The Best of Bloomberg 2010
The best friend
of any Front-office professional is definitely his/her Bloomberg Professional Terminal with its 80's GUI (this being said, the GUI has improved dramatically lately).
Miss a Bloomberg Terminal? No worry, we make for you here a repository of the most read news of the year, month by month.
What is the first information a professional trader look at in the morning? It's the "Quote of the Day" Terminal. The quotes of the year can be found here also.
The most read News in 2010
January
February
March
April
May
June
July
August
January
Wall Street Firms Cut Pay, ‘Buckling’ to Washington (Update1)
By Michael J. Moore
Jan. 25 (Bloomberg) -- Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank slashed their compensation in the fourth quarter, responding to political pressure that will probably persist as details of bonuses for their top executives emerge in coming weeks.
The three Wall Street firms set aside $39.9 billion for pay in 2009, below the 2007 record of $44.7 billion. The total fell short of the $46.1 billion five analysts expected this month and is almost $10 billion less than what some analysts estimated in October.
“There’s no question that Wall Street got the message from Washington,” said Michael W. Robinson, a senior vice president of Levick Strategic Communications and former head of public affairs at the Securities and Exchange Commission. “But positioning the big banks with big bonuses as the bad guys has played well for politicians, and they are likely going to keep coming back to it. To some extent, banks are just going to have to be prepared for that.”
President Barack Obama called bank bonuses “obscene” for the second time in a week on Jan. 21. The next day, Democratic Representative Andre Carson called the industry’s practices “reckless” during a House Financial Services Committee hearing on compensation. Banks are disclosing stock awards handed out to top executives in the next few weeks.
The Full Article
Obama to Propose New Rules on Banks’ Size, Trading (Update3)
By Nicholas Johnston and Julianna Goldman
Jan. 21 (Bloomberg) -- President Barack Obama today will propose limiting the size and trading activities of financial institutions as a way to reduce risk-taking, an administration official said.
Obama is scheduled to announce the plan at 11:40 a.m. at the White House after meeting with former Federal Reserve Chairman Paul Volcker, who has been an advocate of taking such steps. The proposals will be part of an overhaul of regulations and will specifically address firms’ proprietary trading, the official said yesterday on the condition of anonymity.
Obama is renewing his focus on economic issues, tapping into voter anger about the struggling economy, taxpayer bailouts and growing bank profits at a time of 10 percent unemployment, as well as a federal deficit that rose to $1.4 trillion last year. Those economic concerns will figure in the campaigns for November elections that will determine whether Obama’s Democratic Party can sustain majorities in the House and Senate.
The proposals could affect trading at some of the nation’s largest banks, including New York-based Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co., said Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. Banks conduct proprietary trading for their own benefit, not for that of their clients.
The Full Article
Obama Calls for Limiting Size, Risk-Taking of Financial Firms
By Nicholas Johnston and Julianna Goldman
Jan. 22 (Bloomberg) -- President Barack Obama, tapping into voter anger over bank bailouts, called for limits on the size and trading activities of financial institutions in order to reduce risk-taking and prevent another financial crisis.
The proposals, to be added to an overhaul of regulations being considered by Congress, would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds. He also proposes expanding a 10 percent market-share cap on deposits to include other liabilities such as non-deposit funding to restrict growth and consolidation.
“While the financial system is far stronger today than it was one year ago, it’s still operating under the same rules that led to its near collapse,” Obama said yesterday at the White House after meeting with former Federal Reserve Chairman Paul Volcker, who has been an advocate of taking such steps. “Never again will the American taxpayer be held hostage by a bank that is too big to fail.”
The proposals could affect trading at some of the nation’s largest banks, including New York-based Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co., according to Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
The Full Article
Wall Street Seeing Goldman in Rare Reversal With Morgan Stanley
By Christine Harper
Jan. 19 (Bloomberg) -- Goldman Sachs Group Inc., whose record earnings in the first nine months of last year fueled public outrage, will probably hit a profit plateau in 2010, just as Morgan Stanley rebounds from its worst year ever.
The diverging outlooks for earnings growth have started showing in the stock prices, with Morgan Stanley gaining 2.6 percent this year and Goldman Sachs dropping 2.2 percent. Analysts at Credit Suisse Group AG, UBS AG and Macquarie Group Ltd. began recommending investors buy Morgan Stanley this month.
“It makes sense that Morgan’s rebounding, they’re coming from a lower level,” said Ralph Cole, a senior vice president in research at Ferguson Wellman Inc. in Portland, Oregon, which manages about $2.5 billion and owns both Goldman Sachs and Morgan Stanley stock. Goldman Sachs “is trying to continue to move forward off a very large base, and that makes it very difficult for them.”
Goldman Sachs and Morgan Stanley, the two biggest U.S. securities firms before becoming bank holding companies in 2008, continue their traditional rivalry, especially in merger advice and derivatives. When the two New York-based companies report fourth-quarter earnings later this week, Goldman Sachs is still expected by analysts to outshine Morgan Stanley.
Goldman Sachs, headed by Chief Executive Officer Lloyd Blankfein, 55, will probably report $3.2 billion of fourth- quarter net income, or $5.24 per share, according to the average estimate of 13 analysts surveyed by Bloomberg. Morgan Stanley is expected to earn $647 million, or 43 cents a share, according to the average of 10 analysts’ estimates.
The Full Article
Obama Says Bank Fee Aimed at Recovering Rescue Money (Update2)
By Julianna Goldman
Jan. 14 (Bloomberg) -- President Barack Obama said the levy he wants to impose on as many as 50 large financial firms is aimed at getting back “every single dime” that taxpayers put in to bailing out those companies.
“My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people,” Obama said at the White House. “We want our money back, and we’re going to get it.”
The fee would apply to financial companies with assets of more than $50 billion. It would be based on bank liabilities and imposed starting June 30 on companies such as Citigroup Inc., American International Group Inc. and Bank of America Corp.
The administration estimates the levy will raise $90 billion over 10 years and $117 billion over 12 years. An administration official who briefed reporters said the budget office estimates the 10-year figure will be enough to recoup all the losses in the Troubled Asset Relief Program.
With congressional elections coming in November, Obama is tapping into public anger over the taxpayer bailouts of the financial and auto industries, Wall Street bonuses and the federal deficit, which rose to $1.4 trillion last year. Reports about bank profits and bonuses come as the nation’s unemployment rate is at 10 percent and many Americans are struggling to recover from the worst recession since the 1930s.
The Full Article
February
Stocks, Commodities Plunge, Dollar Gains on Debt, Jobs Concerns
By Rita Nazareth and Gavin Serkin
Feb. 4 (Bloomberg) -- Stocks plunged around the globe, with the MSCI World Index dropping the most in nine months, and commodities tumbled on concern an unexpected increase in U.S. jobless claims and growing sovereign debt will derail the economic recovery. The euro slid to the lowest level since May.
The MSCI World Index of 23 developed markets sank 2.9 percent and the Standard & Poor’s 500 Index fell 3.1 percent at 4:30 p.m. in New York, the biggest declines since April 20. Benchmark equity indexes for Portugal and Spain plummeted the most in 15 months. Oil lost 5 percent, the biggest drop in six months, and gold tumbled the most since 2008 as a stronger dollar curbed demand for commodities. The euro lost 1.1 percent to $1.3738 and sank to an almost one-year low versus the yen.
U.S. equities extended the global slide as initial applications for unemployment insurance unexpectedly increased to 480,000 last week and companies from MasterCard Inc. to Monster Worldwide Inc. reported earnings that trailed analyst estimates. European shares added to earlier declines triggered when a disappointing Spanish bond auction fanned concern some nations will struggle to finance their budget deficits.
“Look at those initial claims,” said Diane Garnick, a New York-based investment strategist at Invesco Ltd., which manages $400 billion. “Unemployed people don’t spend money. That means the growth we’ve seen is not sustainable until people get jobs. Also, there are lots of uncertainties on a global basis. That’s certainly negative news for the market. I wouldn’t be surprised if we started to see dramatic increases in volatility again.”
The Full Article
NYC May Get as Much as 10 Inches of Snow Tomorrow (Update3)
By Brian K. Sullivan
Feb. 24 (Bloomberg) -- Snow will probably begin falling in New York City by 3 a.m. tomorrow, and there may be as much as 10 inches (25 centimeters) on the ground before the storm ends a day later, according to the National Weather Service.
Between 5 and 10 inches of snow are predicted for New York, following two days of sleet and rain, with as much as 14 inches to the north and west of the city, said Matt Scalora, a weather service meteorologist in Upton, New York. More snow also is forecast for the Washington area, where seasonal records have been shattered.
“The Northeast is being impacted by one storm now, and the monster storm is going to impact the region tomorrow into Friday,” said Eric Wilhelm of private forecaster AccuWeather.com. “A really complex situation is developing in the Northeast.”
The storm is the latest in an El Nino-driven weather pattern that has pushed moist air across the southern U.S., where it has mixed with colder air coming down from the Arctic, said Matt Rogers, president of private forecaster Commodity Weather Group in Bethesda, Maryland.
The result has been record-breaking seasonal snows from Washington to Philadelphia. El Nino is a warming of the Pacific Ocean that occurs every two to five years and lasts about 12 months.
The Full Article
Goldman Sachs, Greece Didn’t Disclose Swap Contract (Update1)
By Elisa Martinuzzi
Feb. 17 (Bloomberg) -- Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.
No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.
Failing to disclose the swap may have allowed Goldman, a co-lead manager on many of the sales, other underwriters and Greece to get a better price for the securities, said Bill Blain, co-head of fixed income at Matrix Corporate Capital LLP, a London-based broker and fund manager.
“The price of bonds should reflect the reality of Greece’s finances,” Blain said. “If a bank was selling them to investors on the basis of publicly available information, and they were aware that information was incorrect, then investors have been fooled.”
Michael DuVally, a spokesman at Goldman Sachs in New York, declined to comment.
The Full Article
Fed Raises Discount Rate by Quarter-Point to 0.75% (Update4)
By Craig Torres
Feb. 18 (Bloomberg) -- The Federal Reserve Board raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent and said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs.
“These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said today in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”
The dollar jumped as the Fed took another step in a gradual retreat from its unprecedented actions to halt the deepest financial crisis since the Great Depression. The Fed has provided hundreds of billions of dollars in backstop credit to banks, bond dealers, commercial paper borrowers and troubled financial institutions such as American International Group Inc.
“This is an unwinding of another unusual and exigent circumstance,” said David Zervos, visiting adviser to the Fed Board in 2009 who is now a managing director at Jeffries & Co. in New York. “They tried to go out of their way to tell people this doesn’t change their policy outlook at all.”
The dollar rose to $1.3487 per euro by 12:24 p.m. Tokyo time on Feb. 19 from $1.3607 in late New York trading on Feb. 17. It touched $1.3444, the strongest level since May.
The Full Article
Euro Worst to Come as Greece Hammerlocks ECB on Rates (Update3)
By Liz Capo McCormick and Oliver Biggadike
Feb. 22 (Bloomberg) -- Derivative traders are signaling that the euro’s slump to a nine-month low will continue even if European Union leaders bail out Greece.
Short-term rates for borrowing in euros in the forwards market are the cheapest relative to loans in dollars since September. The 50 percent collapse in that spread this month signals investors are betting the European Central Bank will keep its target interest rate at a record low, sacrificing euro strength to prevent deficit cutting by debt-laden economies in the region from stymieing growth.
“Investors have already started to think about the next likely phase of the present crisis, and it appears that all they are finding are new reasons to sell the euro,” said David Woo, global head of foreign-exchange strategy at Barclays Plc in London. “Aggressive fiscal tightening by Greece, Spain and Portugal are likely to plunge their economies back into recession. All else being equal, this calls for a looser monetary policy.”
The shift underscores a turnabout in the two most-traded currencies. In the last three quarters of 2009, the euro outperformed the dollar relative to 15 major currencies tracked by Bloomberg, with Deutsche Bank AG’s euro index gaining 1 percent and the IntercontinentalExchange Inc.’s Dollar Index down 9 percent.
Since Nov. 25, the dollar is up 8.3 percent and has outdone all but four major currencies as the euro lost ground against them. The euro traded at $1.3613 as of 7:11 a.m. in New York, unchanged from Feb. 19. The currency is down 5 percent against the U.S. currency this year.
The Full Article
March
Goldman Sachs Demands Collateral It Won’t Dish Out (Update1)
By Michael J. Moore and Christine Harper
March 15 (Bloomberg) -- Goldman Sachs Group Inc. and JPMorgan Chase & Co., two of the biggest traders of over-the- counter derivatives, are exploiting their growing clout in that market to secure cheap funding in addition to billions in revenue from the business.
Both New York-based banks are demanding unequal arrangements with hedge-fund firms, forcing them to post more cash collateral to offset risks on trades while putting up less on their own wagers. At the end of December this imbalance furnished Goldman Sachs with $110 billion, according to a filing. That’s money it can reinvest in higher-yielding assets.
“If you’re seen as a major player and you have a product that people can’t get elsewhere, you have the negotiating power,” said Richard Lindsey, a former director of market regulation at the U.S. Securities and Exchange Commission who ran the prime brokerage unit at Bear Stearns Cos. from 1999 to 2006. “Goldman and a handful of other banks are the places where people can get over-the-counter products today.”
The collapse of American International Group Inc. in 2008 was hastened by the insurer’s inability to meet $20 billion in collateral demands after its credit-default swaps lost value and its credit rating was lowered, Treasury Secretary Timothy F. Geithner, president of the Federal Reserve Bank of New York at the time of the bailout, testified on Jan. 27. Goldman Sachs was among AIG’s biggest counterparties.
The Full Article
JPMorgan, Citigroup Helped Doom Lehman, Report Says (Update3)
By Linda Sandler, Bob Van Voris and Don Jeffrey
March 12 (Bloomberg) -- JPMorgan Chase & Co. and Citigroup Inc. helped cause the failure of Lehman Brothers Holdings Inc. by demanding more collateral and changing guarantee agreements, according to a report on the biggest bankruptcy in U.S. history.
“The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity,” said Anton Valukas, the bankruptcy examiner, in a 2,200-page document filed yesterday in Manhattan federal court. “Lehman’s available liquidity is central to the question of why Lehman failed.”
Former Lehman Chief Executive Officer Richard Fuld, ex- Chief Financial Officer Erin Callan, former Executive Vice President Ian Lowitt and former Managing Director Christopher O’Meara certified misleading statements about the bank’s finances, according to the report. Fuld, 63, was “at least grossly negligent,” Valukas said. New York-based Lehman collapsed in September 2008 with $639 billion in assets.
In addition to his conclusions regarding New York-based Citigroup and JPMorgan, Valukas said of London-based Barclays Plc’s purchase of Lehman’s North American brokerage that a “limited amount of assets” belonging to Lehman were “improperly transferred to Barclays.” He added that the value of the assets may not be “material.”
Kerrie Cohen, a Barclays spokeswoman in New York, and Brian Marchiony, a JPMorgan spokesman, declined to comment
The Full Article
House Approves Landmark U.S. Health-Care Legislation (Update3)
By Laura Litvan, Nicole Gaouette and Kristin Jensen
March 22 (Bloomberg) -- The U.S. House passed the most sweeping health-care legislation in four decades, rewriting the rules governing medical industries and ensuring that tens of millions of uninsured Americans will get medical coverage.
Yesterday’s 219-212 vote marks a victory for President Barack Obama, who is scheduled to sign the bill into law tomorrow. Only Democrats voted for the legislation, underscoring a partisan divide that promises to make health care the defining issue in November’s congressional elections.
Lawmakers hailed the action as a historic follow-up to the 1965 creation of the Medicare program for the elderly and a way to mitigate soaring health costs that make up a sixth of the U.S. economy. It came after a last-minute deal with anti- abortion Democrats and a lobbying trip by Obama to the Capitol.
“It’s a victory for the American people,” Obama told reporters at the White House just before midnight. “This legislation will not fix everything that ails our health-care system but it moves us decisively in the right direction. This is what change looks like.”
House Speaker Nancy Pelosi described the vote as “history for our country and progress for the American people.”
The Full Article
Deutsche Bank, Moore Workers Probed on Insider Trades (Update3)
By Caroline Binham and Tom Cahill
March 24 (Bloomberg) -- Employees at Deutsche Bank AG, Exane SA and hedge fund Moore Capital Management LLC’s U.K. unit are being investigated as part of the U.K.’s largest crackdown on insider trading.
In all, six men were arrested yesterday, including a Moore Capital employee, after 16 addresses were raided in London and south-east England by the Financial Services Authority. The FSA didn’t release names or details on who was arrested.
Moore Capital, the $15 billion hedge fund run by Louis Bacon, said its office in London was searched yesterday and one of its employees was placed on leave. Deutsche Bank said in a statement an employee was being investigated. An employee at Exane is also being questioned, a spokesman for the firm said. Exane is 50 percent-owned by BNP Paribas SA. None named the employees and all said they were cooperating with the probe.
“It is believed that the city professionals passed inside information to traders -- either directly or via middlemen --who traded on this information and have made significant profits as a result,” the FSA said in a statement.
The regulator is pursuing insider-trading probes after criticism from lawmakers it wasn’t doing enough to halt the crime. It won a jail sentence against a former trader earlier this month, and last week filed charges in another case against a former banker. The raids were the first time the FSA has worked with the Serious Organized Crime Agency in a sting operation dating back to 2007, according to the regulator.
The Full Article
Soros Signals Gold Bubble as Goldman Predicts Record (Update2)
By Nicholas Larkin and Pham-Duy Nguyen
March 1 (Bloomberg) -- George Soros is helping drive up gold prices by doubling his bet in a market even he considers a “bubble” as Goldman Sachs Group Inc., Barclays Capital and HSBC Holdings Plc predict more gains before it bursts.
Soros Fund Management LLC, which manages about $25 billion, increased its investment in SPDR Gold Trust, the world’s largest exchange-traded fund for the metal, by 152 percent in the fourth quarter, a Feb. 16 Securities and Exchange Commission filing shows. While prices have fallen 9.2 percent since reaching a record on Dec. 3, 15 of 22 analysts in a Bloomberg survey say gold will reach a new high, with the median forecast predicting a 17 percent advance to as much as $1,300 an ounce this year.
“When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” Soros said at the World Economic Forum’s annual meeting in Davos, Switzerland, in January. “The ultimate asset bubble is gold,” he said.
In a Jan. 28 Bloomberg Television interview, the 79-year- old billionaire recalled that former Federal Reserve Chairman Alan Greenspan warned of “irrational exuberance” in financial markets three years before the technology bubble burst in 2000. The Standard & Poor’s 500 Index rose 89 percent in the period. Buying at the start of a bubble is “rational,” Soros said.
Gold’s fourfold rally since the end of 2000 has also attracted money managers John Paulson, Paul Tudor Jones and David Einhorn. Paulson’s Credit Opportunities Fund soared almost sixfold in 2007 by betting that subprime mortgages would plummet. Einhorn said in October that his Greenlight Capital Inc. bought gold to bet against the dollar.
The Full Article
April
Goldman Sachs Sued by SEC for Fraud Tied to CDOs (Update4)
By Joshua Gallu and Christine Harper
April 16 (Bloomberg) -- Goldman Sachs Group Inc. was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The firm’s shares tumbled 13 percent and financial stocks slumped.
Goldman Sachs created and sold CDOs tied to subprime mortgages in early 2007, as the U.S. housing market faltered, without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the vehicles, the Securities and Exchange Commission said today. Billionaire John Paulson’s firm earned $1 billion on the trade and wasn’t accused of wrongdoing. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president who helped create the CDOs, known as Abacus.
“The product was new and complex but the deception and conflicts are old and simple,” SEC Enforcement Director Robert Khuzami said. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
The Full Article
Goldman Sachs CDO Labeled ‘Shi**y Deal’ by Montag in E-Mail
By Jody Shenn
April 27 (Bloomberg) -- Thomas Montag, the former head of sales and trading in the Americas at Goldman Sachs Group Inc., called a set of mortgage-linked investments sold by his firm “one shi**y deal,” according to an excerpt from internal e-mails released by Senate lawmakers.
The transaction was Timberwolf Ltd., a $1 billion collateralized debt obligation holding pieces of other CDOs, according to a statement from the Permanent Subcommittee on Investigations. The CDO also included optimistic side-bets on the performance of CDOs, derivatives in which the firm took the opposite pessimistic side in “many” cases, the panel said.
“Boy that timberwo[l]f was one shi**y deal,” Montag, who is now Bank of America Corp.’s president of global banking and markets, said in a June 22, 2007, e-mail to Daniel Sparks, who ran Goldman Sachs’s mortgage business at the time, according to the statement yesterday. Within five months of Timberwolf’s debut, the CDO had lost 80 percent of its value, and it was liquidated in 2008, according to the panel.
The Full Article
Goldman Sachs Says SEC Case Hinges on Actions of One Employee
By Christine Harper and David Scheer
April 21 (Bloomberg) -- Goldman Sachs Group Inc. said the U.S. fraud case against the firm hinges on the actions of the employee it placed on paid leave this week.
Fabrice Tourre, the 31-year-old Goldman Sachs executive director who was accused of misleading investors about a mortgage-linked investment in 2007, will also be de-registered from the Financial Services Authority, a spokeswoman at the firm in London said yesterday.
“It’s all going to be a factual dispute about what he remembers and what the other folks remember on the other side,” Greg Palm, Goldman Sachs’s co-general counsel, said in a call with reporters yesterday, without naming Tourre. “If we had evidence that someone here was trying to mislead someone, that’s not something we’d condone at all and we’d be the first one to take action.”
By characterizing the case as a dispute involving a single employee, Goldman Sachs may be taking its first steps to publically distance itself from Tourre in the case, some lawyers said. That could reduce bad publicity and ultimately make it easier for the company to settle the case.
The Full Article
Greek Deficit Revised to 13.6%; Moody’s Cuts Rating (Update2)
By Andrew Davis
April 22 (Bloomberg) -- The European Union said Greece’s budget deficit last year was worse than previously forecast and Moody’s Investors Service cut the country’s creditworthiness, sending Greek bond yields soaring.
Greece’s deficit was 13.6 percent of gross domestic product in 2009 and may be revised to as high as 14.1 percent because of “uncertainties” about Greek economic data, Eurostat, the EU’s statistics office in Luxembourg, said today in a statement.
Moody’s cut its rating on Greece one notch to A3, saying the EU’s “fractious mobilization” of emergency aid for the cash-strapped nation means it will be “significantly more difficult” for the rating to remain “within the A range.”
Greece’s benchmark 10-year bond yield rose to 9.03 percent, the highest since 1998 and almost three times the comparable German rate. The cost of insuring government debt against default climbed to a record today. The yield on the two-year note soared more than 275 basis points to breach 11 percent, indicating that investors perceive a growing risk of default or restructuring.
The Full Article
Goldman Armed Salespeople to Dump Bonds, E-Mails Show (Update1)
By Joshua Gallu and Jesse Westbrook
April 28 (Bloomberg) -- Goldman Sachs Group Inc., seeking to reduce assets tied to the declining U.S. housing market, urged its sales force in 2006 and 2007 to sell those products to clients, newly disclosed internal e-mails show.
The e-mails, including communications from Chief Executive Officer Lloyd Blankfein, show that employees discussed how to “arm” salespeople to shed bonds the firm found too risky to hold. The e-mails were released yesterday by Senator Carl Levin in connection with a hearing where current and former managers testified about the firm’s role in the financial crisis.
Levin, the Michigan Democrat who heads the Senate’s Permanent Subcommittee on Investigations, grilled the executives about the firm’s bets against the housing market and its disclosure to clients.
In one of the e-mails, Blankfein asked whether employees were doing enough to sell bonds backed by home loans including subprime mortgages.
“Could/should we have cleaned up these books before and are we doing enough right now to sell off cats and dogs in other books throughout the division,” Blankfein, 55, wrote in an e- mail dated Feb. 11, 2007.
The Full Article
May
Stocks Tumble as Debt Woes Spur Electronic Rout; Euro Climbs
By Darren Boey
May 7 (Bloomberg) -- U.S. stocks tumbled the most in a year as waves of computerized trading exacerbated a selloff triggered by Europe’s debt crisis, sparking a slide in Asian shares. U.S. index futures stabilized and the euro climbed.
The rout briefly erased more than $1 trillion in U.S. market value as the Dow Jones Industrial Average fell almost 1,000 points, a 9.2 percent plunge that was the biggest intraday percentage loss since 1987 and largest point drop ever, before paring declines. Japan’s Nikkei 225 Index tumbled 3.5 percent as of 2:47 p.m. in Tokyo and the MSCI Asia Pacific Index slumped 1.9 percent.
The Full Article
Stocks, Euro Slide on Government Debt Concern; Commodities Sink
By Rita Nazareth and Jeff Kearns
May 4 (Bloomberg) -- U.S. equities tumbled the most since February and European stocks erased their 2010 gain, while the euro slid to a one-year low, amid concern a government debt crisis is spreading. Oil, copper and gold sank on a slowdown in Chinese manufacturing. Treasuries rallied.
The Standard & Poor’s 500 Index slid 2.4 percent at 4 p.m. in New York and the Stoxx Europe 600 Index plunged 2.9 percent, leaving it down 0.4 percent this year. The euro weakened below $1.30 for the first time since April 2009. Copper fell to the lowest since February, while oil sank the most in three months as the dollar rose against 14 of 16 major counterparts. The 10- year Treasury yield slid 8 basis points to 3.6 percent.
The Full Article
U.S. Stocks Plunge Most in Year; Treasuries, Euro Rally
By Whitney Kisling and Elizabeth Stanton
May 20 (Bloomberg) -- A weeklong rout in stocks deepened, with U.S. benchmark indexes losing the most in more than a year, as reports cast doubts about the strength of the economic recovery and European leaders struggled to contain the region’s debt crisis. Commodities plunged and Treasuries soared.
The Standard & Poor’s 500 Index plunged 3.9 percent to 1,071.59 at 4 p.m. in New York, its biggest drop since April 2009. The Stoxx Europe 600 Index lost 2.2 percent and the S&P GSCI Index of commodities tumbled to the lowest since October. The losses accelerated even as the euro rallied as much as 1.5 percent to $1.2598 after earlier flirting with a four-year low. Ten-year Treasury yields sank to the lowest level of the year, down 15 basis points at 3.22 percent. The yen rallied against all 16 major counterparts.
The Full Article
Goldman Sachs Hands Clients Losses in ‘Top Trades’ (Update1)
By Ye Xie
May 19 (Bloomberg) -- Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse.
Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who followed the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who followed the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.
The struggles for analysts at Goldman, which is fighting a fraud lawsuit from U.S. regulators who accuse the company of misleading investors in a mortgage-linked security, show the difficulty of predicting market movements as widening budget deficits, a fragile global economic recovery and tighter financial regulations increase volatility. Stock and currency fluctuations rose to the highest in a year this month as Europe pledged about $1 trillion to stop a debt crisis in the region.
The Full Article
Euro Breakup Talk Increases as Germany Loses Proxy (Update1)
May 14 (Bloomberg) -- Romano Prodi recalls how he persuaded Germany to allow debt-swamped Italy into the euro: support our membership and we’ll buy your milk, he said.
When Prodi toured Germany’s agricultural heartland after becoming Italian leader in 1996, he pitched “a big milk pipeline from Bavaria,” pointing to a three-year, 40 percent plunge in the Italian lira that was hurting dairy sales. “To have Italy outside the euro, a huge quantity of exports from Germany would have been endangered,” Prodi, now 70, said.
Germany got the message, allowing entry rules to be bent to create a 16-nation market for its exporters. Now, German taxpayers are footing the bill for that permissiveness as Europe bails out divergent economies lashed to a single currency with little control over national taxes and spending.
The consequences are an 860 billion-euro ($1 trillion) bill for a debt binge led by Greece, sagging confidence in the European Central Bank’s independence and mounting speculation that a currency designed to last forever might break apart.
The Full Article
June
Stocks Slide, Treasuries Jump on Concern Over China, Confidence
By Rita Nazareth and Stephen Kirkland
June 29 (Bloomberg) -- Stocks sank from Shanghai to New York, with the MSCI World Index losing the most in 14 months, and two-year Treasury yields slid to a record low on concern over weakening growth in China and a slump in U.S. consumer confidence. The euro fell to an eight-year low versus the yen.
The MSCI World Index of 24 developed nations lost 3.2 percent, its biggest retreat since April 2009, as of 4 p.m. in New York. The Standard & Poor’s 500 Index slid 3.1 percent to 1,041.24, its lowest close since October, as 499 of its stocks declined. The Shanghai Composite Index tumbled 4.3 percent. The benchmark 2012 Treasury note yield slid as low as 0.5857 percent and the 10-year yield sank below 3 percent for the first time in 14 months. Oil and copper slumped at least 3 percent.
“It’s ugly out there,” said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “Consumers are pulling back. There’s concern about a China slowdown. We’re close to important technical levels on the S&P 500, with 1,040 being closely watched. It’s end of quarter, investors have to close their books and they are selling the stocks that did poorly.”
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Wall Street Hiring Jumps as Guaranteed Bonuses Return (Update1)
By Michael J. Moore
June 28 (Bloomberg) -- Leverage is back on Wall Street -- and this time it’s the bankers who have it.
Firms are adding jobs for the first time in two years, rebuilding businesses cut during the financial crisis and offering guaranteed payouts to lure top bankers. In New York, 6,800 financial-industry positions were added from the end of February through May, the largest three-month increase since 2008, according to the New York State Department of Labor.
Morgan Stanley and Citigroup Inc. are among banks that are hiring to replenish their ranks, while Nomura Holdings Inc. and Jefferies Group Inc. have been recruiting talent from larger firms in a bid to increase their standing on Wall Street.
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U.S. Stocks Fall, Slowing Global Advance; Commodities Trim Gain
By Michael P. Regan and Kelly Bit
June 21 (Bloomberg) -- U.S. stocks fell, slowing a global rally, as the Standard & Poor’s 500 Index failed to remain above levels watched by traders and optimism about China’s plan to relax the yuan’s fixed rate to the dollar faded in the last hour. Commodities pared gains and Treasuries trimmed losses.
The S&P 500 slipped 0.4 percent to 1,113.2 at 4 p.m. in New York after jumping as much as 1.2 percent in the first hour. The Reuters/Jefferies Index of commodities trimmed a 1.6 percent rally to less than 0.3 percent. Ten-year Treasury yields rose 3 basis points to 3.25 percent after surging 8 basis points. The losses in U.S. stocks weren’t enough to erase gains in the MSCI World Index, with the developed-markets gauge rising 0.5 percent for a 10th straight advance, the longest streak in 11 months.
Retailers had the steepest decline among 24 groups in the S&P 500, losing 1.7 percent collectively, amid concern a stronger Chinese currency will boost the cost of importing goods from the country. U.S. equities extended losses as the S&P 500 failed to stay above a level marking a recovery of 50 percent of its bear-market plunge from a 2007 record and remained below its average levels over the past 50 and 100 days.
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Hedge Funds Post Biggest Monthly Losses Since Lehman Aftershock
By Katherine Burton and Saijel Kishan
June 1 (Bloomberg) -- John Paulson, Louis Bacon and Andreas Halvorsen navigated the global market turmoil of 2008 with little or no damage. They weren’t as successful last month as the Dow Jones Industrial average had its worst May since 1940.
Hedge funds lost an average of 2.7 percent through May 27, according to the HFRX Global Hedge Fund Index, as the sovereign debt crisis in Europe triggered declines in stocks, the euro and commodities, and the gap in yields between U.S. short-term and long-term debt narrowed. It was the biggest decline since November 2008, when hedge funds lost 3 percent in the wake of Lehman Brothers Holdings Inc.’s bankruptcy two months earlier.
Almost every strategy lost money in May, according to Hedge Fund Research Inc. in Chicago, as the Dow index of 30 big stocks sank 7.6 percent including dividends amid speculation that Greece’s debt problems would spread to nations such as Spain and Portugal. Some of the best-known funds saw their gains for this year erased.
“Attempting to manage risk in an environment where everything that could go wrong does go wrong seems like a fruitless endeavor,” said Brad Balter, who runs Balter Capital Management LLC, a Boston firm that invests in hedge funds for clients. “The only defense that seems to work in months like these is being in cash.”
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BP at Risk as Share Plunge Fuels Takeover Speculation (Update4)
By Brian Swint and Stanley Reed
June 2 (Bloomberg) -- BP Plc’s failure to stop an oil leak from spewing millions of gallons of crude into the Gulf of Mexico may leave the biggest oil and gas producer in the U.S. in a fight to stay independent.
BP shares have plunged 34 percent since the Deepwater Horizon drilling rig leased by the company exploded on April 20, wiping more than 40 billion pounds ($58 billion) from the company’s value. That may make BP cheap enough to attract acquisition interest, investors said.
“The market value of BP has eroded substantially, so it could be a takeover target,” said Dirk Hoozemans, who helps manage about $4.5 billion at Robeco Group in Rotterdam, which sold its BP holding last year. What matters now is how forceful BP’s Chief Executive Officer Tony Hayward is in tackling the disaster and the aftermath, Hoozemans said.
With a permanent end to the leak depending on so-called relief wells that are some two months from completion, Hayward faces costs that may reach $37 billion, absorbing three years of cash flow, Credit Suisse analyst Kim Fustier said in a note today. The company also faces a criminal and civil investigation in the U.S. into the disaster
The Full Article
July
Goldman Sachs Profit Drops 82%, Missing Analysts’ Estimates
By Christine Harper
Goldman Sachs Group Inc. said second-quarter profit dropped 82 percent, missing analysts’ estimates on a slide in trading revenue five days after settling U.S. regulators’ fraud allegations.
Net income fell to $613 million, or 78 cents a share, from $3.44 billion, or $4.93, a year earlier, New York-based Goldman Sachs said in a statement today. The average estimate of 21 analysts surveyed by Bloomberg was for earnings of $1.99 per share, with estimates ranging from 77 cents to $4.34. Some of the analysts didn’t include costs of the settlement.
Lloyd Blankfein, Goldman Sachs’s chairman and chief executive officer, is working to restore the firm’s reputation after agreeing to pay $550 million to settle the Securities and Exchange Commission’s fraud accusations. The bank’s bigger competitors, including JPMorgan Chase & Co., last week also reported lower trading revenue as market gyrations reduced clients’ willingness to take on risk. Concern that the U.S. economic rebound will stall and reform legislation will crimp profits at finance companies have weighed on their stocks.
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Stocks Advance on Earnings Optimism; Treasuries Retreat
July 19 (Bloomberg) -- U.S. stocks advanced, while Treasuries retreated, as optimism about corporate earnings overshadowed a slump in homebuilder confidence. European equities fell for a fourth day.
The Standard & Poor’s 500 Index gained 0.6 percent to 1,071.25 at the 4 p.m. close in New York. The Stoxx Europe 600 Index fell 0.8 percent. The yield on the 10-year Treasury note climbed 0.05 percentage point to 2.97 percent, rising for the first time in four days. Oil snapped a three-day slump and the euro rose on speculation stress tests will show strength in the region’s banks. Gold declined to an eight-week low.
Microsoft Corp. rallied 1.4 percent to help lead technology stocks higher after UBS AG increased earnings estimates, while Halliburton Co. surged on profit and sales that topped analysts’ projections. Stocks fell earlier, and the two-year Treasury yield matched a record low of 0.5765 percent, as a gauge of homebuilder sentiment slid to the lowest in more than a year.
“These numbers that have been coming out for the second quarter have been pretty good overall,” said Hayes Miller, the Boston-based head of asset allocation in North America at Baring Asset Management, which manages $43.8 billion. “For now, for the most part, our expectation would be the second half of the year would be pretty good.”
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U.S., European Stocks Rally as Treasuries, Dollar Erase Gains
By Rita Nazareth and Kelly Bit
July 7 (Bloomberg) -- Stocks surged, sending U.S. benchmark indexes up the most since May, while the dollar and Treasuries slid as growth in American retail sales bolstered optimism in the earnings season and investors speculated European banks will pass stress tests.
The Standard & Poor’s 500 Index extended a two-day rebound from a 10-month low, rallying 3.1 percent to 1,060.27 at 4 p.m. in New York for its best gain since May 27. The Stoxx Europe 600 Index climbed 1.4 percent as Spanish and Italian lenders surged. The Dollar Index lost 0.2 percent to a two-month low of 83.888 and 10-year Treasury yields rose six basis points to 2.99 percent. Oil climbed from a four-week low and copper jumped.
Retailers advanced as the International Council of Shopping Centers said sales were growing at the fastest pace since 2006, easing concern that a slump in consumer confidence will undermine the economic recovery. Banks led the rally as State Street Corp. reported a profit and people with knowledge of the talks said European stress tests may assume a 17 percent loss on Greek bonds, half of the worst-case scenario estimated by JPMorgan Chase & Co.
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U.S. Stocks Regain Advance With Late-Day Rally; Dollar Weakens
By Kelly Bit and Stephen Kirkland
July 6 (Bloomberg) -- Stocks gained, with the Standard & Poor’s 500 Index rising from a 10-month low, on speculation earnings growth will help the market rebound from its lowest valuation since 2009, while a Spanish bond sale quelled concern the nation will struggle to fund its deficit. The dollar fell.
The S&P 500 ended 0.5 percent higher at 1,028.06 at 4 p.m. in New York, after briefly erasing a 2 percent morning rally and then recovering in the final half hour. The Dow Jones Industrial Average snapped a seven-day losing streak, its longest since the financial crisis in 2008. The dollar slid versus 15 of 16 major currencies. Australia’s dollar rallied as the nation’s central bank paused in lifting interest rates. Treasuries advanced.
Equities rose after an 11-week plunge that erased $7.6 trillion worldwide as U.S. government bond yields signaled almost no sign of the economy contracting and analysts raised S&P 500 earnings estimates at the fastest rate since at least 2004. The MSCI World Index rose after trading at 15 times reported profit yesterday, the lowest since March 2009. Spain’s IBEX 35 Index jumped 3.6 percent as the nation sold bonds in the first syndicated issue since February.
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Pimco Sells Black Swan Protection as Wall Street Markets Fear
July 20 (Bloomberg) -- Wall Street’s hottest new product is fear.
Almost two years after Lehman Brothers Holdings Inc.’s failure caused world markets to seize up, Pacific Investment Management Co. is planning a fund that will offer protection to investors against market declines of more than 15 percent. Morgan Stanley strategists estimate demand for hedges against such cataclysms helped drive as much as a fivefold increase last quarter in trading of credit derivatives that speculate on market volatility.
The efforts to protect against another disaster, which helped drive up the relative costs of the most bearish credit derivatives to the highest in two years, show that investors’ psyches still haven’t recovered from the Lehman bankruptcy on Sept. 15, 2008, which erased $20.3 trillion in stock market value worldwide and caused credit markets to freeze.
“Everyone is starting to realize that this is going to be a much longer, much more difficult path to recovery,” said William Cunningham, head of credit strategies and fixed-income research at Boston-based State Street Corp.’s investment unit, which oversees almost $2 trillion. “It’s really quite fragile and vulnerable in a way that we haven’t seen in our lifetime.”
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August
Druckenmiller to Shut Fund After 30 Years as Stress Takes Toll
Aug. 19 (Bloomberg) -- Hedge-fund icon Stanley Druckenmiller is quitting the business after three decades, telling investors he’d been worn down by the stress of trying to maintain one of the best trading records in the industry while managing an “enormous amount of capital.”
“For 30 years I’ve been responsible for managing client money and it’s been a joy, but at some point I need to move on,” Druckenmiller, who made $1 billion for George Soros by forcing a devaluation of the British pound in 1992, said in a two-hour interview on Aug. 17. “Thirty years is enough.”
Druckenmiller, 57, said he’s frustrated by his failure in the past three years to match returns that had averaged 30 percent annually since 1986. His Duquesne Capital Management LLC, which oversees $12 billion and has never had a losing year, is down 5 percent in 2010.
The Full Article
Stripper Regrets Art Degree Profitable for Goldman (Update2)
Carrianne Howard dreamed of designing video games, so she enrolled in a program at the Art Institute of Fort Lauderdale, a for-profit college part-owned by Goldman Sachs Group Inc. Her bachelor’s degree in game art and design cost $70,000 in tuition and fees. After she graduated in December 2007, she found a job that paid $12 an hour recruiting employees for video game companies. She lost that job a year later when her department was shuttered.
These days, Howard, 26, makes her living in a way that doesn’t require a college diploma: by stripping at the Lido Cabaret, a topless club in Cocoa Beach, Florida. “I didn’t know what else to do,” she says. “I’ve got a worthless degree. It’s like I didn’t attend school at all.”
Like many investors, Goldman, owner of 38 percent of the Art Institute’s parent, Education Management Corp., was drawn to for-profit colleges by their rapid growth and soaring stock prices, reports Bloomberg Businessweek in its Aug. 9 issue. Now Goldman, which recently agreed to pay $550 million to settle U.S. civil-fraud charges related to the subprime mortgage meltdown, is invested in an industry under attack from Congress, the Obama Administration and dissatisfied students.
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Stocks Slump as Treasuries, Dollar Rally Amid Economic Concern
Aug. 11 (Bloomberg) -- Stocks plunged, sending the MSCI World Index to its biggest drop since June, and Treasuries led a rally in government bonds on concern that the U.S. economic recovery is faltering. The dollar surged the most in 19 months against the euro.
The MSCI measure slid 2.8 percent at 4:50 p.m. New York time, the biggest decline since June 29. The Standard & Poor’s 500 Index sank 2.8 percent, and the Dow Jones Industrial Average retreated 265.42 points, or 2.5 percent, to 10,378.83. The two- year Treasury yield fell as much as 3 basis points to a record low of 0.4892 percent. Gilts extended gains after the Bank of England cut its forecast for growth. The dollar gained up to 2.4 percent, the most since Jan. 6, 2009, to $1.2864 per euro.
The Federal Reserve’s statement yesterday that the recovery is weakening and would require fresh stimulus was followed by an announcement that China’s industrial output rose the least in 11 months, adding to signs that the world’s third-biggest economy is slowing. The selloff today halted a rally in stocks that restored almost $4 trillion to global equity markets between July 5 and yesterday.
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Goldman Sachs Lost Money on 10 Days in Second Quarter (Update3)
Aug. 9 (Bloomberg) -- Goldman Sachs Group Inc., the bank that makes the most revenue trading stocks and bonds, lost money in that business on 10 days in the second quarter, ending a three-month streak of loss-free days at the start of the year.
Losses on Goldman Sachs’s trading desks exceeded $100 million on three days during the period that ended June 30, according to a filing today by the New York-based company with the Securities and Exchange Commission. The firm also disclosed that trading losses surpassed its value-at-risk estimate, a measure of potential losses, on two days.
Trading results across Wall Street firms declined after Goldman Sachs and its biggest competitors posted perfect results, with no losing days, in the first quarter. Goldman Sachs’s $5.61 billion in second-quarter trading revenue exceeded all its Wall Street competitors. The bank, overseen by Chairman and Chief Executive Officer Lloyd Blankfein, relied on trading for 71 percent of its revenue in the first half of the year, down from 80 percent a year earlier.
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Treasuries Jump, U.S. Stocks Pare Losses on Fed’s Stimulus Plan
Aug. 10 (Bloomberg) -- Treasuries surged, sending yields on 10-year notes to an 18-month low, after the Federal Reserve said it plans to buy government debt in an effort to buoy the economy. Stocks pared losses and the dollar trimmed its rally.
Yields on 10-year Treasuries fell as much as 9 basis points to 2.74 percent. The Standard & Poor’s 500 Index lost 0.6 percent at 4 p.m. New York time after slumping 1.4 percent. The Dollar Index rose 0.2 percent, following a 1 percent gain. China’s Shanghai Composite Index of shares tumbled 2.9 percent.
Fed officials will reinvest principal payments on their mortgage holdings into long-term Treasury securities to reduce borrowing costs throughout the economy, the central bank’s first attempt to bolster growth in more than a year. “The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement. Data earlier showed China’s import growth and the pace of property-price gains slowed in July.
The Full Article
The Quotes of the Day
“Hindsight is always twenty-twenty.” --Billy Wilder
“Tears may be dried up, but the heart - never.” --Marguerite de Valois
“Feel the fear and do it anyway.”--Susan Jeffers
“The universe is not hostile, nor yet is it friendly. It is simply indifferent.” --J. H. Holmes
Every man is the builder of a temple called his body. --Henry David Thoreau
“I dwell in possibility...” Emily Dickinson
“You’ve got to take the bitter with the sour.” --Samuel Goldwyn
“People who are always making allowances for themselves soon go bankrupt.” --Mary Pettibone Poole
“Don’t try to solve serious matters in the middle of the night.” -- Philip K. Dick
“I feel very strongly that change is good because it stirs up the system.” --Ann Richards
“Mix a little foolishness with your prudence: It’s good to be silly at the right moment.” --Horace
“Imagination is the one weapon in the war against reality.” --Jules de Gaultier
“Don’t let it end like this. Tell them I said something.” --Pancho Villa
“It is better to know some of the questions than all of the answers.” --James Thurber
“What is written without effort is in general read without pleasure.” Samuel Johnson
The most incomprehensible thing about the world is that it is t all comprehensible.” -Albert Einstein
“Fear does not have any special power unless you empower it by submitting to it.” -- Les Brown
“Let us so live that when we come to die even the undertaker will be sorry.” -- Mark Twain
“It is our choices...that show what we truly are, far more than our abilities.” -- J.K. Rowling
“Science may set limits to knowledge, but should not set limits to imagination.” -- Bertrand Russell
“Hares can gambol over the body of a dead lion.” -- Publilius Syrus
“Adversity does teach who your real friends are.” -- Lois McMaster Bujold
“The pleasure of love is in loving.” -- Francois de La Rochefoucauld
“Make the best use of what is in your power, and take the rest as it happens.” -- Epictetus
“Patience has its limits. Take it too far, and it’s cowardice.” -- George Jackson
“In the right light, at the right time, everything is extraordinary” -- Aaron Rose
“Nobody got anywhere in the world by simply being content.” -- Louis L’Amour
“A strong positive mental attitude will create more miracles than any wonder drug.” -- Patricia Neal
“Do not speak of your happiness to one less fortunate than yourself.” -- Plutarch
“A full cup must be carried steadily.” -- English Proverb
“In theory, there is no difference between theory and practice; In practice, there is.” -- Chuck Reid
“All animals are equal but some animals are more equal than others.” -- George Orwell
“Ignorant men don’t know what good they hold in their hands until they’ve flung it away.” -- Sophocles
“Nothing takes the taste out of peanut butter quite like unrequited love.” -- Charles M. Schulz
“As a matter of principle, I never attend the first annual anything.” -- George Carlin
“Better be wise by the misfortunes of others than by your own.” -- Aesop
“Nothing fixes a thing so intensely in the memory as the wish to forget it.” -- Michel de Montaigne
