barclays

DealBook: Carlyle in $3.3 Billion Deal for Getty Images

August 15, 2012 by NewsMaker Leave a Comment

The Carlyle Group announced on Wednesday that it had reached a deal to acquire Getty Images, the well-known distributor of photography, video and multimedia products, from Hellman Friedman for $3.3 billion.

Carlyle will take a controlling stake in Getty Images, while the co-founder and the chairman of Getty Images, Mark H. Getty, and the Getty family will roll substantially all their ownership interests into the acquisition. Other top Getty Images executives, including the co-founder and chief executive Jonathan Klein, will also invest significant equity in the company.

As DealBook reported on Tuesday, Carlyle had been bidding against other private equity firms, including CVC Capital Partners, for Getty Images. Hellman Friedman had acquired the company in 2008 for about $2.4 billion.

“This partnership with the Carlyle Group reflects and bolsters our ongoing strategy, strong management team and the talent of our dedicated employees,” Mr. Klein said in a statement.

The company, which is based in Seattle, was founded in 1995 by Mr. Klein and Mr. Getty, an heir to the J. Paul Getty oil fortune. It possesses an archive that includes 80 million still images and illustrations.

JPMorgan Chase, Barclays, Credit Suisse, Goldman Sachs and RBC Capital Markets are providing debt financing for the deal, which is expected to close later this year.

Article source: http://dealbook.nytimes.com/2012/08/15/carlyle-in-3-3-billion-deal-for-getty-images/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: barclays, cvc capital partners, multimedia products

Bits Blog: Facebook Stock Continues to Fall After Earnings Report

July 27, 2012 by NewsMaker Leave a Comment

5:23 p.m. | Updated

After its stock performance Friday, Facebook probably wishes it could unfriend its stock ticker symbol.

Although the stock fell to a low of $22.28, it closed at $23.71, down $3.14, or 11.7 percent. The fall resulted from a tepid earnings report by the company on Thursday.

Facebook’s stock began falling in after-hours trading Thursday, dipping below $24.

During its earnings call Thursday, David Ebersman, Facebook’s chief financial officer, said, “Obviously we’re disappointed about how the stock is traded.”

But executives seemed confident that the company would continue to raise profits and revenue with new advertising modules and a continued expansion in mobile.

The company said its revenue for the quarter climbed to $1.18 billion, from $895 million. It apparently did not instill enough confidence going forward.

Sheryl Sandberg, the company’s chief operating officer, said Facebook’s “sponsored stories” ad unit is currently generating around $1 million in revenue per day for the company, half of which comes from the mobile version of the service.

As Barron’s noted on its tech trading blog, analysts spent most Friday trying to evaluate what would happen to the stock moving forward, also updating future estimates and targets for the company.

Just like Facebook’s stock, analysts’ numbers were up and down. Victor Anthony of Topeka Capital Markets gave the stock a buy rating, with a positive $40 price target. Spencer Wang of Credit Suisse maintained a neutral rating and gave the stock a $34 price target. Anthony DiClemente of Barclays Capital cut his price target to $31 a share from $35.

Facebook was not the only company to suffer in the markets this week. Other technology companies, including Apple, Netflix and Zynga, fell after disappointing earnings. Shares in Zynga were down to $3.09, for a two-day loss of 38 percent.

Facebook went public two months ago at $38 a share, with a projected market valuation of $100 billion.

Article source: http://bits.blogs.nytimes.com/2012/07/27/facebook-stock-continues-to-fall-after-earnings-call/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: barclays, barclays capital, chief financial officer

DealBook: Ex-Barclays Official in Line for $13.6 Million Payout

July 27, 2012 by NewsMaker Leave a Comment

Simon Dawson/Bloomberg NewsJerry del Missier, former chief operating officer of Barclays.

LONDON — A former senior Barclays executive involved in the interest rate manipulation scandal is set to receive a $13.6 million payout, a compensation package that could add to the scrutiny of the British bank.

Jerry del Missier, the bank’s former chief operating officer who resigned this month, has been a central figure in the firestorm.

In June, British and American authorities fined Barclays for reporting false rates to increase profits and make the bank look healthier during the financial crisis. According to regulatory documents, a senior executive — later identified as Mr. del Missier — asked bank employees to lower the firm’s submissions of the London interbank offered rate, or Libor.

The Barclays case is the first major action stemming from a multiyear inquiry into rate-rigging that has ensnared more than 10 banks. Since the Barclays settlement, lawmakers have taken aim at regulators and bank executives.

In Congressional testimony on Thursday, Timothy F. Geithner, the Treasury secretary, vowed that authorities would forcefully pursue criminal investigations. Mr. Geithner, who ran the Federal Reserve Bank of New York during the financial crisis, has taken heat for not halting the illegal actions back then, despite evidence of problems. Instead, he advocated broad reforms to the rate-setting process.

“I believe that we did the necessary and appropriate thing,” he said on Thursday before a Senate panel, the second Congressional hearing this week to focus on Mr. Geithner.

Mr. del Missier, who has held a number of top positions at the bank, has also defended his actions to lawmakers. In testimony to the British Parliament this month, the Canadian-born executive said he believed he was following the instructions of senior government officials. “I expected that the Bank of England’s views would be incorporated into our Libor submissions,” he said. “The views would have resulted in lower submissions.”

Regulators say Mr. del Missier misinterpreted a discussion between Robert E. Diamond Jr., the former chief executive of Barclays, and Paul Tucker, the deputy governor of the Bank of England, the country’s central bank.

Pay issues have dogged Barclays for months.

This year shareholders balked at the size of management’s pay packages. In April, the top executives pledged to give up some of their bonuses if the bank did meet certain performance goals.

Shortly after the Barclays settlement, Mr. Diamond and Mr. del Missier agreed to forgo their annual payouts. Days later, both of them resigned over their roles in the rate-manipulation scandal. To help quell public anger, Mr. Diamond agreed to forfeit deferred stock bonuses of up to $31 million.

The former chief could still collect one year of salary and a cash payment collectively worth $3.1 million. Mr. del Missier is set to receive $13.6 million, according to a person with direct knowledge of the matter. The news of Mr. del Missier’s payout was reported earlier by Sky News.

Barclays is now looking to replace many of its senior officials. Along with Mr. Diamond and Mr. del Missier, its chairman, Marcus Agius, has said he will leave once a new chief executive is in place. On Wednesday, Alison Carnwath, chairwoman of the firm’s compensation committee, also gave up her position, citing undisclosed personal reasons.

A spokesman for Barclays declined to comment. A representative for Mr. del Missier was not immediately available for comment.

Article source: http://dealbook.nytimes.com/2012/07/26/former-top-barclays-official-in-line-for-13-6-million-payout/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: barclays, federal reserve bank, london interbank offered rate

DealBook: Deutsche Bank Blames Weak Euro for Drop in Second-Quarter Profit

July 24, 2012 by NewsMaker Leave a Comment

ReutersDeutsche Bank’s co-chief executives are Anshu Jain, left, and Jürgen Fitschen.

FRANKFURT — Deutsche Bank, Germany’s largest lender, said on Tuesday that earnings plunged more than expected in the second quarter after a weak euro led to an increase in operating costs in the United States and Britain.

Profit fell more than 40 percent to 700 million euros, or $844 million, the bank said in a preliminary release that offered little detail. The bank’s operating expenses not counting interest rose 5 percent from a year earlier, to 6.6 billion euros.

The increase in costs “is mainly a result of the bank’s U.S. dollar and pound sterling cost base being negatively affected by the weakening of the euro,” the bank said. The euro was trading at slightly more than $1.20 Tuesday, near a two-year low.

The preliminary earnings report demonstrates the challenges facing Anshu Jain and Jürgen Fitschen, who took over in May as co-chief executives of the bank, replacing Josef Ackermann, who retired. Deutsche Bank shares fell 2.1 percent Tuesday to close at $28.17 in New York.

In past quarters, Deutsche Bank had lower trading revenue as its clients stayed away from financial markets hurt by the euro zone debt crisis. The bank said that revenue in the second quarter fell to 8 billion euros from 8.5 billion euros a year earlier.

Deutsche Bank is among the institutions under scrutiny by authorities in connection with manipulation of Libor, the London interbank offered rate, a benchmark used to help determine the borrowing rates for $750 trillion worth of financial products, including student loans and mortgages.

After a rival, Barclays, agreed in June to pay $450 million to resolve accusations against it by American and British authorities, there had been speculation that Deutsche Bank would set aside money to cover a possible settlement. But the bank did not mention the Libor investigation in its one-page statement Tuesday.

Nor did it address speculation that it planned large cuts in its investment banking unit, previously run by Mr. Jain. The bank said only that it planned to reduce its level of risk to help restore profit.

Deutsche Bank said it set aside 400 million euros in the quarter to cover possible bad loans, down from 464 million euros a year earlier. Profit before taxes was about 1 billion euros, down from 1.8 billion euros, the bank said.
It said it would provide precise figures and more details about the quarter on July 31.

Article source: http://dealbook.nytimes.com/2012/07/24/deutsche-bank-blames-weak-euro-for-drop-in-second-quarter-profit/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: barclays, deutsche bank, student loans

DealBook: Focus Shifts to Regulators in British Inquiry on Rate-Fixing

July 16, 2012 by NewsMaker Leave a Comment

Simon Dawson/Bloomberg NewsIn a letter to Barclays, Adair Turner, chairman of the Financial Services Authority, questioned efforts to avoid taxes.

LONDON — British regulators will face further scrutiny for their role in a rate-manipulation scandal when top officials at the Financial Services Authority testify on Monday before Parliament.

Lawmakers in London and Washington have been pressing regulators over what they view as a failure to address problems with the process for setting benchmark interest rates. British politicians are expected to ask regulatory officials when they were first notified about potential issues, and why they did not stop the activities.

Documents released by Barclays indicate that the bank informed regulators about problems with the London interbank offered rate, or Libor, as far back as 2007. But the Financial Services Authority opened its investigation in April 2010.

“It wasn’t just the fault of the banks,” said Mark Garnier, a British politician who sits on the parliamentary committee overseeing testimony on Monday. “The Financial Services Authority should have picked up on the irregularities.”

Mr. Garnier predicted that the investigation “will drag on and on.”

“More banks are going to be caught up in this,” he said.

Regulators are dealing with the fallout from the multiyear investigation into how big banks set crucial benchmark interest rates, including Libor. The rate is used to determine the borrowing costs for trillions of dollars of financial products, including mortgages and loans.

In June, Barclays agreed to pay $450 million to settle claims that it reported false rates in an effort to bolster profits and deflect concerns about the bank’s financial health. The continuing investigations, by civil and criminal authorities worldwide, could eventually cost the industry tens of billions of dollars.

The Libor scandal has helped bolster the chorus of criticism against British regulators.

After the financial crisis began, lawmakers sought to blame regulatory officials for failing to see the warning signs at big banks. They accused the Financial Services Authority of narrowly focusing on banking regulation instead of looking at how banks’ activities affected the broader economy. The regulatory system “failed spectacularly in its mission to maintain stability,” the British chancellor of the Exchequer, George Osborne, said in 2010.

Since the crisis, lawmakers have moved to overhaul the regulatory system. As part of that effort, the Financial Services Authority, which oversees Britain’s banking industry, will be disbanded early next year. Its responsibilities will be divided between a new consumer watchdog and the Bank of England, the country’s central bank.

As it nears the end of its existence, the Financial Services Authority has made a big push to increase enforcement actions. In recent months, the agency has carried out raids and pursued more cases involving insider trading and other market abuses.

Earlier this year, the agency fined the prominent money manager David Einhorn and his hedge fund, Greenlight Capital, $11.3 million for trading on confidential information about a British pub chain. Mr. Einhorn denied wrongdoing but decided to settle the case rather than fight it.

“Our view on enforcement has changed radically,” Tracey McDermott, interim director of enforcement and financial crime for the Financial Services Authority, said in an interview in April. “People need to be worried about being caught. They need to think that the sanctions will be meaningful.”

But the agency could be consumed by the rate-manipulation controversy in its final months.

Peter Foley/Bloomberg NewsJerry del Missier, who resigned as chief operating officer of Barclays this month, is scheduled to testify on Monday.

On Monday, British lawmakers will focus on what steps the Financial Services Authority took to address problems with the way Libor was set each day.

The parliamentary committee will hear from Adair Turner, chairman of the agency, and Andrew Bailey, the head of its prudential business division, who has been tapped to run the Bank of England unit that will be responsible for banking oversight. Ms. McDermott and Jerry del Missier, a senior Barclays executive who resigned this month because of the scandal, are also scheduled to testify on Monday.

Politicians are expected to question whether top executives at Barclays responded to regulators’ concerns about the bank’s corporate culture.

Documents released by Barclays show that Mr. Turner wrote to the bank’s chairman, Marcus Agius, in April, detailing specific worries about corporate governance. Mr. Turner, in part, highlighted Barclays’ efforts to avoid paying around $770 million in taxes and questioned some of the bank’s accounting methods.

“Barclays often seems to be seeking to gain advantage through the use of complex structures, or through arguing for regulatory approaches, which are at the aggressive end of interpretation of the relevant rules and regulations,” Mr. Turner said in the letter.

Through a spokesman, Financial Services Authority officials declined to comment.

In his testimony last week, Mr. Agius, who is stepping down as chairman of Barclays, admitted that the bank had had a strained relationship with the Financial Services Authority. But he added that an agency official told him earlier this year that governance at the bank was “best in class.”

The Financial Services Authority started to hear about potential problems with Libor in 2007. At the time, a Barclays official informed the agency that other banks had not been accurately reporting their Libor submissions, according to regulatory documents.

In an April 2008 call with the Financial Services Authority, a Barclays manager indicated that the bank was understating Libor rates. “So, to the extent that, um, the Libors have been understated, are we guilty of being part of the pack? You could say we are,” the Barclays manager said, according to regulatory documents.“I would sort of express us maybe as not clean clean, but clean in principle.”

Timothy F. Geithner, then president of the Federal Reserve Bank of New York, notified British authorities about problems with Libor in 2008, according to documents. Mr. Geithner, who is now the Treasury secretary, reached out to Mervyn A. King, the governor of the Bank of England, recommending changes to the rate-setting process, including eliminating incentives to misreport Libor. It is unclear whether Mr. King passed on the New York Fed’s recommendations to the Financial Services Authority.

Despite the revelation, British and American regulators did not stop the problems. At Barclays, the manipulation of Libor continued until 2009. As the Libor investigation gained traction, officials in London were also slow to act, and at times they hesitated to investigate, according to people close to the case who spoke on the condition of anonymity. American authorities needed approval from their British counterparts to gain access to some e-mails and bank records from overseas firms.

Despite questions about its efforts to police big banks, the Financial Services Authority will continue to play a central role in the global rate-manipulation investigation. It is examining activities at other financial institutions, and some of the 14 Barclays traders implicated in the rate manipulation may face actions. The Serious Fraud Office of Britain also announced on July 6 that it would open a criminal investigation into the Libor scandal.

“Barclays’ misconduct was serious, widespread and extended over a number of years,” Ms. McDermott said when the Barclays settlement was announced. “The action we have taken against Barclays should leave firms in no doubt about the serious consequences of this type of failure.”

Article source: http://dealbook.nytimes.com/2012/07/15/focus-shifts-to-bank-regulators-in-british-rate-fixing-inquiry/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: barclays, garnier, simon dawson

DealBook: New York Fed Was Warned About Rate Inaccuracies in 2007

July 13, 2012 by NewsMaker Leave a Comment

1:51 p.m. | Updated

A Barclays employee notified the Federal Reserve Bank of New York in April of 2008 that the firm was underestimating its borrowing costs, following potential warning signs as early as 2007 that other banks were undermining the integrity of a key interest rate.

In 2008, the employee said that the move was prompted by a desire to “fit in with the rest of the crowd” and added, “we know that we’re not posting um, an honest Libor,” according to documents that the agency released on Friday. The Barclays employee said that he believed such practices were widespread among major banks.

In response, the New York Fed began examining the matter and passed their findings to other financial authorities, according to the documents.

DealBook: Robert E. Diamond Jr., Chief Executive of Barclays, Resigns

July 3, 2012 by NewsMaker Leave a Comment

Jerome Favre/Bloomberg NewsRobert E. Diamond Jr., chief of Barclays.

3:37 a.m. | Updated

LONDON – Robert E. Diamond Jr., the chief executive of Barclays, resigned on Tuesday less than a week after the big British bank agreed to pay $450 million to settle accusations that it had tried to manipulate key interest rates to benefit its own bottom line.

Mr. Diamond’s resignation, which was effective immediately, follows mounting criticism targeted at Barclays’ actions from politicians and shareholders.

The British prime minister, David Cameron, had called on individuals to take responsibility, while other local politicians had said Mr. Diamond should resign.

“My motivation has always been to do what I believed to be in the best interests of Barclays,” Mr. Diamond said in a statement. “No decision over that period was as hard as the one that I make now to stand down as chief executive. The external pressure placed on Barclays has reached a level that risks damaging the franchise. I cannot let that happen.”

Marcus Agius, the bank’s chairman, who resigned on Monday, will now stay at the bank and lead the search for a new chief executive, according to a statement from Barclays.

Mr. Agius will head the executive committee at Barclays until a new chief executive is appointed, and will be supported by Michael Rake, the firm’s deputy chairman.

While Mr. Diamond is stepping down at Barclays, he will face continued scrutiny on Wednesday when he testifies before a British parliamentary committee.

Local politicians are expected to question him about the actions within the bank that led to the multimillion-dollar fines from the Justice Department and the Commodity Futures Trading Commission in the United States and the Financial Services Authority in Britain.

Fresh details about the case show how Mr. Diamond and other senior executives played a role in the questionable actions and failed to prevent them.

In 2007 and 2008, Mr. Diamond’s top deputies told employees to report artificially low rates in line with its rivals, deflecting scrutiny about the health of Barclays at the height of the financial crisis, according to several people close to the case.

Barclays declined to comment.

Mr. Diamond’s resignation follows a settlement that Barclays struck last week with the American and British authorities, part of wide-ranging inquiry into how big banks set certain benchmarks, including the London interbank offered rate, or Libor.

Those rates are used to determine the costs of $350 trillion in financial products, including credit cards, mortgages and home loans. American and international regulators are investigating several other banks, including HSBC, JPMorgan Chase and Citigroup.

In a letter to Barclays employees on Monday, Mr. Diamond said he was “disappointed and angry” about the bank’s past attempts to manipulate key interest rates.

“I am disappointed because many of these behaviors happened on my watch,” he wrote.

The changes in Barclays’ leadership come after Mr. Diamond helped transform Barclays’ investment bank into a major player on Wall Street.

The American-born Mr. Diamond joined the British bank in the late 1990s, and quickly expanded the investment banking unit into new areas, such as commodities and derivatives trading.

At the height of the financial crisis, Mr. Diamond, then the head of the investment bank, Barclays Capital, beefed up the firm’s presence in the United States by acquiring the North American operations of Lehman Brothers in 2008.

“I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth,” Mr. Diamond said in a statement on Tuesday.

Article source: http://dealbook.nytimes.com/2012/07/03/chief-executive-of-barclays-resigns/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: barclays, mr diamond, robert e diamond

DealBook: Regulator Fines Barclays Capital Over Subprime Mortgages

December 22, 2011 by NewsMaker Leave a Comment

The Financial Industry Regulatory Authority said on Thursday that it had fined Barclays Capital $3 million for misrepresenting information about subprime mortgage securities the bank had sold from 2007 to 2010.

Finra, as the nonprofit self-regulator is known, said in a statement that Barclays Capital had provided inaccurate data about the delinquency rates of mortgages packed into three securities. The misrepresentations “contained errors significant enough to affect an investor’s assessment of subsequent securitizations,” according to the agency.

That data was then referenced for five additional subprime securities, the agency said.

“Barclays did not have a system in place to ensure that delinquency data posted on its Web site was accurate,” J. Bradley Bennett, the agency’s enforcement chief, said in a statement. “Therefore, investors were supplied inaccurate information to assess future performance of RMBS investments.”

Barclays Capital neither admitted nor denied wrongdoing, though it consented to the fine. A spokeswoman for the bank declined comment.

The Financial Industry Regulatory Authority has fined several investment banks in the last two years, including Merrill Lynch and Credit Suisse in May and Deutsche Bank in July 2010.

Article source: http://feeds.nytimes.com/click.phdo?i=c0057d89aedfad29d27e7f05bcd975b5

Filed Under: Business News Tagged With: barclays, barclays capital, inaccurate data

China’s Imports Rise Sharply, While Export Growth Slows

November 10, 2011 by NewsMaker Leave a Comment

BEIJING — China imports rose sharply in October while export growth continued to slow, according to data released Thursday that suggest robust domestic demand could offset the effects of weakening demand for Chinese goods in Europe and elsewhere.

The stronger-than-expected import data may also reflect inventory buildups as Chinese importers took advantage of price swings to stock up on crude oil, copper and other commodities, analysts said.

Over all, imports rose a surprising 28.7 percent, compared with levels a year ago, far surpassing an increase in September of 20.9 percent.

Export growth continued to moderate, rising 15.9 percent over levels of a year ago. Economists said the data — the weakest in eight months — reflected continued economic turmoil in Europe.

Shipments to Europe grew 7.5 percent compared with the level of a year earlier, down from an increase of 9.8 percent in September, Barclays Capital said in a note.

Growth in exports to the United States rebounded, increasing 14 percent in October compared with the level of a year earlier, UBS Securities said in a note. Increases in exports to the United States in the previous few months had risen 10 percent to 11 percent, the investment house said.

While the import data were surprisingly strong, Yang Lingxiu, a Barclays Capital economist, said the export data were not alarming. “The external weakness will influence growth in China but it is not a great slowdown,” he said. “It is a moderation in momentum.”

Goldman Sachs said in a note that while exports were significantly down from the first half of the year, the data indicate “external demand has not deteriorated further” since July.

Chinese officials presented a more dire view. “What we’re facing now is a grave situation for exports and slowdown is inevitable in the third and fourth quarters,” Zhang Yansheng, director of the Institute for International Economics Research of the National Development and Reform Commission, said, according to a report by Xinhua, the state-run news agency.

Mr. Zhang, China’s top economic planner, attributed the moderation in economic growth to shrinking external demand, rising costs, liquidity problems and the gradual appreciation of the renminbi. He said that China also faced the risk of trade-protection measures in Europe and the United States, which says that China keeps its currency weak against the dollar to lower the price of its exports.

According to Barclays Capital, while Chinese exports this year are expected to grow 20 percent, its trade surplus is likely to narrow to about 2.4 percent of gross domestic product, down from 3.1 percent in 2010. Chinese officials cite the slimmer surplus as evidence that the Chinese economy is more balanced and increasingly dependent on domestic demand from industrial and consumer sectors.

UBS Securities said, “For now, the weakening exports, strong imports and narrowing trade surplus should help China resist calls for a faster appreciation” of the renminbi.

Data released Wednesday also suggested that inflation in China was easing, with prices rising 5.5 percent in October compared with levels a year earlier. UBS Securities said the seasonally adjusted annual inflation rate had come down to 3.5 percent, a welcome drop for Chinese policy makers and consumers.

Article source: http://feeds.nytimes.com/click.phdo?i=7643f5d82c69d3d5f58be84e3d0b88c1

Filed Under: Business News Tagged With: barclays, grave situation, sachs

Stock Market’s Sharp Swings Grow More Frequent

September 12, 2011 by NewsMaker Leave a Comment

Day after day, stocks swing sharply by hundreds of points. Last week they tumbled 3 percent in the first 90 minutes of trading on Tuesday morning, then on Wednesday closed nearly 3 percent higher and dropped almost 3 percent on Friday. All of this on the heels of unusual back-to-back 4 percent leaps and dives in one week in August.

Now traders head into the week with fresh worries about the chances that Greece will default on its debt and the havoc that would wreak on European banks.

All of this anxiety has caused experts to ask whether there are new forces at work in the stock market that make trading permanently more erratic.

In fact, big price moves are more common than they used to be.

It has become more likely for stock prices to make large swings — on the order of 3 percent or 4 percent — than it has been in any other time in recent stock market history, according to an analysis by The New York Times of price changes in the Standard Poor’s 500-stock market index since 1962.

Some experts see volatility as a problem because it can scare investors away from the markets, make companies reluctant to go public and undermine confidence in the economy, causing further drops in shares.

But another viewpoint is that stocks are rightly volatile now because there is so much uncertainty about where the economy is heading — and canny investors could profit from the big swings, or simply sit them out until the market eventually finds equilibrium.

“It’s neither good nor bad,” said Michael Schmanske, head of United States index volatility trading at Barclays Capital. “It is a measure of high opportunity but also peril.”

So what’s causing the rise in the big bounces?

It’s hard to know for sure, but market analysts point to new types of souped-up computerized trading and extraordinary global economic turmoil — from protests over a second bailout for Greece to the downgrade of United States debt.

It is also possible that stocks simply move faster today because of the quicker pace of news and trading, and so drops and surges in prices that might have been spread over days in past times are now condensed within hours.

Some economists say they fear the volatility may feed upon itself. The violent ups and downs, said Robert Shiller, an economics professor at Yale, may in turn undermine confidence in the economy, and the weakness in the economy can lead to more strident politics — all of which feeds the volatility loop.

“It is not well understood why we have these bursts of volatility,” Mr. Shiller said. “It seems that in these rare periods of bad economic performance and anxiety about the economy, we have volatility in the markets and high volatility in the political arena. Bad things can happen. This worries me.”

The Times looked at two sorts of historical data — the closing prices of the S. P. 500-stock index as well as the highest and lowest points the index reached during each trading day. Both measures, from 1962 through the end of this August, painted similar pictures of the market — it rises and falls more now in greater size.

Since the start of this century, The Times found, price fluctuations of 4 percent or more during intraday sessions have occurred nearly six times more than they did on average in the four decades leading up to 2000. The price swings today may feel even more notable because the 1990s represented a relatively calm time for trading. In contrast, price fluctuations of 1 percent and more during intraday trading were more common in the 1970s and 1980s.

As for closing prices, the more-frequent jumps could also be clearly spotted. Thirty percent of trading days since the start of 2010 were up or down more than 1 percent at the time of the closing bell. That’s far more than the 20 percent of such jumps in the 1990s. The trend toward greater volatility is more pronounced in larger price moves.

Article source: http://www.nytimes.com/2011/09/12/business/economy/stock-markets-sharp-swings-grow-more-frequent.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: barclays, dives, price moves