The Weekly Oasis

You've heard of Webcasts and Podcasts...welcome to Cubecasts. From our cubicle to yours, here is Issue #8 of The Weekly Oasis, a newsletter in which Bankerella shares her views on market events, financial news, and things of interest to everyone from gorillas to prospective monkeys.



Where did it all go?

In recent months, U.S. financials have lost almost $10 billion, which means that all the investors that bought into the Ponzi-like financing schemes of the last twelve months are hurting bad. That includes all those sovereign wealth funds, including those of Abu Dhabi, Kuwait, and Singapore, and individuals such as Prince Alwaleed bin Alsaud, who once said, "At about $43, Citi's share price was at too attractive a price." (Citi's now trading at $20.) We're talking about massive multinational corporations losing money so fast that they're starting to look like tech startup IPOs in 2000. Where'd all the money go? I know one thing: sure as hell not into our salary and bonuses.

So what's the long-term effect on the markets? Well, sovereign wealth funds are becoming increasingly important in the global markets, and they just got burned like they answered a Nigerian email from Dr. Aminu Atiku. My guess is that the way these funds think about the markets is in the process of changing. They're going to need experts, they're going to need analysts, and they're going to need to start acting like the $2 trillion (and booming) family of high-powered hedge funds that they are. My advice to all you out-of-work monkeys out there is to start thinking about angling towards these guys. In ten years, with the industry projected to grow to $15 trillion you might be glad you did.

Your place or mine?

Analysts are calling Yahoo "damaged goods" after Jerry Yang, Yahoo's CEO, thoroughly botched dealings with Microsoft. What's worse, like that girl at the bar who goes home with the guy she hates just because some other guy dissed her, Yahoo then turned around and made a deal with Google that gives Google the right to sell advertising for Yahoo's searches. This puts 90% of search revenues firmly in Google's hands... and it doesn't look like the deal will create enough share price value for Yahoo to come anywhere near what Microsoft was offering. This is a tacit admission that Yahoo can't extract as much value from search as Google can. Looks like the end of Yahoo's self-respect... and Google didn't even have to pick up the tab for dinner first.

Hardcore Shocker

This last story isn't finance-related, but I'm sure all of us can use a good scurrilous sex story in the midst of the credit crisis fallout. The judge in the trial of a hardcore porn filmmaker and shock artist has been discovered with "graphic depictions of naked women painted to look like cows, masturbation and a man "cavorting" with a sexually aroused farm animal" posted on his personal website. Now, in the era of Two Girls One Cup, at a time when senators and ministers are more likely to get caught up in sex scandals than Hollywood stars, the fact that a respected federal judge with over twenty years of time on the bench has a little barnyard porn on his server isn't all that shocking. Really, who cares? You can't google "horse" without stumbling across that stuff these days. What's shocking is that, once the press outed him, he recused himself and declared a mistrial. Then the real eyebrow-raiser: he asked the judicial counsel to review his behavior to make sure he hadn't done anything wrong. We're looking at something strange and exotic here, folks: a sudden and unexpected stand for decency, integrity, and freedom of speech, coupled with a guy's sense of respect and responsibility towards the position that he was appointed to fill. I'm not sure if the country's ready for this. Talk about shock art.

You've heard of Webcasts and Podcasts...welcome to Cubecasts. From our cubicle to yours, here is Issue #7 of The Weekly Oasis, a newsletter in which Bankerella shares her views on market events, financial news, and things of interest to everyone from gorillas to prospective monkeys.



A quick exit for Jimmy Cayne.

Passionate bridge player, reputed toker and ex-Bear CEO James Cayne was able to stop playing cards long enough to attend a ten-minute press conference yesterday at Bear Stearns headquarters at which he apologized for Bear's downfall, saying: "We just ran into our own hurricane." Not surprisingly, he just couldn't spare enough time for a question and answer session afterwards, leaving Bear employees no choice but to vent their feelings on a painted caricature outside the front door of the building. Classy. Even classier was the way he offloaded his shares in the middle of the takeover. Of course, he may have lost more money on Bear stock than anyone -- his stake, which was once worth nearly a billion dollars, ultimately sold for $61m. Now that's not a lot of bread for a Wall Street CEO, but it's enough to subsidize a decent retirement lifestyle of bridge and smokes... which is more than a lot of his employees are getting. Cry me a river, Jim.

The sky is falling... or is it?

Yesterday, reports on the narrowing US trade deficit cast further doubt on the existence of a current recession and intensified economic analysts' debates over how bad things actually are. However, the Financial Times isn't mincing words with today's doom-and-gloom front page remarks from the FDIC: "US Banks Likely to Fail as Bad Loans Soar". Thanks, FT; that's very helpful. If there wasn't a run on banks before, there will be now.

Nickel and dimed.

Far more important to WSO readers, however, will be the fact that cost-cutting moves at Goldman Sachs and Morgan Stanley (among others) have taken a big bite out of the little analyst perks that make all those late nights possible. Black car and cab bills are now covered by the firms at 10 PM rather than 9 PM. Goldman has gotten rid of free soda and bottled water. Analysts are being forced to print double-sided and even delete files on the network to save space on the servers. And rumors are that SeamlessWeb/meal allowances will dip back below $25 soon. Don't these banks realize that, like an army, analysts march on their stomachs? And you can barely get fried rice delivered in Manhattan for $20, so our advice is to stock up on extra Fiji while you can. What's next: paying our own Blackberry bills?

You've heard of Webcasts and Podcasts...welcome to Cubecasts. From our cubicle to yours, here is Issue #6 of The Weekly Oasis, a newsletter in which Bankerella shares her views on market events, financial news, and things of interest to everyone from gorillas to prospective monkeys.



Round One: Fight!

Last week, corporate raider Carl Icahn picked a proxy fight with Yahoo, claiming Yahoo's board had botched its opportunity to sell to Microsoft. For those not following Icahn's career, this is the latest in a long string of fights, from TWA in the mid-80s to Motorola just a few months ago. Microsoft's now playing hard to get, but if Icahn is successful in causing a bumpier road for Yahoo, it's only a matter of time before they come back to the deal table. We here at WSO will be keeping our ear to the ground on this one. Icahn may be a bastard, but he certainly tends to shake things up when he comes into play. Hey, anyone know if he's hiring?

Exclusive interview with "Katrina"

Strip Clubs have been a hot topic at WSO recently and that left us wondering. We know how the economic downturn is affecting bankers, traders, consultants and the like. So now who's paying the strippers? Being of the opinion that one should keep diversified contacts, I've always got a couple of them in my address book. So today I called my Manhattan stripper friend, Katrina (name changed for privacy), whom I convinced to talk turkey exclusively for WSO. Actually, that's not as hard as you'd think -- in my experience, getting them to start talking is not the problem. (Fair disclosure: Katrina works at one of the mid-range strip clubs in the city, not Scores.) Here's a transcript, edited for privacy and brevity:

You've heard of Webcasts and Podcasts...welcome to Cubecasts. From our cubicle to yours, here is Issue #5 of The Weekly Oasis, a newsletter in which Bankerella shares her views on market events, financial news, and things of interest to everyone from gorillas to prospective monkeys.

Close door, open window.



It's a perennial rule of Wall Street that if there's blood in the streets, somebody's making the most of it. As the job toll from the credit crunch rises to 40,000, companies like Pimco are stepping into the gap in the hopes of picking up the sort of skilled candidates that, until recently, were hard to lure away from big banks. And they're not the only ones: according to several of our recruiter acquaintances, smaller firms are casting broader nets in the hopes of catching some of the outbound talent. If you're affected, it's a great time to ask yourself not just "Must I bank?" but also, "What do I really want to do?" Since many firms are (paradoxically) more accessible now than a year ago, it might be a good time to check out niches of the industry you've wondered about but never pursued. Got jobs? Need a job? Visit us at http://www.wallstreetoasis.com/jobs.









Fire sale at the Federal Reserve.

On Wednesday the Fed cut rates by another quarter point to 2% -- lower than they've been since 2004. Year-to-date, prime rate cuts have been bigger and faster than they have for decades. The market response was initially enthusiastic but flagged by day's end on concerns that this cut would be the last for a while. The Fed's language hinted that more cuts might not be needed, but unfortunately it sounded to much of the market like more cuts might not be possible. And that's a fair concern. Bernanke's (and our) problem is that money can't get much cheaper without causing a slew of undesirable effects, so at a certain point we can't rely on the Fed for stimulus any longer.















Hot thread this week on WallStreetOasis: Taking breaks at work.



You do it, we do it, everybody does it. Find out what your fellow monkeys do at work to decompress, relax, or just wait for senior guys to get their acts together. Sure, you could check your comps for the fourth time, or try to fix that annoying pixel problem on the last graph in the 80-page book that nobody's even going to crack at the meeting. But have you ever wondered what the guy in the next cube is doing with his downtime? Check it out on WSO. And here are two words of wisdom to live by, fellow cube-monkeys: Alt-Tab. Do it early, do it often.

You've heard of Webcasts and Podcasts...welcome to Cubecasts. From our cubicle to yours, here is Issue #4 of The Weekly Oasis, a newsletter in which Bankerella shares her views on market events, financial news, and things of interest to everyone from gorillas to prospective monkeys.

Google Versus the World



There's been a lot of talk out there recently about whether we are or aren't in a recession. Jason Schwartz at Seeking Alpha makes some strong arguments for positive sentiment, among them the recent good news from firms like Google, IBM, Ebay, and Intel. Remember the flap about Google? A couple of months ago everyone was concerned about their paid click rates. The stock entered a freefall. Investors began to draw parallels between Google's flagging click rates and the world's consumer confidence. When Google surprised everyone (except the insiders) by announcing strong earnings, the market realized that they'd put too much confidence in the reporting firm that measures internet click rates. Turns out that Google had been taking steps to make its experience more user-friendly, including reducing accidental clicks and targeting ads more tightly. CEO Eric Schmidt said that it was a step towards quality of ads over quantity, and that revenue per click would rise. Can you say "Oops"? The upshot is that the economy isn't as transparent as we pretend it is, particularly when we can't trust the reporting. Proof: Bernanke.












On that note...

The Fed is likely to cut rates by another quarter of a point next week. Will it help? Tough to say, but either way Bernanke's going to keep taking a lot of heat. Just remember: it's easy to expect that our economy will be run like a highly-responsive precision machine, but it's actually more akin to driving a giant barge with an undersized outboard motor and only a rear-view mirror to guide the way. The throttle only has two directions, the current is unpredictable, it takes forever to get up to speed, and too much (or too little) momentum is a killer. Let's all take a moment and thank Bernanke for doing a tough, thankless job very well........ Yeah, okay. That's long enough. Moving on.












Gas-guzzling, nearly-insolvent airline seeks same for LTR



Call me pessimistic, but this merger has got trainwreck written all over it. Or perhaps planewreck. Delta and Northwest each posted massive losses today (for a combined $10 billion) as they continued on the road to completing the merger that formally announced on April 15th. And the market's not happy about it, at least according to the stock prices. It feels exactly like when your alcoholic college buddy meets your neurotic female coworker at the office Christmas party, sparks fly over the punch bowl, and the next week they're getting married in Vegas. You want to be happy for them, but there's only one way for it to end. And it ain't happily ever after.