollar dropped to a two-week low after a government report showed the nation had the biggest net outflow of residents in more than 10 years. The pound slumped to the weakest in more than a year against the euro.

Foreign Banks Get Scrutiny in Britain (WSJ)
The Financial Services Authority’s goal is to prevent certain companies from exploiting European rules to set up banking and brokerage operations that the agency views as potentially risky because they use a structure that doesn’t face tough local supervision. But the move by the FSA is controversial. Some observers said the pressure conflicts with Europe’s “passporting” rules, under which financial institutions from anywhere in the 30-country European Economic Area are allowed to open outposts in other member countries. Those “branches,” which can house a range of business activities, face limited oversight by local regulators. Instead, they primarily are the responsibility of regulators in their home countries.

KKR and TPG look to move into Brazil (FT)
KKR and TPG are hunting for a senior figure to lead their offices in Brazil, who will then recruit start- up teams, people in the industry said.

At Nasdaq, a Pitch and Woo (WSJ)
Nasdaq OMX Group Inc. has rolled out the red carpet to hedge funds, racing to persuade them to buy up shares of NYSE Euronext to derail the Big Board’s planned tie-up with Deutsche Börse AG…Some merger arbitragers and hedge-fund investors have met with Nasdaq Chief Executive Robert Greifeld three times in the last few weeks, people familiar with the matter said. They also are being offered private meetings with Mr. Greifeld and special tours of Nasdaq headquarters, these people said.

Southampton’s Former Goldman Sachs Party Pad Sells for $4.1M (Curbed)
In 2009, the New York Post caught wind that Goldman Sachs exec Richard Kimball Jr. was in hot water with the Southampton Police. Turns out Kimball, the ex-husband of Holly Peterson, was throwing pretty rowdy pool parties at his Southampton rental. But while Kimball was partying, the rental was trying to find itself a more permanent buyer.

Wall Street’s Cult Calculator Turns 30 (WSJ)
Thirty years after the launch of the 12c, it’s still commonplace for financial analysts filing into a conference room to set down their calculators next to their papers and cellphones. Indeed, the 12c, which costs $70 on H-P’s website, is H-P’s best-selling calculator of all time, though the company won’t reveal how many units it has sold over the years. (A standard calculator costs about $10.) Its chief competitor is Texas Instruments’ $28 BA II Plus, which is the only other calculator test-takers are permitted to use on the official CFA exam.

Florida woman, Gloria Esther Perez, busted for hiding knife in her ‘private area’ (NYDN via Daily Intel)
Perez was searched and found to be hiding dozens of prescription pills, police said. Perez then “became ill,” the police report states, and was taken to a hospital. Once there, it was discovered she was concealing two knives. One was tucked within the folds of her fat while the other was “hidden in her vagina.”



Article courtesy of Dealbreaker

JPMorgan Promotes 132 To Investment Bank Managing Directors

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Jamie Dimon wanted to make the announcement Oprah-style (You get a title change! And you get a title change! And you get a title change!) but there was concern that some employees would pass out from the excitement.

Subject: New Managing Directors

Please join me in congratulating the individuals listed below on their promotion to Managing Director.

It takes leadership, teamwork and dedication to earn this recognition. We set the bar high, and they have delivered the results. We now look to them to foster a culture that emphasizes trust, integrity and honesty in doing business on behalf of our clients and our firm.

Each MD candidate is assessed against important criteria, such as financial performance, control, partnership, people development, scope of role and future potential. These individuals worked hard to become MDs and now belong to a group that comprises 6% of the Investment Bank’s employee population.

I also want to thank the members of the 2011 MD Selection Committee for their commitment to this process. Their judgment and leadership ensured that all of this year’s candidates received careful consideration.

In particular, thanks to Karen Simon and Matt Zames for serving as co-chairs of this year’s Committee.

Congratulations again to our new Managing Directors.

Jes Staley

New IB Managing Directors
Dave Akhtar
Susan Elolampi
Alex Latham
Jim Powers
Steven Alexopoulos
Alfonso Eyzaguirre
David Lau
Tom Prickett
Kimberly Allen
Jamison Feheley
Steven Leppard
Gregory Prime
Daniel Antonelli
Gene Fernandez
Joseph Liguori
Keith Pritchard
Marc Baigneres
Paul Finger
Jiwon Lim
Lauren Puglisi
Sam Bakhshandehpour
Eliot Fisk
Peter Simon Lindsey
Ian Raindle
Tom Baluk
Donal Fleming
Dan Lonski
Pedro Ribeiro Jr.
Fabio Bassi
Rick FlorJancic
Jiandong Lu
Katie Ruci
Afshin Bayrooti
Mark Follett
Simon Maisey
Tim Rule
Duncan Beattie
Rupert Ford
Steve Malin
Tom Salter
Joe Beggans Jr.
Usman Ghani
Stuart Marker
Raja Sambamurty
Shane Berkley
Matt Greenberg
Mislav Matejka
William Simmonds
Anastasia Bloom
Michael Grise
Philippe McAuliffe
Mansoor Sirinathsingh
Eamon Brabazon
Gregg Gunselman
Alton McDowell
Jack Smith
Melissa Bright
Mohit Gupta
Peter McInnes
Bob Stolte
Hans Buehler
Mark Hansen
Daniel McNeill
Hemant Anil Takalkar
David Caldana
David Hine
Geoffrey Meacham
Steve Terui
Evangeline Casey
Alan Ho
Rakesh Mehta
David Thomas
Seung Il Chae
Khaled Hobballah
Eric Menell
Jerry Topitzer
Vivek Chandiramani
George Holst
Ernesto Mercadante
Matthew Troy
Eric Childs
Brett Hoover
Chris Miller
Selen Unsal Jacoby
Mike Collar
Chris Hsieh
Scott Mitchell
Luis Valdich
Nick Conron
David Hudson
Michael Monforth
Xavier Valencia
Simon Crisp
Stephen Jani
Cristina Monteiro
Aristidis Vourakis
Rich Crozier
Michael Jansen
Mark Mullahy
Stephen Bradley Walters
Luiz De Salvo
Ken Janssens
Madhu Namburi
Jill Woodworth
Charles-Everard de T’Serclaes
Ashu Joglekar
Ross Niland
Brian Ye
Brad Demong
Pedro Juliano
Noriko Okano
Ehsun Zaidi
Tushar Desai
Fumihiko Kanai
Fede Olemberg
Yang Diao
Karoline Kane
Michael Openshaw
Brian Dillon
Yoshi Katsumura
Peter Pallister
Ed Donner
K.L. Kim
Rakesh Patel
Alex Douklias
Ken Krug
Richard Pemberton
Anna Dunn
Juan Langlois
Mike Powell

In addition, we would like to congratulate the new Managing Directors who were promoted through the Marketing & Communications and Human Resources selection processes.

Marketing & Communications
Brian Marchiony

Human Resources
Celia Connolly



Article courtesy of Dealbreaker

Who Wants To Work With Vikram Pandit?

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Citi needs 500 bankers and traders to help it ride the “global genie” train.

Citigroup plans to hire more than 500 bankers and traders over the next two years to strengthen its securities business and make up the ground lost to its rivals during the financial crisis…The plans are part of Citi’s strategy to put its troubled past behind it and harness its global presence and a large cash payment division that gives it access to companies and governments.

“The global genie is not going back in the bottle,” John Havens, Citi’s president, told the Financial Times. “As a bank we are in a position to serve our clients wherever they are and that is something not many of our competitors can say. Going global is not easy.”

Citigroup Plans 500-Plus Hiring Spree [FT]



Article courtesy of Dealbreaker

Opening Bell: 04.14.11

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Senator Levin: Goldman Sachs Misled Congress After Duping Clients (Bloomberg)
Goldman Sachs misled clients and Congress about the firm’s bets on securities tied to the housing market, the chairman of the U.S. Senate panel that investigated the causes of the financial crisis said. Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value….Much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market, according to the report. The Levin-Coburn panel levied its harshest criticism at investment banks, in particular accusing Goldman Sachs and Deutsche Bank AG of peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value.

Senate Report Lays Bare Mortgage Mess (WSJ)
“I think I found white elephant, flying pig and unicorn all at once.” –Goldman Sachs email describing an Australian client that invested in a souring mortgage structure 4/26/2007

Moody’s, S&P Caved to Goldman, UBS Mortgage Pressure, Levin Says (Bloomberg)
“Investment bankers who complained about rating methodologies, criteria, or decisions were often able to obtain exceptions or other favorable treatment,” according to the Levin report. The decisions appeared to be “concessions made to prevent the loss of business.”

US Probes Libor Dealings (WSJ)
For the past year, law-enforcement officials have been investigating whether the U.S. and European banks understated their own borrowing costs, which are used to calculate the London interbank offered rate, or Libor. The investigators are now looking into whether the banks effectively formed a global cartel and coordinated how to report borrowing costs between 2006 and 2008.

Geithner: We Must Raise Taxes (PBS)
Appearing on the PBS NewsHour Wednesday evening, U.S. Treasury Secretary Timothy Geithner said there is “no plausible way” to cut the deficit without raising taxes. “Unless you’re going to cut deeply into commitments we have made to seniors and to the disabled and to the poor, or ask the country to go borrow the money, you can’t solve this,” he said.

Raj Keeps Chin Up (NYP)
One reason Rajaratnam has to smile might be the ebullient praise he received yesterday from prominent educator and social activist Geoffrey Canada. Canada, who was called as a character witness, called Rajaratnam a “dear friend” with “a genuine concern for children.”
“Raj and I hit it off right away,” said Canada, the CEO of charitable group the Harlem Children’s Zone. Canada said he approached Rajaratnam earlier this decade to donate to the group and found him eager to help “level the playing field for kids.” “I never had to convince Raj” to be a donor, Canada said when asked to respond to the prosecution’s allegations that Rajaratnam committed his alleged crimes out of greed. “He’s a very generous person,” he added.

Deutsche Bank Sold Mortgage-Linked ‘Pigs’ as Market Buckled, Lawmakers Say (Bloomberg)
“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” Michael Lamont, the group’s co-head, said in a Feb. 8, 2007, e-mail about Deutsche Bank’s Gemstone CDO VII Ltd., according to a report released yesterday by the Permanent Subcommittee on Investigations. The Frankfurt-based firm sold $700 million of the instruments, which lost most of their value within 17 months.

IMF: Banks Face $3.6 Trillion ‘Wall’ of Maturing Debt (Reuters)
Many European banks need bigger capital cushions to restore market confidence and assure they can borrow, and some weak players will need to be closed, the International Monetary Fund said in its Global Financial Stability Report.

Obama Challenges Republicans With Deadline For Deficit Deal (Bloomberg)
The timeline Obama proposed for coming up with an agreement — beginning talks in early May and completing them by late June — sets up a negotiation over the nation’s long-term fiscal challenges in parallel with a congressional debate over raising the $14.29 trillion legal debt limit.

Glenore Aims For $8.8 Billion In IPO (WSJ)
The company said it plans to list a 15% to 20% stake, through an offer to raise around $6.8 billion to $8.8 billion in new capital and up to $2.2 billion in existing shares. At the upper level, that would make it London’s largest-ever initial public offering, topping Rosneft’s $10.6 billion offer in July 2006.

London Retains Lure For Hedge Funds As Banks Demure (Reuters)
Throgmorton’s Rubio points to the “Harvey Nicks effect” — referring to upmarket London department store Harvey Nichols, a magnet for big spenders — and said he had seen one manager relocate to Barcelona, only to move back to London.



Article courtesy of Dealbreaker

Opening Bell: 04.13.11

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JPMorgan Profit Up 67% on Lower Credit Costs, Tops Estimate (Bloomberg)
First-quarter net income climbed to $5.56 billion, or $1.28 a share, from $3.33 billion, or 74 cents, in the same period a year earlier and from $4.83 billion, or $1.12, in the fourth quarter, the New York-based company said today in a statement. The results beat the average per-share estimate for adjusted earnings of $1.15 by 26 analysts surveyed by Bloomberg.

Impatience Over Recovery At Morgan Stanley (Dealbook)
“You can only take so much pain,” said David P. Foley, an investment manager at Estabrook Capital Management, which as of Dec. 31 owned roughly 661,000 shares in Morgan Stanley, valued at almost $18 million. “We have to go to our clients and defend the stock, and invariably someone says, ‘Why do you still own this thing?’ Eventually, I am sure Morgan Stanley will turn around, but the firm has become harder and harder to defend because it still hasn’t turned the corner.”

Bernanke Urges Republicans To ‘Deal With Debt’ (Bloomberg)
“He said we have to deal with the debt,” Representative Steve Pearce, a Republican from New Mexico, said in an interview after leaving the session with the central bank chief on Capitol Hill. “So far the market seems to be forgiving of the fact that we haven’t,” Pearce said, adding that Bernanke told lawmakers that “we need to deal with it.”

Obama to Lay Out Deficit Plan, Focus on Tax, Spending (Reuters)
Obama will explain his vision for tackling the long-term U.S. deficit and debt in a speech in Washington at 1:35 p.m. He will try to regain control of the spending debate by drawing a sharp contrast with a Republican proposal unveiled last week to lower the deficit by $4.4 trillion over the next 10 years.

IMF Warns US on Debts, Wants Austerity (FT)
The US lacks a “credible strategy” to stabilize its mounting public debt posing a small but significant risk of a new global economic crisis, says the International Monetary Fund.

The Battle Of The Office Candy Jar (WSJ)
“The proximity and visibility of a food can consistently increase an adult’s consumption,” says the study, led by Brian Wansink, a professor of marketing and human behavior at Cornell University, Ithaca, N.Y., and author of “Mindless Eating.” He adds, “Even for a person with the greatest resolve, every time they look at a candy dish they say, ‘Do I want that Hershey’s Kiss, or don’t I?’ At the 24th time, maybe I’m kind of hungry, and I just got this terrible email, and my boss is complaining—and gradually my resolve is worn down.”

Tyco Gets Takeover Offer Of $30 Billion (WSJ)
France’s Schneider Electric SA has made a preliminary bid for approximately $30 billion for Tyco International Ltd., according to people familiar with the matter, hoping to draw the Swiss-based conglomerate to the negotiating table. “The board is studying the proposal,” said one person familiar with the matter. The tentative bid “was a surprise,” this person added. As a result, Tyco officials believe “it’s going to take awhile to sort it out,” this person said. It seems highly unlikely that Tyco will accept a $30 billion offer, and directors “would undoubtedly want it to go higher,” this person said.

China Banks Said to Need $131 Billion of Equity Over Six Years (Bloomberg)
“Capital erosion is a long-term issue facing Chinese banks because they don’t really have the motivation to reduce reliance on loan expansion,” said Wen Chunling, a Beijing-based analyst at Fitch. “The focus of China’s rules is to ensure that banks arm themselves with abundant capital to be well-prepared for a crisis, so that the cost of any government bailout would be minimized.”

GOP Spooked On Debt Limit? (PMM)
House Speaker John Boehner has been reaching out to top Wall Street players asking how close Congress can get to the May 16th deadline (or July 8th drop-dead date) for raising the debt limit without seriously unnerving financial markets. The questioning is not going over well. “They don’t seem to understand that you can’t put everything back in the box. Once that fear of default is in the markets, it doesn’t just go away. We’ll be paying the price for years in higher rates,” said one executive.



Article courtesy of Dealbreaker

Opening Bell: 04.11.11

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Obama Girds for Struggle With Republicans Over Debt Limit (Bloomberg)
The U.S. government is projected to slam into the $14.3 trillion legal cap on government borrowing sometime this spring. As the price of their vote to allow the government to go further into debt, congressional Republicans are demanding far deeper cuts than the $38 billion they got last week in the deal to fund the government for the last six months of the 2011 fiscal year. Failing to raise the debt ceiling would have much more dire consequences than a shutdown, with Treasury Secretary Timothy Geithner predicting last week that it would “call into question the willingness of the government of the United States to meet its obligations,” and “shake the basic foundations of the entire global financial system.”

PIMCO goes short US government debt, raises cash holdings (Reuters)
The portion of PIMCO’s $236 billion Total Return Fund held in U.S. government debt, including U.S. Treasuries, was -3 percent of total assets in the fund as of March, down from zero in February.

JPMorgan Accused Of Breaking Its Duty To Clients (NYT)
In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move out $500 million in client assets that it had put into Sigma two months earlier. Sigma collapsed a year later. Now, new documents unsealed late last month as part of a lawsuit by bank clients against JPMorgan show for the first time just how high the warnings about Sigma went — all the way to the office of the bank’s chief executive, Jamie Dimon. While the clients lost nearly all their money, JPMorgan collected nearly $1.9 billion from Sigma’s demise, according to the suit.

China Inflation Is `Somewhat Out of Control’ on Weak Currency, Soros Says (Bloomberg)
“It would be very advantageous to allow the currency to appreciate as a way of controlling inflation,” Soros said. “The authorities missed that opportunity. You now have inflation somewhat out of control, and causing some serious danger of wage-price inflation.”

NYSE Rejects Nasdaq Offer (WSJ)
In a statement Sunday, NYSE Euronext called the bid by Nasdaq and partner IntercontinentalExchange Inc. “strategically unattractive” and entailing “unacceptable execution risk.” The NYSE reaffirmed its commitment to a $9.7 billion merger with Deutsche Börse announced in February, itself fraught with political and antitrust issues in both Europe and the U.S.

Nomura’s Stock-Backed Loans Jump 50% as Japan Quake Spurs Demand for Cash (Bloomberg)
Daily loan transactions jumped to about 150 from 100 and credit volume also climbed 50 percent as customers sought funds following the disaster, Naoshi Sakai, an executive director of Tokyo-based Nomura’s banking and trust agency services unit, said in an interview.

U.K.’s ‘Moderate’ Bank Report Calls for More Capital, Sales (Bloomberg)
“The universal banks such as RBS and Barclays fare best from the report,” said Joseph Dickerson, a banking analyst at Espirito Santo Investment Bank. “The key negative in the report is the prospect of further branch divestitures at Lloyds which is currently unquantifiable.”

From Behind Bars, Madoff Spins His Story (FT)
He says he gets lots of mail from well-wishers, but no hate mail. “I spend most of my time in my room, reading,” he adds. “And – this is my secret – Danielle Steel.” We all laugh. “Yes, Danielle Steel.”

Economists See Growth Accelerating Later This Year (WSJ)
On average, the 56 economists polled downgraded their estimate of first-quarter growth in gross domestic product to 2.7% at a seasonally adjusted annual rate. That is down from an average first-quarter forecast of 3.6% just two months ago. The economy grew at a 3.1% rate in the fourth quarter.

Economist: Spain Will Not Escape Europe’s Debt Woes (CNBC)
“The fact is that nobody knows whether the country (Spain) will need external help in the months that lie ahead. But what everybody knows is that the European Central Bank’s decision to raise interest rates will intensify its difficulties,” said Roger Nightingale, a global economist at Pointon York in London in a note to clients.

Glencore Eyes Big Mergers After IPO (FT)
CEO Glasenberg told the Financial Times that the launch of the offering – the largest ever in London – was “imminent” after it received robust support from big institutional investors. Glencore plans to sell a 20 per cent stake worth about $10 billion-$12 billion, valuing the whole company at around $60 billion, bankers said.

Insider Trading in China Thrives With Selectively Disclosed Economic Data (Bloomberg)
“In China, it’s better to be prepared than to be surprised,” said Shi, 42, an investment manager with Nanjing 21st Century Investment Group, a property developer in eastern China. “There is a window for speculation.”



Article courtesy of Dealbreaker

Securities And Exchange Commission Announces Plans To Keep Close Tabs On Any Moderately Successful Hedge Funds

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Are you a hedge fund that’s made it a habit of doing right by your clients? Just barely justifying your fees? Doing your job? SEC director of enforcement Robert Khuzami is on to you. He knows the only way anyone could beat the market by 3 percent (or what he calls “aberrational performance”) is by being a genetic freak or criminal. So everybody just sit there with your hands in the air. You’re all suspect.

Recently, during congressional testimony, Robert Khuzami, the Director of the Division of Enforcement for the U.S. Securities and Exchange Commission (SEC), faced tough questions regarding the SEC’s response to the Madoff scandal. In response, Khuzami revealed an investigative initiative concerning hedge funds. Enforcement is now focusing on hedge funds that outperform “market indexes by 3% and [are] doing it on a steady basis.” Khuzami referred to such performance as “aberrational,” and stated that Enforcement is “canvassing all hedge funds” for such “aberrational performance.”

SEC Enforcement Division To Focus On Hedge Funds That Outperform The Market [MWE via Heidi Moore]



Article courtesy of Dealbreaker

Semis Dented By That Grim Goldman Note

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If you’re wondering why semiconductor stocks are taking it on the chin this morning, it’s not just the general downdraft in the market: Goldman Sachs’s James Covello this morning writes that “there is no upside left in the group,” based on his impression that there is a big ramp in capacity coming this year that will lead to overcapacity by the end of the year and in 2012.

Yikes. For a rosier picture of things, see Citigroup’s Glen Yeung’s note this morning.

Two things are happening: chip makers that sell to PC makers, and to makers of tablet computers who are not Apple (AAPL), are making big best on how many units they think their clients can ship. Part of that is obviously the latest version of the “tablet bubble” we’ve been hearing about.

The other factor is that foundries, which I would assume include Taiwan Semiconductor (TSM), the largest, though Covello doesn’t actually mention them, are thinking they will gain share of what is currently captive semi production.

All that is leading to capital spending by the semi makers that is at an all time high this year (note Intel’s (INTC) pledge to spend $9 billion in 2011, only the most prominent example.)

Covello sees semiconductor wafer capacity hitting a new peak in Q4 of this year, after reviewing 25 different capital expansion projects going on. That will lead to encouraging semi data points in the first half of this year, he thinks, but “thre is downside risk as we move through the second half of 2011.”

Most at risk among chip makers are Xilinx (XLNX), Advanced Micro Devices (AMD), and Micron Technology (MU), Covello opines. Xilinx’s programmable logic devices are selling above trend, something that may reverse itself this year. AMD has too many issues, such as competition from ARM Holdings (ARMH)-based chips on the low end, and Intel on the high end. And MU shares are trading too high based on expectations for strong memory chip prices that won’t rebound.

The capital equipment makers will also get hit, writes Covello. The record spending by Intel and foundries this year is “unsustainable,” writes Covello. Capital equipment stocks are up 14% this year, on average, ahead of the semi stocks themselves. Covello expects that outperformance to go away. He doesn’t single out any names on that score.

And as for what he likes, Covello defends companies with “non-cyclical earnings drivers,” such as Broadcom (BRCM), Texas Instruments (TXN), NXP Semiconductors NV (NXPI), and Aeroflex Holdings (ARX).

In semi equipment names, Covello actually likes Applied Materials (AMAT), which has good capital allocation and diverse end markets. He also likes Varian Semiconductor and Teradyne.

In the event, Covello’s note is certainly not helping semi stocks today. The Philadelphia Semiconductor Index is down 1.4%, worse than the broader market, and it’s mostly the mainstream chip makers:

Intel is down 26 cents, or 1.2%, at $20.94, while Nvidia (NVDA) is down 39 cents, or 2%, at $18.75, and AMD is off 21 cents, or 2.4%, at $8.46, and Applied Materials shares are off 11 cents, or 0.7%, at $15.19.

Article courtesy of Tech Trader Daily

Twenty Five Guys Who Will “Destroy Your Career On Wall Street”

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According to John Carney, they’re to be avoided and included:

* “The guy who always wants you to be his alibi when he cheats on his wife. (“Hey man, is it cool if I tell Kathy that we’re going fly fishing in Canada this weekend?”). No, dude: It’s not cool.”

* “The guy who offers his clients ‘a very special opportunity’ to invest in anything. He has a problem with cocaine.”

* “The guy who throws his phone across the trading floor whenever his positions go south. He’s an angry dude, and the more time you spend with him the more reasons he’ll find to dislike you.

* “Avoid anyone who tells you that you should relax and have a couple of drinks—at 9:15 on a Tuesday morning. You’re not cool enough to hang out with this guy.”

Agree/disagree? In your experience, have you found the guy who throws stuff at people to be someone you actually want to hitch your wagon to?

25 Guys To Avoid [NetNet]



Article courtesy of Dealbreaker

Disgruntled Goldman Sachs Investor Jim Clark’s Bloomberg Therapy Session Offers Insight Into Why People Stick With GSAM When It Treats ‘Em So Bad

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Jim Clark and his wife, Kristy, who’s probably also pretty steamed at GSAM

For the March issue of Bloomberg Markets magazine, reporter Richard Teitelbaum explores the riddle wrapped within the squid that is Goldman Sachs Asset Management. Specifically, why investors stick with GSAM when evidence suggests they should take their money and run (GS’s funds have “badly trailed their peers over the three, five and 10 year periods ended December 31st” and yet assets under management have nearly tripled since 2000, rising an annual rate of 11.8 percent). To tackle this question, you could analyze data, talk to experts, see a palm reader or poll large groups of people familiar with the matter. Or you could save yourself a lot of time and remember that the simplest explanation is most likely the right one. And the answer to this conundrum is not just simple but brief. It can be summed up in three words, in fact, or two if you count the hyphenated one just once: Brand-name whores.

GSAM clients stick with the Squid no matter how badly it treats them, no matter how much their friends tell them “you could do so much better!” because they are brand-name whores who like to tell people their money’s with GS. At least, that’s how Bank of America Merrill Lynch analyst Guy Moszkowski and New Amsterdam Partners LLC’s Michelle Clayman see it.

Sure, they don’t use the term “whore” (sayeth Moszkowski: “Goldman is a brand. Brands tend to be able to retain customers in situations where performance suggests they shouldn’t.” Sayeth Clayman: “A lot of wealthy clients like to say, ‘I have my account at Goldman, blah, blah, blah,’”), but that’s what they’re getting at. Goldman Sachs retains these clients because these clients are whores for the GS name.

Take Jim Clark. His tale opens the the cover story and hoo boy! is he steaming mad.

On Jan.2, Jim Clark, a founder of such technology icons as Netscape Communications Corp. and Silicon Graphics Inc., was at home in Palm Beach, Florida, when he got an e-mail from an executive at Goldman Sachs Group Inc.’s private wealth management division. Goldman was offering Clark a chance to invest in the closely held social-networking company Facebook Inc. The deal—through a fund overseen by Goldman Sachs Asset Management—was being offered to other Goldman investors at the same time. The firm would levy a 4 percent placement fee on clients, plus a half percent “expense reserve” fee. It would also require investors to surrender 5 percent of any profits, known as “carried interest,” according to a Goldman Sachs document. Clark turned Goldman down…A few months earlier, he had purchased a stake in Facebook through another firm for a lower price, he says, and without the onerous carried interest. “I don’t think it’s reasonable,” Clark says. “It’s just another way for them to make money from their clients.”

He sounds pissed, doesn’t he? You can’t really blame him, though. This was just another example of Goldman assuming Jim would bend over and take it. One example in a long line of many in which the firm done did Jimbo wrong. In addition to the Facebook deal, there was the “big hit” he took from GSAM’s Global Alpha hedge fund, in addition to the generally bad advice and poor performance he’d witnessed since first forking over around $400 million. Another memorable occasion involved Paulson and Co, and Goldman telling Jim not to waste his time with such a peasant.

Clark was particularly irked by the disclosures surrounding Abacus. He had met with Paulson and Co founder John Paulson in August 2006 and been impressed by the manager’s plans to bet against the subprime-mortgage market. His Goldman brokers talked him out of investing with Paulson, describing him as a bit player, Clark says. Paulson generated a 590 percent return in his flagship credit fund in 2007 “When it came out that Paulson had the biggest payday in history, I got angry,” Clark says. The fact that Goldman Sachs had such a close relationship with Paulson incensed Clark further.

“They just butter their own bread and charge huge fees, these jerks,” Clark fumed to Bloomberg. Jerks he says, jerks! Clearly Jim had just about had it with these guys. And to show them he meant business, to show them he was pissed, you know what he did? In 2009 he “angrily yanked almost all of his money to Morgan Stanley,” emphasis ours because guess what Jim? Lloyd Blankfein still owns your ass. When you’re ready to send a real message, you give this guy a call.

Lloyd Blankfein’s Headache [Bloomberg Markets Magazine]



Article courtesy of Dealbreaker