• 6 minutes Can the World Survive without Saudi Oil?
  • 10 minutes Saudis Threaten Retaliation If Sanctions are Imposed
  • 15 minutes Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 29 mins U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 4 hours Saudis Pull Hyperloop Funding As Branson Temporarily Cuts Ties With The Kingdom
  • 17 mins WTI @ $75.75, headed for $64 - 67
  • 11 hours Judge Approves SEC Settlement With Tesla, Musk
  • 5 hours How High Can Oil Prices Rise? (Part 2 of my previous thread)
  • 5 hours UN Report Suggests USD $240 Per Gallon Gasoline Tax to Fight Global Warming
  • 9 hours EU to Splash Billions on Battery Factories
  • 8 hours Iranian Sanctions - What Are The Facts?
  • 6 hours China Thirsty for Canadian Crude
  • 10 hours Porsche Says That it ‘Enters the Electric Era With The New Taycan’
  • 11 hours Gold price on a rise...
  • 7 hours Two Koreas: U.N. Command Wrap Up First Talks On Disarming Border
  • 6 hours Shell, partners approve huge $31 billion LNG Canada project. How long till Canadian Federal government Environmentalates it into the ground?
Alt Text

How To Spot Top E&P Stocks In 2018

As sentiment in oil markets…

Alt Text

Green Bonds Are A Huge Boost For Renewables

The growing popularity of ‘green…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Trending Discussions

Financial Reform has More Holes than Swiss Cheese

Whew! That was close! After 18 months of threats, saber rattling, and posturing about the demise of the competitiveness of the American banking system, we finally have a financial reform bill, although it has more holes than a hunk of Swiss cheese.

There is no return of Glass-Steagall, no breakup of the big banks. Crucial definitions, like one for "proprietary trading", got lost in the Bermuda Triangle.

An industry that was sweating bullets poured tens of millions of dollars into lobbying efforts to render this bill toothless, $6.7 million from JP Morgan (JPM) and $5.5 million from Citicorp (C) alone, and they certainly got their money's worth.

Hedge funds nearly got off Scot free, merely getting stuck with a fraction of the $20 billion tab for regulation if they manage over $10 billion.

As I write this, teams of lawyers are burning the midnight oil, creating subsidiaries and special purpose vehicles to sidestep the most onerous aspects of the 1900 page opus, which we are assured, no one has read in its entirety.

But there is no kidding yourself that the banking business hasn't fundamentally changed.

The days of taking insanely leveraged risks with a government financed safety net are clearly over. The adoption of the gist of the Volker Rule will limit proprietary trading, but it never was a good idea to let kids play with matches anyway.

These guys were way out of their depth the day they started pretending to be hedge funds. The hugely profitable OTC derivative issuance business is migrating to listed exchanges where it belongs, like the CBOE.

Unfortunately for the rest of us, the new restrictions on credit amount to a de facto quantitative tightening that will shave a few dozen basis points off of America's long term GDP growth.

Banks will see some of their most profitable businesses disappear, while getting loaded up with a boatload of costly, new regulation.

Now that the umbrella is no longer needed, you can expect Goldman Sachs (GS) and Morgan Stanley (MS) to bid adieu to their banking licenses and revert to investment banks, private equity firms, or even hedge funds.

The bottom line for those left is that they are allowed to stick around, but only with clipped wings as lower earning, higher cost operations deserving of shrunken multiples. Pass on the financial ETF (XLF).

Toss all this in with the unknown amounts of toxic waste that still lurks on bank balance sheets, and I want to avoid the sector like a blind date who shows up with bleeding sores on her face.

Courtesy: Mad Hedge Fund Trader




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News