Good morning

The headlines:

  1. RollingAlpha is moving to a new home. Link: It was time. I’ll keep posting on both the blogspot site and the new site for the next few weeks, and then I’ll let the blogger site go dormant. Please update your RSS feeds if that’s how you’re following!
  2. The Fall of the Facebook Share Price – it happened. Links: MZ is $2.2 billion less wealthy; and you don’t say; and fingers are being pointed (at MS). The price fell to $34 and change at the end of the second day of trading. Everyone’s saying “but if you have shares – they have value!” Yes – if you had them to begin with. But not if you bought them on Friday morning at 42 bucks a pop. That’s an awkward loss in two days of trading. I think most were expecting a performance a la Linkedin or Groupon. Sadly not. Now, of course, there are fingers being pointed. At Morgan Stanley, at Facebook for being greedy, at Nasdaq (frankly – they should take some blame just for being a general fail). MS is being blamed for “misreading the atmosphere” or something. I think they mean that MS overestimated the “retail interest”* and/or level of crazy by first increasing the number of shares for sale and second increasing the price range. And now people are irritated because it was mispriced? But – how did they not know that it was mispriced?! Geezlike. If THAT’S the argument and now they want MZ and MS to answer for it – then they well deserve the loss.
  3. Merkel says she won’t shy away from a clash with Hollande. Link: Trouble in Merkellande. It makes sense – different viewpoints make for tense egg-shelling around the negotiation table.
  4. JP Morgan counterparties say that losses may widen. Link: I think they just enjoy watching Jamie call himself names in public. But the Hedge Funds are saying that JPM is still in those trades (Jamie Dimon is also saying that they’re still in those trades) – and if the Eurozone goes down the plug-hole any time soon, JPM will join them. That’s being slightly dramatic. But most likely Jamie Dimon will join them. CEOs have been fired for less. Ask that Thomson guy formerly from Yahoo! Anyway – the point is that JPM hasn’t liquidated their positions. Sounds to me like they should close them out (ie. spend some money on taking opposing positions in the trade). It’s either that (if they can find counter-parties) or more derivatives. Two wrongs? Let’s hope, for Jamie’s sake, that someone makes it right.
  5. JP Morgan has suspended share buybacks. Link: But only because of International Capital Rules – not trading losses or anything. The pensioners can sigh in relief though because the dividend payout won’t change. But if I was CEO, and I honestly thought that the CIO (Central Investment Office) losses weren’t such an issue, I would be climbing the walls trying to buy back stock. The general consensus seems to be that Someone (ie. the Fed) told them to stop.
  6. There are more US Budget Troubles. Link: Something something “paper tiger”. Wait, what? This time, President Obama is the one that wants to stop the spending (on defense). The Republicans are reacting in a turnabout fashion and saying that the US can’t cut defense spending for fear that the US becomes a “paper tiger”. I think that a Chinese metaphor is a bit inflammatory.
  7. Rajat Gupta “threw away his duties”. Link: That is some styling english right there. Does his prosecutor speak english? Rajat Gupta was the Goldman Sachs director that was leaking the good stuff to Raj Rajaratnam, who traded on the news and got 11 years in prison and a $90 million odd fine in return. But back to the opening statement: Rajat’s prosecutor may lose the case on a linguistic technicality. One of the jurors is a fourth-grade teacher – and it only takes one person to hang a jury**.
  8. End of extended benefits may decrease the US unemployment rate. Link: Makes sense to me! If you’re being paid not to work – you’re not exactly going to be forced to take jobs that are “beneath” you. In fact, even if those jobs are relatively well-paid. Sometimes, people just really need a kick in the pants.
  9. The US won’t ease oil sanctions at Iran Nuclear talks. Link: Because you won’t negotiate with terrorists? Either way – the situation won’t be solved next month. Higher oil prices, here we come.
That’s all for now.
Have a good day.
** One of the other jurors is a “freelance beauty consultant”. WTF is that?