Receiving Wide Coverage ...
Bonds, Bonds, Bonds: The FT and the Journal printed articles this morning that indicate the bond market is booming. According to the FT, "in order to lure conservative investors away" from the much maligned money market fund industry, fund management groups are launching (and pushing) "ultra-short" bond funds that will invest in short-term government and corporate paper. This type of investment vehicle, launched by six fund managers over the last few months and being eyed by several others, is worth considering because, as one manager told the paper, "it retains a lot of the features that give flexibility to money market funds, things like check-writing and no trading restrictions." But these investments may be short-term for a reason. According to the Journal's article — which also nods to a spike in investor interest in bonds over the past few years — some fund managers (perhaps, not the same ones the FT talked to?) believe there are "hidden dangers lurking" in the market. "Bond math dictates that losses will be magnified when interest rates are low, and when bond maturities are long, as they are now," the paper notes.
Details on Deutsche Bank: Two FT articles highlight allegations made to the Securities and Exchange Commission that Deutsche Bank improperly valued a clutch of complex derivatives in order to avoid taking a government bailout during the financial crisis, and the accusations are worse than yesterday's report may have indicated. One article suggests BaFin, Deutsche's principal regulator, was aware of the valuations, which "could lead to tensions with the SEC." The other alleges Deutsche Bank may have terminated one of its whistleblowers a few days after he filed a complaint with the SEC. (The official reason allegedly cited at the time of termination was that the employee's role had been relocated to Berlin.) Deutsche Bank declined to comment on this specific charge. However, a Dealbook article reiterates the bank's claims that the complaints "had been investigated previously and found to be without merit" and points to a 2011 Reuters article that appears to address similar allegations.
Wall Street Journal
Germany's central bank has cut its growth forecast for the rest of 2012 and 2013. It also warns the country might be headed for a recession over the winter months.
Despite several probes and a stern warning from the U.K.'s Financial Services Authority, High Street banks are still pressuring staff to encourage "product sales that were not appropriate for customers." HSBC, Royal Bank of Scotland, Lloyd's Banking Group, Barclays and Santander are name-dropped in the article.
The Association of British Insurers, which represents the U.K.'s biggest investor groups, say banks may remain "uninvestable" as long as they are not allowed to charge more for loans and regulators take their time issuing new anticipated rules.
New York Times
Goldman Sach's partners are increasing their stake in the firm. According to a disclosure in a regulatory filing, "407 partners own 12.7% of the firm, up from 11.4% in late October."
Seems like you can always count on Dealbook for a fun Friday read (Recall it's round-up of Commodity Futures Trading Commission member Bart Chilton's poems about arcane financial matters.) This article looks at the local restaurateurs frequently invited to set up shop in investment bank cafeterias. So, in other words, you now know what Goldman Sachs employees are eating.
What could solve the U.S. debt crisis? A pair of $1 trillion platinum coins, postulates this Post article. Per the author: "Under current law, the Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases." As such, the U.S. mint could make the coins, President Obama could have them deposited at the Federal Reserve, which can then move the money to the Treasury and, then, problem solved. "Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years," the author writes. "The ceiling is no longer an issue."