Posts by Rick Newman

  • What we talk about when we hate on 'Wall Street'

    Rick Newman at Yahoo Finance 10 hrs ago

    Is your local bank part of Wall Street? What about your mortgage or car-loan issuer? Your credit-card company? Your life insurance carrier?

    With a populist presidential election in full outrage mode, Wall Street is squarely in the crosshairs, vilified by candidates ranging from Bernie Sanders to Ted Cruz, along with millions of angry voters. “The business model of Wall Street is fraud,” Sanders likes to say, tarring an industry that employs 8 million Americans. Judging by Sanders' rousing success in the New Hampshire primary, his message has found a ready audience.

    Are those candidates closer to the heart of Wall Street, or the fringe? Where does Wall Street start and end, anyway? To clarify, we present the Yahoo Finance Wall Street Perfidy Ratings, a best-to-worst breakdown of various elements of the financial industry—and the amount of anger ordinary Americans can justifiably feel toward each. Here are the biggest components of Wall Street, writ large:

  • The big banks will break themselves up before Bernie Sanders ever gets to it

    Rick Newman at Yahoo Finance 1 day ago

    Big banks are the bogeymen of the 2016 presidential campaign, even though the grinding recession they helped cause began nearly a decade ago and they’ve since paid more to the government in fines and interest than they got from taxpayers through the unpopular bailouts of 2008.

    Sanders wants to separate banks’ traditional activities—taking deposits and issuing loans—from riskier activities in securities and capital markets, so that a bank could do one or the other, but not both. He may get his wish—without ever having to sign or back a bill. “Bernie doesn’t have to worry, because it’s going to happen by itself,” says Roy Smith, a former Goldman Sachs (GS) partner who’s now a professor at New York University’s Stern School of Business. “In many ways, their long-term viability is in doubt, which will most likely cause them to break themselves up.”

    The obvious takeaway: Bank stocks are down 44% since 2006, while the stock market overall is up 43%. Bank shares are up a scant 8% during the last 5 years, and down 16% during the last year. This is not an industry sprinting way beyond the rest of the economy.

  • 5 reasons to love the stock-market selloff

    Rick Newman at Yahoo Finance 2 days ago

    Nobody wants to say it out loud—BUY!—but there’s certainly a lot of murmuring on Wall Street about opportunities for investors as financial markets careen lower and lower.

    The gloom from January has carried into February, with the S&P 500 index down more than 10% so far this year. Investors increasingly worry that a recession may be forming, with the Federal Reserve more handicapped than usual because interest rates—the typical antidote—are already so low, with virtually no room to cut. Weak GDP growth from the end of last year, combined with soft earnings reports, have created a "buyer's strike" in markets. 

    Even so, it remains difficult to see what, exactly, would cause a full-blown recession, while there are plenty of reasons to think it won’t happen. For those looking to feel better about the big market selloff of 2016, here are 5 reasons for optimism:

    Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman .

  • Hillary Clinton’s real Wall Street problem: She could seriously use the money

    Rick Newman at Yahoo Finance 5 days ago

    She’s not in the bankers’ back pockets. No, siree. Hillary Clinton may have received millions of dollars from Wall Street—in both personal income and campaign contributions—but she can ditch those well-heeled friends at a moment’s notice.

    To prove it, she has postponed (but not canceled) two fundraisers with Big Finance, one with the huge investing firm BlackRock and the other with an affiliate of Bain Capital, Mitt Romney’s old outfit. This comes amid Clinton’s unconvincing answers when pressed on her apparent coziness with banks and financial firms. When CNN anchor Anderson Cooper asked Clinton recently why she accepted $675,000 from Goldman Sachs for giving a grand total of three speeches, she stammered and finally said, “That’s what they offered,” as if she would have taken 25 bucks and a free sandwich, if that’s all Goldman were able to afford.

  • Goldman Sachs helped Hillary Clinton get rich? So what

    Rick Newman at Yahoo Finance 5 days ago

    In April of 2014, Hillary Clinton earned $225,500 for giving a speech to the Institute of Scrap Recycling Industries in Las Vegas. Scandalous? Hardly. Clinton was a private citizen at the time, earning every dollar she could as one of the most popular paid speakers in the world. Her talk to the recyclers generated absolutely no hint of controversy.

    A few of Clinton’s other speeches have come back to haunt her, however. Between 2013 and 2015, Clinton earned $3.7 million from 16 speeches she gave to Wall Street firms including Goldman Sachs, Morgan Stanley, Deutsche Bank, and Bank of America. Critics claim those lavish payouts show that big banks have Clinton in their back pockets, a claim Clinton has struggled to refute. When CNN anchor Anderson Cooper asked about three speeches to Goldman Sachs in 2013 that earned her $675,000, Clinton waffled and stoked the controversy instead of quelling it. (A list of all paid speeches Hillary Clinton gave during the last three years is at the bottom of this story.)

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    Hillary Clinton's paid speeches between 2013 and 2015

  • To financial markets, the 2016 election will barely matter

    Rick Newman at Yahoo Finance 6 days ago

    It will be the biggest show of the year. And on Wall Street, it may signify nothing at all.

    The 2016 presidential election is already filled with drama and portent. Will Trump fade or continue to steal the show? Will Sanders the socialist disrupt the relentless Clinton machine? Will rich donors buy the next president? Will the Beltway power base shift or remain intact?

    For some segments of the population—such as immigrants or Obamacare enrollees—the outcome of this year’s election could be quite important. But don’t expect a swing in the economy or the financial markets based on whether a Republican or Democrat is the next occupant of the White House. “Meaningful reform is dependent on political consensus and political courage, which will likely remain in short supply, whatever the outcome of the 2016 election," investing firm BlackRock concludes in a recent analysis.

    Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman .

  • Martin Shkreli is actually a great guy

    Rick Newman at Yahoo Finance 6 days ago

    The media has taken down another upstanding citizen.

    Martin Shkreli, unfairly slandered as “the most hated man in America,” is on a sort of redemption tour leading up to his forthcoming trial for federal securities fraud charges. Shkreli, to refresh your outrage, is the former CEO of drug firm Turing Pharmaceuticals, which earlier this year tried to help some cancer and HIV patients by raising the price of a drug they might need by 5,000%. Critics howled, but Shkreli straightened them out by explaining that the move was “altruistic.”

    Honestly the @breakfastclubam interview of @MartinShkreli showed me he actually ISN'T a douche. At all.

  • Alphabet has dethroned Apple, but maybe not for long

    Rick Newman at Yahoo Finance 7 days ago

    Eras change slowly—then seemingly all at once. So now that Google parent Alphabet (GOOGL) has displaced Apple (AAPL) as the nation’s most valuable company, it’s tempting to declare the reign of Steve Jobs and Tim Cook officially over.

    Not likely. A review of the most valuable companies of the last 50 years shows a lot of jockeying for the top spot, with some companies losing the mantle only to regain it a year or two later. The winds of change invariably sweep some companies aside for good, but well-run businesses also adapt and regain their footing. Here’s the market capitalization of the nation’s most valuable company each year since 1968:

    Exxon became a huge energy conglomerate in the 1980s, merging with Mobil in 1999 to become a true giant, Exxon Mobil (XOM). With revenue more volatile than most companies its size, Exxon’s value soared during oil booms and fell during busts.

  • Trump’s campaign is getting the most bang for the buck

    Rick Newman at Yahoo Finance 9 days ago

    Here’s the value of being a master showman running for president: Many millions of dollars.

    Donald Trump is trouncing the competition in terms of getting the best return on the money he’s spending as a presidential candidate, according to a new Yahoo Finance analysis of campaign spending data. Worst among the major candidates: Ben Carson, Rand Paul and Jeb Bush. With primary elections now underway, the field is likely to narrow quickly, and the candidates running the most efficient campaigns will reap a distinct advantage.

    To determine return on investment, or ROI, for each candidate, Yahoo Finance measured the amount spent by each campaign during the last three months of 2015 against the results of the most recent Democratic and Republican polls. In essence, we determined how much money each candidate spent for each percentage point’s worth of poll standings. Here are the results:

    (We used results of the ABC News/Washington Post poll conducted Jan. 26 and 27, 2016. This was a national poll rather than one focused on a single early-voting state such as Iowa or New Hampshire.)

  • Why Republicans envy Bernie Sanders

    Rick Newman at Yahoo Finance 9 days ago

    Capitalists don’t normally envy socialists, but the 2016 presidential election has upset a lot of conventional wisdom. Here’s one more surprise: Left-wing candidate Bernie Sanders has raised more money than every single Republican in the race.

    The candidates just submitted their year-end fundraising reports for 2015, and Democrat Sanders raised a total of $73 million. That trailed his rival Hillary Clinton, who pulled in $109 million. But the closest Republican was Ben Carson, with a fundraising haul of $54 million. Here’s how all the candidates fared:

    These totals represent donations to each individual campaign, where the limit is $2,700 per person. They don’t include the big-money groups known as super PACs, which can accept unlimited amounts of money from rich donors. Some candidates, such as Jeb Bush, have raised far more money for their super PACs than for their campaigns. Super PACS can spend money on behalf of a chosen candidate by running ads, making phone calls and doing other types of electioneering. The campaigns, by contrast, fund the candidate’s staff and travel, plus whatever else there’s money for.