Author: Vitaliy Dadalyan

Preet Bharara Is a Candidate to Run SEC, Putting Bankers on Edge

Preet Bharara Is a Candidate to Run SEC, Putting Bankers on Edge(Bloomberg) -- Joe Biden’s presidential transition has barely started but already banks and investment firms are anxious about two names they fear are in the running to lead the U.S. Securities and Exchange Commission.The uneasiness started late last week, when news broke that Gary Gensler -- a scourge of Wall Street when he led the Commodity Futures Trading Commission -- had been tapped to examine financial regulators for the president-elect. That fueled concerns that Gensler himself might be in line for the top job at the SEC or another agency he’s reviewing.Then Washington lobbyists and industry trade groups got wind of another SEC contender who they would find potentially more alarming: Preet Bharara, Manhattan’s former top federal prosecutor. Bharara loomed large over Wall Street in the decade following the 2008 financial crisis, when he aggressively investigated insider trading and contributed to SAC Capital Advisors, Steven Cohen’s old hedge fund firm, shutting its doors.Biden’s transition team didn’t respond to requests for comment, nor did Gensler or Bharara.Gensler and Bharara are among many names Biden advisers are discussing as possible SEC candidates, according to more than a dozen people familiar with the conversations who asked not to be named in sharing private communications. But the deliberations are in their early stages and Biden has suggested he may not even start offering nominees for higher-profile cabinet positions -- like Treasury secretary and attorney general -- until next month.Still, the financial industry chatter about an SEC pick highlights the job’s importance to banks, asset managers and stock exchanges.Wall Street was already on edge over the internal battle over appointees between moderate and progressive Democrats, worried that liberal Senator Elizabeth Warren and other lawmakers would pressure Biden to select tough regulators. Those fears grew when the president-elect filled his landing teams -- aides who examine federal agencies -- with several industry critics. While Biden has said little about his plans for financial regulators, the move signaled he’s open to nominating candidates in the mold of Gensler and Bharara.Read More: Wall Street Wants to Be Sure Biden Can Keep Warren’s Army at BayOne preferred candidate among progressives, according to people familiar with the matter, is former SEC Commissioner Kara Stein, who clashed with Wall Street banks during her tenure. Allison Lee, a current SEC commissioner who’s likely to become acting chair under Biden, is also favored by some liberal Democrats to get the post permanently.Michael Barr, a former top aide to ex-Treasury Secretary Timothy Geithner, is in the mix, too, according to two people familiar with the matter. Barr, who was one of the main authors of the Dodd-Frank Act, gained a reputation during the Obama administration as an unyielding negotiator who often dismissed Wall Street’s lobbying demands. The University of Michigan law professor is also on the Biden transition group reviewing the Treasury Department.Georgetown University Law Professor Chris Brummer, whose work has focused on global regulatory issues, financial inclusion and industry innovation, is also said to be in the running. Brummer, who would be the first African-American SEC chairman, recently published a study about the lack of diversity among U.S. regulators. Like Barr, Brummer is part of the team examining the Treasury Department for Biden.A candidate favored by moderate Democrats is former SEC Commissioner Robert Jackson Jr., who opposed many of the Trump-era rule cuts during his time at the agency. Jackson, who’s now a law professor at New York University, wrote a New York Times op-ed in 2018 with Bharara arguing that insider-trading laws needed to be clarified to better protect investors.All of the potential SEC nominees named in this article either declined to comment or didn’t respond to requests for comment.Read More: Wall Street’s Best Progressive Defense Is Trump’s HoldoversGensler, who is known for his hard-charging leadership style, has already reached out to high-level SEC officials to get a sense of what’s happening at the agency, said a person familiar with the matter. His appointment as head of the transition team examining the Federal Reserve and banking and securities regulators has set off a stir among SEC workers, some of whom are wondering if it gives him an edge in being nominated for chairman, this person added.Along with his policy work that includes jobs in Bill Clinton’s Treasury Department, Gensler has clashed with Wall Street in the enforcement arena, spearheading global investigations into the manipulation of Libor that resulted in banks paying billions of dollars in penalties. Still, it’s not clear that Gensler, who led the CFTC under President Barack Obama, would want the SEC job, particularly if a cabinet post or a prominent White House position is on the table.Bharara, who became U.S. attorney for the Southern District of New York in 2009, might also view the SEC as a consolation prize, as he’s been mentioned as a possible contender to lead the Justice Department. Fired by President Donald Trump in 2017, Bharara was once a top aide to Senate Minority Leader Chuck Schumer.It’s standard practice for an SEC chairman to step down when an administration changes. Once the head of the agency leaves, one of the commissioners is installed as the acting leader until a permanent replacement is appointed by the president and confirmed by the Senate.Trump’s SEC Chairman, Jay Clayton, hasn’t yet announced whether he plans to resign or what he might do next after leaving the regulator. Before joining the SEC in 2017, he was a law partner at Sullivan & Cromwell, where his clients included big banks and hedge funds.(Updates with Jackson op-ed in 11th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


This Petty Squabble Is Your Big Chance to Load up on Alibaba Stock

This Petty Squabble Is Your Big Chance to Load up on Alibaba StockA couple of weeks ago, I wrote about how Alibaba (NYSE:BABA) had three major catalysts on the horizon. I thought Alibaba stock was a good buy at the time.  Source: Kevin Chen Photography / Shutterstock.com The good news for Alibaba investors is that two of those three catalysts have worked out well. The bad news is that the third has been an unmitigated disaster.  Jack Ma and the Chinese Communist Party (CCP) have totally botched the Ant Financial IPO. Fortunately for Alibaba investors, the market has completely overreacted to the news. InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Ant-related Alibaba sell-off is a great buying opportunity for long-term investors. And it’s in China’s best interest to demonstrate to the world they can trust Chinese investments. Bullish Catalysts for Alibaba Stock Let’s discuss the good news for Alibaba first. Joe Biden won the US election. More importantly for Alibaba investors, Donald Trump lost the election. 7 Retail Stocks That Will Benefit From 2020’s Holiday Shopping Season Trump made his trade war with China one of the centerpieces of his administration. His animosity toward China coupled with his unpredictability created a cloud of uncertainty for Chinese stocks like Alibaba for four years. It doesn’t even matter whether or not Biden will be “soft” on China. Getting Trump out of the White House is bullish for Alibaba and other Chinese stocks. The next bullish catalyst in the past couple of weeks was Alibaba’s third-quarter earnings. The company reported non-GAAP diluted earnings per share of $4.83 in the most recent quarter, topping consensus analyst estimates of $2.08. Revenue for the quarter was up 30% to $22.83 billion, slightly missing analyst estimates of $23.19 billion. Alibaba’s cloud revenue was up 60%, far surpassing the growth rates of US cloud leaders Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT). The cherry on top of a strong quarter for Alibaba was its blowout Singles’ Day numbers. This week, Alibaba reported a record $74.1 billion in Singles’ Day gross merchandise value, nearly double last year’s $38 billion in sales. For perspective, Alibaba generated about seven times the $10.4 billion Amazon generated during its 48-hour Prime Day sales event this year.  Ant IPO Debacle Despite all the good things mentioned above that should have a positive impact on the Alibaba stock price and its long-term business outlook, the stock has taken a major beating in the past couple of weeks. It all started with Jack Ma opening his mouth. Jack Ma was a co-founder of Alibaba and the founder of Ant Group, which is 33% owned by Alibaba.  Prior to the Ant IPO, Ma said in a speech that Chinese banks operate with a “pawnshop mentality.” First, most major Chinese banks are state-owned. In China, the “state” is the CCP, of which Ma is a member. But Ma apparently decided to criticize the CCP just days before the Ant IPO, which was on track to be the biggest in the history of the world.  Ma should have known better. The CCP responded by announcing brand new rules on micro-lending in China and promptly pulling the Ant IPO when the company didn’t immediately comply with those rules. The CCP then followed up by proposing new antitrust regulations that could impact pricing, payment methods and data used by Chinese tech companies. The Chinese government felt Ma was out of line with his comments. Ma made a power play with his criticism, and the CCP felt they needed to put him and other Chinese tech entrepreneurs in their place. But this petty power drama has already wiped more than $280 billion in value from Chinese tech companies, including Alibaba. It has also further tarnished the already pretty horrible reputation Chinese stocks have on the global market.  The CCP should have known better. What It Means for Alibaba Stock At the end of the day, I believe this political bickering in China won’t result in many major disruptions to Alibaba’s business. It’s not in China’s best interest to cripple some of its biggest economic growth engines. At the same time, Ant Group’s reputation has been tarnished, and new regulations could have a significant impact on its business.  The Patriarch Organization estimates Ant’s valuation could drop from around $300 billion to $150 billion by the time it goes public, likely in 2021. In other words, the value of Alibaba’s 33% stake could drop by $50 billion. Fortunately for Alibaba investors, the company’s market cap is already down by more than $120 billion so far in  November. In other words, Alibaba stock seems to be pricing in that Ant is now worthless. Of course, that idea is ridiculous considering Ant is China’s largest digital payment platform.  All this drama surrounding Ant, Ma and the CCP will ultimately blow over. It’s in all parties’ best interest for Ant, Alibaba and China to succeed on the world stage. In the meantime, I agree with Jim Cramer’s take on the Alibaba sell-off.  “I am pounding the table to buy Alibaba.” On the date of publication, Wayne Duggan held a long position in BABA. Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. He is the author of the book “Beating Wall Street With Common Sense,” which focuses on investing psychology and practical strategies to outperform the stock market. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post This Petty Squabble Is Your Big Chance to Load up on Alibaba Stock appeared first on InvestorPlace.


Nokia Stock Still Hobbled by 5G Ineptitude

Nokia Stock Still Hobbled by 5G IneptitudeSome stories — you know, crazy pandemics, crazier elections, craziest wardrobe fails — make so many headlines these days that they’ve shoved otherwise major developments off to the side. One of those, 5G technology, promises to change mobile communications like nothing else in generations. Vying for a nice slice of the pie is Nokia (NYSE:NOK), much to the delight of those who own Nokia stock. Click to EnlargeSource: RistoH / Shutterstock.com The trouble is that with this 5G bakeoff, Nokia will at best win ugly and at worst lose uglier, snatching defeat from the jaws of victory. Just a few months back, Nokia had a full tummy eating the dust of China’s privately held Huawei Technologies — then the world’s undisputed 5G leader. But when the Commerce Department, citing Chinese espionage concerns, cut off Huawei’s access to advanced computer chips, it created a mobile miracle for Nokia and other players, including its Swedish rival Ericsson (NASDAQ:ERIC). The $21 billion question, then (that’s Nokia’s market capitalization) centers on whether the Finnish company has leveraged or squandered this once-in-a-cellular-lifetime opportunity. Effective Aug. 1, new CEO Pekka Lundmark was given the reigns to make victory possible. How’s he doing so far? And how’s Nokia stock doing given its recently ended quarter?InvestorPlace - Stock Market News, Stock Advice & Trading Tips Nokia Stock Sinks Like a Rock The vernacular phrase quants and investment wonks use to describe NOK is “no can do.” If Lundmark’s return to Nokia after two decades away was supposed to inspire the troops, it’s hardly done any wonders for shareholders. Since August, Nokia stock has lopped off a quarter of its value. 7 Retail Stocks That Will Benefit From 2020’s Holiday Shopping Season Granted, much of the slump came off a terrible third quarter that largely predates Lundmark’s arrival. When that earnings report was released Oct. 29, shares of Nokia stock tumbled 13% as the company cut its full-year and margin forecasts. You have to admire Lundmark for putting on a brave face for his first-ever earnings release, given the glum nature of the news. He proclaimed that Nokia would do “whatever it takes” to take the lead in 5G — which is fine, except for a few things. Very big things. Huge things no new CEO can just pretend or pray will go away like a screened spam caller. Three Major Challenges Nokia Can’t Ignore First: If you can’t take the 5G lead or get anywhere close to it when the top dog is effectively cut off at the knees — which would require, in essence, nothing but just showing up — then you’re not going to convince anyone you’ll do “whatever it takes.” Second: Lundmark needs to prove he’s more than just a feel-good story. Sure, he’s returning to the company where he built his career — but hasn’t been around Nokia since the flip-phone era. He honed his CEO chops at Fortum (OTCMKTS:FOJCF), a Finnish energy company, and the analogy that could hold is that a championship football coach might not find his winning skills translate well to synchronized swimming. Finally: Nokia stock has lacked consistency and upward trajectory. While dismal this quarter, Nokia’s net profit for the April-June period shot up 22% to $376 million, this despite the challenges all telecoms have faced due to the novel coronavirus. So are we looking at a company on its way up? Or down? Or up and down? You tell me. If long-run prices were long distance calls, Nokia sends more mixed signals than you’d find in a Manhattan subway during a solar eclipse. Since 2016, prices have waxed or waned 25% or more every single year, and sometimes both (2017). Since January 2019, Nokia stock has been on a frightening nosedive of 37%. Quick Pekka! Call in the analysts! Who say… Anticlimax Over Analyst Anticipation Well, they’re hanging in there. The Wall Street Journal reports that currently, more than half (17 of 32) consider Nokia a buy. But 13 call it a hold and with a consensus share price target of $4.47 per share, we’re not talking champagne in the bathtub. (If we were, we’d kindly ask you not to drop your $700 Nokia 8.3 phone in there.) At present, Nokia stock trades at $3.75 so yes, a 19% lift would be nice. But again, so much depends on this little thing called 5G. I’m going to be honest: Nokia stock stumps me. On paper, it looks like it has all the elements to succeed, including an attractive price-to-earnings ratio of 24-to-1. With Huawei hobbled, 5G dominance is very much in the air and Nokia is still in the early innings of a new game. The new CEO may see paths to victory his predecessors did not. But to my mind and my gut, Nokia’s only consistency over the years has been its inconsistency. Bold moves, including the purchase of Alcatel-Lucent for $16.6 billion in 2015, have fizzled badly. Some people would call this a great time to buy the bottom; I’m more apt to call it flinging dollars into a broad, flat mud puddle. All that to say: While it’s not at all proper to write Nokia’s 5G epitaph, the company hasn’t proven ready to write a new chapter either. Those who hold Nokia stock only know the first line: “Whatever it takes,” right? Now that’s making a statement. Just not a case. On the date of publication, Lou Carlozo did not have (either directly or indirectly) any positions in the securities mentioned in this article. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post Nokia Stock Still Hobbled by 5G Ineptitude appeared first on InvestorPlace.