John At The Center

Incumbent managers, said Guhan Subramanian, a Harvard University professor who studied the effectiveness of a go-shop period, have “a significant advantage over other potential buyers.”The case of J. Crew makes it clear why. The retailing chief, in a cloud of secrecy, teamed up with TPG and Leonard Green to make a deal. Mr. Drexler relaxed his stance and agreed to consider other suitors, after shareholders sued J. Crew.But the die was cast at that point. What buyers would want to work with a C.E.O. who clearly didn’t want to work with them?

via Go Shop Can Be a Fig Leaf for a Deal to Hide Behind – NYTimes.com.

China has been routing a significant portion of its purchases of U.S. Treasury securities through other major financial centers such as London to play down its debt profile in the U.S., a politically sensitive subject in Washington.

via China Owns a Lot More U.S. Debt Than Previously Thought – Real Time Economics – WSJ.

How can such facts be reconciled with the “two lost decades” story? I dont think they can. There is clearly a contradiction here, and after studying the facts on the ground in Tokyo for decades I find it hard to avoid the conclusion that the story of Japans stagnation is a media myth.

via The Myth of Japans Lost Decades – James Fallows – International – The Atlantic.

We aren’t headed into the 1970s-style stagflation, says James Golden, head of Treasury trading at Jefferies. He sides with Fed Chairman Ben Bernanke’s thesis that the U.S. core consumer price index is likely to stay contained even as a rise in commodities will push up headline CPI. Higher oil prices are likely to hurt consumer confidence, and thus consumer spending, making producers more difficult to pass through the cost to consumers. As such, Golden sees the benchmark 10-year Treasury’s yield to trade between 3.35% and 3.55% near-term. It was recently at 3.43%.

via Stagflation on the Way? Nope, Says Analyst – MarketBeat – WSJ.

But less than three years later, cov-lite loans are back. “With a vengeance,” my friend David Pesikoff, a Texas-based hedge-fund manager, assures me. Has the world of finance gone insane? Not necessarily. The return of cov-lite loans makes a certain sense in the current financial environment. But I find myself wondering what that says about the current financial environment.

via Covenant-lite: The default crisis that never happened. Will it now? – By Bethany McLean – Slate Magazine.

In the 11 years through 2009, the company reported an aggregate pre-tax loss of $157 million, a figure that was far understated since borrowing costs at NetJets were heavily subsidized by its free use of Berkshire’s credit. Had NetJets been operating on a stand-alone basis, its loss over the years would have been several hundreds of millions greater.

We are now charging NetJets an appropriate fee for Berkshire’s guarantee.

via Read Warren Buffett’s Latest Berkshire Hathaway Letter to Shareholders – Deal Journal – WSJ.

That steep divergence reflects the fact that while natural gas and oil can sometimes be used as substitute fuels, for the most part they are two different markets. One is global, while the other is continental. And that can make all the difference.

via Natural Gas at a Historically Low Price Relative to Oil – NYTimes.com.

The number of new hedge funds worldwide declined to about 150 in the fourth quarter, from almost 250 a year earlier

via Institutions Damp Hedge Fund ‘Startup Spirit,’ Citi’s Roe Says – Bloomberg.

Hedge-fund startups are slowing as institutional investors favor larger managers and regulators increase oversight of the industry, according to Citigroup Inc.

“We are seeing the larger funds getting larger and less of the startup spirit that really typified the hedge fund industry five to 10 years ago,” said Nick Roe, London-based global head of prime finance at Citigroup. “A continuation of institutional flows and increased regulation in international markets are making the traditional entrepreneurial hedge fund startups more difficult.”

via Institutions Damp Hedge Fund ‘Startup Spirit,’ Citi’s Roe Says – Bloomberg.

Cocoa prices surged to 32-year peaks after the internationally recognized president of Ivory Coast extended a ban on the export of the key ingredient in chocolate.

Cocoa futures jumped 2.5% to close at $3,633 a ton on ICE Futures U.S.

The front-month contract, for March delivery, earlier hit an intraday high of $3,666. Although IntercontinentalExchange Inc. only has records from the mid-1990s, data from Dow Jones Market Data Group showed the front-month contract last settled at $3,635 on Jan. 12, 1979.

via Cocoa at 32-Year High – WSJ.com.