While You Were Working - June 13

Programming note: WYWW is wheels down in sunny San Diego where I will spend the next three days at Pershing's INSITE 2017 conference. Watch this space for coverage from the event, including comments from former Treasury Secretary Jack Lew.

Gorman got loose on Dodd-Frank

Morgan Stanley Chairman and CEO James Gorman took to the pages of the Financial Times with what begins as a full-throated defense of Dodd-Frank. Then he pivots to those pesky stress tests. And the Volcker rule. While Gorman’s view might be considered measured and nuanced, I will never cease laughing incredulously when US bankers breathlessly voice concerns like this one about the potential impact of over-regulation on the US banking sector:

“Regulators around the world have achieved an unprecedented level of collaboration since the financial crisis to create global standards for financial institutions. American regulators have largely viewed these international standards as a floor, and imposed higher standards on US institutions. Such “gold-plating” has gone far enough. Continuing down this road risks making the US financial sector uncompetitive, which could lead global companies to do business with banks elsewhere in the world.”

The facts are that US banks are crushing their foreign competitors and generated record profits in 2016. Most honest observers attribute much of the US banks’ dominance to the swiftness with which US regulators acted to clean up the post-crisis mess. Left to their own devices, US banks would have likely acted like their European counterparts and dragged their feet and allowed crisis-era issues to linger.

Pay to play in Qatar

So it looks like some banks in Qatar taking measures to respond to the campaign of isolation being deployed by other countries in the region. The banks are offering interest rates as high as 100 basis points over LIBOR to attract and keep dollar deposits. Interestingly enough, S&P Global Research has concluded that Qatari banks are so flush that they could withstand the withdrawal of all gulf state assets as well as 25% of all other foreign holdings. Of course, if things get really bad, then the Qataris can just relieve all the diplomatic pressure by opening a Trump Hotel.

Bill Gross sees troubled water ahead

The former (and some would say current) Bond King issued his monthly global markets forecast and it isn’t pretty.

“Investors in the real economy (not only large corporations but small businesses and startups) sense future headwinds that will thwart historic consumer demand and they therefore slow down investment. … Instead of making money by investing in the real economy, savers/investors increasingly are steered toward making money in the financial economy – making money with money. And that, thanks to nearly $8 trillion of QE asset purchases from major central banks and the holding of short-term borrowing rates near zero or even negative, has made this secular shift in monetary policy extremely profitable.”

Gross calls for investors both big and small to transition from their current addiction to “making money with money” to actually investing in things that will drive sustainable growth. Gross’ call is loud and clear, but he does not make it with much confidence that it will be listened to.

JPMorgan showed some scruples

The bank has pulled its advertising from the upcoming NBC special featuring Megyn Kelly’s interview with Alex Jones, the guy who claims the slaughter of small children at Sandy Hook Elementary School was a hoax perpetrated by the Obama administration. In a recent court case, Jones likened his antics to performance art. And yet NBC and the very well-paid Kelly have seen fit to give him a platform to continue his performance and call it news. Kudos to JPMorgan. I wish they would follow up by having Jamie Dimon challenge Jones to a live debate. Now that would be “Must-See TV.”

Defenders can’t stop Ronaldo…

… But maybe the tax man can. I guess CR7 just wants to follow in Lionel Messi’s footsteps. These cases crack me up. Like Ronaldo or Messi hatched some scheme to avoid paying $16 million in taxes. They hired tax pros to handle their taxes. Those guys devised plans and then violated the trust of their clients. But I guess athletes in hot water and judges and want to me their hero athletes. (And yes, it pained the Barca fan in me to write that headline, but the man has dominated the last 13 months of world soccer.)

WYWW Appetizer