About CNBC’s Cash Flow

---

CNBC’s Cash Flow. CNBC turns news flow into cash flow, creating investment, trading and business opportunities out of the mass of information, announcements and decisions that occur each morning. "Cash Flow" filters through this content and delivers 'the bottom line,' providing traders and investors with usable information that helps them make profitable decisions.

---

Host: Chloe Cho

Host: Welcome back. US Secretary Tim Geithner is calling for a sweeping new rules to limit the level of risk taking in the US financial system. He told Congress the flaws in the current financial system needed to be fixed to prevent repeat of the banking crisis.

(Video clip of Timothy Geithner’s US financial reforms speech presented to Congress)

Geithner: To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game and new rules must be simpler and more effectively enforced. They must produce a more stable system, one that protects consumers and investors, rewards innovation and is able to adapt and evolve with changes in the structure of our financial system.

Host: Besides tougher standards, Mr. Geithner wants to extend federal regulations to all trading and financial derivatives including credit default swaps. The US government is also planning to create a single super regulator to monitor financial institutions and have the Securities and Exchange Commission keep track of the larger hedge funds. Let’s try to shed light on where all of this stands and how that’s going to affect your investments.

Todd Everts as President and CEO of Wall Street Global an independent brokerage firm in the United States, he is normally based in New York but swinging by Hong Kong. Well thank you so much Todd for dropping in today. Let’s talk about…we have so many plans coming out of the US. We have this toxic asset plan and yet now we’re also hearing that Timothy Geithner is going to tighten the reins on private equity firms, hedge funds. Ultimately how is this going to shape the way you place your investments?

Todd G. Everts: Well right now what we saw in his testimony overnight was a plan and there wasn’t a tremendous amount of detail in what ultimately it will look like. Really what he was doing was creating an opportunity for debate and how much regulation there needs to be. Many of the institutional investors currently believe that the system of regulation is not the problem, it’s more a systemic problem and the way in which markets work and unfortunately how the US economy has not performed against world economies. The one thing we are seeing is a big shift towards what’s referred to in the industry as managed accounts so that the investor can feel confident that the actual securities that the managers are purchasing are actually there, thus avoiding a Madoff-Ponti scheme type scandals. So that type of regulation is something..and that transparency is something the industry wants so the investors can feel confident and come back into the market.

Host: Hey, do you know overnight Wall Street actually had a pretty great rally. The NASDAQ market now in bull market territory in positive side for the year to date and for a lot of the Asian markets as well. Do you think now could be a great opportunity to jump in and if we don’t jump in that a lot of investors could be missing out or is this just a bleep in the long term cycle of ups and downs?

Todd G. Everts: What I’m encouraged by is that the market movements right now versus the market movements of a year ago, these movements are used…are being moved by new money and unlevered money where a year ago the whip sauce and the volatility we saw was using leveraged money and there isn’t a lot of leverage yet to the investor therefore this is true money coming in to the market that’s moving the markets. I’m encouraged by that. What I’m still continued to be frustrated by is the systemic problem in the US from a manufacturing standpoint, from an output standpoint and from how the consumer will drive world economies. When I speak to US investors, just kind of the average person on the street in the US, they’re very, very pessimistic about their job, about the future of the US economy and so that will play out as future poor earnings are announced from major US firms in the next coming quarters so I don’t think we’re out in the clear. I think we’re going to continue to have volatility but an investor needs to choose obviously the right market and the right asset class to be in and they obviously have to have an appetite for risk.

Host: So ultimately what do you think is going to be the outcome especially after the detoxifying plan because you are because the government is introducing leverage again it’s 6 to 1 for people who want to take part in that banking toxic asset plan.

Todd G. Everts: I know. That’s what’s so confusing, the government is blaming the problems on leverage and structured products and synthetic type of vehicles that are highly levered and now they’re basically saying through PIMCO and BlackRock that the average person on the street could buy a levered product that would be structured to buy into toxic assets that the average person wouldn’t understand. I don’t understand it. The problems in the US lead back to the average person not being able to make their mortgage payment, not knowing if they’re going to have a job and that person is a consumer which drive world economies so the US, is unfortunately focusing on the wrong area.

Host: Hmmm…okay well, Todd have a great business trip and have a great weekend. Todd Everts, president and CEO of Wall Street Global talking to us from our Hong Kong studio during a business trip.

Todd G. Everts: Thank you too.