Two chart updates today worth considering. This first one shows 10 Treasury yields continuing to fall as money flows to strategic ‘risk-off’ mode parking in the relative liquidity of US Treasuries.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
Another big picture snapshot of the Canadian stock market confirms this trend, with capital continuing to flow out of the ‘risk on’ global-growth bet.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
Private equity firm Carlyle Group LP went public today raising $671 million in its initial public offering and making its three founding partners billionaires. The issue was priced below the marketed range however, after struggling to win investors wary of the track record of publicly traded buyout firms. More evidence of the investor dupe of IPO’s can be found in considering the after-IPO performance of some of the other much-hyped deals sold to the public over the past few years as shown below. Typically sellers and their broker/promoters get big bucks while investors get big hype and big hurt. See Carlyle Prices IPO Below Range.
Michael Lewis, who authored “Moneyball,” “Liar’s Poker” and “The Blind Side” spoke to CNBC this morning about the two key themes that degraded our financial system over the past 30 years.
I agree with Lewis that the solutions are quite simple: financial firms must go back to choosing between being a dealer or being an advisor. We cannot afford them to be both. Cross-selling in this area is deadly for clients and the stability of the banking sector and we already learned this lesson in the 20’s and 30’s. The real economy is paying for our naivete on this point again today. Second, the firms that chose to be dealers and concerted risk takers must do so on their own dime. This means a migration back to the old model of partnerships where those making the bets can reap the rewards and fall on their own sword as needs must. As soon as the risk-takers are gambling with client capital, in a tax-payer-backed bank, the depths of greed and recklessness are literally bottomless.
