Paul McCulley is back.
Pimco's new chief economist is Paul McCulley, back for his third stint at the firm that he previously left in 1992, returned to in 1999, and left again in 2010. So he knows what the culture is like and also will fit right in; last time he was there he "was known for a whimsical style in his commentaries that included imaginary question-and-answer sessions with his pet rabbit Morgan le Fay." Known for a whimsical style in his commentaries at a place that also published is back! (Later he was known for his hair, which was glorious but is now "back to acceptable corporate standards.") Alas the Bloomberg News article is less clear about whether Morgan le Fay got her own offer to return to Pimco and, given the fact that she featured in monthly commentaries at least as early as 2000, and the average life expectancy of rabbits, I fear she will not be coming back as chief rabbit to the chief economist.
You know a speech about "inclusive capitalism" will be inclusive when it starts by thanking Lady Lynn de Rothschild and the Prince of Wales, but to be fair Christine Lagarde gets to Marx by the fifth paragraph. She is unhappy with banks, calling them "more extractive than inclusive" -- to a hereditary prince, remember -- and citing an implicit too-big-to-fail subsidy, even now, of "about $70 billion in the US, and up to $300 billion in the Euro Area." She also wants to improve culture at the banks, by asking them to look at their telos:
In Aristotle’s framework, once we know the purpose, we can identify the virtues needed to fulfill it. It becomes a matter of every person doing the right thing.
When we think about finance, surely one of these core virtues is prudence—which is about stewardship, sustainability, and safeguarding the future. Prudence has long been a byword of banking, and yet has been sorely missing in action in recent times.
Good times, good times. At the same conference, Mark Carney said that "A sense of self must be accompanied by a sense of the systemic," and I guess there aren't that many opportunities for financial bureaucrats to spout philosophy at European royals so I hope they all had fun.
Trading is no fun this quarter.
"People lack direction. People are uncertain. There just isn't a lot of movement," says Citigroup chief financial officer John Gerspach, and perhaps he should send them to see Christine Lagarde to re-align their telos? A notable thing about trading revenues is that the two main things you hear executives complain about are (1) too much volatility and (2) too little volatility. We're in state 2 now, and I guess things could be worse.
Fabulous Fab won't appeal.
The sort of interesting tidbit here is that "Mr. Tourre, who made millions during his Goldman tenure, has already paid the S.E.C. $825,000 in penalties and other costs," so I guess you can't feel too bad for him.
Goldman Sachs has your World Cup prediction.
It's Brazil, but there is much else here, including a list of probabilities of reaching various stages (Brazil: 48.5 percent chance of winning; U.S.: 0.5 percent chance of winning but 22.4 percent chance of making the quarterfinals; England: 1.4 and 34.8 percent respectively; Argentina, Germany and Spain are the other predicted semifinalists), a comparison of GS versus Ladbrokes odds (GS thinks favorites Brazil are undervalued while dark-horse Belgium are overvalued), a client-selected Dream Team (thanks clients!), and a picture of Chief Global Equity Strategist Peter Oppenheimer grinning with Willian and David Luiz. Also there is some nonsense about "The World Cup and Equity Markets" to justify the rest of it.
The Harvard Crimson's annual survey is out.
Key numbers for the Harvard Class of 2014 include: 31 percent going into finance or consulting (24 percent of men and 10 percent of women to finance, 14 percent of men and 15 percent of women to consulting), versus 15 percent to tech; 17 percent have cheated in classes while at Harvard; and 21 percent are virgins, while 12 percent have had 10 or more sexual partners during college. Alas the Crimson's report lacks important cross-tabs, including the relative prevalence of the virgins and cheaters among those going into finance. The only amusing cross-tab is that, among those planning to go into government or politics only 7 percent have cheated in classes, versus 17 percent overall, which seems fishy.
"Investor storytime is not exactly advertising, but it is related to advertising. Think of it as an advertising future." Anonymous stock tips. PfizerZeneca's falling out. Bank of America still wants to return capital. 50 Cent, life coach. In mortgage fraud prosecutions, "Some of the worst offenders got extraordinary deals in return for their testimony against others." What kind of crazy person would cook for their dog, he asked nervously. "Owners should stop using the crossbows and return them to PSE for repairs."
To contact the author on this story:
Matt Levine at firstname.lastname@example.org