Jefferies suffers as investors look for the next MF Global

As investors wonder which Wall Street firm might be the next to catch the cold that brought down MF Global last week, most of the suspicion has fallen on one originally founded in Los Angeles, Jefferies.

Investors have sent Jefferies stock down nearly 20% from before MF Global's bankruptcy, leading the firm to spend much of the last week beating off rumors that it may soon suffer from the same problems with European sovereign debt that brought down MF Global.

MF Global took a series of ultimately fatal bets on the bonds of struggling European nations, causing clients to worry that MF Global would find itself unable to sell those bonds and unable to carry out other customer business. That fear proved contagious and ultimately sunk MF Global, according to industry experts.

Just this morning, Jefferies announced that it took the highly unusual step over the weekend of selling off 50% of its holdings of European bonds, just to show that it could.

"We undertook this reduction in our holdings solely to demonstrate the liquid nature of this market-making trading book,” Jefferies Chief Executive Richard Handler said in a statement explaining the move. 

The big bets on European bonds at MF Global were part of a strategy -- initiated by its recently hired chief executive, Jon Corzine -- to expand the firm through risky bets made with the company's own funds.

Jefferies has had a similar business model to MF Global's -- at least before Corzine took over -- but Jefferies executives have been trying to convince investors that they did not take the kind of bets that Corzine pushed for at MF Global.

Last week, Handler released a full accounting of Jefferies' holdings of European bonds. 

"We decided the only way to conclusively dispel rumors, misinformation and misplaced concerns is with unprecedented transparency about internal information that is rarely, if ever, publicly disclosed," Handler said in a statement on Nov. 4.

That was not enough to calm worried investors. The stock price continued to sink, leading to the unusual moves over the weekend. This morning, those moves gave Jefferies stock an initial boost, but it has recently sunk down again almost to the level where it closed Friday afternoon. It is currently trading up 1.6%, or 19 cents, to $12.26.

A columnist at the Wall Street Journal this morning wrote evocatively that Jefferies is "being strip-searched at gunpoint by the markets."

RELATED:

Jon Corzine resigns as CEO of MF Global

Jon Corzine caught up as MF Global inquiries escalate

MF Global is investigated for possible misuse of customer funds

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Wall Street: Stocks up on European plan

Gold: Trading now at $1,723 an ounce, unchanged from Wednesday. Dow Jones industrial average: Trading now at 12,095.29, up 1.9% from Wednesday.

European optimism. The European debt deal announced last night, along with some good economic data, is helping to send stocks up this morning.

Gimme shelter. As winter approaches in New York, the Occupy Wall Street protesters are said by CNBC to be looking for an inside space that will allow them to escape the cold.

Sad second act. The former head of Goldman Sachs and governor of New Jersey, Jon Corzine, made it his mission after leaving the governor's mansion to help a small brokerage firm rise -- instead the firm appears now to be close to implosion. 

Rolling Stone rant. Rolling Stone brings you the latest anti-Wall Street screed from the man who called Goldman Sachs the "vampire squid."

The SEC and the financial crisis. A ProPublica columnist says that the latest financial-crisis case -- this one against Citi -- suggests that the Securities and Exchange Commission appears to be deciding which cases to pursue based on who wrote the most imprudent emails.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wall Street: Stocks down, gold up

Gold: Trading now at $1,656 an ounce, up 0.2% from Monday. Dow Jones industrial average: Trading now at 11,791.24, down 1.0% from Monday.

Home prices, stocks falling. Stocks fell this morning after it was announced that U.S. home prices dropped again, and as investors await the results of the European financial summit.

Wall Street moves West. As Wall Street lays off employees, some regional banks further west are building up their investment banking operations.

Suspicious of Stevie. Regulators have been flagging suspicious activity at Steven Cohen's hedge funds for years, the Wall Street Journal found.

Divided twins. The Daily gets the story of a set of twins split by the barricades in lower Manhattan, one in the 1%, the other in the 99%.

Raj speaks. After Raj Rajaratnam spoke publicly for the first time since being arrested on insider trading charges, the U.S. attorney's office said he was lying.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wall Street: Gold falls, stocks waver

Gold: Trading now at $1,639 an ounce, down 2.3% from Monday. Dow Jones industrial average: Trading now at 11,414.56, up 0.2% from Monday.

Uncertainty. Stocks are wavering as investors digest earnings reports and news from Europe.

Bad for banks. This morning's earnings announcements from Goldman Sachs and Bank of America confirmed that Wall Street is indeed hurting.

A man of many contradictions. One of the men who has given to the Occupy Wall Street protests and spent time in Zuccotti Park, the epicenter of the New York demonstrations, is also a former Wall Street trader and current donor to Mitt Romney.

Blaming Madoff. Bernard Madoff's daughter-in-law breaks her silence and blames the Ponzi schemer for her husband's suicide.

Stone on the Street. Oliver Stone took on Jamie Dimon and the rest of the Wall Street crowd after a screening of his film about the industry.

Fat cats. The real fat cats of Wall Street.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wall Street: Stocks and gold up again

Gold: Trading now at $1,681 an ounce, up 1.2% from Tuesday. Dow Jones industrial average: Trading now at 11,522.26, up 0.9% from Tuesday.

Another up day. Stocks opened higher yet again as fear about the European financial crisis ebbs.

Fighting Volcker. Banks had been lobbying regulators hard before the release of a draft of the Volcker rule -- one of the most important pieces of the financial reform legislation -- and now that the draft is out, they will continue their lobbying effort.

Psychic help. As bankers try to figure out how to deal with tough economic conditions, at least some of them are turning to psychics for guidance. 

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wall Street: Stocks and gold rising

Gold: Trading now at $1,668 an ounce, up 2.0% from Friday. Dow Jones industrial average: Trading now at 11,360.94, up 2.3% from Friday.

Big Monday. Stocks are having a big day as investors grow encouraged about the rescue effort in Europe and financial data in the U.S.

Recession averted? Bloomberg thinks the good economic data of the last week is enough to say that a recession has been averted. 

Earnings season. Bank earnings season begins again this week, and the results are not expected to be good.

Lehman averted? A struggling Belgian bank was broken up in a surprisingly peaceful fashion over the weekend, averting what some thought would be a calamitous collapse.

Nail in the coffin. One of the last vestiges of Bernie Madoff's empire -- a trading division that had been sold off after Madoff's Ponzi scheme was exposed -- has now bitten the dust.

Paulson's bad year. For John Paulson, the hedge fund magnate who made billions of dollars betting against the subprime mortgage market, the bad news keeps coming -- one of his funds has lost almost 50% since the beginning of the year.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wall Street: Jobs report helps stocks rise

Gold: Trading now at $1,651 an ounce, down 0.1% from Thursday. Dow Jones industrial average: Trading now at 11,213.39, up 0.8% from Thursday.

Jobs and stocks. The jobs report this morning did not paint a pretty picture, but it had some good headline numbers that appeared to be enough to help send stocks up again.

Big leak. A leaked version of the so-called Volcker rule -- designed to stop proprietary trading on Wall Street -- has sent law firms and regulators and bankers into a tizzy.

Romney rising. With New Jersey Gov. Chris Christie ruling out a presidential run, Mitt Romney is picking up new Wall Street names to add to his already big lead on the street.

OccuPie Wall Street. A pizza shop near that Wall Street protests has been raking it in with a $15 pepperoni-heavy OccuPie pizza -- though the owner of the shop is warning that he is not taking sides. 

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Apple stock wavers after death of Steve Jobs

Shares of Apple Inc., wavered on the first day of trading after the death of the company's former chief executive, Steve Jobs.

Apple stock was recently trading up 0.4%, or $1.36, to $379.61 after dropping to as low as $372.58 at one point. After falling sharply immediately after the markets opened, Apple stock has largely moved parallel to broader stock indexes, which also wavered this morning.

Jobs, who is given credit for Apple's unmatched record of innovation, went on extended medical leave earlier this year and stepped down from his job atop Apple in August, handing the reins to Tim Cook. But Jobs stayed on as chairman and had been expected to remain involved in the company's work moving forward. 

Jobs turned Apple into the second-most-valuable U.S. publicly traded company, after Exxon Mobil Corp., The Cupertino, Calif.-based company briefly took the top spot earlier this year.

RELATED:

Tech pioneer Steve Jobs dies at 56

Memorial grows at Apple headquarters

Jobs' genius paid off for Apple stockholders

-- Nathaniel Popper in New York

Wall Street: Stocks down, gold up on mixed data

Gold: Trading now at $1,649 an ounce, up 1.6% from Friday. Dow Jones industrial average: Trading now at 10,829.38, down 0.8% from Friday.

Mixed results. Stocks have been bouncing around this morning on good news about the U.S. economy but worrying signs out of Europe.

Protest prime time. As the Wall Street protests spread across the country to Los Angeles, the 700 arrests this weekend in New York are helping the movement's cause.

Off with their heads. Roseanne Barr calls for a return of the guillotine, for use on bankers.

Inside the Koch empire. Bloomberg has a lengthy investigative take-down of the secretive company run by the Koch brothers, detailing a number of alleged instances in which the firm broke the law.

Merrill vs. Countrywide. Merrill Lynch, the Wall Street firm acquired by Bank of America, is doing okay these days but it is being dragged down by BofA's other recent acquisition, Countrywide, and employees are not happy.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wall Street: Bad quarter ends with stocks and gold falling

Gold: Trading now at $1,615 an ounce, down 0.1% from Thursday. Dow Jones industrial average: Trading now at 11,064.89, down 0.8% from Thursday.

Goodbye to a bad quarter. As the worst quarter for stocks since the financial crisis comes to a close, investors are showing some pessimism today.

Investors turn on Obama. President Obama's favorability ratings among investors have plummeted in recent months, though he can take consolation in approval among investors for his plan to tax those earning $1 million-plus a year. 

DJ + S&P. The two kings of the stock index world -- Standard & Poor's and Dow Jones -- are talking about joining forces.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wall Street: Stocks and gold bounce

Gold: Trading now at $1,622 an ounce, up 0.3% from Wednesday. Dow Jones industrial average: Trading now at 11,178.20, up 1.5% from Wednesday.

Good morning. Investors are feeling hopeful this morning after a vote in Germany and new data in the U.S. on unemployment and economic growth.

HP turns to Goldman. To deal with potentially hostile activist investors, Hewlett-Packard has hired a company that has experience with hostile activist investors, Goldman Sachs. 

Disappointed by banks. Investor Stephen Ross collected money to invest in banks, but his analysis of banks has disappointed him so much that he has given the money back.

Lewis on California. After providing probing analysis of what is wrong with the economies of Iceland and Greece, Michael Lewis now turns his attention to California.

A picture of protesters. Can't make it to the Wall Street protests yourself -- here is a photo gallery of 50 of the protesters camped in lower Manhattan.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Stock markets close down after big sell-off

Stock markets around the world tumbled on fears that U.S. and European policymakers may have run out of measures to stop the global economy from entering recession.

The Dow Jones industrial average closed Thursday down 391.01 points, or 3.5%, to 10,733.83. The broader Standard & Poor's 500 index was down 37.18 points, or 3.2%, to 1,129.58.

The Dow had earlier been down over 500 points, but recovered some of those losses in the final half hour of trading.

The U.S. declines followed sharp drops overnight in European and Asian markets, most of which fell about 5%. Coming after losses earlier in the week, stock markets around the world are now at risk of the biggest weekly decline since the depths of the global financial crisis in 2008.

The worldwide sell-off followed the Federal Reserve's announcement Wednesday that it is rejiggering its holdings of Treasury bonds in its latest bid to spur the economy by lowering interest rates on everything from home mortgages to car loans.

Many analysts, however, doubt the Fed action will have any measurable effect, and investors were spooked by the Fed's bluntly worded warning of "significant downside risks to the economic outlook."

Thursday's sell-off "is a direct reaction to the Fed's statement and actions," said John Bollinger, head of Bollinger Capital Management in Manhattan Beach. "It's the markets' vote that the actions aren’t commensurate with the risks described in the statement."

As investors fled stocks some bought long-term U.S. Treasury bonds -- a move the Fed essentially recommended on Wednesday.

The 30-year T-bond yield dived to 2.79%, down from 3.00% on Wednesday and 3.20% on Tuesday.

The 10-year T-note yield, a benchmark for mortgage rates, was at 1.72%, a new 60-year low and down from 1.86% on Wednesday and 1.94% on Tuesday..

RELATED:

Fed seeks economic boost by shifting its bond mix

Moody's cuts BofA, Wells Fargo and Citigroup credit ratings

Q&A: How the Fed move could affect the economy and markets

-- Nathaniel Popper in New York

Photo: Traders on the floor of the New York Stock Exchange this morning. Credit: Associated Press

 

Wall Street: Stocks rise at the open; gold up

Gold: Trading now at $1,787 an ounce, up 0.6% from Monday. Dow Jones industrial average: Trading now at 11,431.30, up 0.3% from Monday.

Mixed news. U.S. stock markets wavered at the open; there was disappointing news about the housing market, but that was tempered by speculation that the Federal Reserve may announce a new stimulus plan.

Morgan Stanley's feud. Wall Street has become increasingly divided between its trading operations and its more traditional investment banking operations -- and at Morgan Stanley, this division has become personal.

Downgrade insiders. The Securities and Exchange Commission is reportedly probing whether some big trading firms took advantage of last month's downgrade of the United States' credit rating by Standard & Poor's.

Rogue trader. UBS executives will meet later this week in Singapore to review the fallout from the disclosure of a rogue trader's $2.3-billion losses.

Quiet protest. Protesters are continuing their demonstrations on Wall Street, but their numbers and strength have not been overwhelming.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images