Tag Archives: wall street

How Wall Street got snowed on weather derivatives

By January 3, 2014: 3:52 PM ET


A potential gold mine has entered the deep freeze.


FORTUNE — Wall Street is no longer minting money off the snow. But it’s still trying.

A few years ago, the market for financial contracts based on snowfall was, for lack of a better phrase, heating up. More and more firms began popping up to sell the specialized weather derivatives. Insurance firms hired traders who would focus on buying and selling the contracts. The Chicago Mercantile Exchange listed dozens of contracts based on snowfall in numerous cities that could be traded like stocks, and were expected to rise and fall daily based on the forecast. A number of large Wall Street firms seemed interested in getting into the market.

These days, though, Wall Street’s market for betting on snow has, well, melted. The CME says that not a single snow-related weather contract traded in 2013. That’s down from 510 trades in 2011.

MORE: Spain’s largest bank is in trouble

“The market took off quickly, but then it never hit critical mass,” says Jeff Hodgson, who heads the Chicago Weather Exchange and had sought to specialize in snow derivatives. Now Hodgson is focused on contracts tied to temperature or rainfall for utilities or farmers.

Edgar Bautista, who co-heads weather and commodities markets at AXIS Capital, says he hasn’t traded a snow-related contract in over two years. “I used to see a lot of interest from municipalities that wanted to insure against the costs of snow removal,” says Bautista. “But I haven’t seen them in quite a while.”

In theory, the market for snow-related weather derivatives should be huge. Snowstorms can affect lots of businesses. And often you hear about billions of dollars in economic damage from blizzards. Typically, the contracts are priced based on the expected inches of snow in a particular time period in a given city. If accumulation is greater than the set amount, the seller of the derivative has to pay out. But if the snowfall is less than that figure, the contract will expire worthless. Along the way, the contract can rise and fall in price.

CWE’s Hodgson says most contracts are sold by early November and run through March. Late last year, you could have bought a snow contract for $30,000 that would have paid out $100,000 if it snowed more than 50 inches in New York City. New York’s snowfall, even including the most recent storm, as measured at LaGuardia Airport, has been 14 inches. So that contract still looks like a long shot.

The lack of interest can be partly chalked up to the fact that, up until this week, there has been a lack of snow. It turns out there are many more companies that want to protect themselves against too much snow than too little. Large ski mountains, perhaps because they pre-sell season tickets, never took an interest in the market. Vail Resorts (MTN), for instance, a public company that owns its namesake mountain as well as a number of others, says it doesn’t use weather derivatives to mitigate losses when snow is light.

MORE: Is Wall Street betting against Washington?

Wall Street made a killing in the winter of 2011-12, which saw a record lack of snow across the U.S. Since then, buyers of the contracts, who lost money on the insurance, have failed to come back.

In general, the markets for more esoteric derivatives have dried up since the financial crisis. That could be hurting demand for weather contracts as well. Also, given the effects of climate change, the number of people expecting record snowfalls is rapidly shrinking.

It’s probably too late for this year. Still, snowstorms like the one that hit the East Coast on Friday give Wall Street hope.

Hodgson says there is still an active market in over-the-counter snow contracts specifically tailored to a single company. But the market tends to be dominated by specialty firms, not big banks, and it tends to behave more like insurance rather than a financial contract. Hodgson says he thinks the lack of a good index for the market, like the S&P 500 (SPX) for stocks, has made weather derivatives hard to trade.

eWeatherRisk CEO Brian Ohearne says his company is trying to develop snow contracts that are based on the number of storms rather than the absolute number of inches. He thinks those contacts will be more popular.


For Stocks, an Amazingly Good Year


It was the market rally that defied gravity and left many with a case of vertigo.

Despite turbulence in Washington, China and Europe, which threatened at several points to pull the world into another recession, stock prices just kept rising in 2013.
The benchmark Standard & Poor’s 500-stock index led the way, ending the year almost 30 percent higher than it began, or 32.4 percent higher with dividends counted in. That’s the biggest jump since 1997, when the technology bubble was inflating. Even the returns from the heady years of the real estate boom were left in the dust.

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As 2013 drew to a close and evidence of a strengthening economic recovery mounted, Wall Street was feeling giddy. But the feeling was tinged with a sense of anxiety that the ascent might have been fed by a bit too much hot air.

“It’s really great, but you just don’t feel entirely comfortable with it,” said Dan Morris, the global chief investment strategist at the asset manager TIAA-CREF.

Most analysts delivered their forecasts for 2014 with a good dose of caution, warning that corporate profit would have to catch up with stock prices before further gains were warranted.

In other popular corners of the financial markets, investors were left nursing their wounds after previously reliable assets turned negative. Goldbugs were routed as the price of gold plummeted 28 percent. The drop came after years in which pessimistic investors stockpiled gold as a hedge against bad times. Gold finished on Tuesday at $1,202.30 an ounce.

More investors felt the sting of a decline in the bond market after decades in which bonds were trumpeted as the safest place for retirement money. The prices of bonds fell as the yield on the benchmark 10-year Treasury nearly doubled during the year, ending on Tuesday at 3.03 percent. A Bank of America index of the total returns on United States government bonds fell 3.2 percent for the year, the first annual decline since 2009. Few are predicting much of a turnaround any time soon, given the likelihood of a continuing rise in interest rates.

All of the big moves of 2013 were much greater than most financial analysts expected at the start of the year. Coming out of 2012, a cloud of anxiety, similar to the current one, hovered over Wall Street. That was caused, in no small part, by the fractious debate over the so-called fiscal cliff, which was resolved only on the last day of 2012. The average prediction of strategists at the big banks was that the S.&P. 500 would rise a modest 7.3 percent in 2013, according to a tally done by Bloomberg.

Those projections were quickly upended when the year began with a rally that ran almost unbroken for months.

But then a series of crises threatened to derail the optimism. When the Greek government fell apart at the beginning of the summer, there were fears that the European common currency might splinter with it.

About the same time, Federal Reserve officials began dropping hints that they might be ready to start pulling back on a bond-buying program that had helped buttress the economy since the financial crisis. That led to a market downturn in the United States and even worse damage in developing countries that had used the Fed’s easy money policies to take out cheap loans.

When those flare-ups faded, Republican congressional leaders resisted raising the government’s borrowing limit, threatening to push the country into default for the first time.

“It was surprising to me this year with all the political dysfunction in Washington that we didn’t see more of a pullback,” said Marshall B. Front, the chairman of Front Barnett Associates. “I’ve been calling for a correction for two years and I still haven’t seen one.”

As each crisis was resolved, new data came out pointing to an economy that was strengthening slowly, but more rapidly than many had predicted. Over the last month alone, the unemployment rate dropped to 7 percent while the economy’s growth rate was revised upward significantly. On the last day of the year, new data showed that consumer confidence and home prices had risen more than expected.

The S.&P. 500 finished on Tuesday up 0.4 percent, or 7.29 points, at 1,848.36.

The Dow Jones industrial average rose 0.4 percent, or 72.37 points, to close at 16,576.66. It was up 26.5 percent for the year. The Nasdaq composite index was up 0.5 percent, or 22.39 points, to 4,176.59 — bringing its gains for the year to 38 percent.

The fear now is that investors have gotten ahead of themselves, paying too much for the actual earnings of corporate America. Shareholders are paying about $17 for every dollar of earnings from companies in the S.&P. 500. That is the highest the ratio has been since the current economic recovery began and above where it was in the optimistic years before the financial crisis began — though far below its ratio at the peak of the technology bubble.

Another significant concern is the Fed. The stock rally is attributed, in part, to the Fed’s stimulus programs and those of other central banks that followed suit. By buying bonds, the Fed pushed investors into riskier assets. The Fed has also allowed companies to borrow money at artificially low rates.

But with the Fed’s announcement in December that it would begin scaling back its bond purchases, many on Wall Street wonder whether investors will still be as eager to take risks. Problems could surface if the so-called tapering goes awry, a possibility given the extraordinary nature of the stimulus.

“The biggest risk is going to be a misstep by the Fed,” Mr. Morris said.

The uncertain outlook for interest rates could be particularly important for the housing market. Home prices have been rising, supporting the broader economic recovery, but those gains could slow if mortgage rates rise.

Economists have also been waiting for the economic gains to filter through to lower income Americans, whose wages and job prospects have stagnated. Then there are the persistent fears of another flare-up of economic problems in Europe or China.

But the consensus as the year ended was that stocks would probably continue to chug upward, albeit more slowly. The forecast among Wall Street strategists is for a 6 percent rise in the S.&P. 500, according to Bloomberg figures. That, though, is not far from the cautious predictions that kicked off 2013 and turned out to be wildly understated.

A version of this article appears in print on 01/01/2014, on page B1 of the NewYork edition with the headline: For Stocks, an Amazingly Good Year.

Wall Street is finally acknowledging that bogus trades are a problem… in its own way


By John McDuling @jmcduling January 3, 2014

If only someone could understand it enough to regulate it. Reuters/Pichi Chuang

Wall Street has never been very good at regulating itself. For example, the market for over-the-counter derivatives (interest-rate swaps, credit-default swaps and so forth) was, up until recently, largely self-regulated, and we all know how that worked out (paywall).


But for the big banks and brokerage houses, self-regulation is vastly preferable to onerous and costly government regulation. That’s why Wall Street’s own self-appointed regulator, the Financial Industry Regulatory Authority (FINRA), is keen to show that it is alert to any new risks that might threaten the financial system. FINRA released its regulatory priorities for 2014 yesterday (Jan. 2), and it’s keeping an eye on everything you’d expect it to: insider trading, complex structured products, funds investing in opaque and politically unstable “frontier” markets, and brokerages staffed by people who have already been busted by authorities.


But one area of focus that piqued our interest was FINRA’s concern about the abuse of algorithmic and high-frequency trading. FINRA highlighted the use of “momentum ignition strategies,” also known as “spoofing” or “layering.” Essentially, these are when a high-frequency trading system floods the market with buy orders above the current price or sell orders below it, in an attempt to make it look like there is buying or selling interest and induce others to trade at the artificially high or low prices. When the market price accordingly moves up or down, the trader quickly takes the other side of the spoof order, at a (slightly) better price than it would otherwise have achieved.


There has been a lot of concern about spoofing among traders. The practice is, of course, illegal, but FINRA said it continues to see variations of spoofing strategies, with different prices and sizes of fake orders, which is worrying in itself. The Commodity Futures Trading Commission laid its first charges for the activity in June last year, and the Securities and Exchange Commission also clamped down on the practice in 2012.


It’s good to know that America’s financial regulators are concerned about market-distorting behavior like spoofing. But the alarming lack of co-ordination and persistent turf wars among America’s disparate financial regulators are also a problem. Maybe if they spoke to each other, bogus trades would be less of an issue.

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Read more about our obsession with Future of Finance


Wall St. closes flat after Fed comments

By Ryan Vlastelica

NEW YORK Fri Jan 3, 2014 8:19pm EST

1 of 2. Traders work on the floor of the New York Stock Exchange at the opening bell in New York, January 2, 2014.

Credit: Reuters/Carlo Allegri

(Reuters) – U.S. stocks ended a volatile session mostly flat on Friday as investors digested comments from Federal Reserve officials that raised questions about how quickly the central bank will end its stimulus program.

Wall Street opened higher but subsequently pared gains after Philadelphia Fed President Charles Plosser said the Fed faced “immense” challenges now that it had reduced bond-buying, and that it needed to be cognizant of a potential rapid rise in future inflation.

Volatility was exacerbated by light trading volume, with about 4.61 billion shares traded on all U.S. platforms, according to BATS exchange data, well below average, with many market participants out in the wake of the New Year’s holiday, as well as a snowstorm in the northeast.

“Plosser suggested that it might not be an easy or smooth process for the Fed to unwind its balance sheet, which could have been be an indication the Fed could act sooner on ending bond buying than is currently expected,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Following Plosser’s comments, Fed Chairman Ben Bernanke said that the central bank was no less committed to accommodative monetary policies despite the recent announcement that it would slow its stimulus program. He also said the U.S. economic recovery “clearly remains incomplete.

Equities briefly turned positive following the comments before returning to breakeven territory.

General Motors (GM.N) fell 3.4 percent to $39.57, one of the S&P 500′s biggest decliners, after the automaker reported lower December sales, below analysts’ expectations of a slight gain. Ford Motor Co (F.N) rose 0.5 percent to $15.51 after its sales.

The Dow Jones industrial average .DJI was up 28.64 points, or 0.17 percent, at 16,469.99. The Standard & Poor’s 500 Index .SPX was down 0.62 points, or 0.03 percent, at 1,831.36. The Nasdaq Composite Index .IXIC was down 11.16 points, or 0.27 percent, at 4,131.91.

The S&P’s slight decline marked the first time since 2005 that the benchmark index started a year with two straight negative sessions. For the week, the Dow fell less than 0.1 percent while both the S&P and Nasdaq lost 0.6 percent.

“Valuations are full, but not egregiously rich right now,” said Luschini, who oversees about $60 billion in assets. “In order for markets to really outperform now, we need to see better growth develop and for earnings to brighten considerably.”

Crude oil fell 1.3 percent, bringing its 2014 year-to-date losses to 4.3 percent, a fact that boosted airline stocks on Friday. Delta Air Lines (DAL.N) rose 5.5 percent to $29.23 as the S&P’s biggest gainer while Southwest Airlines (LUV.N) rose 2.9 percent to $19.42.

FireEye Inc (FEYE.O) surged 39 percent to $57.02 after the cybersecurity company acquired Mandiant Corp, the computer forensics specialist best known for unveiling a secretive Chinese military unit believed to be behind a series of hacking attacks on U.S. companies.

Twitter (TWTR.N) gained 2.2 percent to $69. Shares in the social media company burst out of the gate in 2014 with a gain of more than 8 percent.

About 62 percent of stocks traded on the New York Stock Exchange closed higher on the day, while 59 percent of Nasdaq-listed shares ended in positive territory.

(Editing by Nick Zieminski)


Wall Street closes 2013 at records; best year in 16 for S&P, 18 for Dow

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Published: Tuesday, 31 Dec 2013 | 4:24 PM ET

By: | Markets Writer

Play Video
Bob Pisani‘s bold 2014 predictions
CNBC’s Bob Pisani predicts the Fed will increase its bond buying program in 2014.

U.S. stocks on Tuesday closed 2013 at records, with the S&P 500 posting its largest annual jump in 16 years and the Dow its biggest gain in 18, after positive reports on consumer confidence and housing boosted sentiment on the final trading day of the year.

“It’s been a great year, if you look at it from what the prevailing sentiment was at the beginning of the year, it has surpassed even the most bullish of predictions. It’s the type of year you want to savor, there’s been a nice wealth effect that has warmed people’s portfolios,” said Matthew Kaufler, portfolio manager at Federated Investors.

“Between the rise in the markets as well as the rebound in housing prices, this year went a long way in repairing consumer balance sheets,” he added.

(Read more: Cashin: 2 things that may surprise markets in 2014)

Hertz Global Holdings rose a day after the car-rental company said it had adopted a one-year shareholder rights plan after “unusual and substantial activity” in its shares. Phillips 66 gained after saying Berkshire Hathaway would exchange about $1.4 billion in shares to acquire a unit that produces chemicals to improve pipeline flow. Marvell Technology Group surged after private-equity firm KKR & Co. said in a regulatory filing that it held a 6.8 percent stake in the chip manufacturer.

Name Price Change %Change
DJIA Dow Jones Industrial Average 16576.66
72.37 0.44%
S&P 500 S&P 500 Index 1848.36
7.29 0.40%
NASDAQ Nasdaq Composite Index 4176.59
22.39 0.54%

Up 26.5 percent for the year, the Dow Jones Industrial Average finished the year at another closing high, its 52nd for 2013. It rose 72.37 points, or 0.4 percent, to 16,576.66.

American Express led blue-chip gains, which extended to 23 of its 30 components.

Tallying its fourth monthly advance, and up 29.6 percent for the year, the S&P 500 also advanced to an all-time finish, with energy the best performing and telecommunications the hardest hit among its 10 major sectors. It gained 7.29 points, or 0.4 percent, to 1,848.36.

(Read more: Housing could be facing another bubble: Shiller)

For the year, consumer discretionary gained the most, followed by health care, with telecommunications and utilities performing most poorly.

The Nasdaq rose 22.39 points, or 0.5 percent, to 4,176.59, a yearly advance of 38.2 percent, and its best year since 2009.

For every stock falling, nearly two gained on the New York Stock Exchange, where 568 million shares traded. Composite volume surpassed 2.3 billion.

Play Video
Pisani: Look for volatility to spike
CNBC’s Bob Pisani looks at the great year for the major indices and explains why volatility has been low.

The 10-year Treasury note yield used in determining mortgage rates and other consumer loans rose 6 basis points to 3.036 percent, its highest of the year and since July 2011. The dollar edged higher against the currencies of major U.S. trading partners.

(Read more: Over 2 million have signed up on Obamacare)

On the New York Mercantile Exchange, oil futures fell 87 cents, or 0.9 percent, to $98.42 a barrel, while gold futures settled 28 percent lower for 2013 at $1,202.30 an ounce, its largest annual fall in 32 years.

Stocks furthered their advance after the Conference Board’s index of consumer confidence climbed to 78.1 in December from 72 in November. Analysts expected a December reading of 76.

Ahead of Wall Street‘s open, stock futures retained modest gains after a report had home prices in 20 U.S. cities climbing in October from the year earlier, illustrating the bounce back in real estate will continue in the new year. The S&P/Case-Shiller home price index rose 13.6 percent in October from the year earlier period.

Stocks offered little to no reaction to the Institute of Supply Management’s Chicago purchasing manager’s index, which fell to 59.1 in December from 63.

On Monday, stocks finished little changed.

“Going forward, I would say I am optimistic on equities but valuations are essentially fair, so I don’t know that we are going to tack on another 20 to 30 percent in 2014, my expectation would be 8 to 10 percent. Just because the economy is picking up and tapering has begun doesn’t mean the markets are going to perform accordingly,” said Kaufler.

Coming Up This Week:

Wednesday – Markets closed for the New Year’s Day holiday.

Thursday – Initial jobless claims for week ending Dec. 28 at 8:30 a.m. Eastern. Manufacturing PMI for December at 8:58 a.m. Eastern. ISM Manufacturing for December at 10 a.m. Eastern. Construction spending for November at 10 a.m. Eastern.

Friday – Light vehicle sales for December. Earnings from Lindsay Corp. expected ahead of the market open.

—By CNBC’s Kate Gibson

Correction: This article has been revised to reflect the Dow’s annual rise is the best in 18 years.



Netflix CEO Reed Hastings’ Salary To Get 50% Bump To $3M In 2014

Next Story

Remember Qwikster? Wall Street doesn’t.

The AP is reporting this morning that the Netflix CEO will get a healthy pay raise in 2014. According to a regulatory filing, Reed Hastingsannual salary will jump to $3 million, up from the $2 million he earned this year. His annual stock option allowance also improves to $3 million from the current level of $1 million.

It’s hard to argue against the pay increase. Netflix had a great 2013. The stock price is up 296% on the year. It’s trading around an all time high of $365. The stock was the top performer in the S&P 500 and Nasdaq 100 this year.

The company isn’t raking in the profits, though. In its most recent quarterly report, Netflix only made $32 million. But Wall Street doesn’t seem to mind and so the company should stay the course raking in the subscribers and producing award-winning original content. Netflix just needs to remember to listen to their subscribers.



Your Employer Doesn’t Need to Know

Much of America – hard-working, bill-paying America – has a damaged credit rating.

There are a lot of different reasons, but a lot of people just caught a bad break. They got sick. Their husband left or their wife died. They lost their job.

Problems only got worse after the financial crisis. Shrinking home prices made it impossible to sell or refinance a home. People lost their small businesses. Smaller savings left people without much cushion to ride out the tough times. People missed a payment or went into debt.

Most people recognize that bad credit means they will have trouble borrowing money or they will pay more to borrow. But many don’t realize that a damaged credit rating can also block access to a job.

It was once thought that credit history would provide insight into someone’s character, and many companies routinely require credit reports from job applicants. But research has shown that an individual’s credit rating has little or no correlation with his ability to succeed at work. A bad credit rating is far more often the result of unexpected personal crisis or economic downturn than a reflection of someone’s abilities.

Today, along with Senators Blumenthal, Brown, Leahy, Markey, Shaheen, and Whitehouse, I am introducing the Equal Employment for All Act to stop employers from requiring prospective employees to disclose their credit history or disqualifying applicants based on a poor credit rating.

After a terrible blow like a family death, a divorce, or a life-changing disease, many people scramble to get back to work, pick up a second job, or change jobs so they can get back on their feet financially. But they are knocked back by their damaged credit rating.

Highly qualified applicants with bad credit can be shut out of the job market. That’s wrong.

Let’s be honest: This is one more way the game is rigged against the middle class. A rich person who loses a job or gets divorced or faces a family illness is unlikely to suffer from a drop in his or her credit rating. But for millions of hard-working families, a hard personal blow translates into a hard financial blow that will show up for years in a credit report.

It’s been five years since the financial crisis, and it’s time for struggling families to stop paying the price for the recklessness on Wall Street and failed oversight in Washington that tanked our economy.

The Equal Employment for All Act addresses just one small issue, but for many families, it’ll make a world of difference.


Social Media Gerrymandering

Aren’t cats fun to share? 

Aren’t cats fun to share?

Who you amplify says a lot about you

In 2011 I counted, by hand, the number of women the then “top 20 VCs on Twitter” followed.

All of them, with the exception of one, followed less than ten percent women. Once I excluded women journalists (Sorry Kara Swisher!), the number declined to less than 5%. I won’t name any names except to say at the time, Dave McClure won by a landslide. I gave up counting once the number of women he followed, minus journalists, reached 40%. With my apologies to people of color, I didn’t look into that, but I have no reason to doubt the results would change much.

Over at Hacker News, a quick scan of today’s top 20 stories shows, that all of them were written by men.

In my time on Twitter, I’ve seen many of those same top 20 VCs respond to men who asked them questions, but outright ignore me and any other women who weren’t journalists, or “famous” executives. There’s even science that says that 35% of the time men physically can’t hear the voices of women who are menstruating.

Since I observed all of this, I watch closely who VCs and people of power not only follow, but retweet, reply to on blogs, and so on; and I have come to believe that everyone, myself included, is more likely to follow, and amplify, the thoughts of those we resemble in gender, race, world view, and class. This is dangerous stuff, the choice to insulate ourselves from the rest of the world. This self insulation from thoughtful and sometimes upsetting dissent makes us less likely to listen, to compromise, and to work with others for the most optimal outcomes. Just look at our Congress if you need more proof.

Think Before You Repeat

Everyone can help prejudice in our world by making it a point to respond to women and people of color; in fact anyone who is likely to have had less privilege in life than yourself. Someone who is poor. Someone who didn’t go to an ivy league school. Someone who makes you angry, but deep inside makes you think. Someone who scares you—the right way.

Don’t just take the safe route and retweet Kara, or only share Sheryl, or only invite Marissa to speak at your conference.Challenge yourself to promote more marginalized ideas and peoples(plural intended). Work hard to follow and argue with those who challenge you (intelligently).

Just like each day you try to run a little farther in your workout, or ship better code, or get a little more revenue, make it a point to actively follow and promote marginalized groups in every social media channel you have, including your blog, Twitter, Facebook,and upvoting those voices on sites like this one.

You never know where your next big deal will come from. And when it does, don’t you want to be remembered as the person who helped along the way?

A note on the data: At the time I did my original study, I reached out to Klout, Kred, and Twitter and asked them to share “share” data with me by gender. None would comply. So I was forced to do it by hand. I’ve been tempted to make a Mechanical Turk project out of it, but I have a startup to get off the ground.

Further Reading

Different Internets: How Online Sexism and Misogyny Impact Women in Tech

 — The Internet is not a monolith. Yet even in the tech industry, ostensibly better positioned than any other to provide a nuanced mapping of…

On Twitter, Men Are Retweeted Far More Than Women (And You’re Probably Sexist, Too) – AllTwitter

 — Social media is dominated by women, and Twitter is no exception, but it appears that when it comes to sharing information on our favourit…

It’s Not Just Political Districts. Our News Is Gerrymandered, Too.

 — I read an interview this last week with someone who gets his news from a narrow band of information providers. He reads The Wall Street J…

Written by

Founder, @vendorsi. 10+ years in tech. Lovable Snark. Cornell MBA.

Published October 27, 2013


The Wolf of Wall Street: The True Story

We sort out what’s fact and what’s fiction in Martin Scorsese’s glitzy new film about a real-life scammer


Mary Cybulski / Paramount

Drugs, prostitutes, crashed helicopters — the debauchery in The Wolf of Wall Street is so outlandish that audiences might leave the theater thinking director Martin Scorsese took plenty of creative license in telling the story of Jordan Belfort, a New York stock broker who conned his way to earning hundreds of millions in the 1990s. But Scorsese’s film closely follows Belfort’s own memoir, also titled The Wolf of Wall Street.

That said, Belfort glorifies his vulgar antics in his book, so how much of his account is truly real is up for debate. After all, Belfort was a scam artist — he made a living by lying. Scorsese, knowing this, portrays Belfort (Leonardo DiCaprio) as an unreliable narrator in the film (see: the changing color of the car in the first scene and the driving while high on Quaaludes episode).

TIME fact-checks the movie against Belfort’s books (he also wrote a sequel entitled Catching the Wolf of Wall Street) and a series of Forbes articles that have followed Belfort’s scheming.

Belfort’s first boss told him the keys to success were masturbation, cocaine and hookers.
Ruling: Fact

According to the book, a broker named Mark Hanna (Matthew McConaughey) gave him this advice early on in his career.

Belfort and his partner owned shares of a risky stock and had their brokers at Stratton Oakmont brokerage aggressively sell the stock to inflate the price. They then sold the stock themselves to turn a profit.
Ruling: Fact

Belfort and Danny Porush (called Donnie Azoff in the film and portrayed by Jonah Hill) utilized this age-old pump-and-dump scheme to get rich quick after graduating from scamming middle-class people into buying worthless penny stocks at a 50 percent commission.

Forbes magazine exposed Belfort, calling him a “twisted Robin Hood.”
Ruling: Fact

Though Belfort wasn’t on the cover, Forbes did run a profile of him in which they called him “a twisted version of Robin Hood, who robs from the rich and gives to himself and his merry band of brokers.” Though it was a scathing portrait, the promise of quick $100,000 commissions brought job applicants to Stratton Oakmont in droves.

Stratton Oakmont took Steve Madden public.
Ruling: Fact

Steve Madden did give a speech the day of the IPO, to which the Stratton Oakmont brokers responded with jeers. Madden, Belfort and Porush owned most of the stock and drove up the price. Belfort, Porush and Madden all went to jail for their scheme.

Belfort laundered his money into Swiss banks using his in-laws.
Ruling: Fact

His wife’s mother and aunt both helped smuggle the money into Switzerland.


Paramount Pictures

Now for the really ridiculous stuff…

Danny Porush (Donnie Azoff) was married to his cousin.
Ruling: Fact

They’re now divorced.

The driving on Quaaludes scene.
Ruling: Mostly fact

It was a Mercedes, not a Lamborghini. But the rest is true to Belfort’s memoir.

The office parties included a “midget-tossing competition.”
Ruling: Fact

…According to Belfort.

The company billed prostitutes to the corporate card.
Ruling: Fact

…And wrote them off in their taxes.

He crashed a helicopter in his front yard while high.
Ruling: Fact

On a related note, he also did at least attempt to sober up in real life.

He sunk a yacht in Italy.
Ruling: Fact

And the yacht used to belong to Coco Chanel.

He called his trophy wife “duchess.”
Ruling: Fact

Though her name was Nadine, not Naomi.

He served a reduced prison sentence after ratting on his friends.
Ruling: Fact

Turns out Belfort was even more of a jerk than they show in the movie. In the film version, Belfort tries to save his partner from incriminating himself. In reality, Belfort ratted out his partner Porush, among others, for a reduced sentence (the two reportedly no longer speak). Belfort spent only two years in prison and had Tommy Chong (of Cheech and Chong) as his cellmate. Chong convinced Belfort to write a memoir.

He scammed only the rich.
Ruling: Fiction

Some writers have criticized Scorsese for portraying Belfort’s lifestyle as glamorous without showing the victims of his scam. Though Belfort claims in his book and in the film that he only took from the wealthy, the New York Times reports that many small business owners are still trying to recover financially from Belfort’s scheme. (The government claims Belfort has failed to pay his restitution, and reports suggest that Porush is still running get-rich-quick schemes.)

Read more: The Wolf of Wall Street: The True Story of Jordan Belfort | TIME.com http://entertainment.time.com/2013/12/26/wolf-wall-street-true-story/#ixzz2opQX4M4o



Stocks, Treasury yield climb on Christmas Eve


William Cummings, USA TODAY 1:51 p.m. EST December 24, 2013

Stocks finished higher on a shortened day of Christmas Eve trading as the 10-year Treasury yield neared 3%.

The Dow Jones industrial average and S&P 500 again set records for all-time closing highs, reaching 16,357.55 and 1,833.32, respectively.

At the 1 p.m. ET closing bell, the Dow and S&P 500 index logged gains of 0.4% and 0.3%, respectively. The Nasdaq composite finished 0.1% higher.

DURABLE GOODS: Orders jump 3.5%

NEW HOME SALES: Dip in November

Government reports showed durable goods orders surging as home sales gave up some ground.

The Commerce Department said orders for durables jumped 3.5% in compared with October, when orders had fallen 0.7%. The increase was led by a 21.8% jump in demand for commercial aircraft, which can be volatile.

Homebuilder stocks rose after the government reported that new home sales rose at a faster pace than analysts were expecting last month.

But still, sales slipped slightly after a big surge the previous month. The figures add to evidence that the housing market is struggling to sustain the pace of its recovery.

The yield on the 10-year Treasury sprang 1.8%, climbing to 2.98%. It’s been almost two and a half years since the yield surpassed 3%.

On Monday, the Dow Jones industrial average rose 73.47 points, or 0.5%, to a record close of 16,294.61. The Standard & Poor’s 500 index gained 9.67 points, or 0.5%, to close at at a record 1,827.99. The Nasdaq composite jumped 44.16 points, or 1.1%, to 4,148.90.

MONDAY: Stocks: Record-high indexes cruise higher

Historically, stocks perform well during the holiday season, albeit with light trading, and this year has followed that trend, with the market setting new records thanks to several strong reports indicating a strengthening recovery. The Fed’s announcement that it will begin to slowly taper its economic stimulus has also removed a degree of uncertainty from the market.

MORE: Is ‘Santa Claus’ rally in cards for Wall Street?

In Asia, stock indexes finished higher, despite losing early gains in late trading. Japan’s Nikkei 225 index gained 18.91 points, or 0.1%, to close at 15,996.88, after touching above the 16,000 level for the first time in six years in the morning session. China’s Shanghai Composite added 3.20 points, or 0.2%, to finish at 2,104.66. Hong Kong’s Hang Seng index gained 257.99 points, or 1.1%, to 23,179.55.

Major European benchmarks also ended higher, with Britain’s FTSE 100 index up 0.2% and France’s CAC-40 up 0.1%.

Contributing: The Associated Press