Clueless on Wall Street

Turning against Obama 

MEYERSON: Wall Street's brazen cluelessness | PressDemocrat.com

By HAROLD MEYERSON Published: Friday, April 6, 2012


In 2008, Wall Street backed Barack Obama. 

Today, Alec MacGillis reports in the New Republic,

 Wall Street has turned against Obama with a vengeance. 

Hedge fund operators have given Mitt Romney four times what they’ve given Obama, and that doesn’t count their contributions to “super PACs” backing Romney and other Republican candidates.

China accuses Goldman

Wall Street, Goldman Sachs And China - Forbes

 

Image via Wikipedia

 

1973 Wall Street firms offered financial advisory services to governments, companies and individuals, and only in a few instances, traded securities for their own account. Some firms didn’t even underwrite the securities of their clients, and the thought of establishing a trading position that might be contrary to the interest of a client never entered anyone’s mind.

Investment bankers were akin to corporate doctors, whose job it was to advise CEOs on capital raising and the occasional acquisition, which was always a friendly deal that was negotiated by the investment bankers and the leaders of the two companies. In the Wall Street of the 1970s, hostile, or unwanted, takeover offers were unheard of.

Goldman Sachs stood as the epitome of teamwork. As the mergers and acquisitions business began to grow, other firms would produce celebrity-like “M&A Stars,” but at Goldman, the emphasis was always on the team — and the client. Even as M&A became the biggest profit center for any firm, Goldman was one of the last to have a stated policy of not representing any company in the hostile takeover of another company, foregoing tens of millions of dollars in fees in the process.

Wall Street began to be a very big business in the 1980s, and all firms, including Goldman Sachs, began to change as a result.

Although the Glass-Steagall Act of 1933 limited securities activities by commercial banks, the banks were anxious to get into the securities business and began to encroach on turf once reserved for their investment-banking brethren.

The repeal of Glass-Steagall in 1999 irrevocably changed the Street. To secure profitable M&A and underwriting business, it was now necessary to have a big balance sheet. With an ability to leverage its capital, it didn’t take long for all firms to recognize that proprietary trading — trading for one’s own account — could be the most lucrative business of all.

Unfortunately for the firm, though, the publication of the New York Times editorial last week by Greg Smith, the executive director and head of Goldman’s United States equity derivatives business in Europe, the Middle East and Africa, singled Goldman out as the poster child for an industry that has lost credibility everywhere, including in China.



In the 1990s and into this century, government officials and the heads of China’s big state-owned companies began to be courted by all of the large Wall Street firms, hoping to secure mandates for lucrative initial public offerings and equity deals.

In many cases, the sons and daughters of top Chinese officials went off to Harvard and Yale, and came back to China as new business representatives for the leading firms. By 2008, senior Chinese executives and government officials were very familiar with the workings of the capital markets.


There is no doubt that the global financial crisis of 2008 tarnished the reputations of all of Wall Street’s leading players in every part of the world, and this was certainly the case in China. 

In 2010, Li Delin, a Chinese financial journalist who is well-known for his outspoken writings, published a sensationalist bestseller in China, the “Goldman Sachs Conspiracy,” in which Delin argued that Goldman’s ultimate goal is to “kill China.” “Like a fox chewing a bone, Goldman Sachs knows the rules of the game and when to go for your neck,” he says in his book.

The controversy surrounding Mr. Smith’s editorial has received widespread attention in China. Last Friday, a morning financial news show on national radio reported on Smith’s editorial and interviewed Mr. Li. Needless to say, the comments and the opinions expressed in the press have been universally negative.


China’s capital markets are now where the U.S. capital markets were in the late 1970s/early 1980s, and merger and acquisition and financing activities are about to explode in the years ahead. As is the case for most products and services, China is likely to become one of the largest markets for investment banking services over the next 10 years.

The Chinese government and Chinese companies will turn for advice to firms that they trust, and will favor those that respect the client relationship. Firms that can get back to the core values that permeated Wall Street in that earlier period will have the best chances for success here, and will be in the best position to capitalize on this next big trend.

 ..........................................

Can a company like Goldman Sachs change its corporate culture to suit the Chinese or will the Chinese business people actually learn from the culture of greed and do business  in the Goldman style? 

The financial atrocities that have been reported in newspapers like the New York Times, make the man on the street wonder why no executive from these companies was prosecuted and sent to jail. 

Given that there is no legal consequence for apparent crimes against the American public, why would banking executives change their mode of operation? 

"The Bring Fraud Back to Wall Street Act.”

Wall Street Examines Fine Print in a Bill for Start-Ups - NYTimes.com
 Investment Banking | Legal/Regulatory

Wall Street Examines Fine Print in a Bill for Start-Ups

By SUSANNE CRAIG and BEN PROTESS


Wall Street is examining whether it will benefit from a little-known section of a broad new law that President Obama is expected to sign on Thursday.

Provisions tucked into the so-called JOBS Act, or the Jumpstart Our Business Startups, will roll back some major securities regulations and parts of a landmark legal settlement struck almost a decade ago. That 2003 settlement built a Chinese wall between Wall Street research analysts and investment bankers, an effort to prevent analysts from improperly promoting stocks to help their firms drum up business from corporate clients.

Under the new legislation, some of those restrictions would be eased when it comes to smaller companies, so-called emerging growth companies.

Wall Street senses an opportunity. Davis Polk, a large law firm that caters to Wall Street, wrote in a recent note to clients that the JOBS Act represented “the most significant legislative loosening in memory of restrictions around the I.P.O. process and public company reporting obligations.”

Almost every big bank on Wall Street, including Goldman Sachs, Morgan Stanley and Bank of America, is poring over the provisions, which some firms say will open a new front on their business model. Several firms contacted Wednesday said they were studying the JOBS Act and were eager to see how regulators would begin to interpret the legislation. One Wall Street executive familiar with the JOBS Act but who declined to be named said the law would give firms “more flexibility” in covering emerging companies.
The new legislation passed through Congress over the objections of regulators, past and present, who warned of the potential risks to investors.
“It is a bad sequel to a bad movie,” said Eliot Spitzer, the former New York attorney general. “It shouldn’t be called the JOBS Act, it should be called the 

 

"Bring Fraud Back to Wall Street Act.”

Mr. Spitzer was a crucial architect of the 2003 settlement, struck after the dot-com bubble, when investors lost millions of dollars investing in companies that regulators later claimed were improperly hyped by analysts. In some cases, analysts would privately disparage the same stocks they were telling investors to buy, including in one e-mail where an analyst called a security a “piece of junk.”
Regulators contended that analysts were influenced by their investment banking colleagues who were seeking to win lucrative business from these hot companies. The settlement, some aspects of which were echoed in the Sarbanes-Oxley law and in regulations, barred any communication between bankers and analysts unless accompanied by a compliance officer, a move aimed at reducing the influence of bankers on the research.
There is concern that the JOBS Act will unwind this provision for emerging growth companies, those that have less than $1 billion in annual revenue. Lawmakers argued that the current restrictions have stifled the ability of start-up companies to raise capital and amplify their profile.

The JOBS Act also will allow banks to publish research reports about these companies while the bankers are helping take them public. The potential conflict here, regulators say, is that bankers might use research to drum up interest in the stock, which is then often sold to retail investors.

Despite the apparent opportunities available in the new legislation, Wall Street is proceeding with some caution. 

 

 

The banks, the person said, are mindful that investors will sue them if they can show that analysts drafted intentionally deceptive research.
Before taking any actions, the banks are first seeking guidance from a cavalry of lawyers.
Lawyers are advising the banks to tread lightly until the Financial Industry Regulatory Authority, Wall Street’s self-regulator, acts. The Securities and Exchange Commission is unlikely to have to change any of its rules.

 

Still, the JOBS Act appears to loosen financial communication more broadly. For instance, the bill will relax rules on how investment firms can market themselves to the public, reversing regulations that restrict what hedge funds and private equity firms can say publicly about their investment strategy.

Regulators were against the JOBS Act from the beginning. When the measure cleared hurdles in the House, the Securities and Exchange Commission scrambled to stop it in its tracks.

The law will “weaken investor protection,” Mary Schapiro, chairwoman of the S.E.C. warned last month.

“We should not walk backwards here,” she said. “Collusive behavior between analysts and bankers cost investors huge sums, shattered confidence in the integrity of research, and damaged the markets themselves.”

The JOBS Act is far reaching and also exempts emerging growth companies from certain disclosure and governance requirements for up to five years. It will also provide a new form of financing to start up companies.

Through what is known as crowd-funding, or the sale of small amounts of stock to many individuals, companies could solicit equity investments through the Internet or elsewhere, raising up to $1 million annually without being required to register the shares for public trading with regulators. 

 

Some see this as a big deal for entrepreneurs who can now sell their ideas without having to find a big financial backer.

 

 

 Others say this provision will bring a return to the boiler rooms of the days gone by where brokers peddled worthless stock to unassuming investors. 

 

Shuns Wall Street

Main Street banks break away from Wall Street with their own SuperPAC - The Washington Post

---

Main Street banks break away from Wall Street with their own SuperPAC

By Suzy Khimm, Published: April 5/12

Of all interest groups trying to influence the 2012 election, you’d think the banking industry would need the least extra help. The financial sector, together with real-estate and insurance, has already donated over $207 million to candidates this election cycle--more than any other single industry. 

But the donations have predominantly come from the richest and most prominent players on Wall Street, with Goldman Sachs and Bain Capital topping the list. SOURCE: AP

Now a group of Main Street banks has launched its own SuperPAC to push for the concerns of “traditional banks” each election cycle, as American Banker first reported.

Like most banking groups, Friends of Traditional Banking aims to fight the “massive new regulations” in Dodd-Frank. But the rationale is that the group represents “traditional banks” that weren’t responsible for bringing down the economy during the financial crisis, unlike their Wall Street counterparts that moved beyond customer-centered commercial banking to gamble with complex financial instruments. 

“Everyone knows that traditional banks didn’t cause the economic crisis, but that didn’t stop Congress from heaping massive new regulations on them and their customers,” the SuperPAC says in its mission statement, describing traditional bankers as “the ones who go to work every day to serve their communities.”

 It also plans on relying upon small donations — from $150 to $500 — unlike many of the prominent SuperPACs that have emerged so far, which have been bankrolled by a few very wealthy individuals.

Mining the Way they built the Pyramids

Sebastiao Selgado recorded this mining operation in Brazil.

Indifference is not acceptable...

395725_294942540564383_100001459190619_856734_780545757_n.jpg 104K

Help us Fight Monsanto

Help us Fight Monsanto

Help NationofChange stand up against Monsanto! - YouTube




 Monsanto is one of the greatest threats on the planet to human health and the environment.

Aura Minerals Announces Fourth Quarter and Full Year 2011 Financial and Operating Results - Yahoo! Finance

We follow Aura Minerals 'for education purposes ' because Aura is a Canadian mining company operating internationally, tied to the fortunes of gold base metals, currencies, labor conditions and  macroeconomics . 

This is a good "real world" case study for any business student or an autodidact
hoping to learn something about the mining business.

Aura has growth prospects planned  like, increasing throughput at existing mines and developing the Serrote Property in Brazil from the feasibility stage to a producing property, thereby, significantly increasing the size of the company.  

Aura is gaining  'critical mass' whereby internal cash flow can fund growth. Commodity prices are one 'wild card' to consider when assessing risk 
but it is not the only consideration in growing the company.  They need a stable labor environment and operational and drilling success for their plans to be realized.


Management is aiming to increase operational efficiency, develop the feasibility stage Serrote Project.   The company  is reducing commodity price risks by instituting a hedging program having sold forward 80,000 ounces of gold at 'good' prices.


This is what makes Aura an interesting company to study.

More details from this company press release are available: 

 http://www.auraminerals.com/

 http://finance.yahoo.com/news/aura-minerals-announces-fourth-quarter-223500863.html

• 2010 Annual Consolidated Financial Statements (PDF 481 KB)
• Investor Presentation (PDF 1.78 MB)
• News Releases
• Link to SEDAR

About Aura Minerals Inc.

Aura Minerals is a Canadian mid-tier mining company focused on the exploration, development and operation of gold and base metal projects in the Americas. 

The Company's producing assets include: 


1. the San Andres gold mine in Honduras,

2. the Sao Francisco mine in Brazil and 

3.Sao Vicente gold mine in Brazil and 

4.the copper-gold-silver Aranzazu Mine in Mexico.

The Company's core exploration asset is:

i.) the feasibility-stage copper-gold-iron ore Serrote Project in Brazil.

........................................................................................


Aura Minerals Announces Fourth Quarter and Full Year 2011 Financial and Operating Results - Yahoo! Finance

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 28, 2012) - Aura Minerals Inc. ("Aura Minerals" or the "Company") (TSX:ORA.TO - News) today announced financial and operating results for the fourth quarter and full year 2011. All dollar amounts are expressed in US dollars unless otherwise specified.

Fourth Quarter and Full Year 2011 Financial and Operating Highlights:

-- Gold production of 43,863 ounces and 160,159 ounces in the fourthquarter and full year 2011, respectively, with full year 2011 production being 16% higher than 2010;

-- Average on-site cash cost(1) per ounce of gold produced of $1,274 and


"Despite experiencing several operational challenges during 2011, we continue to make significant progress towards improving our operations and advancing our projects," stated Jim Bannantine, President and CEO of Aura Minerals. "

In connection with the mine plans at the Brazilian mines, we implemented a gold hedging program in late February to take advantage of high gold prices at the time and secure cash flows at these operations. We have hedged 80,000 ounces of gold production through June 2014, using a series of  zero-cost collars having a floor price of $1,700 per ounce and an average ceiling price of $1,812 per ounce.

With - an improved outlook for cash generation this year from our asset portfolio, 
- combined with lower capital expenditures than in past years, 
- and the credit facility upsizing which we expect to close in April,

(Credit Facility UpsizingFrom Feb.28/12 company update)
[Although the Company expects to generate positive free cash flow in 2012 based on current metal prices, management has negotiated an increase in the revolving credit facility to $45 million, from $25 million, to fund working capital for growth. Closing of the upsizing is expected to be in late March or early April, 2012.]

 we are better positioned for the next stages of the Company's growth. 

This includes:

- increasing the Aranzazu Mine throughput level to up to 5,000 tpd, subject to a positive Aranzazu PEA, with internal capital provided by the Brazilian mines over the next three years, and 

- developing the Serrote Project to significantly increase the size of the Company, subject to a positive Serrote Feasibility Study."


Outlook and Strategy


Aura Minerals' future profitability, operating cash flows and financial position will be closely related to the prevailing prices of gold and copper. 

The Company's future operating and financing cash flows are expected to fund internal growth and overall expansion of our projects. 

Key factors influencing the price of gold and copper include the supply of and demand for these commodities, the relative strength of currencies (particularly the U.S. dollar) and macroeconomic factors such as current and future expectations for inflation and interest rates.


Management believes that the short-to-medium term economic environment is likely to remain supportive for gold and copper prices with continued volatility in both.

The Company believes that other key factors influencing profitability and operating cash flows are production levels - impacted by grades, ore quantities, labour, plant and equipment availabilities, and process recoveries - and production and processing costs - which are impacted by production levels, prices and usage of key consumables, labour, inflation, and exchange rates.

The Company's primary strategic focus for 2012 is to unlock the value of its portfolio of producing mines by:

--  focusing on improving operational efficiencies at the 

San Andres Mine to reduce cash costs and conducting an 

in-fill drilling program to potentially expand resources and reserves; 

--  maintaining steady state operations at the Aranzazu Mine 

with mill throughput of 2,600 tpd and completing the Aranzazu PEA to 

potentially increase mill throughput up to 5,000 tpd; and 

--  achieving, sustaining and maximizing cash flows 

from the Brazilian Mines by executing the new life of mine 

plans with reduced strip ratios and improved ore grades. 

Longer term, the Company's organic 

growth plans include:


--  ensuring the San Andres Mine provides continuous cash flows for the
foreseeable future; 

--  increasing the Aranzazu Mine throughput levels up to 5,000 tpd 

with internal capital provided by the Brazilian Mines over the next 

three years, to be confirmed by the Aranzazu PEA; and 

-- developing the Serrote Project to significantly 
increase the size of the Company, subject to completion 

of the Serrote Feasibility Study. 



Jim Bannantine

Aura Minerals Inc.

President & Chief Executive Officer

info@auraminerals.com

www.auraminerals.com

 Sebastiao Salgado took this photograph of a dispute between miners 

and police in giant open pit gold mine+

Salgado was born on February 8, 1944 in Aimorés, in the state of Minas Gerais, Brazil. After a somewhat itinerant childhood, Salgado initially trained as an economist, earning a master’s degree in economics from the University of São Paulo in Brazil.

He began work as an economist for the International Coffee Organization, often traveling to Africa on missions for the World Bank, when he first started seriously taking photographs.

He chose to abandon a career as an economist and switched to photography in 1973, working initially on news assignments before veering more towards documentary-type work.

Source: http://en.wikipedia.org/wiki/Sebasti%C3%A3o_Salgado

His last work was "Workers", a 7 year project spent photographing labourers in 26 countries. 

One stunning photo from that series show 12,000 marchers breaking open the gates to a huge estate and reclaiming the land from an absentee landlord.

"Migrations", also called "Exodus", focused on immigrants, refugees and other displaced populations. For seven years, he took photographs of migrants from Africa, Asia and South America, many of whom had fled ethnic and religious conflict and genocidal regimes.

In the Times, he said that "there is little different between photographing a pelican or an albatross and photographing a human being. You must pay attention to them, spend time with them, respect their territory."

He has also founded the Terra Institute on 600 hectares of land where he is rebuilding a rain forest which belonged to his father. "All the birds are coming back, the river is flowing again, the environment is working, and all this has made such a difference to my relationship with nature. My life has completely changed," he wrote 

More on Environmental Photographers Environmental Photographer of the Year Award Grantham Prize Winners Announced: Environmental Reporting at its Best New Prize for Photos Showing

Bill Gross is co-chief investment officer of PIMCO, the giant asset managers whose Total Return Fund is the largest bond mutual fund with current assets of about $250 billion.

Gross says long-term interest rates have been rising in recent weeks for two principal reasons. 

"Yes, inflation is rearing its head. We're seeing that in oil prices and other commodities, and we're seeing it in the numbers," he said.
The consumer price index has risen 2.9% in the past 12 months.

In addition, Gross says, the Federal Reserve's "Operation Twist" is scheduled to end in a few months. Under this plan, the Fed sold short-term debt and purchased long-term bonds in an effort to keep longer-term interest rates lower.
At its meeting earlier this week, the Fed indicated that it didn't plan to extend the operation. "Yields have risen based upon the possibility that the Fed simply stops buying long-term bonds," he said. "If they do that, the question becomes, who is left?"

Despite the Fed's communiqué earlier this week, Gross doesn't believe the central bank's interventions in the bond markets are over. In two rounds of quantitative easing (QE), the Federal Reserve printed money to buy hundreds of billions of dollars of Treasury bonds and mortgage-backed securities. 

"I believe there will be a QE3, and perhaps a QE4," he said. Why? In the past few years, whenever central banks have stopped or paused their quantitative easing efforts, "stock prices have fallen and economies have slowed." 

The globe's private economies simply aren't sufficiently strong enough to support robust growth, and the world's central banks aren't willing to stand by and watch. 

"That's not a policy recommendation, it's simply a realization that the substitution of central bank monetary purchases will continue for a long time, as long as they [central banks] try to support private economies on a global basis," Gross said.

The Total Return Fund missed out on a healthy chunk of last year's bond rally. But since last fall, Gross notes, "we basically gained all of that back, and the Total Return Fund is back on track of producing" positive returns.

Still, Gross believes the 30-year long bull run for bonds may be coming to an end. 

"We're certainly close and have been close for a number of months," he said. It's very difficult to imagine interest rates going lower.
"The bond market, whether it's Treasuries, mortgages, or investment-grade bonds in combination, basically yield a little higher than 2%," Gross said. "
And unless the U.S. economy replicates Japan, where yields are down to 1% on average, then you'd have to say that we're close to the bottom in terms of yield."
He adds: "It doesn't mean the beginning of a bear market, but it does suggest at least that the great bond bull market since 1981 is probably over."

Gross recommends that investors avoid longer-term bonds — i.e. 10-year and 30-year bonds — whose prices may fall if long-term growth and inflation expectations rise.

However, they should also avoid short-term bonds. 
"The Fed has conditionally guaranteed that they won't be raising interest rates until late 2014, and that's almost three years from now." Gross believes that bonds that mature in five, six, or seven years occupy the sweet spot in today's market.

Bond holders tend to fear strong growth because it has the potential to ignite inflation and boost interest rates, thus reducing their returns.

Gross says that while the economy has improved, it shows no signs of overheating. He believes the U.S. economy is growing at about a 2% annual rate in the first quarter "and probably beyond." That's about as good as can be hoped for. 

While the Federal Reserve has injected close to $1 trillion into the U.S. economy in the past year, growth is in large measure tied to what happens in the global economy. And the omens from abroad aren't particularly good. "China is slowing and the euro land is in recession," Gross said.

The U.S. is growing at a decent clip, "what we call a new normal, but it probably won't get back to the 3 or 4% real growth numbers that we witnessed over the past decades."





Daniel Gross is economics editor at Yahoo! Finance

Groupon Blows It Again, Restates Earnings As Customers Demand Refunds | Daily Ticker - Yahoo! Finance

Groupon Blows It Again, Restates Earnings As Customers Demand Refunds | Daily Ticker - Yahoo! Finance

After missing the bottom line in its first quarter as a public company, Groupon is now restating its Q4 earnings after a higher-than-expected number of customers demanded refunds.
 
The restatement does not affect cash flow, and the company is sticking with its outlook for the first quarter.
According to the company, what happened is this:

Groupon launched a bunch of new, higher-priced products late last year. At least in the fourth quarter, the return rate on these products was considerably higher than the return rate for Groupon's cheaper offerings.

When customers demand refunds within 60 days, Groupon's accounting treats the refund as a "contra-revenue" event, meaning that it reduces Groupon's revenue and earnings. After 60 days, refunds are treated as an expense, so they only hit earnings.

Going forward, Groupon will use higher refund assumptions for its higher-priced products. So this shouldn't happen again....