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US Unemployment Rate Rose To 10.2% In October, Highest Rate Since April 1983.

It rose from September's figure of 9.8%. The number of unemployed people rose by 558,000 to 15.7 million.

» TradeBlog [ Contribute: submit link / submit article ]

Roubini Fear: Biggest Co-ordinated Asset Bust Ever

Since March there has been a massive rally in all sorts of risky assets – equities, oil, energy and commodity prices – a narrowing of high-yield and high-grade credit spreads, and an even bigger rally in emerging market asset classes (their stocks, bonds and currencies). At the same time, the dollar has weakened sharply , while government bond yields have gently increased but stayed low and stable.

Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.

» FT [ Contribute: submit link / submit article ]

Dollar Reaches Breaking Point as Banks Shift Reserves

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

» Bloomberg [ Contribute: submit link / submit article ]

U.S. Jobless Rate May Exceed 6% Until 2013, Poll Shows

The worst recession since the Great Depression has left a scorched landscape that will weigh on the labor market and the broader economy for years to come, according to economists in the latest Wall Street Journal forecasting survey.

The 48 surveyed economists expect the economy to bounce back from four quarters of contraction with 3.1% growth in gross domestic product at a seasonally adjusted annual rate in the just-ended third quarter. Expansion is seen continuing through the first half of 2010, though at a slower rate. But the massive downturn means the labor market will take years to heal. On average, the economists don't expect unemployment to fall below 6% until 2013; unemployment hit 9.8% in September.

» WSJ [ Contribute: submit link / submit article ]

It's Business as Usual Again for Wall Street's Casino Capitalists

One year after the bankruptcy of US investment bank Lehman Brothers, governments are divided over what lessons should be learned from the crisis. But the more the economy recovers, the less desire there is to implement radical reforms -- and many bankers have already returned to their old casino capitalism ways.

» Spiegel [ Contribute: submit link / submit article ]

Hedge Fund Liquidations Decline

The number of hedge fund liquidations declined in the second quarter, as gains in the industry picked up pace, according to Hedge Fund Research Inc.

» Trade Blog [ Contribute: submit link / submit article ]

The Next Financial Crisis. It's coming--and we just made it worse.

To many observers, the Federal Reserve has never looked more heroic than it does right now. This past winter, America’s financial system faced the prospect of utter ruin. And, while the economy has suffered plenty in 2009, the worst did not come to pass. The banking system that lends to our employers, thereby allowing our economy to function, never did collapse. Now, many of the accolades for averting catastrophe are going to the Fed. President Obama himself ratified this analysis last week when he renominated Fed chairman Ben Bernanke for a second term. Bernanke, the president told reporters, had marshaled “his background, his temperament, his courage, and his creativity” to help prevent a second Great Depression.

» New Republic [ Contribute: submit link / submit article ]

JOBLESS RATE HITS 9.7%

Employers cut 216,000 from payrolls, fewer than forecast, after a 276,000 drop in July that was larger than previously reported, Labor Department data showed today in Washington. The jobless rate jumped to 9.7 percent from 9.4 percent.

» TradeBlog [ Contribute: submit link / submit article ]

RBS - Fresh alert on global stock markets

RBS uber-bear issues fresh alert on global stock markets. Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts.

Britain's Uber-bear is growling again. After predicting a torrid "relief rally" over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears. "We are now in the middle of a parabolic spike up," he said in his latest confidential note to clients.

» telegraph.co.uk [ Contribute: submit link / submit article ]

U.S. Enters Recovery as Stimulus Refutes Skeptics

Recovery from the worst recession since the 1930s has begun as President Barack Obama’s fiscal stimulus -- derided as insufficient and budget-busting months ago -- takes effect, a survey of economists indicated.

The economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly Bloomberg News survey. Analysts lifted their estimate for the third quarter by 1.2 percentage points compared with July, the biggest such boost in surveys dating from May 2003.

» Bloomberg [ Contribute: submit link / submit article ]

Durable Goods Orders Fell 2.5% In June...

...much larger than the 0.6% slip economists expected.

» Trade Blog [ Contribute: submit link / submit article ]

Are We Better off Because of the Stimulus

For weeks on end, Republicans have pounded home the message that economic stimulus has failed. (Charles Krauthammer: “[Obama] blew a hole in the budget that is a trillion dollars wide. There is nothing to show for it.”) Polls show that most people think the stimulus has done nothing to help so far. But today’s second quarter GDP data show that the stimulus has actually helped quite a bit.

» New Republic [ Contribute: submit link / submit article ]

Geithner urges end to ‘dumb regulation’

Tim Geithner, Treasury secretary, said there was “a lot of dumb regulation in our country” and urged lawmakers to enact quickly the administration’s plan to reform the system, in spite of resistance from the financial industry and other regulators. “Every financial crisis of the last generation has sparked some effort at reform, but past attempts began too late, after the will to act had subsided,” he told the House financial services committee, which will start drawing up legislation in September. “That cannot happen this time.”

» FT [ Contribute: submit link / submit article ]

Podcast: Value investing versus 'buy and hold'

David Stevenson, the FT's Adventurous Investor, asks City analysts James Montier, Albert Edwards and Tim Bond about the best strategies for long-term shareholders

[ MP3 ] Value investing versus 'buy and hold' Part 1
[ MP3 ] Value investing versus 'buy and hold' Part 2

Stock Traders Find Speed Pays, in Milliseconds

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices. It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

» The New York Times [ Contribute: submit link / submit article ]

Wharton: Are Hedge Funds out of Control?

If you go to Amazon.com and search for books about venture capital, you get 14,114 responses, which include many text books. Andrew Metrick, a professor of finance at Wharton, has just written a new book on the subject titled, "Venture Capital and the Finance of Innovation." Unlike the thousands of other books, though, this one offers a different approach, especially in areas such as valuing startup companies and IPOs, by bridging the gap between finance fundamentals and venture capital practice. Knowledge@Wharton spoke to Metrick about his new book and also about the increasing power and presence of hedge funds.

[ mp3 ] listen or download / Knowledge@Wharton

Courtroom intelligence: Hedge fund investment strategies

Hedge fund managers are always looking for an edge. Lately they've found one by sending patent litigators to court -- not to try a case, but as highly informed (and highly paid) observers. Their task: to pick up and quickly report back to the money managers any intelligence that could move a stock.

Litigators have often been called in to evaluate the investment impact of a patent conflict during the course of due diligence for an acquisition. Now hedge funds are moving earlier and faster. They are putting lawyers in the courtroom to report on the outcome of a trial as it is happening. "I hear these stories of Markman hearings; the minute the ruling comes down, 15 guys jump up and run out of the room," says Ron Laurie, of Inflexion Point Strategy, an IP investment bank. "These guys are texting the hedge fund, so they can short the stock." By the time the market-moving information hits financial news services like Bloomberg, the investors get to take their gains.

» law.com

Dow Stocks: Best winning streak since '55...

The Dow Jones industrial average hit another record high Wednesday, capping its longest winning stretch in almost 52 years as investors welcomed strong earnings, lower oil prices, media merger news and a strong reading on manufacturing.

The Dow (up 75.74 to 13,211.88, Charts) rose 0.6 percent to close at an all-time high for the fifth time in the last six sessions. The Dow also hit an intraday record high of 13,256.33 during the session before retreating near the close.

» money.cnn.com

Mergermarket: April a record month for M&A

April was a record month for M&A, no matter whose data you choose to read. Mergermarket, the financial news and data business, newly part of the Financial Times Group, calculates $482.6bn worth of M&A activity during the month, while Thomson puts the figure at a whopping $626.3bn.

» Alphaville

Top 3 fund managers earn over $1bn, top 25 almost $15bn

The combined earnings of the world’s top 25 hedge fund managers of almost $15bn exceeded the national income of Jordan last year and three individuals took home more than $1bn, according to an annual industry survey.

The survey put Jim Simons, of Renaissance Technologies, on earnings of $1.7bn, Ken Griffin, of Citadel Investment Group, on $1.4bn and Eddie Lampert, of ESL Investments, on $1.3bn.

The earnings reflect record investment into hedge funds, with the money increasingly flowing into the biggest managers as institutional investors such as pension funds begin to put cash into the industry.

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