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The Fed, Lawrence Summers, and Money

August 10, 2013 by

But as he negotiated with a prominent venture capital firm in Silicon Valley, Mr. Summers made one thing very clear: he needed an exit plan, in case he returned to public service.

“That was generally the assumption,” said Marc Andreessen, the co-founder of the firm. “If he did, he needed a way to do a clean disengage.”

Today, the Obama administration is considering nominating Mr. Summers as the next chairman of the Federal Reserve. If the White House does so, Mr. Summers’s financial disclosure — including his recent consulting jobs, paid speeches and service on company boards — will be one of the hottest documents in Washington. Among the top contenders for the position, Mr. Summers has by far the most Wall Street experience and the most personal wealth.

In addition to rejoining the Harvard
faculty in 2011, he jumped into a moneymaking spree. His clock was ticking partly because he knew that the Fed chairmanship, to which he has long aspired, was likely to open up in early 2014, when Ben S. Bernanke’s second term will come to an end.

“With Larry, my wife always says that it’s hard to be happy if you want to have the most money because you’ll never have the most money,” said Jeremy I. Bulow, an economics professor at Stanford University who is a friend and co-author of academic papers with Mr. Summers. “He’s kind of been going about his life just on the basis of ‘who knows what’s going to come next?’ and just sort of maximizing his experiences, given the opportunities in front of him.”

The opportunities have been many over the last two years. Mr. Summers, 58, has been employed by the megabank Citigroup and the sprawling hedge fund D. E. Shaw. He works for a firm that advises small banks as well as the exchange company Nasdaq OMX. And he serves on the board of two Silicon Valley start-ups: both financial firms that may pursue initial public offerings in the next year. One of them, Lending Club, offers loans to consumers and small businesses by making arrangements directly with online investors, a new business model that falls into a regulatory gap that consumer advocates say may lead to risky borrowing.

Before his tenure in the Obama administration, Mr. Summers had accumulated personal wealth of at least $7 million; the last two years have most likely added considerably to that. But his money and Wall Street connections put him in an awkward position, partly because the next person to lead the Federal Reserve will oversee the writing of several key new regulations from the Dodd-Frank financial reform bill.

Wall Street experience is not unprecedented for a Fed chairman. The departing chairman, Mr. Bernanke, has never been employed on Wall Street, spending most of his career at Princeton. But his predecessor, Alan Greenspan, was the president of a consulting firm and worked in investment banking early in his career, and Paul A. Volcker, an earlier chairman, did some work at Chase Manhattan Bank, which is now a part of JPMorgan Chase.

Still, some senators are speaking out against Mr. Summers. They are raising questions about potential conflicts of interest and noting his role in the repeal of the Glass-Steagall law, which limited the sorts of activities banks could undertake, and his opposition to regulating derivatives in the 1990s — decisions that many critics say contributed to the financial crisis.

“I start from a position of being extraordinarily skeptical that Larry Summers is appropriate to chair the Fed,” said Senator Jeff Merkley, a Democrat from Oregon. “I have serious doubts that Mr. Summers, who as a committed deregulator drove policies that set the stage for the Great Recession, is the right person for a key regulatory position.”

Mr. Summers declined to comment. But whatever his views on regulatory policy, those who know and admire Mr. Summers say he arrived at them honestly.

Article source: http://www.nytimes.com/2013/08/11/business/economy/the-fed-lawrence-summers-and-money.html?partner=rss&emc=rss

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DealBook: Hong Kong Broker Fined for Hyping Undisclosed Trades

April 8, 2013 by Leave a Comment

HONG KONG – A local stockbroker and financial columnist, Sky Cheung, was fined 500,000 Hong Kong dollars ($65,000) on Monday by Hong Kong’s market regulator for profiting on stock trades linked to his column. His broker’s license was also suspended for 30 months.

The Securities and Futures Commission found that on 25 occasions from March 2009 to March 2010, Mr. Cheung bought stocks through an undisclosed account registered in his wife’s name and, shortly afterward, published newspaper columns talking up those stocks.

“Cheung put himself in a conflict-of-interest position by purchasing the stocks shortly before favorable comments were published in his column, and sold them at a profit shortly after publication of the column,” the commission said in a statement. “Cheung’s conduct has cast serious doubt on his ability to carry on the regulated activity competently, honestly and fairly, as well as his reputation, character and reliability.’’

Hong Kong’s financial watchdog has had a number of successes in recent years as it seeks to crack down on market malfeasance, including a prominent criminal conviction of a Morgan Stanley managing director for insider trading. And a push is under way to make the banks that sponsor initial public offerings criminally liable for the accuracy of disclosures made by the companies they are bringing to market.

Mr. Cheung’s missteps were of a more mundane nature. Licensed brokers in Hong Kong are permitted to trade on the side for personal profit, but must disclose this to their employers and have the activity vetted by their senior managers. Mr. Cheung did not declare his activity to his employer at the time, the local brokerage Quam Group. He now works at the Hong Kong unit of Taiwan’s Polaris Securities.

According to the regulator, Mr. Cheung’s tactic was to buy stocks through his wife’s account and then write positively about them in his column, ‘‘Investment Sky,’’ which appears twice a week in the popular Chinese-language newspaper Apple Daily. He would then typically cash out at a profit one to three days after publication.

On several occasions, he would write the columns first, and instruct his assistant to delay publication until after he had time to buy the stocks he was writing about, the regulator said. Other times, Mr. Cheung denied any holdings in the stocks in his column, although they had been purchased through his wife’s account. The regulator said its fine was equal to the profit he made on his undisclosed trades.

In his most recent Apple Daily column on Friday, Mr. Cheung did not single out specific stocks, but waded into a local debate about whether authorities in China and Hong Kong had been over-regulating the market and scaring away investors. He cited the Chinese saying “fish are caught where the waters are muddy,” then turned it around.

“Of course there are no fish when the water is clear,’’ he wrote. ‘‘But if the water is too muddy that will kill a lot of fish.”

This post has been revised to reflect the following correction:

Correction: April 8, 2013

An earlier version of this article misstated when Hong Kong’s market regulator levied the fine. It was Monday, not last week.

Article source: http://dealbook.nytimes.com/2013/04/08/hong-kong-broker-fined-for-hyping-undisclosed-trades/?partner=rss&emc=rss

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DealBook: Its I.P.O. Botched, Facebook Looks Hard at Nasdaq

July 2, 2012 by Leave a Comment

In the weeks since Facebook’s much-ballyhooed — and ultimately botched — initial public offering, its relationship with Nasdaq has soured.Illustration by The New York Times

Facebook’s debut was supposed to be Nasdaq’s ultimate coup.

But in the weeks since the social network’s much-ballyhooed — and ultimately botched — initial public offering, the relationship has soured.

In Facebook parlance, it’s complicated.

Executives at the Internet company are pinning much of the blame on Nasdaq, according to several people close to the company and its underwriters, who spoke on the condition of anonymity because of continuing shareholder lawsuits. Tensions remain so high that Facebook is still considering switching exchanges and is weighing the costs of such a move, these people said.

As the drama plays out, Nasdaq, the first electronic stock market, faces one of its hardest tests since it was founded 41 years ago.

For years, the exchange, considered friendly to start-ups, was the preferred place for up-and-coming technology companies. Now, Nasdaq is trying to salvage its reputation with Facebook and the rest of Silicon Valley while also fending off the advances of its archrival, the New York Stock Exchange, which has ramped up efforts in the industry.

“Nasdaq will be wearing that albatross for quite a while,” said Lise Buyer, founder of Class V Group, an advisory firm for initial public offerings. “The errors associated with Facebook’s I.P.O. will now be part of Nasdaq’s conversations.”

Nasdaq's chief executive, Robert Greifeld, acknowledges that Facebook's I.P.O. could have been better handled.Lucas Jackson/ReutersNasdaq’s chief executive, Robert Greifeld, acknowledges that Facebook’s I.P.O. could have been better handled.

Nasdaq, for its part, has expressed contrition, with its chief executive, Robert Greifeld, publicly acknowledging the firm’s arrogance during the I.P.O. The exchange has also agreed to set aside $40 million for broker losses. Even so, Nasdaq defends its position as a major player in technology listings.

“For more than two decades, Silicon Valley has played a vital role in Nasdaq’s evolution,” said Joseph G. Christinat, a Nasdaq spokesman. “Nasdaq will always strive to be part of the Valley’s start-up ecosystem.”

Nasdaq’s troubles come at a challenging time for the industry.

The Securities and Exchange Commission is pressing exchanges to bolster controls, with open investigations on Nasdaq, N.Y.S.E. and others. Authorities are focusing on the Facebook I.P.O., trying to determine if Nasdaq acted improperly as it scrambled to push Facebook live and clear orders. So far, Nasdaq has not been charged with any wrongdoing, but the scrutiny represents a marked shift for the S.E.C., which has traditionally had a light touch with exchanges.

Facebook and its underwriters have been criticized for being too aggressive on the size and price of the offering. Still, many experts argue that it’s impossible to discount the psychological impact of Nasdaq’s problems.

“Very small actions can trigger very large dynamic mechanisms,” said Dan Ariely, a professor of behavioral economics at the Fuqua School of Business at Duke.

Nasdaq is navigating a forest of questions, as rival N.Y.S.E. settles onto its turf.

N.Y.S.E., once known as the dowdy exchange of blue chips, has aggressively courted Silicon Valley in the last five years, calling on executives and holding private dinners at places like the Four Seasons in Palo Alto. The Big Board recently snapped up the listings of a number of technology start-ups, including LinkedIn, Pandora and Yelp.

While N.Y.S.E.’s sales pitch used to center on its established brand, it now talks about technology and client services. A few years ago, the exchange also revised requirements to make it easier for smaller technology companies to list. The two exchanges battled for months over Facebook. Nasdaq won, in part, because it agreed to shorten the so-called seasoning period for newly public companies. The move would allow Facebook to join the Nasdaq 100 three months after its listing, people with knowledge of the matter have said.

But the short-lived victory has become an ordeal.

In recent weeks, the divide between Nasdaq and Facebook has deepened, as both face a bundle of shareholder lawsuits. In June, Facebook filed a motion alongside its lead underwriters to combine these lawsuits in New York. Nasdaq, which faces some of the same suits, was left out of the motion. Shares of Facebook, which hit a low of $25, currently trade around $31.10, well below the offering price of $38.

Facebook is upset about Nasdaq’s lack of communication, according to people close to the company. Executives were left out of important decisions like whether the stock should begin trading at all given the crush of early issues. Once trading did begin on May 18, Nasdaq did not contact Facebook’s chief financial officer, David Ebersman, who was the main point person for the I.P.O.

Executives at the social network have also grown frustrated by the technology problems. Many order confirmations were delayed. These were eventually released hours later, along with stock that ended up in a separate Nasdaq account. But the unexpected flood of shares looked like a giant order of roughly 11 million shares, weighing on the stock, according people with knowledge of the matter.

Facebook executives believe Nasdaq added to the woes the next week. Before the second trading day, Nasdaq alerted traders to file claims by noon if they wanted financial “accommodations” for the I.P.O. Executives believe the notice encouraged investors to dump shares to prove a loss on Facebook, prompting the stock to fall more than $4 in the first hour of trading that day.

Perhaps most disconcerting was Nasdaq’s conference call with reporters on Sunday, just days after the I.P.O. On the call, Mr. Greifeld, Nasdaq’s chief, assured the press that Nasdaq’s errors had not affected the stock’s performance.

“It would lead a reasonable person to conclude that it didn’t have an impact on the stock price,” he said.

The statement was tantamount to an act of betrayal, according to those close to Facebook. Once again, the Facebook team was baffled. Why didn’t the exchange warn them about Mr. Greifeld’s comments? Incensed, a Facebook executive told Mr. Greifeld, “You don’t understand the hole you’re in.”

Most start-ups hoping to go public are not worried about encountering Facebook’s problems. As the largest Internet I.P.O. on record, Facebook attracted a barrage of coverage. Many industry insiders interviewed believe Nasdaq will move quickly to improve its controls. It is currently working with I.B.M., for instance, to review its entire technical system.

Still, the fumbles are ugly blemishes for an exchange that has prided itself on its tech heritage. After dominating technology listings for the last decade, Nasdaq’s ranking has slipped. So far this year, Nasdaq has accounted for 11 of the 24 technology listings, with the rest going to N.Y.S.E., according to Renaissance Capital, an I.P.O. advisory firm. “It might be an anomaly,” said Aaron Levie, the chief executive of Box, a data storage company. “But Nasdaq is getting more competition from N.Y.S.E., which has been really proactive out here.”

Amid mounting pressure, Mr. Greifeld made one more visit to Menlo Park three weeks ago.

In a meeting with Mr. Ebersman and other executives, he apologized, according to people briefed on the meeting. He acknowledged that he had said that Nasdaq’s problems did not impact Facebook’s price, but conceded that that assessment did not fully factor in the psychology of the market.

After that, a chill settled in the room, as several executives quietly scrawled his statement on their notepads.

Article source: http://dealbook.nytimes.com/2012/07/01/facebook-not-feeling-friendly-with-nasdaq/?partner=rss&emc=rss

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Reuters Breakingviews: Beware of September

September 6, 2011 by Leave a Comment

European debt trouble, the weakness of economic growth in the United States — underlined by the zero jobs created in August — and political conflict spell more wild rides.

Out of 45 developed and emerging stock markets tracked by S. P. indexes, August left all but two underwater, by an average of 7.7 percent globally. Anyone who packed up at the end of July, sold stocks and bought Treasuries can at least count themselves lucky. After all, even those who stuck around for live deals have seen initial public offerings abandoned and one huge merger deal, ATT’s $39 billion purchase of T-Mobile USA, put in jeopardy.

But returning players shouldn’t forget that, at the end of August, 44 of those same 45 markets were also still down from the end of August 2008 (the exception is Peru’s). Then, the collapse of Lehman Brothers and the worst of the crisis was still in the future, but by only two weeks. A lot can go wrong.

The euro zone remains a basket case — at least in places. That is belied by its currency, which has remained remarkably strong against the dollar at around $1.42. Yet shaky sovereign debt tucked away in the region’s banking system makes it the biggest potential flashpoint for global markets.

The crisis has moved well beyond Greece. There is a metaphorical bull’s-eye on too-big-to-rescue Italy. In August, 10-year Italian bond yields soared above 6 percent before the European Central Bank stepped in and agreed, reluctantly, to buy Italian debt. Italy has to refinance a record 62.4 billion euros of debt due for repayment in September, and that could put the central bank’s calming influence to the test.

And there is still a question over European bank financing. In August, fear erupted again about the banks’ access to short-term sources of finance like United States money market funds. The funds are still lending, but for shorter periods. The shorter the term of lending — and it can get down to day-by-day — the easier it is for the funds and other lenders to pull out, leaving European banks to scramble.

Between Europe’s sovereign debtors, its banks and its currency, there is a credible systemic threat. And despite the ray of hope for private sector answers provided by a Greek bank merger in the last days of August, no one has come up with a comprehensive plan to right the European financial ship.

Meanwhile, worries over a double-dip recession in the United States are overshadowing earlier concerns about a slowdown in global growth. Chinese expansion has held up so far, though its policy makers face the challenge of maintaining that expansion while trying to cool parts of the economy and control bank lending. But for America, the latest gloomy data point was the stark jobs report for August, released on Friday.

The Federal Reserve on Aug. 9 pledged to keep short-term interest rates near zero for at least two years, and it looks as if the central bank, led by Ben Bernanke, is weighing round of quantitative easing. Any new measures are sure to be contentious. With three Federal Open Market Committee dissents over the low-rate promise last month, Mr. Bernanke and his colleagues have plenty to debate. This month’s meeting, now extended to run Sept. 20-21, will be scrutinized closely by investors.

Mr. Bernanke referred in an Aug. 26 speech to a third big theme for markets: the seeming inability of Washington’s political leaders to agree on anything. Such dysfunction played a part in Standard Poor’s landmark downgrade of United States debt at the end of July. And President Obama and Republican leaders even managed to bicker over a date for Mr. Obama to tell Congress about new job creation ideas, an event now set for Thursday.

But America isn’t the only place with a political credibility problem. Europe’s leaders, including Angela Merkel of Germany and Nicolas Sarkozy of France, are struggling for a way to escape from the region’s debt troubles. That is partly because the disparate interests within the euro zone make it difficult to force weaklings like Greece to take austerity medicine, and just as tough to persuade the bloc to help out. With politicians everywhere as well as markets floundering, investors could be in for a bumpy ride.

Article source: http://feeds.nytimes.com/click.phdo?i=7eeebbaa7ab85508c210c6db419fb582

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DealBook: Start-Ups Vie for Attention at the Venture Capital Table

May 25, 2011 by Leave a Comment

The recent initial public offerings by Internet companies including LinkedIn and Yandex are grabbing the attention of investors and making headlines, but small technology start-ups are expecting more than just scraps from the venture capital table.

Instantly recognizable companies like Facebook, LinkedIn and Groupon have no problem getting financing, but these smaller companies are hoping to prove they have what it takes to become essential services. At TechCrunch’s Disrupt conference in Manhattan, DealBook spoke to executives from three start-ups about their plans for raising capital.

Guillaume Balas, chief marketing officer of 3Scale, described his company’s “unique architecture” for managing application programming interfaces, or A.P.I.’s, which allow different software programs and applications to talk to each other. He said that with the growth of mobile Internet use and connected applications, A.P.I.’s were moving into the mainstream and making his company’s services essential for businesses with an online presence.

Andy Leff is the founder of Meporter, a company that has developed a mobile application that he described as taking “local citizen newsgathering to the extreme.” It allows users to post photos, video and articles to a local map — posts that can then be added to by other users.

Finally, Jaafer Haidar is a co-founder of Socialseek, an aggregation site that allows people to create sites following unique topics. He said the site has the potential to allow brands to “connect with users directly.”

Article source: http://feeds.nytimes.com/click.phdo?i=4c0202459b2df8e972e8f08e5b7ab751

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DealBook: LinkedIn Prices I.P.O. at Top of Forecast at $45 a Share

May 19, 2011 by Leave a Comment

8:36 p.m. | Updated

The professional social network LinkedIn priced its public offering at $45 a share late Wednesday, at the top of its expected price range.

At that price, LinkedIn will raise $352.8 million, valuing the company at $4.3 billion. It is set to offer 7.8 million shares, with shareholders selling about three million shares.

The underwriters have the option to sell an additional 1.1 million shares, which would increase the total amount raised to $405 million.

LinkedIn, which is set to go public Thursday morning on the New York Stock Exchange, is one of the most eagerly awaited initial public offerings in years.

While many Internet companies plan to go public in the next 12 months, LinkedIn is the first social media company to do so this year in the United States.

At $352.8 million, Linkedin’s offering will be the fifth largest for the Internet software and services sector in the United States, according to data from Capital IQ and Standard Poor’s. Google’s offering in 2004 still stands as the largest, at $1.67 billion.

LinkedIn’s valuation has surged in the last month, amid rising investor demand for social media companies.

Early this month, the company set its price range at $32 to $35 a share, at a roughly $3 billion valuation. Private shares of LinkedIn, meanwhile, traded at an implied valuation of $2.5 billion on SharesPost, a secondary market.

On Tuesday, buoyed by growing investor interest in the offering, the company raised its projected range sharply, to $42 to $45 a share.

“LinkedIn is definitely a beneficiary of the social networking trends,” said Aaron Kessler, an analyst at ThinkEquity. “The valuation implies a lot of excitement. It’s one of the first ways to get into social in a public forum.”

Still, analysts have raised concerns that LinkedIn’s valuation is running ahead of its fundamentals. The company recorded revenue of $243.1 million in 2010, with net income of $15.4 million. It also warned investors, in its recent filing, that it expected its revenue growth to slow as costs increased. It said it did not expect to be profitable in 2011.

The site, which reports about 100 million members, derives most of its revenue from advertisers and recruiters who pay for hiring solutions. Based on its current growth trajectory, LinkedIn is selling for roughly 46 times 2011’s projected earnings, according to Abelardo Mendez, an analyst for GreenCrest Capital. “It’s very rich. This is a challenge for investors. LinkedIn’s revenues doubled last year, but will they double again in 2011?” Mr. Mendez said.

LinkedIn will trade under the symbol LNKD. Morgan Stanley, Bank of America Merrill Lynch and JPMorgan Chase are running the offering.

Article source: http://feeds.nytimes.com/click.phdo?i=0b098c64d198f180a1f5dc61a771545c

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DealBook: LinkedIn and Freescale Join Surge of I.P.O.’s

May 10, 2011 by Leave a Comment

Jeff Weiner, chief executive of LinkedIn. The company expects its public offering to raise up to $274 million.David Paul Morris/Bloomberg News Jeff Weiner, chief executive of LinkedIn. The company expects its public offering to raise up to $274 million.

As investor appetite for initial public offerings grows, dozens of technology companies from start-ups to stalwarts are prepping for their stock market debuts.

On Monday, LinkedIn, the social network for professionals, said it was on track to raise as much as $274.4 million in an I.P.O., according to a filing on Monday. Freescale Semiconductor Holdings, the chip maker acquired in 2006 in one of the largest technology buyouts ever, disclosed the same day that it could raise $944 million in its offering

“If LinkedIn’s I.P.O. does well, it will likely drive others to come to market,” said Kerry Rice, a Wedbush Securities analyst. “You could see a pretty strong second half of this year for the technology I.P.O. market.”

While investor demand for such offerings has been strong, the performance of new technology shares has been mixed. So far this year, the average I.P.O. in the industry has closed 24.6 percent higher than the initial share price on its first day of trading, according to data from the brokerage firm Morgan Keegan.

But many stocks are giving up those gains. The group’s total average return is 17.6 percent.

On its first day of trading, shares of Renren, often described as the Facebook of China, jumped 29 percent to $18. Netqin, another technology company based in China, priced at the top end of its forecast last week, but has fallen roughly 28 percent since its debut.

Hoping to build on the fervor of social networking sites like Facebook, LinkedIn, which has more than 100 million members in over 200 countries, said it expected to sell 7.8 million shares at $32 to $35 a share.

At the top end of the range, the company is valued at more than $3 billion. LinkedIn, one of the first major social networks to go public this year, said it planned to use the proceeds of the sale for working capital, product development and possible acquisitions.

Both the company’s chairman, Reid Hoffman, and its chief executive, Jeff Weiner, are selling a small number of shares, about 0.1 percent each. The company’s top venture capital investors — Sequoia Capital, Greylock Partners and Bessemer Venture Partners — are not offering any shares in the I.P.O. and will collectively own 37.5 percent of LinkedIn after the offering.

According to the filing, Goldman Sachs, which owns 871,840 shares (less than 1 percent of the company), is selling its entire investment, making it the largest individual seller.

In an amended prospectus with the Securities and Exchange Commission, Freescale set the price range for its offering at $22 to $24 a share.

The company, which plans to use the proceeds to reduce debt, said it would sell 43.5 million shares. At the midpoint price, Freescale could raise $944 million, after taking expenses into account. The underwriters have the option to sell an additional 6.525 million shares if there is enough demand.

Freescale is among a recent flurry of private equity-backed companies looking to go public, as buyout firms rush to make an exit from deals made at the peak of the boom. The hospital operator HCA raised $3.78 billion in its debut this year, a record private equity-backed I.P.O. that topped other recent ones, including those of Kinder Morgan and Nielsen Holdings.

A group of firms, including the Blackstone Group, TPG Capital, the Carlyle Group and Permira Advisers, acquired Freescale in 2006 for $17.6 billion , a deal that was called “one of the ugliest buyouts in history.” In the first years after the takeover, Freescale struggled under the weight of its debt.

But the fortunes of the company, which makes chips for cars, cellphones and other products, have improved somewhat with the economy. Freescale reported that last year, revenue rose to $4.46 billion from $3.5 billion in 2009. Its debt load, though, is still cutting into earnings, and the company reported a net loss of $1 billion in 2010. It turned a $748 million profit in 2009.

With the proceeds from the offering and cash on hand, Freescale plans to pay off about $1.1 billion in debt. The company will also make payments to its private equity owners, as part of their management deals. Blackstone is to receive $33.6 million, Carlyle $10.8 million, TPG $9.6 million and Permira $6.5 million.

Article source: http://feeds.nytimes.com/click.phdo?i=23a7120f25ee49aa1689c353d2d3419f

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Critical Reports on Banks Weigh on Financial Shares

April 15, 2011 by Leave a Comment

A Senate report released late Wednesday criticized rating agencies and banks, like Goldman Sachs, for their practices during the financial crisis, while federal regulators also released a report saying that banks did a poor job of handling the flood of foreclosures. The regulators said they would impose penalties, without giving the timing or amount.

In response, the banking sector was down almost 1 percent Thursday. Among the decliners were some of the 14 mortgage servicers that had signed consent agreements promising to overhaul their foreclosure practices.

“The uncertainty over this whole mortgage mess is contributing” to the decline in the financial sector, said Anthony G. Valeri, a senior vice president and market strategist for LPL Financial. “I think the market is waiting to see what the fines will be.”

“But it is a short-term concern for the market until we ultimately find out what the exact dollar amount is,” he said.

JPMorgan Chase, one of the banks signing a consent agreement, said it would add as many as 3,000 employees to meet the new regulatory demands. Its shares were down 2.8 percent at $44.97. Among other major banks, Citigroup fell 1.6 percent to $4.43; Bank of America was down 1.1 percent to $13.13; Wells Fargo declined 1.7 percent to $30.15; and Goldman Sachs lost 2.7 percent to $155.79.

Major indexes closed the day mixed. The Dow Jones industrial average rose 14.16 points, or 0.12 percent, to 12,285.15, while the Standard Poor’s 500-stock index added less than a point to close at 1,314.52. The Nasdaq composite slipped 1.3 points, or 0.05 percent, to 2.760.22.

Alan B. Lancz, the president of Alan B. Lancz Associates, said indexes might have gotten late-day help from initial public offerings, like that of the car-sharing company Zipcar, which gained 56 percent.

“As we headed into the last hour they were still showing significant gains,” Mr. Lancz said. “That maybe gave a spark to the buyers.”

Google rose $2.23, to $578.51, in the regular session but lost more than 5 percent in after-hours trading after reporting a quarterly profit that missed forecasts.

Shares of consumer staples were up 0.63 percent as a sector. Supervalu gained more than 16 percent, to $10.61, after forecasting fiscal-year earnings above Wall Street expectations. Kraft Foods closed at $32.95 and Coca-Cola at $68.31, each gaining more than 1 percent.

While the banking sector’s responsibility for the mortgage crisis drew most of the attention, analysts said other factors also weighed on the sector.

Nomura analysts said in a research note that a downward revision to gross domestic product, negative revenue and loan growth and an unpredictable regulatory backdrop have discouraged investors.

“We have spent the past few weeks on the road visiting investors,” the analysts said. “The overwhelming feedback on banks has been ‘Why bother?’ ”

“It’s just hard to get people to care about bank stocks right now,” Nomura said.

An increase in unemployment filings last week also weighed on the markets, as well as a monthly index on producer prices that showed energy costs were responsible for almost all of the increase in March.

Economists are concerned that increases in wholesales prices will be passed along and damp spending by consumers.

Downward revisions to economic growth, like the recent cut by the International Monetary Fund in its United States growth estimate, may have discouraged investors, Mr. Valeri added.

But the bond market has benefited. The yield on the 10-year Treasury bond was little changed Thursday at 3.5 percent.

“We thought going into this week that it would be a tough week for Treasuries given the fresh supply,” Mr. Valeri said, referring to an auction of 10-year bonds. “A new theme emerging this week that seems to have trumped the data, and even the auctions, was the potential of a slowdown in the economy.”

Article source: http://feeds.nytimes.com/click.phdo?i=2405040902db0d5f433a86d690e72941

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Bucks: Just Ignore the Crisis du Jour

April 12, 2011 by Leave a Comment

Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog and on his personal Web site, BehaviorGap.com.

Unless you were under a rock on Friday, you had to endure endless chatter about the impact of the looming government shutdown on our lives. By the time you woke up Saturday morning, it was over, after a suspense-filled, last-minute deal averted what had begun to seem like sure disaster thanks to all of the minute-by-minute updates.

At its height, the chatter verged on comical. Venture Beat warned that initial public offerings would be delayed. But the bright spot for the day was that the Cherry Blossom Parade would go on even if there was a shutdown.

I know that the impact to federal employees would have been no joke, so here’s my point:

1. The shutdown didn’t happen.

2. There was almost nothing any of us could have done on Friday afternoon to change the outcome.

3. There will be something new to worry about today. Or tomorrow for sure.

It’s amazing how often we fall into this trap of worrying about things that are simply not problems yet. Most of the problems we face are not even really problems at the time we’re tying ourselves up in knots. Often these “problems” serve only to call up regret about how we responded to a real problem in the past or worry about something that has a small chance of happening in the future. But none of these things are within our control. So why waste the time?

Because emotion plays such a huge role in our financial behavior, it’s critical that we not act on irrational fears about the crisis du jour. History has shown us that the best way to meet financial goals is to have a plan, get to work and avoid reacting to each and every one of the latest crises.

Article source: http://feeds.nytimes.com/click.phdo?i=36472bf07c0b74db9182b514db6a48b3

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