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Thing One: Happy Stress Test Day: The stock market has finally put the financial crisis behind it, and soon the nation's ginormous banks will do the same thing. Or pretend to do so, at least.
Today is the glorious day when banks get preliminary results of their annual "stress tests" from the Federal Reserve. The big banks are expected to get the Fed's approval to shovel more cash out the door to shareholders in the form of dividends and share buybacks, Bloomberg writes. The six biggest U.S. banks alone could give away $41 billion in the next 12 months, Bloomberg estimates. Even the sad-sack banks like Citigroup, which flunked its test last year, and Bank of America, which has been paying a paltry one-cent dividend since the crisis, will be allowed to give away more money, Bloomberg figures.
The banks are supposed to wait a week before announcing whether they've passed or not, but some banks will probably ignore that embargo and break the news early, as JPMorgan Chase did last year, Bloomberg notes. Because who cares what the regulators think, right? What are they going to do, prosecute the banks? As if.
It helps that this year's test is slightly less rigorous than those in the past. And after getting their preliminary results today, banks will have a week to work with the Fed on patching up any holes in their capital plans to make sure they can give cash away. The thinking here seems to be that banks almost certainly have more than enough cash to protect themselves against any future unpleasantness.
ProPublica's Jesse Eisinger is not so sure: He suggests that Bank of America, for example, seems under-reserved for possible litigation costs, including the risk that a paltry $8.5 billion lawsuit settlement could triple in size. Also not sure are Stanford professor Anat Admati and Martin Hellwig of the Max Planck Institute. Their new book, "The Banker's New Clothes," suggests the banks still don't have enough capital set aside to cover another crisis.
But, hey, the biggest banks are still big enough in the ways that benefit the biggest banks, at least. For example, they are too big to ever be allowed to fail. And they are certainly too big to ever be prosecuted for their crimes, as the Attorney General of the United States admitted publicly yesterday. Between that and being able to shovel cash out the door to keep shareholders placated, the biggest banks shouldn't feel stressed about anything.
Thing Two: Europe Watch: The European Central Bank meets today to try and discuss the European economy without breaking down in tears or fits of drunken rage. Despite the fact that Europe's economy is still stuck in a long recession, ECB policy makers aren't expected to cut interest rates, Bloomberg notes. And the signals are mixed for the continent: German factory orders dropped unexpectedly, it emerged this morning, but so too did Spanish borrowing costs. For comic relief, former and potentially future Italian Prime Minister Silvio Berlusconi was sentenced to a year in jail in a wiretap case. He won't have to serve any time until all of his appeals run out or he flaps his leathery wings off to the great Bunga Bunga party in the sky, whichever comes first.
Thing Three: Revolving Door Update: President Obama may appoint yet another bank-defending lawyer to the Securities and Exchange Commission, the New York Times writes. Obama is considering naming Andrew J. Ceresney as the SEC's enforcement chief, according to the NYT. Ceresney has spent the past decade defending the same banks he would then be policing. That puts him in good company with his potential boss, SEC chair nominee Mary Jo White, who has also spent the past several years working for banks.
Thing Four: Bank Makes Freakishly Lucky Trade: Maybe one case Ceresney could not look into would be the curious case of Bank of America's purchase of a bunch of options on Constellation Brands last year. Just a week later, Bank of America led a merger of Constellation and another beer maker that sent Constellation shares soaring 24 percent in one day. As luck would have it, that made Bank of America's big options bet pay off handsomely, the WSJ reports. The bank says it also made bets against Constellation and that its total profit was not very big.
Thing Five: You Like Stocks? Here, Take A Bunch More: U.S. companies are taking advantage of new highs in the stock market to dump more stock on the public, the WSJ writes. They're planning to use the extra cash to buy other companies, which should juice stock prices further. One thing they're not doing much of is hiring human beings, however, the NYT notes. Oh well, tough luck, economy! At least the Dow is at a new high.
Thing Six: Time In A Bottle: Time Warner plans to spin off its Time Inc. publishing division, having tried and failed to craft a merger with Better Homes and Gardens publisher Meredith. It's a move similar to what News Corp. is doing with its publishing side: cutting slow-moving and/or dying businesses loose from more-robust broadcasting and film businesses, leaving them to be eaten by wolves, or maybe rescued by a Warren Buffett type.
Thing Seven: Dell In A Handbasket: Michael Dell's plan to buy out his eponymous computer company for $24.4 billion may be starting to come unraveled. The company's board has gone out and found interest for potential competing bids from Blackstone Group, Hewlett-Packard and Lenovo, according to Bloomberg. Meanwhile, activist investor Carl Icahn has taken a big stake and is agitating for the company to borrow a bunch of money to give away to investors, which sounds like a great plan.
Thing Seven And One Half: Happy Birthday, Telephone: On this day in 1876, Alexander Graham Bell received history's first official patent for the telephone, taking the first step on the long road toward the fulfillment of Bell's lifelong dream that, one day, people of the future would be able to send each other pictures of their junk. (Correction: An earlier version of this item suggested Bell had used the word "telephone" to describe his device in his patent. Instead his patent was for "Improvements In Telegraphy." I am certain, however, that junk-pic-sending was still on his mind.)
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Calendar Du Jour:
8:30 a.m. ET: Weekly Jobless Claims for March 2
8:30 a.m. ET: International Trade for January
8:30 a.m. ET: Productivity for the Fourth Quarter 2012
3:00 p.m. ET: Consumer Credit for January
Heard On The Tweets:
Are NYers on Twitter this annoying about snow? Might be biased but I'm gonna say they are not.
— Dan Amira (@DanAmira) March 6, 2013
Sometimes I get confused and say snarky things to my family and nice things on the internet.
— Christopher Mims (@mims) March 6, 2013
You only live once, so don't forget to spend 15 hours every day on the internet, desperately searching for the validation of strangers.
— Chris Rock (@chrisrockoz) March 5, 2013
Shotgunned 3 K Cups and now I'm on my neighbor's roof singing Bittersweet Symphony to a fox/possibly a pile of leaves.
— Eliza Bayne (@ElizaBayne) March 6, 2013
I don't care what TSA says. I'm still not going to allow small planes in my knife shop OR interpret current news headlines correctly.
— Derek Lawler (@RowdyBowden) March 6, 2013
-- Calendar and Tweets rounded up by Alexis Kleinman