Anthony Scaramucci on stocks, trade and China: May 8, 2019
A decade after Countrywide's collapse, Angelo Mozilo is still in denial over his mortgage machine's role in the Great Recession.
"Countrywide is a great company," Mozilo said on Wednesday from the SALT Conference in Las Vegas.
Financial historians say otherwise. Mozilo, Countrywide's co-founder, helped pioneer the use of subprime mortgages. These risky loans blew up when home prices unexpectedly plunged.
The perpetually tanned Mozilo became one of the villains of the subprime crisis and ensuing financial meltdown.
"Somehow -- for some unknown reason -- I got blamed," Mozilo said.
Mozilo said that blaming Countrywide is "nonsense" because subprime was "not the cause at all" for why the economy tanked.
But subprime did play a central role in sparking the worst financial crisis since the Great Depression. These bad mortgages were packed into securities that became toxic when foreclosures spiked. Bear Stearns nearly collapsed. Lehman Brothers imploded. Financial markets seized up.
Ten years ago, Mozilo said he worried about how the backlash affected his reputation.
"Now, I don't care," he said.
The SEC is laser-focused on Tesla CEO Elon Musk's Twitter account.
At SALT on Wednesday, SEC Commissioner Robert Jackson said the agency was monitoring Musk's social media use "very closely."
"I fully expect that he’s going to be held to the deal" he recently struck with the SEC, Jackson said of Musk.
Earlier this year, Musk tweeted that Tesla "will make around 500k [cars] in 2019." Hours later, Musk sent a follow-up tweet indicating that the company will actually deliver just 400,000 cars this year.
That prompted the SEC to ask a federal judge to hold Musk in contempt for violating the settlement agreement he reached with the agency last year about his social media use.
Instead, Musk and the SEC reached an updated agreement in April about his Twitter account and what he's allowed to say on social media.
Jackson said Musk's tweet that prompted the SEC to go to a federal judge "didn’t follow the agreement that he signed."
Musk "signed an agreement with the federal government at the behest of a federal judge to do something, and he didn’t do it," Jackson said. "It’s crystal clear that he didn’t follow the agreement."
Most panels here at SALT are about investment strategies or economic risks. But on Wednesday, leaders from BlackRock (BLK), HP (HPE) and Bank of America (BAC) spoke on a panel about diversity and inclusivity in the finance industry.
Jonathan McBride, managing director and global head of inclusion and diversity at BlackRock, said the firm's clients were increasingly pressing the company on its diversity policies.
“Inactivity is the more costly place to be,” he said.
Lesley Slaton Brown, chief diversity officer at HP, agreed. "Shareholders are demanding this and customers are demanding this as well." Brown said HP had increased the number of women in leadership roles by 8% since 2015.
Amanda Pullinger, CEO of 100 Women in Finance, said she was focused on raising the profile of women in the industry. She encouraged top women in finance to speak at conferences and panels and appear on television.
"Get yourself on a stage," Pullinger said. “We need more women to be seen as experts in their field."
Wednesday's trading day is over and we can only hope that markets will calm down as the week draws to a close.
Here's what's next for investors.
- China reports consumer price inflation numbers for April
- On the US economic calendar, trade data and jobless claims are due at 8.30 am ET.
- The SALT Conference in Las Vegas is on for another day, with CNN Business' Matt Egan and Nathaniel Meyersohn at the scene.
- Ford (F) holds its annual meeting
US stocks finished the day mixed, with the Dow ending in positive territory for the first time in two days, though just barely.
The market took investors for a wild ride on Wednesday, flipping back and forth on sentiment surrounding a possible trade deal between the United States and China.
Amid all the trade drama, government contractor Parsons (PSN) IPOed today, pricing its shares at $27 per shares. The shares rose 11.$% on their first trading day.
Intel (INTC) was the biggest loser in the Dow, dropping 2.5%.
President Donald Trump checks in on financial markets "every few hours," according to economic adviser Stephen Moore.
"This guy loves to follow the markets," said Moore, who until last week was Trump's pick to join the Federal Reserve.
Speaking at the SALT Conference in Las Vegas, Moore said on Wednesday that recent market turbulence over the White House's tough stance on China will give Trump "hesitation."
He understands that if the stock market and economy crash on him, there's no way he can get re-elected," Moore said.
Last week, Moore withdrew his name from consideration to join the Fed amid a firestorm of controversy over years of disparaging comments he made about women and concerns about his qualifications.
Moore tried to make light of the controversy regarding his comments about women.
"I like women. I just don't like women's basketball," Moore said, though his comment failed to draw any laughter from the sparse conference room.
On China, Moore said that he advised Trump to take as good of a trade deal as he can and then get "really tough with China" after winning re-election.
"This isn't going to stop now," Moore said. "This trade dispute with China will last for years and years and years. This is the issue of our time."
SoFi, the personal finance company popular with millennials, has launched a new investment that's squarely in the wheelhouse of its younger users: a gig economy ETF.
The company said the The SoFi Gig Economy ETF (GIGE) will be run by investment firm Toroso as an actively managed fund. In other words, managers will pick the stocks instead of relying on an index. SoFi also launched a new ETF geared toward high-growth stocks.
"Our members are excited by high-growth and gig economy companies because these companies are in many cases part of their lives," said SoFi CEO Anthony Noto. "We're giving our members a way to get started investing by buying what they know and investing in themselves."
Noto left his job as the COO of Twitter in January 2018 to take over as SoFi's CEO. Interestingly enough, Twitter (TWTR) is the sixth-largest holding in the ETF.
Here's a look at the top five stocks. They collectively make up more than 20% of the fund.
Other big picks? Eventbrite (EB). Facebook (FB) and Alibaba (BABA). And SoFi said the fund is set up so that companies that just went public can be included about a month after the IPO. So don't be surprised to see Uber (UBER) show up as a top holding in June.
Hedge fund manager and philanthropist Manny Friedman said the idea to create tax incentives for investments in underdeveloped neighborhoods was "a massive bipartisan effort."
The Obama administration conceived of Opportunity Zones, which offer tax incentives for investments in some low-income and underdeveloped ares. They were passed into law as part of Congress' tax cut package in 2017.
Friedman was critical of investors and reporters who call the initiative a Trump-inspired program. "This is not a Trump program," said Friedman, an advocate for Opportunity Zones. "It’s a bipartisan program."
Friedman said there was a risk to the future of opportunity zones if the White House changes hands in the 2020 election.
Things got a little heated when Nouriel "Dr. Doom" Roubini and bitcoin bull Michael Novogratz clashed at SALT on Wednesday.
The bear's take
Roubini slammed bitcoin as the “mother and father of all bubbles and busts.”
The NYU professor pointed out that bitcoin’s crash was deeper than history’s other bubbles like the dotcom boom and even the tulip mania of the 1630s.
Roubini said bitcoin is subject to “massive manipulation” and has “no future as a currency.”
The bull's take
Novogratz, the CEO of Galaxy Digital, believes the future is very bright for bitcoin despite the price collapse. He pointed to moves by establishment players like Fidelity into the crypto space and bitcoin’s $100 billion market cap.
The debate is already over. Bitcoin won,” Novogratz said.
Bitcoin has spiked more than 60% this year, rebounding from its recent crash.
Roubini repeatedly took issue with Novogratz cutting him off, saying at one point “let me finish."
Novogratz tried to make peace with Roubini at the end of the panel by making a friendly bet.
If bitcoin finishes the year above its current price of roughly $6,000, Roubini would have to wear a t-shirt saying bitcoin is great. If bitcoin ends the year below $6,000, Novogratz offered to wear a t-shirt saying: “Nouriel was right."
Roubini declined the offer, saying: “I don’t care about the price of bitcoin."