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Best of the Blogs: Will Regulators Use This Tactic to Reform Money Market Funds?

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Plus, what are the chances that the German Constitutional Court won't approve of Germany ratifying the ESM?

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This column highlights the most interesting and useful business and financial commentary from around the Web each day.

The New York Times: DealBook
Link: A Third Option for Regulators in the Money Market Fund Fight

"The biggest battles are sometimes decided by the most arcane tactics.

"That could turn out to be the case in a fierce fight between the mutual fund industry and top financial regulators.

"At issue is whether to impose more regulations on the nation's $2.6 trillion of money market funds.

"Regulators think the funds pose a risk to the financial system. In the 2008 financial crisis, investors fled the funds in droves, which worsened the credit freeze that gripped the banking system. Money funds then received a big bailout."

Zerohedge
Link: "Don't Count Your Hahnchen": 40% Chance German Court Does Not Ratify ESM

"'Don't underestimate how close the Court verdict is' is the warning that Morgan Stanley's (MS) European Research group sends out in a note today. In their view, there is a non-negligible risk that the German Constitutional Court will voice concerns about the ESM and, potentially, also the fiscal compact on September 12. Given that the EFSF is still in operation, given that the Court views the scope of the German constitution as being exploited already, and given its record of voicing concerns about European integration, Morgan Stanley sees a 40% chance that the Court bans Germany from ratifying the ESM treaty (with major repercussions for financial markets), at least for now, and while their base case is for ratification of both treaties, they believe the market is not priced appropriately for the downside tail-risk of a possible 'no' verdict."

Financial Times: Alphaville
Link: Portugal and a Second bailout

"Chalk this one up to the 'second bailout, no PSI' trade, maybe - Portuguese government bonds have been a top performer so far this year.

"So, as for that second bailout…

"Portugal has been quietly toiling away to reduce its deficit after the first, €78bn, bailout last year. Progress has been slow but steady, earning the government props from the Troika. But as we've noted in the past, one of the quirks here is that Portugal needs to show the IMF whether it could maintain market access for the next 12 months after the programme finishes."

The Wall Street Journal: Deal Journal
Link: Barclays New CEO Has Had Sights on US Retail Presence

Now that Barclays (BCS) is being run by a British retail bank executive, don't expect the bank to stop looking toward the US.

"Antony Jenkins, newly minted Barclays CEO, has been an innovative banker over his 30 year career, pushing technology advances at Citigroup (C) while he was running their credit card operations during the tech boom.

"But maybe more notable for US retail bankers, Jenkins has also been at the top of Barclays push to expand its US presence in retail banking."

The Reformed Broker
Link: I CAN HAZ MOAR JUNK BONDS NOW PLEEEEZE?

"On The Street, we call junk bonds 'chicken equity' in the context of portfolio construction.

"Many allocators are buying junk bonds not as part of their fixed income allocation but really in search of an almost-equity return with slightly less risk and volatility. So, for example, you'll see a financial advisor carve out a 5 or 10% spot for junk bond index ETFs ([iShares iBoxx $ High Yield Corporate Bd] (HYG), [SPDR Barclays Capital High Yield Bond] (JNK) etc) but that allocation won't be coming from the bond side of his clients' portfolios, it'll be coming from the stock side."

Twitter: @ChrisWitrak
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No positions in stocks mentioned.
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