BlueMountain Capital Management Chief Executive Andrew Feldstein talks about the role of credit derivatives in financial markets with Bloomberg TV’s Lisa Murphy BlueMountain Capital co-founder and president Stephen Siderow also appears in the segment.
“I think credit derivatives are an incredibly valuable tool to the financial markets,” Feldstein says. “And I think the financial markets would be much worse off without them.”
Michael Platt, founder of the $30 billion hedge fund BlueCrest Capital Management LLP, talks about the European debt crisis, euro-zone banks and investment strategy. He spoke with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “InsideTrack.”
“The level of concern of what we have about what is going on in Europe is absolutely huge,” Platt said. “I mean, you see evidence all over the markets these days that the pricing for the potential of a eurozone break up, is distinctly non-zero, contrary to what everything is said by policy makers and by central bankers. â€¦ [I]f you look at the debt of, say, Italy, at 120% of GDP, which is increasing at a real rate of 5% â€¦ and you look at the GDP, which is now forecast for next year to be declining at 0.5%, arithmetically that means that debt is going to blow up.”
David Rich, founder and chief investment officer at Amida Partners, talks about his investment strategy for debt and his preference for convertible bonds. He speaks with Deirdre Bolton on Bloomberg Television’s “Money Moves.”
“As a relative value manager, one thing I want to try and do is find options,” Rich says. “And we think we can find some cheap options in the convertibles space right now.”
Warren Buffett, chairman and chief executive of Berkshire Hathaway, weighs in on his cooperation with the government on questions pertaining to David Sokol, former NetJets chairman, and adds his outlook on the economy. First, though, Andrew Ross Sorkin asked Buffett about Rajat Gupta and what Buffett knew/thought about Gupta’s arrest on charges he provided Raj Rajaratnam with inside information about Buffett’s investment in Goldman Sachs.
“The system has a lot of temptations in it,” Buffett said. “And people succumb to temptations and the only way to reduce that kind of activity is you look very hard to find and then you do something about it when you do find it.”
CNBC’s Tyler Mathisen talks to six power players to get their best ideas for investing right now, featuring Kyle Bass, Hayman Advisors LP founder and principal; Leon G. Cooperman, Omega Advisors chairman and CEO; Philip Falcone, Harbinger Capital Investments founder; J. Tomilson Hill, Blackstone Marketable Alternative Asset Management CEO; Daniel S. Loeb, Third Point LLC founder and CEO; Anne B. Popkin, Symphony Asset Management president.
Meredith Whitney, founder and Chief Executive of the Meredith Whitney Advisory Group, was a guest host on CNBC’s Squawk Box Wednesday morning. At the beginning of the show, she explained why now isn’t such a good time to be buying financial institutions.
“The banks â€¦ the large banks, which dominate most of the lending in the United States, are effectively zombie banks because number one, they still have sludgy assets on their balance sheets that they’re working off over time, and number two they are capital constrained because they are required to hold more capital so they have to de-lever. The U.S. consumer is de-levering therefore the banks have to de-lever because they’re not serving as many consumers and so you’ve got an expense structure, then, that just doesn’t match the revenue structure, and so it’s classic case of negative operating leverage, and so you don’t buy institutions that have negative operating leverage.”
She went on to say the banks are going through a multi-year cycle of business change.
Other highlights from this segment:
1:40 â€“ The big banks are too big to move right now. In 10 years, they will look very different.
2:25 â€“ Regarding Bank of America and the on the dissimilarity between today’s problems and 2007/2008: “This is not a liquidity issue for the U.S. banks, this is not a solvency issue for the U.S. banks. They know what the problems are, it just takes a long time to fix itâ€¦. Part of the problem in ‘07 was no one had any idea what the real issues were. We know what the issues are todayâ€¦.” She called Brian Moynihan the “right guy for the job” of fixing BofA, but said the work won’t be glamorous. She also said BofA isn’t going out of business.
4:40 â€“ Today’s markets remind Whitney more of “the ’70s” than 2008. “I think the market’s harder now than it was in 2008 because it’s a constant beat-down. These are structural economic problems that we face, which is nothing to do with â€¦ I mean obviously there’s been incredible volatility in the market, but huge swings in terms of uncertainty.”
Mark Yusko, chief executive of Morgan Creek Capital Management, a $10 billion fund of funds, talks on CNBC’s Strategy Session about the fund of funds business, how his firm evaluates managers and what hedge fund strategies are working right now.
“We do look at what I call the ‘red Ferrari syndrome,’” Yusko says. “If you buy a red Ferrari, we’re likely not going to be invested with you any more because we liked you when you drove the Toyota pickup truck.”
Yusko also said three strategies are really working right now: hedging against sovereign debt default, fundamental long/short and pre-IPO mezzanine financing.
Fortress Investment Group LLC principal and director Michael Novogratz conducts a wide-ranging interview with several Bloomberg TV journalists. Toward the end of the segment, around the 10-minute mark, Novogratz says he thinks the principal market driver going forward will be inflation. Europe is trying to limit it by raising interest rates, while the Fed seems to be trying to encourage some mild form of it by keeping rates low. Novogratz also discusses his outlook for equity markets and his investment strategy. (more…)
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