We’re hearing rumors that Caxton Associates is blowing up. Caxton is one of the largest hedge funds in the world with around $16 billion under multi-strategy management so this would be huge and, as they say, unlikely. Some are saying it’s because of the move SEPR has made of over the past few weeks (Caxton’s largest equity position had been SEPR), others that it’s the very fashionable credit situation. Right now, all just hearsay. Maybe funds this large don't blow up. Maybe Caxton was already a red giant, and will contract into a white dwarf under a sea of redemption requests after some significant losses. Only then will it be ready for a supernova. Heard anything? You know where to find us.

Update: Caxton denies any such rumors. According a friend o' DealBreaker, there was a "larger than normal liquidation in order to reduce risk," the main fund is down 3-4% mtd and Caxton "made money today." Make of that what you will.

$$$ Of Taxes and ‘Deals That Don’t Get Done’ [DealBook]

$$$ The Complicated, Modern Renaissance Man [Banker's Ball]

$$$ How to Say All Their Money is Gone [LoSC]

Are you presently working for a hedge fund or major bank? May Jeremey Grantham, chairman of Grantham, Mayo, Van Otterloo & Co. (via us) suggest that you get the hell out of there, because most of you are going to die anyway? That’s right, Dealbreakettes, according to Grantham, credit-market declines are going to force “as many as half”-- half, 50%, 1 of every 2-- of all hedge funds to close in the next five years. Last year 717 hedge funds closed, leaving 9,800 in business. Ergo, FOUR THOUSAND NINE HUNDRED of you are soon to be history (we did the math). Oh, and at least one global bank (gut instinct: Goldman Sachs) and “one or two” of the largest private equity firms, because those assholes have it coming. Grantham can make such apocalyptic forecasts for 2012 because he is 68, and may very well be dead by then. Grantham, Mayo, Van Otterloo & Co will survive, presumably.

The troublesome US asset-backed insecurities market is mauvaises nouvelles for the French too, apparently. Oddo & Cie, a Paris-based money manager is closing three hedge funds worth 1bn Euros ($1.37bn) after losses on collateralized debt obligations, Bloomberg reports. The funds, which held 15% of investments in US CDOs, will be close in “the shortest possible time frame.”

“Like many actors, we have tried to revitalize the performance of our funds by investing in CDOs. Like others, we noticed recent problems with short-term liquidity and were caught out by the subprime dilemma,” said Arnaud Ploix, a spokesman for Oddo.

Oddo to Shut Three Funds `Caught Out' by Credit Rout [Bloomberg]

Did anyone catch today's New York Times lovefest fluff-piece about Chelsea Clinton? There's nothing she can't do, from working in finance to reading "Goodnight Moon" at a college level to dating Jews. And as any truly well-fluffed piece will tell you, merit carries the day throughout Ms. Clinton's orgy of success.

For instance, how did Chelsea deal with 9/11? In a bold, career-defining moment, Chelsea shuns the materialistic ambitions of her post-collegiate peers and decides to devote herself to good works. From the Times:

Ms. Clinton shared her answer in an earnest essay a few months later in Talk magazine: “For most young Americans I know, ‘serving’ in the broadest sense now seems like the only thing to do,” she wrote. “Is banking what’s important right now?” Her words are reminiscent of the young Hillary Clinton, who, as the campaign frequently reminds voters, chose children’s advocacy over corporate work after law school.

Chelsea's true desire to "serve" and shun banking led her straight into a career in finance when she got back from Oxford. Nothing fulfills that desire to serve more than firing a few people from a struggling company in a management consultant role. More from the Times:

after Oxford, Chelsea Clinton signed up with McKinsey, a consulting company known as an elite business training corps. She was the youngest in her class, hired at the same rank as those with M.B.A. degrees. Her interview was more like a conversation, said D. Ronald Daniel, a senior partner. “That’s why she was a good consultant, because we are professional question-askers and professional listeners,” Mr. Daniel said.

Let me get this straight fluff-piece, Chelsea Clinton's rare and unique business acumen resulted in her catapulting the entire McKinsey class?

Word on the Street (and from a couple tipsters) is that Chelsea was job shopping and resume padding like any other post-grad. McKinsey wanted a Clinton so badly that they were willing to give her a post-M.B.A. job. Other consulting firms laughed at the idea, even though word has it that Chelsea tried to play some hardball.

Chelsea was interviewing with BCG and a couple other places only prepared to throw her in with people of the same skill level who didn't live in the White House. Apparently consultants at other firms didn't have the right "conversations" with her, namely the ones deferred to her parents. The nerve.

Like her father, Chelsea is as drawn to integrity and character in her personal life as her professional life. This is why her boyfriend, Marc Mezvinsky is that rare combination of a Jew working at Goldman Sachs and the son of criminals. Mezvinsky’s father pleaded guilty in 2002 to swindling a bunch of investors out of $10 million, using his son’s bank account to transfer money undetected and often bragging about his Clinton connection. Papa M gets out of jail in November 2008.

Primed for a Second Stint as First Daughter [New York Times]

It’s finally pretty much almost over. Rupert Murdoch has secured enough Bancroft family shareholder votes to move forward with his $60-a-share, $5bn bid, one future News Corp holding reports.

One day after a Murdoch spokesperson said the deal was “highly unlikely,” the Denver branch of the Bancroft family, previously holding out for a higher offer, capitulated, giving News Corp at least 32% of the family vote. Nonetheless, one Bancroft family spokesperson said today, “Any suggestion that the process has been completed and/or that a particular level of support has been established is at this point premature.”

Both companies have board meetings this evening to formulate the take-over procedure. Dow Jones is trading up 7.04% to $57.50 today.

News Corp. Appears to Have Enough Votes to Clinch Deal [Wall Street Journal]
Murdoch Seen to Win Control of Dow Jones [NY Times]

Which New York short-seller, Simpsons fan and Yale graduate had this to say about the recent adversity faced by Sowood Capital?

"Let Harvard have its academic and athletic excellence...Yale will always be known for the finest in gentlemanly club life..."

Earlier: Sowood Is So Sowwy

Sowood Makes Citadel Look Good

ABN Amro’s board decided over the weekend to withdraw its formal recommendation for a bid by Barclays, but it was only half-serious, and they were winking at the time (though that may have just been an involuntary spasm resulting from getting grapefruit in their eyes, which stings quite badly). ABN’s chief executive Rijkman Groenink said today that he supports the offer by the British bank and may formally recommend it to shareholders later, just not now, even though he sort of just did.

Groenick commented that "We continue to support the Barclays offer because we believe overall it is to the benefit of shareholders and stakeholders,” and the ABN-A board “still believes in the strategic rationale of the Barclays bid,” but they’re still “neutral.” So “neutral,” in fact, that they “acknowledged”—yes “acknowledged” numbers—that the 38.40 euros/ABN Amro share being offered by rival bidder Royal Bank of Scotland-Fortis Group of Belgium-Banco Santander Central Hispano is “higher” than Barclay’s proposed 35.73 euros/share. Because they're "neutral."

ABN's Chief Expresses Support for Barclays's Bid [WSJ]
Board to Remain Neutral in Bids for Dutch Bank [NYT]

(If you missed our first installment of "Great Moments in Financial History," detailing Maria Bartiromo's appearance on Celebrity Jeopardy, you definitely want to check this out)

Traders, take a second from shifting vol and imagine this announcement:

"Traders, your work here is done. The market has done all it can do for you this year, so we're closing it. Come back in December, just in time for Christmas bonuses."

That was pretty much the case this day in 1914, although some believe the extended holiday was due to that particularly gory flick showing in the European theater at the time. From the Freakonomics Blog:

On July 31, 1914, officials shut down the New York Stock Exchange following news that Germany had declared Kriegsgefahrzustand (defined as an “imminent-danger-of-war situation“) while Austria and Turkey were already mobilizing.

From the NYSE's website, the exchange, "Reopened for trading in bonds with price restrictions on November 28, 1914; for trading in a limited number of stocks under price restrictions on December 12, 1914; and for trading in all stocks, under price restrictions, on December 15, 1914. All restrictions were removed April 1, 1915." The hiatus was the longest in the NYSE's history since 1885. There was no extended closing during World War II.

And Today Is… [Freakonomics Blog]

Ever wonder why, after a few minutes on the treadmill at the end of a grueling week, you're breathing harder than (eighteen pack a day smoker) James Simons trying to explain 5/44 to investors? Forget the crippling fatigue, lousy diet, self-loathing and emotional stress, it’s the PRINTERS.

Australian scientists from the Queensland University of Technology have found that office laser printers can damage lungs as much as smoke particles from cigarettes. Almost a third of the 60 printer models studied emit dangerous levels of toner into the air. A detailed explanation of your deteriorating health, from the BBC:

Almost one-third were found to emit ultra-tiny particles of toner-like material, so small that they can infiltrate the lungs and cause a range of health problems from respiratory irritation to more chronic illnesses. Conducted in an open-plan office, the test revealed that particle levels increased five-fold during working hours, a rise blamed on printer use. The problem was worse when new cartridges were used and when graphics and images required higher quantities of toner.

Since “working hours” for bankers include most of the 168 hours in a week, it turns out banking causes you to really suck, much more than originally thought.

Office printers 'are health risk' [BBC]

This is a list of people who we respectfully submit are liars: CNBC’s David Faber, Thestreet.com’s Nat Worden, and Reuters. We believe these entities to be capital 'L' small 'i' small 'a' small 'r's because among them they share the distinction of having reported or re-reported this morning that there will be an official announcement of News Corp.’s Dow Jones victory tonight. Nothing personal, it’s just that we no longer believe the words coming out of the mouths of people who say anything—outright, implying, leading, lip synching—that even hints that this whole thing will be conclusively finished before hell freezes over. We WANT to believe them, we just can't. Know anyone you’d like to add to our list? Send his/her name to tips at dealbreaker dot com.

In other news, MySpace co-founder Brad Greenspan sent an open letter to Dow Jones shareholders detailing a new proposal (he’s done this before, several times) in which he would invest $600 million in cash and stock in three joint ventures with DJ. Greenspan says he’s received “interest” from five “credible” investor groups, though he would not disclose their names, and their profiles are set to private. Brad informed shareholders that he and his investors “can meet this week” in order to “firm investment commitments,” but starting next week things are going to be really tight for him, so if Dow Jones could really get back to him A-sap to nail something down that would be solid, just name the time and place, but seriously, get back to him soon, otherwise, who knows, he could be busy.

Dow Jones to Agree To Takeover by News Corp. [CNBC]
Dow Jones Deal Gets Closer [WSJ]
Dow Jones Soars As Deal Appears Near [thestreet.com]
News Corp., Dow Jones deal expected Tues [Reuters]
MySpace Co-Founder Makes Another Dow Jones Proposal [Bloomberg]

Steve Schwarzman is selling state secrets to the Chinese. Is Schwarzman trying to pull a Jack Bauer's father in last season of 24 (Schwarzman is the only PE fund guru as "tall" as Keifer Sutherland, after all)?

For the low, low price of $540 million dollars, or a nice $23 million a day, the Chinese government has been studying the U.S. buyout market, courtesy of Blackstone's IPO. The first lesson is an awfully bitter fortune cookie - PE fund IPOs allow shrewd fund partners to cash out while passing impending turmoil onto investors.

China used its increasingly hard to employ $1 trillion "rainy day fund" of foreign exchange holdings to pump money into a 10% stake in Blackstone's IPO. China bought shares at a 4.5% discount and watched Blackstone's share price fall 18% in 24 trading days.

China is watching patiently, slowly developing the script for taking the PE reigns from the West, and the script for "Shaolin PE Investing," starring Stephen Chow.

(Pictured: Some Chinese investors have lost their shirts in the deal, others just have an axe to grind.)

Blackstone share slump costs China $540 million [MarketWatch via Deal Journal]

The letter a hedge fund manager sends to his/her investors in the event of bad news like, say, a meltdown, etc., is an exercise in trying to jam a huge ego and an “I’m sorry, but I’m not really sorry, but I’m saying I’m sorry” onto one page. We’ve been calling him out a lot lately for what he’s done wrong, but one thing James Cayne did right was his memo to investors. As you well know, Cayne informed them that, contrary to what he and his colleagues had been pretending in the weeks previous, Bear Stearns’ two hedge funds were worth jack. As this charade was getting exhausting, and not because it’s wrong to lie, the big guy took it upon himself to come clean with the sad sacks (his words) who were silly enough to give Bear their money only to watch it be lit on fire. This would have all been rather unfortunate, Cayne went on, if it were going to hurt employee compensation at year end, which it won’t, thank god, so that’s pretty much it. Shipshape.

Sadly, Sowood Capital Management founder Jeff Larson has apparently not mastered the art of this particular love letter, and comes off as actually rather regretful and apologetic in the one he sent to his investors yesterday, re: selling “substantially all the funds’ [Sowood Alpha Fund LP and Sowood Alpha Fund Ltd] portfolio to Citadel,” which was more than happy to take them on. Larson even says “We are very sorry this has happened.” It’s actually all rather off-putting. Full letter (which seems to imply Sowood will be shutting down) after the jump.

Funding a $37 billion buyout isn't what it used to be, especially since debt on recent buyouts is losing up to 10% in value, sticking lenders with hefty losses. The lenders led by Citi and including Lehman, JPMorgan, Goldman and Morgan Stanley are considering paying a $1 billion break-up fee so that everyone can quietly walk away.

The proposed KKR, TPG and Goldman PE buyout of TXU calls for $30 billion of term loans and $11 billion in an unsecured bridge loan. Sharing a $1 billion loss is better than sharing a potential $3.7 billion loss (several analysts worked a 120 hour week to compute that). The banks are clever like that, at least in hindsight after offering such huge financing packages for these PE deals.

Thomson Financial reports that there is $300 billion worth of unfunded buyout debt currently threatening numerous impending PE deals like First Data.

Lenders mull pulling out of TXU and pay 1 bln usd break-up fee [Thomson Financial via CNN Money]

ADM fiscal 4Q profit increases (Thomson Financial)
Food purveyor to the world, ADM, saw its profits rise in its most recent quarter, although that was mainly due to the disposal of certain assets. Surprisingly, the company's operating profits actually dipped, in part due to the rise in corn prices. Seems strange -- wasn't ADM supposed to benefit from higher grain prices. Isn't the spike in corn prices due to ethanol, a big area for ADM? Either way, the company says that prices are already coming down (which is good news for just about every other company in the world) and that earnings will normalize.

Murdoch Awaits Decision on His Dow Offer (NYT)
There was a moment yesterday when we honestly believed that we'd get some sort of definitive answer to the whole Dow Jones mess. How naive. This thing probably isn't going away anytime soon. At one point, it looked like the deal really might not happen, at least based on some murmurings coming out of the Murdoch camp, which, in retrospect, was probably just more posturing. Then, later into the evening there was talk about more negotiations and nailing down some fine points -- quite positive. Either way, we didn't get we wanted, which was resolution. Hopefully we'll have something more definitive today.

Russian Oil Magnate Forced to Sell to Putin Loyalist, He Says (NYT)
Vladimir Putin, the world's most important energy executive, continues to tighten his grip on the market. The owner of Russneft (Not to be confused with Rosneft), will be forced to sell out to Putin loyalists, AKA Putin. In a sense, we're not sad to see the Russian oligarchs' power dismantled... but oligopoly is probably preferable to monopoly, which is what the Russian energy market is turning into.

Europe, Asia Stocks Rise, U.S. Futures Advance; Aviva, UBS Gain (Bloomberg)
Remember all of those fears about subprime mortgages dragging down the markets? Yeah, neither do we. That was last week's news. This week it's all about how the subprime fears were overblown and not really a threat to the broader economy. Both Europe and Asia have shrugged it all off, gaining over night, while the US futures are pointing upward, at least for now.

$$$ Deals: Holding Their Own
In our M&A Roundup for the week ending July 29, reports of the death of the deal were exaggerated, as activity rose slightly from the prior week. [CFO.com]

$$$ "The Track is what separates man from beast. It’s what separates Banker from every other ungainfully employed idiot that exists out there. It’s magnificent in its simplicity and supreme in the rewards of its end-state." [Leveraged Sell-Out]

$$$ Dow Jones Reaches 14,000 [The Onion via CWS]

We’re almost as sick of the private equity tax debate as we are with Deal or No Deal: Dow Jones/News Corp. Edition (and, come to think of it, the same horrible game show featuring ABN Amro and Barclays, which has only kept our interest this long due to the Holocaust angle, because, as intuited by one of our more favored commenters earlier, I hate Germans). So we’re just going to point you in the direction of some people who are arguing in favor of the increase and some who are arguing against it and send you on your way.

- Pro-35 percent: Ben Stein comes up with a perfect storm that only a man who guest starred as Stanley Willard on “Charles in Charge” could pull off. First, he goes where no one else will: “Hedge funds have created a terribly wealthy new class. Although the data is overwhelming that the mass of hedge funds have not been outperforming the market after fees, money still pours into them. This has often made their proprietors terribly rich.” Then he tugs at the heart strings, noting that doctors, lawyers and actors are paying almost two times more than private equity guys on long-term capital gains on their compensation. He finishes up with a “support our troops” plea, says “let’s keep it real,” and suggests that we’re living in a climate not unlike that of the French Revolution.

- Anti-35 percent: It’s quite stunning to hear that a politician from New York would want to keep his constituents happy (by keeping them rich), but sometimes life just shocks you like that. Sen. Chuck Schumer, who is really giving Corzine a run for his money for our affection after JSC’s recent airstrike on e-mail, will resist all efforts by his party to more than double the taxes on his people.

- A little bit of both?: Noted private equity hater Andrew Ross Sorkin goes to bat for Crab Hands.

Sponsored by Financial Times

Coming off Wall Street’s worst week in five years, stocks traded up today in spite of lingering credit concerns. Purchases in the financial sector increased confidence and drove up prices across the board.

All ten S&P sectors traded higher today. The Dow closed up 92.84 or .7% to 13,358.31; the Nasdaq Composite Index increased 21.04 or .82% to 2583.28; and the S&P 500 jumped 14.96 or 1.03% to 1473.91. However, with the long-term consequences of the new credit crisis still unknown, it’s hard to see this rebound as the end of summer market woes (although a plurality of Dealbreaker readers predict a “small comeback” for the week).

Market intelligence everyday at FT Alphaville.

Sowood Capital, blistered by big losses in its bond portfolio resulting from the current state of affairs in subprime mortgages and karma for Harvard being one of its biggest investors, voluntarily left the credit business today, after being asked to leave. The erstwhile multi-strategy fund, founded by Jeffrey Larson, sold its credit positions to Citadel, which now controls the “majority” of Sowood’s positions. Citadel manager Ken Griffin said in a statement this morning that his people “appreciate the professional manner in which the Sowood team has handled this complex transaction from start to finish.” Because when you’ve just completed the “transaction” of organ-harvesting, it’s nice to be gracious about it.

Sowood Unloads Credit Portfolio On Citadel [FINalternatives]

Joseph Nacchio, former almost brother of Karate Kid idol and Qwest CEO, was sentenced to 6 years in prison for making $52 million by dumping Qwest stock when he knew his company was on a special tanking Qwest. Nacchio was convicted in April. The icing on the sentencing cake, from the New York Times:

Judge Edward Nottingham of United States District Court also ordered Mr. Nacchio to forfeit $52 million in assets he gained in illegal stock sales, imposed a maximum $19 million fine and ordered him to serve two years’ probation after serving his sentence.

Whether Nacchio's new home will be a federal "pound me in the ass" prison (or the TV edit, "pound me into ash prison"), remains to be seen. Whether Nacchio's lawyers will come up with something more clever in appeals than a tainted jury from pretrial publicity also remains to be seen.

Ex-Qwest Chief Gets 6-Year Sentence [New York Times]

(Note: The following is what happens when our graphics intern leaves and I am left to render artistic interpretations in Paint)

Rupert Murdoch’s bid for Dow Jones, once a sure thing, then “too close to call,” is now “highly unlikely” unless the Bancroft family increases its support of the deal by 5 p.m. today, the Wall Street Journal reports.

At the moment, 28% of Dow Jones’ voting power supports the deal, although it is unclear what percentage of Bancrofts voted affirmatively; 30% of the family needs to support Murdoch for his $5bn bid to go through. If this is not met, “News Corp likely wouldn’t take the deal to a full Dow Jones shareholder vote.”

After all the mud-slinging and Rupe’s cryptic commentary, this summer’s saga could come to a close tonight, in which case I will have no idea what to write about.

News Corp. Says It's 'Highly Unlikely' To Buy Dow Jones at Current Count [Wall Street Journal]

Anyone who’s ever interfaced with a jerk knows that the best of breed have an uncanny ability to turn situations around so that, all of a sudden, they’re accusing *you* of being the prick. Brian Hunter is no exception. In the middle of an interview earlier this year with Washington regulators, everyone’s favorite salmon lover went off for lunch and “never came back.” Just, you know, never came back. Made small talk about the turkey sandwiches from the deli across the street, acted as though he would be returning, like everyone else, and then never came back.

When FERC chairman Joseph Kelliher dared to go public with this information, a spokesman for Hunter said that he "voluntarily flew to the U.S.A. to meet with FERC officials and give an interview. Brian ended the interview when he and his attorney became aware that the FERC had misrepresented the agenda for the discussion." Got that? Not only will the Hunter not be apologizing for unilaterally ending the meeting, but *he,* Brian Hunter is accusing *other people* of pulling the wool over *his* eyes.

The trader who went to lunch and never came back [globe and mail]

After adding 10,000 employees in June, the U.S. Securities Industry is now 848,300 worker bees strong, higher than the March 2001 level of 840,900. This is a new all-time record, and June was the biggest single month gain in number of employees since June 2000.

Despite the record number of big winners trolling the Street, DealBook reports that with the credit crunch and arguable peak of PE/M&A deal bubble, many firms have frozen hiring. Is your firm one of them? Comment or send an email to tips at dealbreaker dot com. (There are even stirrings that...gasp...bonuses might not keep pace with last year if we've reached the peak of the current cycle.)

Banking jobs hit record high [Financial News via DealBook]

KB Deutsche Industriebank became the first German victim of the subprime situation today, saying that losses in the US sub-p mortgage market would translate to “significantly lower” earnings than the previously predicted €280m ($383m) for its 2007-2008 fiscal year. The profit warning caused shares of IKB to plummet 16.7% to €17.89, its lowest level since December 2003. Unlike others touched by the housing rough patch, IKB choose to hold those responsible accountable for their actions, and fired its chief executive. (Germans aren't exactly a "3-strikes" people).

Simon Adamson, an analyst at CreditSights, told Reuters, "This announcement from IKB will confirm the fears of a lot of investors that we don't really know what the scale of the problem is," which is comforting.

Subprime woes claim first German victim [FT via MSNBC]
U.S. mortgage woes claim first German victim [Reuters]

*We kid the Krauts.

Last, week, when Bear Stearns seized the assets of its own hedge funds, some people scoffed. It seemed a little unjust that while investors had been told there was a grand total of zero dollars (or zero-ish dollars, depending on whether or not they put their money in the gigantically failing fund or the essentially gigantically failing fund) available for them, B.S. managed to wring out some value for itself.

For those feeling bitter, today we offer some vindication: on the same day the bank was seeing just how long it could ride the Screw our Investors Express, CEO James Cayne—CHAMPIONSHIP BRIDGE PLAYER AND CIGAR SMOKER JAMES CAYNE, whose “ascent has been a result of a [bridge] player’s guile”—was getting his ass handed to him at the card table. Mr. Cayne, the No. 2 seed in the American Contract Bridge League’s Summer North American Bridge Championships in Nashville, Tennesse, lost to the No. 15 seed. The score was 119 imps to 93. Cayne was presumably not cheating at the time.

A First-Time Winner in Bridge Event [NYT]

Xerox has developed a new strain of low-cost environmentally friendly paper that compares in quality to standard 20-pound bond paper many businesses use. Xerox's "High-Yield Business Paper" is higher-yielding than most subprime issues and made in a much less intensive way than most paper on the market.

The new paper avoids some of the problems with "green" paper of the past, like its proclivity for curling in printers and spontaneously combusting in the hands of children. The new paper does have a slight aging problem, however, pictured here after two weeks out of the package. Here's a list of the pros and cons of the new paper:

Pros:
-Requires half as many trees, half as much energy, fewer chemicals and one-third as much heart to produce
-Weighs 10% less, looks better in swimwear
-Costs less
-Still beats rock
-Can now be folded 12 times
-Has a low fertility rate

Cons:
-Made from Giving Trees
-Not as white or smooth as what we conventionally call "paper," or "gravel"
-Yellows badly as it ages, confusing Egyptologists, politically correct Asians
-Goats won't eat it, not even for comedic effect
-Paper cuts now fatal

Xerox Develops a 'Green' Paper, But Will Firms Add It to Fold? [Wall Street Journal]

When Amaranth was blown to smithereens, we all had a good laugh about it. A fund lost $6 billion in one week because a brash young ichthyophile bet the wrong way on everything? That's hilarious. Plus: the genius trader and his boss really weren't affected, monetarily, as evidenced by the latter's chutzpah in threatening his investors not to sue him and the carefree attitude toward huge legal fees exhibited by the former. It's like Katrina, see-you can laugh about a disaster if no one got hurt. (I also challenge you to name one person who wouldn't pay to fulfill their childhood fantasy of having a sleepover in the Astrodome). LTCM? The tears are still streaming down our faces.

Today, however, our attitude toward the destruction of hedge funds took a hit. John Devaney, the United Capital Markets founder who recently suspended investor withdrawals on his $620 million hedge fund portfolios, has put his yacht up for sale. For John Devaney, "Positive Carry" wasn't just a boat. It was a big boat. And now, thanks to the markets, the god-damned markets, John Devaney is voluntarily stripping himself-at a starting price of $23.5 million-of his pride and joy. JD is also trying to get $16.5 million for his 16-bedroom house in Aspen, which he bought for $16.25 million in November.

Are you getting all this? A man is going to be without his yacht and ski lodge. All he's going to be left with are a Gulfstream jet, a waterfront mansion, and a helicopter.

There's an almost unbearable sadness about this permeating DBHQ. Carney's perma-glib has disappeared--he's been in the men's room, silent, for hours.

ANCHORS AWAY! FUND BOSS' YACHT ON BLOCK [NYP]
Disgusted With Hedge Funds? [thestreet.com]

Monster Worldwide posted lower than expected earnings and happily announced that it was cutting 15% of its full-time staff. Monster management put a happy spin on the layoffs, by first labeling them a "restructuring":

We are raising guidance for this quarter, knowing that our user base will grow by at least 800 people next quarter. We're talking high-end users who can take full advantage of the wide array of services they helped sell or put in place. Remember Monster is the leading global online careers property, that has changed the way people we lay off look for jobs and the way employers look for people we lay off.

Monster posted a 28% drop in net income from the same quarter last year on a 20% increase in revenue to $331 million, below analyst estimates of $337 million.

The market has such faith in Monster's unemployed legions that shares (Nasdaq: MNST) are up almost 3%, after hovering near 52-week lows last week.

Monster slashing 800 jobs [Reuters via CNN Money]

The Simpsons made $72 million in its opening weekend (our favorite comic book guy scene - facing impending doom, the comic book guy muses (paraphrasing here) "I've done nothing in my life buy collect comic books. Life well spent!"), picking up some Hollywood slack this summer by being one of the few films to exceed expectations.

Comic book guy, meet Steve Schwarzman, proud owner of the worst IPO ever, of 2007. In contrast to the ten largest U.S. IPOs this year, averaging a 14% return in their first month, Blackstone shares have dropped 21% in July, losing $7 billion in market value. Keep in mind that we're talking about IPOs that are larger than $500 million and that Schwarzman still made out like a bandit and got to cockblock Kravis by lowering the PE IPO bar to virtually un-limbo-able depths.

Another Superlative for Schwarzman: Worst IPO [Deal Journal]

It is now time that I bid you all adieu (albeit teary-eyed and heartbroken). I have enjoyed my internship here at DealBreaker more than any other internship I've had (slim pickings). I've had the privilege of exploring the deep, dark underbelly that is the DealBreaker dungeon and have had an exposure to the lovely, heartwarming comments that you, DealBreaker reader, have adorned me with.

From a meager start of mammaries to a grand finale of Rupert Murdoch, my just over eight weeks here have been a blast. From shocking secrets revealed at the Shake Shack to hoity-toity evenings at the NYPL to Dow Jones employees at the Corporate Challenge to iPhone launch coverage (by far the most fun), my photo essays have shocked millions dozens throughout the nation.

The people who work here are awesome. Bess, Keith, David, and John, thank you so much for everything including the opportunity to work with you for a short while. It has really been an excellent experience for me and I wish you all the best throughout the next months as DealBreaker undoubtedly grows to uncharted territories and new heights.

[Ed.'s note: we have released the hostage.]

Bank ratings intact despite LBO funding jam -S&P (Reuters)
Repeat after me: the problem is contained. That seems to be the message coming from S&P, which says that bank rating will be held steady... unless problems extend to investment grade credit. In the meantime, their models almost certainly don't foresee any problems, so no need to get worried.

Corporate Bond Risk Surges as IKB Reports Subprime-Loan Losses (Bloomberg)
Speaking of contagion, the subprime meltdown has claimed its first victim in Germany, as a bank there has reported significant losses stemming from losses in the US market. This is beginning to feel a bit like a made-for-TV disaster move, as some disease is rapidly breaking out, while biologists and epidemiologists sit in front of a big map of the world trying to predict where it will strike next. Meanwhile, the phone rings, and the person on the other end gives the somber news that they have to put a red pin over Dusseldorf.

Bancrofts' Jockeying Over Murdoch Deal Goes Down to the Wire (WSJ)
You already know what today is: the day we get some sort of 'yes' or 'no' from the Bancrofts. We have this nightmare that somehow the whole thing is going to get delayed and we'll be talking about this for the next six months. Word is that it's close. There may have been some late switchers to the 'nay' column, although it's hard to see how anyone has a good count right now. As far as we care, the family can do whatever the heck it wants at this point. Originally, we'd have said that it would be rubbish for it to reject the deal and screw over shareholders. However, the stock price has been high for quite awhile no, so any shareholders were free to sell out for almost the price the Murdoch is willing to pay. Thus, if the Bancrofts do refuse to sell, the only ones getting screwed will be the people that couldn't forgo one or two extra dollars. Seems they need a reminder about the old aphorism of picking up pennies in front of a steamroller.

Pearson lifts guidance for second half, posts first-half loss (MarketWatch)
If News Corp. is successful in acquiring Dow Jones, the big winner is likely going to be Pearson, particularly if Rupert Murdoch messes with the Wall Street Journal's style at all (which will happen, at least to some extent). Already there's been talk that the FT is the new WSJ, and you have to figure that the FT has a handicap, in that it's printed on pink paper. Pearson says things are looking bright, as it's raised its guidance for the second half of the year.

$$$ How Many Yachts Can John Devaney Waterski Behind? [thestreet.com]

$$$ Stocks Stocks Stocks: A Week in Review 07-27-07 [LoSC]

$$$ Grace Under Pressure [Going Private]

$$$ Amaranth Turns to Lobbying Powerhouse [DealBook]

$$$ A Thaw in Investment Prospects for Sex-Related Businesses? [NYT]

Sponsored by Financial Times

The Market slipped again today in spite of Treasury Secretary Henry Paulson’s positive comments on quickening growth in the US economy. Stocks closed at the at lowest point in today’s session, after a last minute sell-off.

Nine of the ten S&P 500 sectors traded down today. The Dow dropped 207.20, or 1.54% to 13266.37; the Nasdaq Composite Index fell 13.84, or .53% to 2585.50; and the S&P 500 fell 23.59 or 1.59% to 1459.07. JP Morgan Chase traded up. Volatility is their friend.

Market intelligence everyday at FT Alphaville.

Carney [16:01] So these Sowood guys are the ones who quit when the alumni started complaining that the dudes running their endowment fund were getting paid so much, right?
Levin [16:02] That’s the party line. But the rumors have it that Harvard dropped Meyer not because of alumni flap but because Robert Rubin knew the kind of trades Sowood/Meyer did were about to run into trouble.
Carney [16:02] I can’t get anywhere with these guys. They won’t return my phone calls. Let’s have Hahn call. He’s a Harvard man.
Levin [16:05] Don’t take it personally. They won’t call back Jenny Anderson at the New York Times either.

Two days after the contentious Bancroft family powwow in Boston, the Denver branch of the family announced it will vote against News Corp’s $5bn bid for Dow Jones, insisting that Rupert Murdoch raise his offer by $120-240mn. The Denver trust controls 9.1% of the Bancroft’s voting power, but has been watched closely by News Corp and Dow Jones management. “The outcome has been seen as too close to call, although the Denver trust's decision increases doubts about the deal's prospects,” The Wall Street Journal reports.

The Colorado Bancrofts want a 10-20% premium on compensation for super-voting B class shareholders (The Bancrofts) although News Corp spokespeople insist that the Murdoch will not raise the bid and that a two tiered compensation is not tenable.

Key Bancroft Family Trust to Vote Against News Corp. Bid for Dow Jones [Wall Street Journal]

Carney [15:21]: Lots of CNBC material on DealBreaker today. Aren’t we kind of hating a bit much on Maria? Feels like we’re piling on.
Hahn [15:22]: you are a weak man, carney. don’t go all bleeding heart on us now. didn’t you once ask whether warren buffett was going to hell?
Levin [15:22]: Yeah, Carney. Man up. There’s also lots of DealBreaker on CNBC today. Did you see that bit with Rebecca Jarvis?
Carney [15:23] That rocked. Remember to include her in our next poll of who moves your market.

Notice Maria’s score (and provide a caption in the comments section). Keep in mind that this wasn’t that early in the game.

For those who missed it several years ago, the Money Honey was featured in a May 2004 episode of Celebrity Jeopardy in Washington D.C. during POWER PLAYERS week. A POWER PLAYER is presumably a celebrity with a brain. Fortunately SNL stereotypes held, and Maria outshined the competition, which consisted of fellow TV personality Anderson Cooper and former NAACP President and Maryland Congressman Kweisi Mfume. Maria was playing for the National Italian American Foundation, ensuring that pizza remains an alternative to baby carrots in school lunches nationwide (especially good old fashioned school lunch “Mexican pizza”).

Maria got off to a slow start, not buzzing in on the first 10 or so questions. Taking a breather, she put her spontaneous intellectual bandwidth on display during the meet the players segment:

Alex: What’s the fascination for you and for Americans with finance?

Maria: I think that it’s an opportunity for all of us to know that we can have the American Dream. That we can invest in America, in business and have a feeling that we have an ownership of some business and hopefully watch that investment grow. It’s a (struggling with the next word) democratization of information and investing.

The key words are investment and business. After managing to sound like Ralph Wiggum when he said “Mrs. Krabappel and Principal Skinner were in the closet making babies and I saw one of the babies and then the baby looked at me,” Maria prepares to enter the fray and answer a question. Baby steps.

Maria’s first time:

Category: The Capital, for $100
A: In 1989 hundreds of pro-democracy demonstrators were killed by the military at Tiananmen Square in this capital.
Q: Maria buzzes in and makes a face for five seconds. A five second face, to her dismay, is incorrect. Armed with a functioning buzzer, Maria prepares to actually verbalize a question next time.

Maria does end up getting two questions right in a flurry at the end of the round, and manages to finish ahead of (and look slightly less retarded than) Kweisi, who ingeniously answered that “Montebello” was the name of Thomas Jefferson’s estate instead of “Monticello.”

Stay tuned for Maria's revenge in Double Jeopardy after the jump, along with the coveted YouTube clip of the entire episode (believe me, you want to know what went down in Final Jeopardy).

From a report that’s poised to win a cornucopia of awards for its breakthroughs in the field of human behavior, scientists—yes, scientists—have determined that “US executives have been able to secure more favorable research ratings for their companies from investment banks by bestowing professional favors on Wall Street analysts.” Time out. Did they just say what we think they just said? Let’s watch the tape again: “US executives have been able to secure more favorable research ratings for their companies from investment banks by bestowing professional favors on Wall Street analysts.” They did, indeed! Hang on. We need a second.

Okay, we’re going to try and muscle through this. “Unprecedented research” performed on 1,800 equity analysts found that an executive could greatly increase the odds of his company getting a happy face emoticon instead of the one with a foot where the mouth should be, by offering analysts favors ranging from recommending them for a job to agreeing to speak with their clients to blow job y backrub combos. Jesusmaryandjoseph! Keithrichardhahn! Johnfranciscarneythethird!

We’re not finished— analyst receiving two favors were 50% less likely than non-favor receiving colleagues to downgrade a company. We’re not finished—“favor-rending” to analysts in order to reduce the chances of a downgrade in the wake of poor results or a controversial deal is “widespread.” Meaning it happens a lot? In what kind of sick, fucked up, alternate universe was this study conducted?

Are you ready for this biggest kicker of them all? Kurt Schacht, director of the Center for Financial Market Integrity at the CFA Institute, which represents more than 80,000 analysts and fund managers, said that “Activities such as these are in clear breach of our code of conducts and standards…and are unethical.” Someone hand us a Molotov cocktail.

Executives find favours bring better ratings [FT]

Blackstone Group traded up yesterday despite the near-universal melt-down on Wall Street, surging from $23.80 to $25.70 in the final ten minutes. After dropping almost nine percent in the afternoon, BX rallied with a flood of buy-orders, including a block of 114,000 shares at 3:59:55pm.

Was this the work of Morgan Stanley or Citigroup, pulling their big IPO up by the bootstraps; Steven Schwazman, trying to save face with his new cash; or some Blackstone insider, trading on advanced news that Blackstone is taking itself private?

A dark horse (im)possible reason for the signs of life in Blackstone: maybe they’re a takeover target. Market Watch columnist David Weidner suggested yesterday that Kohlberg Kravis Roberts & Co should abandon its plans for an IPO and stick to what it knows best: the buyout business. More concretely, Weidner suggest they should buy Blackstone.

Blackstone is inefficient. It will pay nearly $400 million of Schwarzman and other managers' taxes during the next decade. Its IPO has generated a political backlash that could end up doubling its tax rate, and the firm expects "significant losses" during the next few years as it absorbs compensation costs and amortizes its goodwill, according the firm's prospectus.

KKR could eliminate most of those ills by sweeping management out the door and installing its own team.

It’s simply spoiling the fun to point out that the governance structure built into the Blackstone Group would make any hostile takeover impossible. The rights of Blackstone’s common shareholders approach zero. In fact, the only recent deal we can think with less rights was the sale of a stake in Blackstone to a Chinese government entity, where the Chinamen arguably have less than zero shareholder rights.

In any case, Blackstone, the worst $500mn+ IPO of the year is down close to 7% today and 23% since the IPO. It is currently trading in a territory we call "Early Vonage." China’s State Investment Company may be regretting its major stake in the private equity firm. Even after the 10% discount they received, the Chinese are down 13% in 5 weeks. As Reuters asked today, “Do friends lose friends that much money that quickly?”

The Case of the Mysterious Blackstone Jump [Dealbook]
Blackstone’s great leap forward [Reuters]
Barbarians face to face [Market Watch via Blogging Buyouts]

There may be no money left for investors in the two troubled Bear Stearns hedge funds but last night Bear Stearns itself managed to squeeze some value out of one of the funds by seizing its assets. Last month, Bear Stearns assumed the debt of the less levered of its two structured debt hedge funds—said to be around $1.6 billion—after creditors started seizing assets of the more highly levered fund. Last night it announced it was seizing securities from the fund to control their sale as the fund unwinds.

Bloomberg makes it clear that while Bear Stearns may have made a show of “standing behind its hedge fund” (as one trader put it to us), it certainly isn’t planning on losing on money on those funds.

Bear Stearns told investors in the two hedge funds last week that they'll get little if any money after “unprecedented declines” in the value of securities used to bet on subprime mortgages, or loans to homebuyers with the weakest credit.

The firm has said it expects to lose no money from the debt it assumed from the High-Grade Structured Credit Strategies Fund.

``We don't anticipate any material change in financial exposure to Bear Stearns as a result of this action,'' Sherman said. He said the debt Bear Stearns took over from the fund last month is now valued at $1.3 billion.

Early reactions to the news that Bear was taking this action haven’t been entirely favorable. “This presumably protects Mama Bear from more pain, which for the most part has been limited to their reputation,” a writer at the 1440 Wall Street blog writes. “But this wound is self-inflicted, and the sellers are finally getting to brokerage stocks, and Bear's stock is the poorest performer by far over the past year. Ralph Cioffi will be out of a job soon, but walks with the bulk of his net worth intact. Scuttlebutt pegs him as having only 10% of his net worth in the game, he can comfortably live off the rest of his stash. Sounds familiar, no?”

To turn around an old Wall Street saying, “Where are the managers losses?”

Bear Stearns Seizes Assets From Failed Hedge Fund [Bloomberg]
Bear seizes collateral from Bear Fund [1440 Wall Street]

If you see an army of people wearing bright blue T-shirts in Robert Venable or Breukelen Park today, just look straight ahead, and slowly walk away. An army of Barclays summer interns are fixing playgrounds, planting flowers, weeding and painting away in attempts to brighten the future of more than a few lonely associates pretending to be college interns at firm drink-ups. At least the kids are outside, and we hear several of them have irises that are ready to love again, or adjust to sunlight.

Barclays, the ever-so-modest advocate of community service, doesn't want you to know about the park effort, aside from the loud blue shirts that say "Banking on a Brighter Future" the bank is forcing everyone to wear. When reached for comment, a Barclays rep acted as if we were trying to confirm that the CFO has feline AIDS.

DB: Are there a bunch of Barclays employees running around fixing the city's parks and doing other good works?
Barclays Rep: Where did you hear that? Who told you? WHO TOLD YOU!!! You can't tell anyone, in fact, even having this conversation with you is putting us all in danger...no, no...no, I didn't mean to...NO...you have a choice Keith...there was so much love in this house...but you're going to have to run again...RUUUUUUUNNNNNNNNN :::silence:::

The interns should get their community service out of the way, because when they become full-fledged bankers the serviceable community gets a lot smaller. We'll never forget the recruiting event we went to in college (we won't give away the bank...cough...UBS...cough) when the banker leading the discussion was asked if the bank supports active community service (like you know, on those crazy things called nights and weekends) and the guy literally made a face as if he had mistaken a hornet's nest for a prophylactic and responded, "No. No way. You're not going to have time for that."

Carney [11:48]: Hearing rumors about Sowood Capital. You got anything on them?

Levin [11:52]: Try to keep up Carney. The Journal is all over this. Bond market losses. Down 10% for the year. Liquidating positions to make margin calls. Still saying they’re not dead yet. Harvard boys hogging the headlines with their woes again.

1928 was a great year to be a WASP—the Crash hadn’t yet happened, no one questioned the sexuality of a man who adorned his body with silk twill pocket squares, and Mein Kampf was going into its ninth printing (only to be outdone several years later by Dana Vachon’s Mergers and Acquisitions, now in it’s nine-thousandth printing). To commemorate this glorious 26-times-a-fortnight, when life was droll and full of hilarious bon mots, and to celebrate the recent opening of their Wall Street branch, Hermès is offering a limited edition version of its “Cape Cod 1928” watch ("Cape Cod Wall Street") for your consumption, exclusively at the 15 Broad store.

Complex has deemed the piece a “little Eichmann” and notes that it perfectly captures the “homogeneous banality” of “long summers on the beach,” which was the designer’s intent. We want to agree and say something about how the wearers of these things specialize in autoerotic asphyxiation but we're actually really into the black crocodile strap, rose gold case and sunny bronze face. Jesucristo, what’s happening to us? Look away, please. Is this what it sounds like when doves cry?

Hermès Watch Reminds Us Why Wall Street and Cape Cod Sucks [Complex]

Rifts. Uproar. Agitated. Riled.

We're not talking about the reaction of the markets to widening credit spreads. We're talking about the rivalry between two of CNBC's top women. Those are some of the words that the New York Post's Page Six uses to describe Maria Bartiromo's reaction to the rise of Erin Burnett. According to the New York Post's Page Six, insiders at the network are saying Maria Bartiromo is "in an uproar" over being upstaged by Erin Burnett.

An inside source tells Page Six the Money Honey has been fuming that curvy Burnett, in addition to her duties as anchor of "Street Signs" and co-anchor of "Squawk on the Street," is getting substantial airtime on the "Today" show, which gives her a much bigger audience. "Maria is like, hey, why isn't it me on the 'Today' show? She's very jealous of all the attention Erin is getting," our source said.

A recent New York Post profile of Burnett only deepened the rivalry, according to Page Six. That profile reported that "Burnett handily won a poll of the hottest financial news anchors on Wall Street gossip blog Dealbreaker.com. She got 37 percent of the votes while rival CNBC anchor Becky Quick came in second with 22 percent. Bartiromo only got 13 percent."

It's hard not to get the feeling that Page Six is choosing sides in this battle. And it's obvious who the Post is sweet on.

Some of Burnett's fans have even labeled her "Maria 2.0," while Bartiromo has acquired another nickname, "The Bank Skank."

Not only is Burnett nine years younger than Bartiromo, she also comes with less baggage. Last year, Bartiromo got caught up in an ethics scandal for globetrotting on Citigroup's private jet with its then-wealth-management chief Todd Thomson, who later got the ax.

We can't help but admire the evil genius of the Page Six writer who managed to bridge name calling, Bartiromo's age and the Thomson scandal in the space of three sentences. Rough stuff.

Of course, the network's official spokesman denies everything.

Upstart Erin Agitates Maria [Page Six]

One of our favorite trader friends called us yesterday absolutely overjoyed by the volatility. "Days like this," he said. "Days like this are why you become a trader. One of the best days ever."

We've got an hour before the market opens this morning so we figured we'd ask our favorite experts to predict what would happen by the time it closes. So DealBreaker readers, please vote on the market's direction in the poll to the left.

Oil drops as U.S. stock market fall clips rally (Reuters)
Time to start looking for silver linings after yesterday's market crash drop. Here's one: the price of crude oil fell, as traders worried that a sinking economy would depress demand for the brown stuff. Of course, this will hurt major US energy companies, which have carried the markets on their back, so many investors wouldn't be happy with a long-term decline, but at least summer driving season (which is coming to an end) might be more tolerable. Another bright spot: Can you say intersession rate cut?

Nikkei ends at 3-mth low on Wall Street, election (Reuters)
The Nikkei took its cues from the Dow over night and decided to plunge right along with it. Stocks ended at a three-month low , with some blue chips losing more than 5%. The stronger yen, which is freaking everyone out on both sides of the Pacific, didn't help things.

Is Landry's in trouble? (Houston's Clear Thinkers)
It probably won't come up as a top story on your Bloomberg, but seafood chain Landry's is the latest company to feel the credit pinch. S&P has lowered its ratings on the company, just as it looks for new financing to replace some expiring notes.

Apparel Maker VF Acquires Jeans and Activewear Brands (NYT)
Do people still wear Seven for all Mankind jeans? We know they were really big during the bubble (the designer denim bubble, that is), but the only time we hear about them now is when we're walking through Soho and someone has a table set up on the sidewalk where they're selling them (or knockoffs; we're never quite sure) at a discount. Either way, the company's been acquired by VF Corp, which must be a nice exit for the seven-years young firm.

$$$ Japanese Housewives Henpeck Gold Miners [thestreet.com]

$$$ Liz Claman, look what you've sacrificed. And for what? [tbjb]

$$$ MARRIED ,WEALTHY AND LOOKING FOR A DISCRETE AFFAIR- WILL BE YOUR BANKER, LOVER AND MOST OF ALL FRIEND. [craigslist]

Sponsored by Financial Times

We told you today would be down.

After yesterday's rebound, stock plunged today in the most violent expression of recent market volatility. All the usual suspects are blaming the biggest drop since mid-February's nose-dive, traders on tighter credit markets, word of a continuing housing slump, and the price of oil, which shot up past $73-a-barrell for the second time ever.

Ninety-seven percent of S&P 500 stocks fell in what may be may be the big drop on this week's rollercoaster. The S&P fell 35.42, or 2.33% to 1482.66. Twenty-nine of the stocks that make up the Dow Jones Industrial Average closed lower for the day. The Dow dropped 311.50, or 2.26% to 13473.57. The Nasdaq Composite Index fell 65.94, or 2.49% to 2582.23. We could see further decline before any substantial rebound, but many see today's dive as corrective after the effective explosion of the credit bubble.

The numbers at the close actually represent a sizable rebound for the indexes, which down even lower earlier in the day. At one point, the Dow was down 430 points.

Check for the earliest English speaking market news at FT Alphaville.

The Wall Street Journal reports that the yen hit a three-month high against the dollar today. Combined with the yen's rise against other currencies and volatility in global markets, investors rushed to unwind yen carry trades.

Many market oracles contend that the fine difference between a boom and its busting rests on movements in the yen carry trade. The yen carry trade is borrowing in countries with low short-term rates like Japan and investing in higher yield assets in nations with higher rates, like the US. As long as exchange rates stay constant, you net the difference in interest rates. Compounded by leverage, you net considerably more.

When the yen rises sharply against the dollar (check), and US Treasuries dip (check), huge losses can result from carry trades (in 1998, this was a major reason for the LTCM collapse). Carry trades are major source of cheap funding and global liquidity, and a sudden unwinding in the carry trade creates a feedback loop that augments existing credit concerns and often results in negative movements in equity markets.

Stocks Plummet on Credit Worries [Wall Street Journal]
Yen Gains as Carry Trades Unwind [Wall Street Journal]

McDonald’s CFO Matthew Paull is trading in the pinstripes for corduroy, leaving his lucrative finance career for the somewhat less lucrative world of higher education. After fourteen years under the refulgent golden arches, Paull will begin teaching economics and finance part-time at an unspecified university in San Diego next year while continuing to serve on the Best Buy board of directors, CFO.com reports.

Before compiling BigMac projections, Paull “fell in love” with teaching at the University of Illinois, but “couldn't support the lifestyle that I enjoy on a teacher's salary." This calls to mind Dealbreaker’s Tuesday poll: “Would you be working in a field other than finance if you could make the same amount of money?” 70.9% responded affirmatively, suggesting that the "passion for corporate finance" is largely synonymous with “passion for pecuniary remuneration.”

Why McDonald's CFO Is Heading for Academia [CFO.com]

Analysts are telling Kohlberg Kravis Roberts & Co to scrap its plans for an initial public offering, saying tighter credit markets make the private equity firm a less attractive investment than it appeared to be just a few months ago.

We have certainly come a long way since last spring, when Henry Kravis was instructing the world about the “golden age” of private equity. (More recently, George Roberts, Kravis’s cousin and partner at KKR, told a German magazine that he expects returns on buyouts to “significantly” from where they’ve been. “The coming years will be harder, no question,” Roberts said according to reports.)

"They should absolutely, unequivocally, withdraw the IPO," David Menlow, president of research firm IPOfinancial.com, tells Reuters.

Offerings from hedge funds and private equity shops pose a special dilemma for analysts at investment banks. Because they are involved in so many deals, private equity firms pay lots of fees to investment banks. And this can put pressure on analysts to give favorable ratings to the companies.

Covering hedge funds and private equity firms may also renew conflict-of-interest concerns Private equity-related fees, including those from advising and underwriting, accounted for $15.6 billion, or 20 percent of total global investment banking revenue last year, according to data provider Dealogic.

"The greatest challenge one faces as an equity analyst looking at Blackstone is the fact that they are one of the largest investment banking clients," said Hintz. "It isn't going to make you very popular if you put an 'underperform' on them."

Not surprisingly, many of the analysts who are calling for KKR to pull its IPO work for independent firms that don’t suffer from fee-related conflicts.

KKR should pull its IPO: analysts [Reuters via Washington Post[
Formerly private equity firms irk stock analysts [Reuters]

Tech mentor to the stars (of Silicon Valley) Jim Gray is still missing after drifting off in late January to release his mother’s ashes on the Farallon Islands 27-miles off the San Francisco coastline. The latest issue of Wired takes us inside the man, the myth, and not so much the model of a modern major general.

The story of the high-tech hunt and Gray’s emergence as a programming legend is fascinating and all, but what really gets us is how programming gods delve into the mortal realm to pick up chicks. Hot Scandinavian chicks. The key – Lord of the Rings, proving that once a programming geek, always a programming geek, from Wired:

In 1984, [Gray] met Carnes, an articulate Norwegian-American beauty with master's degrees in history and education. An avid sailor and hiker, she accepted his proposal on their third date — on his boat, of course. She became an engineering manager in the Valley, and they spent their vacations sailing and reading Tolkien aloud to each other in the wilderness. When they bought the house on Telegraph Hill, they christened their nautically themed bedroom Gondor — the realm of the Ship-Kings. Courtesy Joel Bartlett

"I fell head over heels in love," Carnes says. "We'd both been married before, but we met our match in each other. He was intense, I was intense, and we were both raised by single parents. Jim was like a mountain man who was also a brilliant scientist." She liked to call him Mr. Database.

Of course, it helps when “Mr. Database” has untold millions to throw around. What’s elfish for “sugar daddy?”

Inside the High-Tech Hunt for a Missing Silicon Valley Legend [Wired]

A second Outback hedge fund has become ensnared in the subprime mortgage blip. This time it’s Absolute Capital, which invests in collateralized debt obligations (last week it was Basis Capital). The Sydney-based fund, half owned by ABN Amro Holding NV's Australian unit, informed investors that it won’t be processing any requests for withdrawals until October 25. The suspended funds are the Yield Strategies Fund and Yield Strategies Fund NZD, which have a combined $177 million under management.

Chief Investment Officer Bill Entwistle said in an interview today, “There are lots of sellers and no buyers, the market has to settle down before we can get some clarity,” which sounds like James Cayne-speak for “We’ve got nothing, join us as we live this lie for a few months longer.” Expect subprime fallout opportunist Blackstone to offer its advice on the matter, for a price.

Second Australia hedge fund suspends withdrawals [Reuters]

This has not been a good week to be Brian Hunter. Yesterday the world’s most famous energy trader got slapped with a lawsuit by the Commodity Futures Trading Commission for allegedly manipulating the markets in natural gas futures. This morning, the Federal Energy Regulatory Commission announced that it would seek penalties amounting to $291 million from Brian Hunter, Amaranth Advisors and another trader formerly with the hedge fund.

FERC seeks $30 million from Brian personally. It has assessed penalties of $200 million against Amaranth Advisors, plus $59 million in unjust profits. The Federal Energy Regulatory Commission this morning laid boot into various Amaranth entities, along with natural gas traders Brian Hunter and Matthew Donohue, seeking “penalties of $200 million for Amaranth, $30 million for Hunter and $2 million for Donohoe. The commission also proposes that Amaranth disgorge more than $59 million in unjust profits, plus interest.

Things could get even worse for Hunter. This morning , for instance, Gary Weiss wonders whether or not Hunter might face jail time. "Hey, I have a question: isn't market manipulation against the law? Don't people go to prison for that? Just wondering. After all, it seems to me that what these guys are talking about is a lot worse than insider trading," Weiss writes.

FERC wants Amaranth, Hunter to pay $291M for manipulation [Market Watch]
Another Regulator Piles on Brian Hunter [Gary Weiss]

We're not sure why but for some reason this afternoon we found ourselves wondering about trading collars and curbs. This infographic from the New York Stock Exchange is just about the clearest illustration of when the NYSE will put the breaks on a plummeting market. (Or a skyrocketing market, but that's unlikely to be an issue today.)

The circuit breakers don't kick in until there is a 1,350 point drop in the Dow Jones Industrial Average. The "circuit breakers" halt trading for varying periods of time, depending on when the DJIA hits the trigger.

The job of a trader is a confluence of responsibilities, essentially limited to executing trades and IMing. Anyone who's ever interfaced with one of God's special creatures through AIM knows such an experience is a guided tour through copious spelling errors, homonym problems that suggest serious learning disabilities, response times that range from jackhammer to 3-hours-later-I'm-still-sitting-here and cockiness as far as the eye can see (*very* occasionally justified, most often not).

So while they're not particularly revealing, it's nice to read through some instant-message conversations between Brian Hunter, Matthew Donohoe, other Amaranth employees and a trader at another firm, who were all included in CFTC's complaint against Hunter y Amaranth, and see that the biggest hedge fund fuckup of all time's "experimental" grammar is no better than his actual trading. Next, we'll publish his IMs with thefish. Those are some quality exchanges not to be missed.

Sony is on the cusp (in the glacial sense) of reemerging as the dominant home console maker with a hefty 21% gain in PS3 sales from May to June. It looks like chopping $100 off the staggeringly short-sighted $599 “I can buy two Wiis and two games for this” initial price worked. The Blu-Ray revolution is here, a format so innovative that it can properly eulogize the Mini-Disc and UMD.

The PS2 is famously cited as selling over 100 million units, averaging over 15 million units sold per year. To contrast, Sony sold 98,500 PS3s in June. SeekingAlpha points out (was not too lazy to do the math) that at this pace, it will take 83 years to sell 100 million consoles, a shade off the 5-6 year time frame Sony execs projected. Monthly PS3 sales would have to increase over 1500% to about 1.65 million to hit the century mark by 2013. That 21% sales “surge” looks a little empty in context.

Sony reports that its $100 price cut has shot (unreleased) PS3 sales up 135%, although the slashed $499 console is soon to be phased out, displaced with a “new and improved” $599 version. “New and improved” defined by Sony is 20GB more on a hard drive, boldly charging $100 for about a $10 manufacturing cost difference (got to make up those negative margins somewhere).

Microsoft balked on announcing an Xbox 360 price cut during E3 this year, but there are rumors that Microsoft will slash $50 sometime in August. The Core Xbox 360 costs $299.

The Wii-coup is almost complete, and Nintendo holds almost half the next-gen home console market, completing the first to worst to first circle. The Wii sold more than twice the number of Xbox 360s sold last month, which sold more than twice the number of PS3s.

Game Over For Sony In The Console Wars [SeekingAlpha]
PS3 Price Cut Is Fake [DigitalBattle]
Xbox 360 Price Cut Coming? [SlipperyBrick]

The Ford Motor Co. nailed a quarterly profit for the first time in two years, it was announced today. (Ford purists will be happy to know that in spite of gains, the automaker continued its red-hot losing streak in its core market of North American SUV/oil enthusiast). Ford, in the throes of a restructuring program that will close 16 plans and slash up to 45,000 jobs, made a net profit of $750 million (31 cents/share), versus last year’s $317 million (17 cents/share) loss. Profits from continuing operations handily beat the Street’s expectations of a loss of 37 cents/share with a 13 cents/share gain.

Profits were posted in all regions excluding North America, which lost $279 million, marking an improvement from last year’s $789 million loss. Ford said that profitability is not in the cards for North America until 2009, if ever.

Lest we take this as some sort of sign that the tide is turning for Ford’s Fjords, cynics should be pleased to note that the swing to profit may throw a wrench in F’s plans to F its workers during negotiations with the United Automobile Workers union this summer. That the automaker is not hurting for cash did not escape union prez Ron Gettelfinger, who the Times reports declined to comment on how Ford’s $12.6 billion 2006 loss would affect dialogue but noted, “They have a lot of cash, by the way.”

Ford swings to surprising 2nd-quarter profit [Reuters]

London comes out on top again, as Morgan Stanely is shipping Walid Chammah, global head of M&A, across the pond. Morgan Stanley is the most relocation-happy out of the bulge brackets, now that London houses the bank's I-banking chief, securities division COO and global head of capital markets.

Some oft-stated reasons for the push, from breakingviews:

The reasons are manifold. First and foremost is London's geography. By straddling the time zones of Asia and North America, a globally-focused executive can wake up speaking with colleagues in Tokyo and pass the Jag ride home directing charges in New York. London is also more conveniently situated than New York for courting executives in Russia, China, the Middle East and India - the four horsemen of future industry growth.

The trend isn't just affecting top positions, and doing its best to scrape the bottom of the barrel. More and more banker and trader underlings are getting shipped from NYC to the UK, or taking exploratory mini-work-"vacations," to work a week or two in London. Some even say that the work environment in London as a result is becoming just as life-crushing, if not more so, than Wall Street. If anyone has any stories of the difference in work environment from any of these trips, comment or drop a line to *tips at dealbreaker dot com*.

Follow his Walid [breakingviews]

Geoffrey Raymond is at it again! Now he's gone off and painted good 'ol Rupert Murdoch in his classic style, but this time he's asking for a little help from the viewer. Raymond is displaying his masterpiece outside of One World Financial Center so that Wall Street Journal employees and tourists alike can add their feelings about Rupes directly to the piece. WSJ employees in red marker, everyone else in black, with Raymond acting as a moderator. Barring rain, Raymond will be there until the end of the week and then the painting is going to the highest bidder. By highest bidder we mean any bidder, as the eBay auction starting at $3,500 has no bids to date with just three days left.

To one man walking by who refused to stop but still seemed interested, Raymond said defensively, "It's not a picture of Rupert Murdoch, it's a picture of a moment in the history of the Wall Street Journal." Apparently this painting took only about two weeks to complete with Raymond rushing to finish before any official announcement about the fate of Dow Jones is announced. His painting of the $Honey is still a work in progress, he told DealBreaker — Raymond hasn't yet figured out the finishing touch.

After the jump we bring you some pictures of the painting's set up on Liberty Street.

The Annotated Murdoch [eBay]

An investment group that advises a coalition of labor unions sent a letter to Whole Foods’ lead independent director yesterday, advising the board to do business sans Crazy from this point forward. CtW, whose members own around 900,000 shares of WFMI, was apparently made uncomfortable with the revelation that the company’s co-founder and CEO had spent the better half of a decade posting comments in financial chat rooms about Whole Foods, rival Wild Oats and a few from the grab-bag, including “Mackey looks like a model for Brooks Brothers” and “I like Mackey's haircut.”

The group strongly urged Whole Foods’ board to immediately name an independent chairman in order to assure government regulators and shareholders that Whole Foods takes a hard line on what some small-minded people might call “sociopathic tendencies.” Rahodeb, Aohber and Hodebra are among the names in the hopper for possible appointees.

Shares of WFMI are down 33 cents to $37.20.

Firm Asks Mackey To Log Out [New York Post]

Apple's Quarterly Earnings Show The iPhone Revolution Is Succeeding (InformationWeek)
So there was some initial confusion over Apple's earnings reports. You shoulda seen the Yahoo message boards -- a mix of elation and despair, a volatile situation caused mainly by the fact that the posters on it seem to have a hard time grasping financial statements and the fact that Apple isn't the most transparent company in the world. The iPhone, it's selling like crazy, but not that crazy. Initial estimates that the company may have sold nearly a million handsets in the first weekend proved waaay too optimistic. On the other hand, the company sold regular, old-fashioned computers at a scary clip. Articles will note that the company's guidance was "cautious", as its estimates for the coming quarter are well below what Wall Street's finest have been predicting. We have a message to Apple: stop predicting earnings. You lowball every single time, and it's a totally obvious, bush-league move. It's one thing to under-promise and over-deliver on the product side -- that's good business. But you accomplish nothing by taking such an extreme approach to earnings.

Federal Minimum Wage Increase Goes Into Effect (Cato Daily Dispatch)
Ah, we'd been wondering why there were so many homeless people picking through our trash this week. Turns out a minimum wage hike went into effect earlier this week. That explains it.

Buffett Buys Kraft Stake, But Goal Is Unclear (WSJ)
Next time you go to Omaha for Buffett-stock, it looks like you'll be getting some Oscar-Meyer weiners topped with Velveeta to eat alongside your Coca-Cola. And then when you're done with all that, you'll be so intoxicated with the sheer deliciousness of it all, you'll go drop a few thousand on a diamond ring at Borsheims. Yes, Buffett is at it again, adding another iconic American brand, Kraft, to his portfolio of expensive high-priced "value" stocks. Not that there's anything original about buying Kraft -- we can't tell you how many times we saw some analyst on CNBC tout the company because their daughter couldn't stop eating their macaroni and cheese.

Toyota, UC researchers to test plug-in hybrid vehicles (San Jose Mercury News)
Apparently, the Prius isn't the end all and be all, at least to Toyota. Not that that should be any surprise. They're all about kaizen baby -- continuous improvement. You can't rest on your laurels, not even for a moment. The company is planning on doing more research into plug-in vehicles, a nice concept (in theory), because power plants are more efficient than engines, but a challenge, because typically plug-in vehicles are bound to traveling short distances. Crack this nut and there may be a niche for this model.

$$$ What do you need to start your own hedge fund? Just three things [Andy Borowitz|]

$$$ Even Anti-Market Forces Can’t Fight The Market [LoSC]

$$$ London-- set of the 'Wall Street' sequel? [Banker's Ball]

Apple reported a 92 cent/share profit for its fiscal third quarter, easily beating the Street’s forecast of 72. AAPL also surpassed sales expectations of $5.285 billion to hit $5.41 billion. The company earned 54 cents/share and $4.37 billion in revenue in last year’s Q3, so this would be better. Jobs, et. al., shilled 9.815 million iPods (a 21% increase) and 1.764 million computers (a 33% percent increase), but a mere 146,000 iPhones, a number that meant basically nothing for earnings but scared investors into knocking shares of Apple down 6%.

In other AAPL news, Steve Jobs, was profiled this morning in a WSJ article about Mock Turtleneck’s “decades-long campaign against buttons.” This is not a joke. A caption for an accompanying video reads: “A look at Steve Jobs's history of antibutton ideology.”

Apple Profit Easily Beats Estimates On Mac, iPod Sales [CNBC]
Hide the Button: Steve Jobs Has His Finger on It [WSJ]
Apple Profit May Rise; Analysts See IPhone Slowdown [Bloomberg]
Finally, Apple's iPhone Lowdown [thestreet.com]
Apple Calls Trade Heavily Ahead of Report [WSJ]

Despite credit market concerns, the market rebounded today after yesterday’s slide. Everyone blamed (or credited) today's upturn on Amazon and Boeing, who both beat analysts’ estimates for second quarter profit, and a spike in oil prices, which should boost profits at energy companies.

The trend of day to day seesaw fluctuation continues. Down one day. Up the next. The S&P 500 increased 7.05, or 0.47 percent, to 1518. The Dow Jones Industrial Average added 68.12, or 0.5 percent, to 13,785.05. The Nasdaq Composite Index gained 8.3, or 0.31 percent, to 2648.17. If the trend continues tomorrow, stock prices should drop like Monday's rain. But watch what happens to Apple. If it's up, maybe the trend breaks.

Check for the earliest English speaking market news at FT Alphaville.

"Brian Hunter simply did not undertake any manipulative trading and we are going to prove it,” said Michael S. Kim. Kim is a partner at the Kobra Kai dojo Kobre & Kim lawfirm that advises Hunter’s new hedge fund, Solengo.

Earlier today the CFTC filed a lawsuit charging that Hunter, who was trading gas for Amaranth at the time, had illegally manipulated the natural gas futures market by exploiting the New York Mercantile Exchange’s rules for determining the settlement price on futures contracts. Prices for futures contracts are set according to the volume-weighted averages of trades executed during between 2:00 p.m. and 2:30 p.m. on the last day of trading for each contract, a period known as the “closing range.”

According to the CFTC’s lawsuit, Hunter attempted to push the price of the futures contracts down by dumping large amounts of the contracts into the closing range. The complaint states that Amaranth traders would buy up large amounts of gas contracts prior to the closing range, then dump them in order to depress prices. Amaranth wanted lower prices because it held a huge short position in the contracts, the CFTC report alleges.

Hunter’s lawyers say that the contention that Amaranth desired lower prices prices is contradicted by a recent report from the Senate Permanent Subcommittee on Investigations, which they say concluded that Amaranth sought rises in natural gas futures prices.

“None of these various government bodies can come up with a consistent theory of Mr. Hunter’s alleged misconduct because in fact there was no misconduct” said Mr. Kim, “These accusations from the CFTC and the FERC against Brian Hunter are aimed at finding a scapegoat to bear the public outrage over ever-increasing energy prices. We will not stand idly by as the regulators use Brian for political cover, their action is meritless and we will prove it.”

After our review of confidential trading documents, which you may download here,* DealBreaker has concluded that Brian Hunter should tell us whether he wanted to inflate or deflate the prices in the gas futures markets while he was making these trades. Pointing out that the government is confused, inconsistent and probably abusing its power is a bit like pointing out that the Pope is Catholic. That’s what governments do.

But just because the government is out to get you, doesn’t mean you didn’t do anything wrong. So come on, Brian, give up the goods. Was Amaranth after a higher or a lower price?

*We're totally kidding about those confidential documents. Sorry.

DealBook reports that Lion Fund chairman and 1.4 percent stake Applebee’s shareholder Sardar Biglari is experiencing some acid reflux regarding IHOP’s proposed acquisition of the chain. While analysts have crowded around the stark ideological differences in business strategies between the two “restaurants” (IHOP owns 26.3% of its locations, whereas Apple is primarily a franchisor, and owns only 10 of its 1,306 establishments), and Keith Hahn refuses to believe that anyone would want to live in a society where soccer moms, Two and a Half Men, AND IHOPplebees exists, Biglari’s issue is that the purveyor of annoying commercials starring celebrity "chef" Tyler Florence is being lowballed.

Since the $1.9 billion deal was made public last week, IHOP’s stock price has surged, shooting up by about 17 percent to $65.76. Since a buyer’s stock tends to go down after announcements of this nature, Biglari thinks an undervaluation is at hand. He told the Applebee’s board that they’ve “made a grave mistake” in agreeing to the bid, and refused to eat in an International House of Pancakes—a restaurant that DealBook points out, “is known for its pancakes”—until conditions (the $25.50 sale price) improve.

Just to play devil’s advocate, and not because we necessarily think Biglari is wrong, here’s what some of our commenters have had to say about Applebee’s in the past:

Used to work for Crapplebees...as a waiter and in the kitchen sometimes...once undercooked the chicken (that ish was more raw than BSD's bunghole) for the Buffalo Chix Salad...Manager wanted to get it out...just had me douse it in Buffalo Sauce so the customer couldn't see the pink...and served it...This manager left after a busted-ugly waitress he was having an affair with tried to kill herself...twice. This merger is like a White-trash wedding in a trailer park. Posted by: LexSteelz | June 14, 2007 12:35 PM

I work for applebees, This would be a glorified Denny's. Except much more messed up. Yea can I get me a side of bbq covered slap jacks and some steak. Mmm, yeap thats me trailer i live it it follows me 1974 ford pickup where ever I go. And also can I get a beer?

Actually applebees stinks thiscould be a great thing.
Posted by: Apple B*tch | June 14, 2007 02:28 PM

applebees is the work of the devil. if ihop gives them a penny i will take is as a sign that they are in a partnership with the terrorists.

Posted by: Anonymous | July 25, 2007 03:16 PM

Earlier: Mergin’ good in the neighborhood – Ihopplebees in the works

Applebee’s Sale Gives Investor Indigestion [DealBook]

A Bancroft wrangle over NewsCorp’s bid for Dow Jones ended in stalemate yesterday after emotional harangues from opposing factions, the Wall Street Journal reports. The meeting, in the Boston Hilton was so grueling that, “after four hours of discussion, family members were so hungry that they made do with a tray of stale danishes.”

Interviews with more than a dozen family members, outside advisers, lawyers and others involved in the process suggest that the outcome remains too close to call. What has seemed to many analysts like a logical move -- accepting a $60-a-share bid for a company whose shares previously had been trading in the mid-30s -- is still in question amid the deep emotions the bid has stirred. Participants said more doubts about a News Corp. deal were apparent at the end of the six-hour session than at the beginning.

On several occasions Bancrofts “held back tears” as they extolled the merits of an independent editorial board. One prominent Rupe resister, Jane Cox MacElree, seemed even to make the distressing “Daniel-Pearle-would-have-wanted-it-this-way” argument. Another opposing force claimed that the company was worth more than Murdoch’s offer of $60-a-share and that the family shouldn’t accept anything below $66.

Although only 30% of the Bancrofts’ voting power must endorse Murdoch’s proposal for it to go through, investors are becoming increasingly unsure that the deal is a sure thing, Dow stock is currently trading at $54.01, down from as high as $61.20 in June.

It looks like the interminable saga will continue for now, maybe even into August.

Relative Uncertainty [Wall Street Journal]

It looks like Brian Hunter is getting his way. Yesterday his lawyers asked a federal court to block an energy regulator, the Federal Energy Regulatory Commission, from filing a lawsuit against him on the grounds that it was infringing on the jurisdiction of another regulator, the Commodity Futures Trading Commission. This morning the CFTC responded by filing a civil enforcement action against him and Amaranth Advisors.

Our favorite hedge fund newsletter, FinAlternatives, nicely points out the irony.

Hunter and his lawyers may now regret the vigorous defense of the CFTC’s right to bring such charges they put on in court yesterday and in court filings on Monday. During those proceedings, Hunter’s attorneys argued that the Federal Energy Regulatory Commission did not have the authority to bring civil charges against him, as it had said it intended to do. The CFTC and FERC collaborated on the Amaranth investigation.

“FERC is not [emphasis in original] statutorily authorized to regulate futures markets for energy commodities, which include natural gas futures contracts,” Hunter’s lawyers wrote in their complaint against FERC. “FERC’s assertion of jurisdiction to bring an enforcement action is an impermissible encroachment on the exclusive statutory jurisdiction of the CFTC, and is beyond the scope of FERC’s statutory authority to regulate wholesale energy markets.”

A similar lawsuit from FERC is expected to be announced later today.

Amaranth, Hunter Hit With Market Manipulation Charges [FinAlternatives (free registration required)]
Complaint Against Amaranth Advisors and Brian Hunter [pdf]

In an attempt to combat sluggish sales and declining growth, PepsiCo, the maker of Gatorade, announced that it will roll out a low-cal version of the drink later this year, aimed at “athletes who are not breaking a sweat.” (Also: people who are sitting on the couch, people who are too lazy to mix one part water with one part Gatorade, and so on and so forth). According to a recent survey of 2,500 adults by Goldman Sachs, 43% of those who dialed down their Gatorade consumption did so because of a calorie-count concern, which seems to suggest that people will go for this Not Water, Not Gatorade but Somewhere in Between hogwash. A lower-calorie version of Coca-Cola’s Powerade, released several years ago and called (The) Powerade Option (to swill sewer water) did not sell well. PepsiCo’s chairman and chief executive, Indra K. Nooyi rebuffed comparisons and said she’s confident that the “Gatorade name” will be enough to do the trick.

Full-fat Powerade, Gator’s main competitor, enjoyed double-digit volume growth in this year’s second quarter, and helped Coca-Cola to beat profit expectations. PepsiCo’s Q2 rose 13% but saw its stock fall due to declines for Gatorade.

PepsiCo closed at $66.26 yesterday, down 33 cents.

For Less-Active Athletes, a Low-Calorie Gatorade [NYT]

While researching a story on taxes on private equity last night, we came across a startling transcript of an interview in which Maria Bartiromo appears to proposition a CNBC guest for more than just his tax knowledge.

Ryan Ellis, hired gun for some tax-cut outfit, was appearing on CNBC's Closing Bell to debate taxes with the Robert McIntyre, a hired gun for a tax-hike outfit. According to the TV transcripting service TV Eyes, the debate was moving along predictably until Bartiromo interrupts with a seemingly unprovoked solicitation.

maria: ryan ellis what do you think sex.

The transcription then seems to breakdown completely.

We debated the meaning of this little bit of ungrammatical sex talk for quite a while. Was she simply asking his opinion of sex? Or was she implying that tax hikers want more taxes because they aren’t getting enough sex? We finally decided that this was a proposition, which could be more easily understood as. “Ryan Ellis. What do you think: sex?”

Then, sadly, we watched the actual video. No such proposition took place. It was just a transcription error.

And our dirty minds.

CNBC -- Closing Bell [TVEyes]

Brian Hunter has filed suit against the Federal Energy Regulatory Commission yesterday, asking a court to block the regulator from bringing an enforcement action against him. Hunter, of course, needs no introduction to regular readers of DealBreaker. But for those of you new to the site, Hunter (pictured left) is the energy trader whose positions in natural gas futures led to the collapse of Amaranth last year. We have no idea who the guy holding him up is.

Hunter claims that FERC lacks jurisdiction over trading in natural gas futures, which he says falls under the purview of the Commodity Futures Trading Commission. FERC and the CFTC have been investigating natural gas futures trading at Amaranth.

But Hunter’s boldest claim is probably that his reputation would be damaged by a FERC action.

“If FERC files the unlawful action it contemplates against me, Solengo and I will suffer irreparable injury. The ability of the Solengo Managed Funds to attract potential investors in the future is based primarily on my personal reputation as well as Solengo’s ability to qualify for certain registrations, permits, and other legal arrangements,” Hunter writes in a statement to the court.

Apparently, Hunter believes that his role in destroying Amaranth hasn’t really hurt his personal reputation all that much. But a lawsuit from FERC. How could anyone survive something that big?

Ex-Amaranth Trader Fights Regulator [Wall Street Journal]

Yes, says Fortune's Geoff Colvin. Sure, there have been people claiming Google has hit the ceiling during almost every phase of Google's unprecedented value creation ascent, but Colvin swears that Google is bound for a tumble. The reason - Google can't keep investing capital at 13% and getting 53% returns, a spread better than 99% of the Russell 3000. Google has only invested about $9 billion of capital so far but is experiencing diminishing returns, from 111% four years ago, to 82% the year after, to 53% in the last four quarters.

Colvin looks at Google's implied future economic value added (EVA, or the dollar amount by which return on capital exceeds the cost of capital) in relation to its current share price. His argument:

To live up to the expectations embedded in its current share price, Google would have to increase its EVA, which was $2.4 billion for the past four quarters, by $2 billion annually this year, next year, and every year into the future - forever. So Google's EVA next year would have to be $4.4 billion; in five years it would have to be $12.4 billion, and so on.

That's what investors are counting on when they buy Google at today's price. Are they being realistic? No, they're not. To hit that EVA target, Google would have to invest $5.1 billion every year at its recent knockout return of 52.5 percent (assuming its capital cost doesn't vary much). But you can't invest $5.1 billion every year at 52.5 percent.

Google (Nasdaq: GOOG) is down almost a half a percent in daily trading.

Don't go gaga over Google [Fortune via CNN Money]

Stevie Cohen (may be) a sell-out. Yes, the man who has made his money through a combination of massive, rapid trading in US securities and “If you tell anyone about this, I’ll end you” secrecy is considering selling upwards of 20% of SAC Capital, his $14 billion hedge fund. The Financial Times reports that the fund has been shopping stakes in its management company to a number of Asian state funds like Temasek. Or maybe it's the other way, and the Asians are asking to buy a piece of Cohen. It is unclear at the time whether SAC will sell one or two large stakes or a couple of baby stakes adding up to 20. Word is that Lehman is helping put together the deal.

SAC declined to comment. And the FT story contains all the usual verbal parachutes that it can rely on if the story turns out to be wrong. But we’ve been hearing similar rumors for the past several weeks. One source tells us that the fund may be planning an equity sale for September/October, but would likely step up its timeline if the news becomes public (i.e…now).

We'd also heard that Cohen's donation of the Damien Hirst shark tank to the Met was part of an image remake in advance of an equity offering of some sort. We dismissed this and privately decided that he just wanted to show Citadel founder Kenneth Griffin that he isn't the only one rich enough to donate small fortunes to the local art museum. Boy do we have egg on our face now.

Speaking of hedge funds and formaldehyde, the International Herald Tribune this morning anoints Hirst as a hedge fund manager: "Hirst...has gone from being an artist to being what you might call the manager of the hedge fund of Damien Hirst's art."

SAC Capital considers sale of stakes [FT]

Rivaling Yahoo Personal Finance for containing more buckets of pure insight than any other website, CareerBuilder.com wants you to be more assertive at work. After all, groundbreaking studies have shown that whiney spineless pushovers are not as successful as assertive and confident peers. Here are five major potholes in the heavily trafficked Massachusetts winter road to success, and how to overcome them (don’t go anywhere near Massachusetts in the winter), from CareerBuilder.com:

1. You Let Others' Mistakes Inconvenience You
Refuse to be inconvenienced over things like a huge bet in the opposite direction of the ABX (you’re pulling at least a couple mil from management fees!) or management hiding billions of dollars of debt and losses in dozens of questionably structured limited offshore partnerships and cashing out before the stock price tanks and cripples your pension. This bold refusal is also an important morale boosting tip for U.S. troops in Iraq.

2. You Let Others Take Credit For Your Ideas

To avoid having others steal your ideas [three words, man-sized safes], make sure you state them loudly and confidently or put them in writing. If you're at a meeting and someone proposes the same thing you've previously suggested, call attention to it by saying [“my name is Fred from accounting, you killed my original idea, prepare to die”], "Sounds like you're building on my original suggestion, and I would certainly support that [much like your face would support my fists, asshole]."

3. You Apologize Unnecessarily
It’s only natural to clench. Don’t sweat it.

4. You Work Without Breaks
Be more Spanish, not Mexican. Nothing says a top-tier review like a siesta, especially during that 18-hour banking or pork plant cleaning shift.

5. You Do Others' Work For Them
Unless it's a really, really attractive female.

Stop Being So Nice to Your Co-workers [CareerBuilder.com]

Finally, the National Pension Service (NPS) of South Korea is letting some of the bulge bracket banks into its $220 billion coffers. Morgan Stanley and Credit Suisse are the first to get a piece of the pie, although we hope they aren't that hungry. South Korea is condescending to let Morgan Stanley and Credit Suisse manage $500 million and $450 million respectively, for a whopping(ly disappointing) three years.

"Oh. Um...great. Well, thanks, I guess," said Morgan Stanley Investment Management's Asia Head, Blair Pickerell, while David Blumer, Credit Suisse's chief executive officer for asset management, reenacted the title track from Oliver! the musical ("Please, Sir, I want some more.").

Taking a note from its batty Northern neighbor, the NPS deals exclusively in five-year plans, from MarketWatch:

NPS plans to double the proportion of its offshore investment to 20% by 2012, when it expects to have assets worth KRW400 trillion, it said recently when it unveiled its 2007-2012 investment strategy. Global asset managers will manage all of its offshore investments during the period, but NPS plans to gradually increase its direct offshore investment after that. It also targets to further increase its international investment allocation to 50% sometime around 2040, when NPS's assets are forecast to reach KRW2,600 trillion.

NPS does plan on throwing scraps to some other major banks to manage funds in the future, although it's several five-year plans away.

Morgan Stanley, Credit Suisse to manage Korean national pension assets [MarketWatch via DealBook]

Facebook is now ripping people away from Google. Gideon Yu, YouTube's former finance chief, has joined the social networking site as CFO, replacing Mike Sheridan, who will be summarily executed.

Yu's career path is a microcosm of the flow of Tech company buzz. Yu was the treasurer at Yahoo, then joined YouTube to help negotiate the $1.7 billion sale to Google. Yu stuck around at Google, turning down plans to become a partner at VC bastion Sequoia Capital. Not one to be confused with a loyal employee, Yu's made all these moves in the past year. While crossing his fingers behind his back, Yu commented, "I'm hoping this is my last job for a long time."

Mark Zuckerberg is fully aware of the implications of nabbing Yu, and is quoted in the Journal, saying "I consider it kind of a coup that we were able to recruit him here." Zucks affirmed the notion that he is not looking to sell facebook, dress like a grown-up, or IPO anytime soon, however people in the loop believe that facebook is on a 2 year IPO time table if it doesn't get scooped up.

Facebook Hires Yu as Finance Chief [Wall Street Journal]

We read this on CNBC's website so it must be true, right? Under the headline "FINALLY, WEDDING BELLS FOR BECKY QUICK?" Jane Wells brings us the report about speculation that "while CNBC's Becky Quick on assignment in China, followed Boone Pickens around, they got married: 'The CNBC co-anchor will go by her new name, Becky Quick-Pickens.'"

We ran this story by a squad of young women who toil away as Fashionistas in our offices. They're initial reaction: Jane Wells might be out to tear Quick down. It's all in the subtleties, they explained.

"I know it's a joke but it's the edges that cut. Asking whether wedding bells rang for Quick is one thing," a top Fashionista said. "Asking if they finally rang for Becky is just hateful. Also, calling her 'quick-pickens' is a bit like calling her 'fast-n-easy."

Neither Quick or Wells could be reached for comment because we couldn't bring ourselves to ask about this stuff.

Finally, Wedding Bells For Becky Quick? [CNBC.com]

Loonie jumps on 'blowout' (Canada.com)
Ugh, the Canadian dollar is now within spitting distance of the US dollar. When the two finally switch places, it's going to be so embarrassing that people will thank the stars that their dead relatives aren't alive to see this day. As if Canadians don't already have enough to be smug about.

Paulson Says U.S. Hurt by High Tax Rates (NYT)
Hank Paulson is expected to lay out a major critique of the US corporate tax system, citing the high rate of taxes as well as its complexity. A number of recent studies have pointed out that compared to the rest of the world, the US tax climate is not particularly business friendly. That being said, the real culprit would seem to be the complexity rather than the nominal rate itself. Troll through some 10qs and you'll realize that big, complex multinationals have all kinds of mechanisms for avoiding taxes, whereas your small or medium sized business that doesn't have a corporate structure like a Russian doll typically has to pay the piper in full. Pretty obvious that all that talk about wanting small businesses to succeed is just political nonsense.

A bully exposed (Houston's Clear Thinkers)
Funny that we'd link to a Houston-based blogger for a story on Eliot Spitzer, but it there's nobody who knows more about the 'bully' that New Yorkers now call Governor than Tom Kirkendall, an expert on the criminalization of business, et. al. Suffice to say, we don't think this embarrassment could've happened to a nicer guy. Meanwhile, another 'Breaker fav, Professor Bainbridge, whips out fitting Nixon comparisons.

Mozilo’s Perfect Storm (Paper Money Blog)
In case you missed it, here's what the head of Countrywide said yesterday to tank the market: "I do think it’s important to observe what happens going forward because we are experiencing home price depreciation almost like never before with the exception of the Great Depression and so I think using standards or frames of reference on prime and the performance of prime in other environments may not be a fair comparison in light of what’s happening to real estate values.” Zing!

Many popular websites are unavailable at the moment. CNet was temporarily unavailable. Craigslist, LiveJournal and Typepad are all currently unavailable. Ebay is reportedly slow. We’re hearing that a large internet service provider in San Francisco has lost power, and taken down the websites with it.

Netflix is also down due to an unrelated problem. Apparently its stock price sunk so low it pulled its internet connection down with it.

What else has gone down? If you encounter a website that seems to have been affected, please leave the information in the comments section below.

Update: O'Reilly Radar confirms.

Update II: NBC is reporting power outages in San Francisco. "Some 51,000 customers throughout San Francisco are without power Tuesday afternoon, according to a Pacific Gas and Electric Co. spokeswoman."

Update III: Feeling bad about the internet troubles from San Francisco? Well, at least it's not as bad as the video after the jump.

Update IV: We're told that the internet problems began when "a car crashed into a pole that carries the power line to [the internet hub known as] 365 main, which houses craigslist, typepad, red envelope..." Developing.

$$$ Deals: Private Equity Takes a Breather
In our M&A Roundup for the week ending July 22, a relative lull results from the dearth of LBOs in the top 10. [CFO.com]

$$$ Investment banking wizardry [theallnighter]

$$$ Morgan unit ranked last in customer satisfaction [New York Business]

$$$ Hedgies live/buy stuff in Greenwich. [WWD]

$$$ Here's a revolutionary idea: don't put your street address, building and apartment # on your FaceBook profile! [Freakonomics]

$$$ CNBC: not so good on the geo. [big city small world]

$$$ Bankers: Actually Terrible Dressers [Banker's Ball]

The latest round of robber barons are engaged in full-throttle PR campaigns to convince the public that "they love what they do." It's one of the most common statements thrown around in the increasingly cushy human-interest pieces we have to digest on these guys. Statements like "I've never worked a day in my life," "I'm so passionate about doing deals," and "It's just a strap-on," flow incessantly from these modern day martyrs. Did anyone read the (it seemed longer than) 10,000 word piece on Zuckerman in the New Yorker? I was convinced Western Civ hinged on this guy's recycled jokes after a while.

Wall Street Journal's Wealth Report probes the billionaire mantra with a bit of skepticism, culminating in the asshatdom of Ken Griffin. From the Wealth Report:

Ken Griffin, the “passionate” hedge fund manager makes a telling remark in the Times article. When he’s asked about raising taxes on the rich, Mr. Griffin says that if his taxes are raised, he would lose some of his incentive and ” I would not be working this hard” So what is really motivating today’s rich? The passion or the money?

We know you can never completely dissociate a job from what it gets you in society, and we're sure there are a lot of people who genuinely like finance. Judging the extent of how "passionate" a financial professional is, however, is a valid question. No one makes as much $$, so no other field is as conspicuously tied to its positive socioeconomic effects as finance.

We used to get into the debate in the bullpen over whether we'd be doing something other than finance if it paid as well, or was treated like banking during the critical end of college crossroads (you remember, that point at which, at least in some colleges, they make it seem like if you don't get a finance job, you've lost at life and should consider prompt alternatives to existing).

Is a "passion for corporate finance" as self-delusional of a notion as the harshest cynic would suggest, or are most finance types actually passionate about what they do? If you could be a teacher and make as much as an investment banker, would you be a teacher? Likewise if a banker made a teacher's salary, would you still be a banker?

Our own theory is that the self-proclaimed passion for finance is (mostly) derivative. How many college seniors are elbowing each other trying to study markets in academia opposed to going to that Goldman informational presentation? The "passion" springs from a competitive desire to "win," judged by society's current scorecard, which is $$$. People are competitive, everyone has a different utility curve, winning has its benefits, and the risk/reward profile works out for some such that a couple years (or 20) of agony are more than worth it.

Here is DealBreaker's effort to engage in some Rawlsian exercise in career choice: what career would you choose under a veil of ignorance as to that career's effects on your status and bank account? Let's hear those Kindergarten pipe dreams, people, and answer the following poll:

Getting Rich By Doing What You Love [Wealth Report]

After the monumental IPO last month, Blackstone Group may already be an appealing target for private equity, Slate columnist Daniel Gross suggests.

What makes a good target? Slumping stock, healthy margins, lots of cash, valuable brand name, manageable debt, liability in public ownership. Check, check, check, check, check, check.

There's a final bonus to Blackstone taking Blackstone private. Buyout firms pay substantial fees to the investment bankers who steer them toward targets, and help structure, and negotiate deals. Blackstone, of course, has a well-regarded financial advisory unit. So, Blackstone's partners could essentially pay themselves for advising themselves to take Blackstone private.

Before the IPO, Institutional Investor predicted a Blackstone reprivatization in 2012, but with stock down 25% since June, this may be a conservative estimate. BX is trading down 1.75% today at $25.91.

Blackstone, Meet Blackstone [Slate]

Hedge fund managers short on decent shorts [Citywire]

Earlier on DealBreaker: Let Me Ask You Something

SBux will increase prices on coffee, frappuccinos, vanilla bullshit latte cappa things and other drinks by an average of 9 cents per cup* starting next week. Starbucks claims the move is necessary to help offset the “soaring costs” of milk and other commodities.

Morningstar analyst John Owens said that “There will probably be some grumblings initially, but at the end of the day, I think people aren’t going to change their pattern of buying,” because we are lazy, caffeine-addicted sheep (I’m on #4, how ‘bout you?).

The increase—the second in less than a year, following October’s 5 cent/drink bump—effectively levels the price of a grande beverage to that of a gram of blow, the latter of which you don’t have to wait for on some ungodly long line. We’re not saying, we’re just saying.

Shares of Starbucks are up 15 cents to $28.31.

Starbucks raising U.S. drinks prices next week [Reuters]

*Listen, people. We get that it’s a negligible increase. But we’ve got to draw the line somewhere. Ours will be at $8.50, which is extremely generous considering that we get iced coffee, and, as everyone knows, the iced drinks are where the ‘Buck screws you. What's your limit?

Citi is no longer the world's largest bank in terms of market cap. When Asian markets closed yesterday the Industrial & Commercial Bank of China (ICBC) was $3 billion ahead of Citi's market cap of $251 billion.

The main reason for Citi's dethronement is ICBC's 15% share price surge this month, compared with Citi's relatively flat stock. Investor exuberance has propped the Chinese bank up despite that fact that state controlled ICBC generates less than a third of the income Citi does. Last year, ICBC posted net income of $24 billion last year compared to Citi's $90 billion. Investors value ICBC's stock at 28 times projected earnings per share, opposed to Citi's below market 11x P/E ratio. The global average for major banks is 16x P/E.

Will Citi regain its crown?

The Yeas (BusinessWeek) contend that Citi's M&A business is right up there these days with Goldman, Morgan Stanley and JPMorgan. Citi now commands 27% of global M&A business, in line with the white shoes on the Street.

The Nays (everyone else) maintain that the solidification in its M&A unit doesn't disguise the fact that Citi is a relatively bloated, poorly run (according to Jim Cramer) behemoth of an institution that dropped the ball on hedge funds, private equity and prop trading, three of the fastest growing sources of bank revenue. When it comes to enterprise market share, as calculated by the Competing for Customers and Capital blog, Citi has lost the vast majority of market share that other banks have gained in recent months.

Next stop, HSBC, in 3rd place with a $215 billion market cap.

ICBC tops Citigroup as largest bank [ReportonBusiness.com]
Citigroup Enterprise Marketing Expenses: The Middle Line [Competing for Customers and Capital]
How Citi Fixed Its M&A Business [BusinessWeek]

Apple’s earning report won’t be out ‘til Wednesday, but thanks to AT&T’s, we now know the iPhone’s first 30 hours in existence were an iFailure. The wireless carrier reported 146,000 activations during the mobile’s first weekend on sale, meaning the iPod/cell phone combo didn’t come close to Piper Jaffray’s expectation of 500,000. PJ analyst Gene Munster he was “disappointed” by the news, which is so much worse than if he'd said he was mad.

CIBC reported a “significant” decline in babe mags over the last ten days. They also anticipate a new version of the 3G to be released in the US in November, earlier than previously expected. That could mean the people Jobs ‘n Co. are banking on buying a phone today will stop, remember that buying first generation Apple products is more risky than unprotected sex with a Port Authority local, put off their purchases ‘til the new version is released, and stall sales even further.

Shares of Apple are down -2.73% ($3.95). In other news, people buy Apple products at the Apple store.

Apple's iPhone Falls Well Below Expectations [CNBC]

Anyone else catch the article from today’s Journal about the invasion of instant messenger in the workplace? It was in a new pull-out section called "We think you’re dumb. And considering that this is a newspaper, and you can’t leave comments, you’re really in no position to prove us wrong."

Ohbabyitsbess: hey…when you’re back from your abs class, I have a ?

UKKeith14: yo, I’m here, took the early morning one, my obliques are BURNING

Ohbabyitsbess: cool, you can eat without punishing yourself today! Anygay…my ? is this—when you were at JP Morgan, did you use IM much?

Ohbabyitsbess: like, as in, instant messenger? IM?

UKKeith14: que?

Ohbabyitsbess: what we’re doing right now…?

UKKeith14: what’s instant messenger?

Ohbabyitbess: Instant-messaging programs allow users to organize contacts into "buddy lists" and see who is online and available to chat at any given moment, world-wide. With most IM programs, users can start real-time conversations with one or more contacts, including multiple participants simultaneously. Sending a message opens up small windows on the participants' screens where users can type their chats. Most programs also offer file-sharing, voice and video features. IM can be used on computers and on wireless devices like cellphones. Many employees use popular consumer-level IM applications, such as AOL Instant Messenger and Yahoo Messenger.

UKKeith14: I’m not following...wait, let me grab a protein shake

Ohbabyitsbess: ok...say you had a bar chart that was the wrong color scheme and needed to make things right. if you had to rely on email and phone to fix the problem, it would've taken several weeks, as opposed to just IMing your associate and getting R'd real time instead of going back and forth with mark-ups, and you could rectify things w/in the hour.

UKKeith14: oh. we had an in-house program to do that.

Ohbabyitsbess: ok but if you didn't. you could just do it on IM

UKKeith14: what's IM

Ohbabyitsbess: what we're talking on right now

UKKeith14: what are we talking on right now

Ohbabyitsbess: Instant-messaging programs allow users to organize contacts into "buddy lists" and see who is online and available to chat at any given moment, world-wide. With most IM programs, users can start real-time conversations with one or more contacts, including multiple participants simultaneously. Sending a message opens up small windows on the participants' screens where users can type their chats. Most programs also offer file-sharing, voice and video features. IM can be used on computers and on wireless devices like cellphones. Many employees use popular consumer-level IM applications, such as AOL Instant Messenger and Yahoo Messenger.

UKKeith14: ok, but what's the diff between email and IM?

Ohbabyitsbess: Unlike email, instant messaging offers "presence" -- a snapshot of which colleagues are available at a given moment, world-wide. Together with allied Internet technologies such as blogs and wikis, it is "changing the way people collaborate," says Andrew McAfee, an associate professor at Harvard Business School. Companies "increasingly react to situations and problems on the fly, not solely by hierarchy," he says.

Jfcarney has invited you to Thirty, Flirty and Dirty

Jfcarney: guys

Jfcarney: GUYS

Jfcarney: I’ve brought you here to discuss 2 things- 1. Lindsay Lohan’s second DUI and b. what I believe will be today’s answer to the Crash of ’29. I’m about to move into my safe zone where I’ve stock piled bottles of water, but, unfortunately, don’t get much wireless. So this is goodbye for now, possibly forever.

Instant Messaging Invades the Office [WSJ]

The Princeton Review in $60 million richer, thanks to a capital infusion from Bain Capital and Prides Capital. The two firms will get accruing preferred stock convertible into common at $6 a share.

The deal also brings a management shuffling. Princeton Review founder John Katzman will step down as CEO but remain executive chairman, making way for former Learning Company CEO Michael Perik.

With $60 million, Princeton Review is free to keep pressuring ETS to add sections to the already bloated 'out of 2400' SAT, making the test even more dependent on prep courses. Everybody (i.e. - rich white people, a few Asians) wins.

Princeton Review Reaps $60 Million, New C.E.O. [DealBook]

Last month, the SEC put up links on its website to every company filing that mentions business conducted with the U.S. designated "State Sponsors of Terrorism," or Cuba, Iran, North Korea, Sudan and Syria. We covered it here. The most common "offenders" were banks, consumer products companies, natural resource companies and Nokia.

There were even five companies linked to business in North Korea: Biotech Holdings Ltd, China Yuchai International Ltd, Credit Suisse Group Ltd, HSBC Holdings PLC and Siemens Aktiengesellschaft (Gesundheit).

Last week, Barney Frank, Chair of the House Committee on Financial Services dissed the SEC Terror Tool, and SEC Chairman Chris Cox took the thing down on Friday. Here's an overview of the official SEC statement, from the AAO Weblog:

On Friday, the SEC took the tool away from investors [you can take the tool out of the investor, but you can't take the investor out of the tool]. According to a statement by Chairman Christopher Cox, it will return [more powerful than you can ever imagine] with more up-to-date information [and a different colored light saber]. That carries the implication that the tool will corral information [and livestock] from 10-Qs as well as 10-Ks. (The original tool extracted data from only 10-Ks.) Cox also hinted that [he might be going commando] the tool might evolve into an XBRL project [the bonobo of projects] - and that “the Commission staff will also consider whether to recommend a Concept Release on the question of how best to make public company disclosure of activities in terrorist states more accessible [a new thrill ride]. The release would solicit public comment in a formal way [leave a card in the SEC comment box on the way out], so that the Commission could ensure that all legitimate concerns can be met [if Applebees and IHOP merge, do the terrorists win?] while providing better access to company disclosures on these topics [the last three sentences don't mean anything].”

Basically, in a mess of gloriously fuzzy obfuscation, the tool has been shelved. It doesn't make much sense that the existing site had to be completely eliminated on an interim basis. Even if Frank thought that the site was inaccurate, it did point to the actual segments of company filings that mentioned the designated countries. We're thinking maybe a simple disclaimer would have sufficed - "Just because Nokia is the mobile carrier of choice for terrorists doesn't mean that you shouldn't buy a new Nokia N75."

The SEC Pulls Its “Terrorism Tool” [The AAO Weblog]

Any women, minorities, Jews or otherwise handicapped people looking for work at a bulge-bracket bank? Might we suggest Merrill Lynch, where a NASD arbitration panel recently ordered the bank to pay Fariborz Todd Zojaji $1.6 million for firing him over the issue of being Persian? In addition to “sending [the Iranian broker] to a corner to eventually be terminated,” the panel stated that Merrill defamed Zojaji on public record (his Form U5), destroying “claimant’s ability to become employed in the securities industry."

Mark Herr, a spokesman for the Lynchettes said that the bank “regretted the panel didn’t view the evidence in the same light we did,” which is surprising, considering Merrill had registered with the Prejudice? That’s Cool, Whatever panel of arbitration.

This is the second time in a month ML has been caught with its hand in the cookie jar of Iranian hate. On June 27, the bank was sued by the Equal Employement Opportunity Commission for firing Majid Borumand, an analyst with the firm’s global markets and investment banking model development group.

You’ve actually got to hand it to the O’Neals. Where some banks might say, “You know what? We’ve been getting kind of a reputation for condoning sexual harassment and bigotry, maybe we should cool it on the hate for a bit, you know, just dial it down for the time being,” Merrill said, “No, if anything, let’s take it up a few notches and really call attention to ourselves. We’re going to make it work for us.” Next up: a writing utensil sex suit of our very own!

Fired Iranian broker wins $1.6M from Merrill [AP via International Herald Tribune]
U.S. Sues Merrill on Treatment of Muslim Analyst [DealBook]

GM's Allison Hits a Financing Snag (WSJ)
So, like, money really isn't cheap anymore. Yet another plan, this time the pending LBO of GM's Allison Transmission unit, has hid a snag, as the buyer has been delayed in getting financing. At the moment, the deal is just delayed, and it's expected that it will go through without too much of a delay. But it's yet another sign that it's no longer so easy to just walk into the Money Store, er, money store, and walk out with a fat loan. And people wonder why shares of Blackstone aren't doing so hot.

Expedia slashes buyback plan over debt concerns (Bloomberg)
And in more news, the cost of debt matters to buybacks too. Yesterday, online travel site Expedia announced that it would suspend share buyback plans, citing the rising cost of debt, which it had been using to fund the buybacks. Seeing as buybacks have been a driver of at least some of this bull market, this might be taken as bad news. There's a plus side though -- buybacks aren't always a good thing. In fact, buybacks near the top of a bull market are a total waste of money. So if we're anywhere near the market's highs, then the debt market is sending an important signal to slow down.

UAW talks start with GM, Ford (AP)
Finally, the union and the automakers are set to bury the hatchet. After years and years of a contentious relationship, which has seen both sides accuse the other of undermining, the parties are finally set to break bread, speak honestly and resolve their differences. It's about time. The US automakers have enough to be worried without having to think about labor issues.

Oil prices slide on Opec remarks (BBC)
Oil buyers will receive a temporary, moderate reprieve, as an OPEC minister has indicated that the cartel may be inclined to increase production, if only by a smidgen. But, when your thirsty a smidgen is better than nothing. Heck, even if the extra oil were a mirage or an illusion, it might be temporarily satisfactory. The minister is quotes as saying that a fair price for a barrel might be between $60-$65, although he added that current supplies should be adequate.

$$$We keep thinking this looks like someone but we can't quite figure it out. Some help in comments, please.

$$$ London vs. New York [Fortune]

$$$ For your Lindsay Campbell craving. [Seasonique]

$$$ Unanswered Questions at Bear Stearns [Portfolio]

$$$ I am a clean cut successful rock & roll banker looking for mother & daughter, pleasures of the flesh [Craigslist]

Why are you people still putting your money in hedge funds? Investors dumped $58.7 billion in new money into funds that are hedged during the second quarter, moving total HF assets to $1.74 trillion. Funds of hedge funds also hit a new asset-level record, adding $17.4 billion to hit $745 billion. Can you not smell the rotting carcasses of over leveraged hedge funds heavily invested in CDOs? Anyone care that you can save yourself the hassle of picking a top quartile fund, invest in an S&P fund and make as much if not more money? No? Okay. Just don’t come crying to us when you’re in trubs. (But please, send us tips about it. tips at dealbreaker dot com).

Hedge Funds Have 2nd Best Fundraising Quarter [FINalternatives]

We dazzle you with our radiant erudition every day, but now Dealbreaker reader, it is your turn. We are looking to compile a firm canon of Wall Street literature and in the spirit of blogspheric democracy, we’re taking your suggestions. Please give us the classics, your favorites, must-reads, oldy-but-goodies, contemporary standouts, whatever you would anthologize in the Dealbreaker Authoritative Compendium of Business and Wall Street Literature. What makes a canonical Wall Street text? Prescient insight? Elegant prose? Amusing Anecdotes? You decide!

We will review the suggestions and compile the canon in good time.

Let’s see what two guys (Kurt Andersen and a friend, who asked requested his name be withheld) had to say about the matter:

* Guy New York contributor Kurt Andersen knows who works around private equity “snarls” when he says the name “Steve,” and “blames the current anti-private-equity spasm not on whiny anti-business liberals, but on Steve Schwarzman”

* “The fucking birthday party” (attribution to same “guy”)

* “Where no one gave a toast, by the way, not one” (same party, same guy)

* “We’re where we are right now because of the unbelievable egos of guys running the private-equity firms like Blackstone. They put big targets on their backs by what I consider stupid actions like throwing these big parties.” (same party, different guy—head of the National Venture Capital Association)

* “Ostentatious, churlish, megalomaniacal, tone-deaf—and a hypocritical dissembler to boot.” (Andersen, in cahoots with “guy”)

James Bonomo (pictured), a former paper sales manager for Mitsubishi and proud gay Italian-American, is suing his former employer for events that transpired during a business trip to China.

The night's events, according to Bonomo:

1. Bonomo and his Tokyo-based boss, Tetsuya Furuichi go to Beijing.
2. The dynamic duo meets with a China Mitsubishi exec and a potential customer for dinner.
3. The dinner party goes to a karaoke bar and gets sloshed, with special attention to fueling Bonomo's drunkenness.
4. Everyone decides to go for "a non-sexual massage" at a bathhouse. Furuichi comments that Italian-Americans have penises that hang down to their knees. Furuichi continues to harp on the subject of large, Italian-American schlongs.
5. Yue Zhibo, a colleague from China, takes a picture of Bonomo's penis on his cell phone and shows it to everyone. Furuichi comments that it looks like an Italian sausage.
6. Zhibo refuses to delete the picture, despite Bonomo's pleas.
7. Bonomo returns to an abusive and hostile environment at work, with inflated sales targets designed to force him out.
8. Bonomo quits and files a lawsuit.

The night's events according to Mitsubishi:

1. Everyone goes to China and stays in their hotel rooms and watches "Kung Fu Hustle."
2. A one-armed man was spotted at the bathhouse in question.
3. Bonomo was on the grassy knoll.

A Mitsubishi spokesperson asserts that everyone else on the trip (who works for Mitsubishi) denies Bonomo's claims and that Bonomo never filed a complaint before he left the company.

Does anyone have any good (or similar) Asian business trip stories? Have any of your superiors ever tried to lull you into a bathhouse after karaoke?

FIRED EXEC'S 'BEEF' [New York Post]

Although Gary Weiss has been on to him months, Overstock CEO Patrick Byrne admitted to “pulling a Mackey” last night, writing on the Overstock website that, like Whole Foods CEO John “Rahodeb” Mackey, he posted on company-related message boards pseudonymously.

Byrne’s admission comes in response to this New York Times article, where he told reporters that unlike Mackey, “he never hides his true identity and always signs his name when he posts under his online handle, ‘Hannibal.’” But it appears that Byrne has occasionally let the sobriquet stand alone. Last night, Byrne wrote in an open letter to Times reporter Brad Stone,

Please provide a citation for this claim: "Mr. Byrne said that he never hides his true identity and always signs his name when he posts under his online handle, 'Hannibal'". Is it your claim that I used the words "always" and "never" in some message board post (and if so, please cite that post), or is it your claim that I stated this in our interview? I know for a fact that the claim is false as regards our interview, and believe it to be false with regard to any online posting, but I stand ready to be corrected.

Just how prevalent is this anonymous executive posting phenomena? If you frequent these boards, please share every suspicious nom de plum you come across. Be particularly wary of anagrammed names of an executive’s mother, sister, wife or daughter, famous military commanders and Republican presidents.

Overstock.com CEO Patrick Byrne Admits He Posted Under Pseudonyms [Gary Weiss]
Take 5 With Patrick [Overstock.com]

Morgan Stanley has taken an internal study over the cost of debt and done some basic math so you don't have to. The study figures that stock market corrections occur about six months after the cost of debt begins to increase. Since spreads began to widen in February, Morgan Stanley thinks that (let's see, take the 2, add the 6, carry the 1, integrate by parts... and yup, 8) August could see a 14% market correction, or 2,000 points off the Dow.

Historically, equity markets take a while to pick up on the bad market omens created by higher rates and wider spreads. The eerie similarities between now and the last bubble burst, from the Telegraph:

The current pattern looks similar to the relentless rise in spreads from February to September 2000 when the stock markets finally tipped over... the iTraxx Crossover index measuring risk appetite for high-yield bonds touched bottom at around 170 in February. It has since jumped to 320 - mostly this month - implying a 150 basis point rise in the cost of raising capital.

Morgan Stanley's internal Cassandras think the correction could begin with the unwinding of the yen carry trade in Japan, significantly impacting global liquidity. The Bank of Japan is expected to raise rates in August.

Morgan Stanley Predicts Correction [DealBook]
Morgan Stanley predicting correction [Telegraph]

Wouldn't it be hilarious if your pension* was worth nothing? If all your money had been invested y lost in hedge funds? If you had to work 'til you were 432? Pension Governance, LLC certainly thinks so. The pension research and advisory firm penned a ballad about what's up in pension land called "Pension Tension Blues," even setting the words to music. Then they circulated it to the media. The lyrics (and "sing-along" link) are after the jump, but first, this: if you're a big enough idiot to hire these idiots to do whatever it is that they do, you deserve whatever you have coming.

*More hilarious would be anyone in the DealBreaker audience actually having a pension.

It would probably be more cost effective to just ask everyone not miffed with Bear Stearns to raise his/her hand but we can't fit that many people into an auditorium so we'll just continue to re-report it here. Barclays PLC is getting litigious over what may be a $400 million loss from investments in the little hedge fund that couldn't. BarNloungeclays played a few roles in the meltdown of the hedge fund doomed to fail the second it was christened with a 12-- TWELVE-- word (and one hyphen) name. The Nazi sympathizers lent the Bear Stearns Asset Management High-Grade Structured Credit Strategies Enhanced Leverage Fund $200 million, which was paid off, and offered an additional $250 million, which was never extended. At issue is 400 mill. invested in the fund separately from the loan. BarNloungeclays is considering a negotiated settlement or litigation.

Scott A. Meyers, who represents clients invested in the BS hedge funds, told the Journal, "I would be astounded if there weren't lawsuits, given the magnitude and speed of the collapse," and the tendency of human beings to get their panties in a bunch when they lose money. "The fundamental
issue will be what caused the collapse," Meyers said, "a general market event, something specific to the way these funds were managed"--like James Cayne golfing during business hours--"or some combination of the two."

Barclays may sue to recover losses at Bear Stearns [MarketWatch]
Barclays Spars Over Its Losses at Bear Stearns [WSJ]

***UPDATE: Cumulus Media's $1.3 billion buyout offer from an investor group consisting of the company's CEO and Merrill PE peeps has sent shares (Nasdaq: CMLS) up over 30% and shares in the rest of the radio sector soaring. Cox is by far the greatest residual radio beneficiary, however, without necessarily the strongest fundamentals, leading one to think that something might be up.***

A reader tipped us off to the following - why on earth is Cox so huge this morning? Cox Radio (NYSE: CXR) is up over 9% on no available public information. The last major thing that happened to Cox is a BBB- Fitch rating and "positive" outlook a week and a half ago. The company is expected to release earnings on August 1.

Any insider traders want to throw us some scraps? Comment or tips at dealbreaker.com.

Cox Radio Climbs Above 50-Day Moving Average [TradingMarkets.com]
UPDATE: Cumulus Media In Pact For Sale To Investor Group [Dow Jones via CNN Money]

Off to a slow start here this morning because of the rain in New York City. We had to wait for our interwebs to dry out. (Just like Alphaville, the deal blog at Financial Times, which has reportedly had trouble due to the flooding in England. Unless that's just Brit-speak for, uhm, one too many pints on Sunday night.)

But it’s back to business now. And by “business” we mean, of course, the saga of Rupert Murdoch, the Bancroft family and the Wall Street Journal.

One of the things we’re sure has been absolutely frustrating to anyone who has been following the endless tape of this story has been the complete lack of information about which members of the Bancroft family and its representatives control exactly which shares and which percentage of the votes. It was only at the middle of last week that we learned that Michael Elefante, the partner at the Boston law firm Hemenway & Barnes who is a trustee for two of the largest trusts holding shares for the family, can deliver a little less than half of the family's 64% voting stake. Let’s call that 30% of the total voting power of the company.

Today the New York Times reports that the leader of the opposition to Murdoch within the family, Christopher Bancroft, controls around 14.5 percent of the total Dow Jones shareholder vote as of January. And his cousin, Jane Cox MacElree, is running around with 14.8 percent. (Apparently no-one else has more than 4.3%.) But you have to read a bit between the lines of the Times—too often the stuff we really want to know apparently isn’t “fit to print”—to understand why they spend so much time talking about Chris and so little talking about Jane. It’s because Jane isn’t really involved with the Dow Jones stuff, and leaves the decision making to Chris. So you can count her shares as shares controlled by Chris. That gives him around a little more than 30% of the voting power of the company, or about what Elephante controls. To that you can add the “Never Murdoch” shares controlled by the Ottaway family to come up with a 36% opposed number.

In short, going into today’s big Boston Bancroft powwow, Murdoch is a bit behind. Probably at least 36% of the voting power of Dow Jones opposes him. He’s got 30% on his side. But Murdoch has a secret weapon: the 30% or so of the voting power vesting in shares that were once held by the general public and are now held by stock arbitrageurs, the Bancrofts, the Ottaways and a few people who aren’t paying any attention. Most of those shares will vote his way. To play it safe, let’s put that pro-Murdoch number at around 25%.

Which gives Murdoch right around 55% of the voting power of the company. Since he only needs 51%, that means he wins. But it’s close. And since we’ve been guestimating at a few of the crucial numbers, it’s possible that it’s even closer than this. If the numbers are shifted a couple points in the only direction—say, Elefante only has around 28% of the vote in his pocket and only 22% votes held by common shareholders go for Murdoch, he’s down to a losing 50%.

Which leaves us at the exciting possibility that we may be entering the rare situation where a very few amount of votes—perhaps those held by a small shareholder who doesn’t even remember he has the shares in his account (or his attic)—could swing the voting. In short, the Bancrofts may be meeting in Boston in 2008. But the voting may well be in Florida, 2000 territory.

A Family Meets Today to Hear the Complexities of a Bid for Dow Jones [New York Times]
Bancrofts To Consider Murdoch Bid, ‘Close Vote' Predicted [New York Sun]
Know Your Bancrofts [New York Magazine]

Why do companies keep lowballing facebook? Zucks can't figure it out. He's got the lofty, world-changing rhetoric and strangely consistent fashion sense down (one man's black turtleneck is another man's sandals). You would figure that the ridiculous offers should just fall in line with the expectations of the VC investors that have chugged the most Kool-Aid. Simple market bubble physics 101.

Unfortunately for paper coffers in Silicon Valley, it seems potential acquirers only want to pay a 20x revenue multiple for facebook, opposed to the 60x+ multiple the company wants. Insiders like initial investor Peter Thiel think the company is worth $7-10 billion, which would give Zucks a nice $2-3 billion to buy sandals with. Viacom recently valued facebook at $3 billion. The discrepancy will most likely force facebook to stay single until an IPO.

Facebook is expected to make $150 million this year (you read that correctly). With the addition of well marketed widgets and rapid tween growth, revenue is sure to surge to several billion dollars next year (says the irrational bubble buyer of old), or at least a couple hundred million bucks in the real world. That's less than $4 per user. Getting a certificate for the purchase of 30 million un-monetized eyes (with notoriously low ad response rates) isn't as satisfying as getting an actual revenue stream, and tweens have fickle loyalties.

Facebook to remain swinging single [The Deal via DealBook]

Happy Monday! Halliburton’s Q2 net income more than doubled from last year. If that doesn't get you going, I don't know what will. The non-profit reported net income of $1.53 billion ($1.62/share), up from 2006’s second quarter of $591 million (55 cents/share). The gain was due in large part to the April spinoff of KBR Inc, which generated a $933 million gain. Earnings from continuing operations in Iraq rose 19% (63 cents/share) and revenue shot up 20% to $3.74 billion, particularly from work in the Eastern Hemisphere.

The Bush administration said that in addition to the auspicious foresight that that opposite of successes in the Middle East would pick up speed this year, and it would be convenient to have a headquarters in Dubai, “well stimulation” proved profitable. Chief Executive Dave Lesar noted that well stimulations in the U.S. were a record for Halliburton last month. The last time Lesar felt so good was when he was (prematurely) told ‘Burton had won the contract to rebuild ground zero.

The one disappointment for the company was Canada, where Halliburton’s operations suffered in the second quarter by a "significant decline in activity and the spring breakup season." In order to drum up business up top, Bushie etc are planning on pulling out of Iraq and leaving a trail of falafel to Quebec so as to bait the enemy into invading Big C (i.e. getting “them” to “fight us” “over here” but not “here, here,” just “north of here”), which will in turn spawn a cornucopia of contracts for Hallie and pave Giuliani’s path to the White House and blow your mind with the ingenuity of it all.

Halliburton Quarterly Operating Profit Rises, Tops Street View [CNBC]
Halliburton's Net More Than Doubles [WSJ]

The latest Harry Potter book is the fastest selling book in U.S. history, with publisher Scholastic estimating that the title sold 8.3 million copies over the weekend since the 12:01am Saturday release. Major retailers Borders, Barnes & Noble and Amazon all sold over 1 million copies and many book retailers offered discounts on the $34.99 cover price to charge additional purchases (translation - please read something else... we'll settle for the trivia on the back of our coffee cups, which is more literary than Rowling's prose).

It seems that the wild Potter sales expectations were mostly priced into Scholastic's (Nasdaq:SCHL) stock, up over 1% in daily trading, but down over 3% in the last week since the Company released earnings.

***SPOILER ALERT***

As for who dies in the book - the answer is publishing. Scholastic posted slight revenue and net income gains for the quarter, but declining revenue and profit for the fiscal year, suggesting that even Harry Potter can't save the publishing sector.

Harry Potter and the Magical Coattails [Wall Street Journal]

TomTom to buy map supplier Tele Atlas for $2.5 bln (Reuters)
Dutch navigation firm Tom Tom announced the purchase of Tele Atlas, a supplier of maps. This acquisition is personally meaningful to us, because the other day we were walking, and an orange Tele Atlas van with 360 degrees worth of cameras mounted on top of it drove right by us. It appeared as though it was doing something similar to Google's Street View. So, Tele Atlas has a picture of us walking in Brooklyn, which is an image that will now be owned by Tom Tom.

Dubai Offers $2.1 Billion for Auckland Airport Stake (Bloomberg)
Dubai continues to buy anything it can get its hands on, left and right, here and there, from banks to real estate and now a controlling interest in the main Auckland Airport in New Zealand. This is the beauty of oil money. Sure, it flows from all over the world into the hands of some lucky few, but then they have to spend it and everyone gets it back. The only catch is that you have to part with critical chunks of your national infrastructure, like a national airport or a water system. Meanwhile, check out the picture of the CEO of the Dubai Aerospace Enterprise. That's one intense dude.

Cerberus to buy United Rentals for $4 billion (Reuters)
Here's your obligatory Monday private equity deal. This time its equipment rental firm United Rentals, which will sell out to Cerberus for $4 billion, a mere 6.6% premium over its Friday closing price. Of course, United Rentals announced a few weeks ago that it was seeking "alternatives" to its existing structure, so much of the actual premium was already baked in. All in all, seems pretty typical.

A Family Meets Today to Hear the Complexities of a Bid for Dow Jones (NYT)
Just in case you somehow forgot, the Bancrofts are having a family reunion today, where, among other things, they'll be discussing a bid for Dow Jones made by some Australian ex-pat. Just out of curiosity, do you think that the Bancrofts are the type of family to make a t-shirt commemorating their family reunion that they'll give out to all of the members in attendance? Eh, they're probably to Brahmin for that, although you might want to keep a look out at thrift stores for that one.

Still at work? We are too. Maybe we all need better jobs. Here’s a start. DealBreaker combed through the DealBreaker Career Center to pick out some of the highlights.

• A leading investment bank needs a foreign exchange prime brokerage client service representatives. Must work well with hedge funds.

• Client services not your cup of tea? Try out for this job as a senior fixed income analyst at an investment bank.

• A hedge fund is looking for someone to get started as a trading analyst. Little or no experience necessary. Problem solving skills get you in the door.

• A private equity group is looking for a third-year analyst for its financial institutions group.

• Much more in the Career Center.

$$$ Blackstone shareholders: No golden egg but goose is cooked [Reuters Blog]

$$$ The Ring of Greenspan [Long or Short Capital]

$$$ Bankers Banned From Bikini Bar [Banker's Ball]

How do you follow up a 1-2-3 punch of your piece de resistance, Grand Theft Auto: San Andreas, being pulled by retailers for offensive material, shitty 2007 fiscals, and a duo of guilty pleas by former employees for falsifying business records in connection with improper backdating of employee stock options? With a video game featuring one of America’s most famous and smugly “not-guilty guilty” killers, that’s how!

That’s right, Take-Two, those paragons of decency and good taste, have knocked it out of the park with their latest sports video game, All-Pro Football 2K8, which allows gamers to play as The Assassins’ O.J. Simpson. Oh, and when Juice scores a touchdown, a hooded mascot makes stabbing motions with a large knife, probably suitable for killing an adulterous ex-wife and her lover and then getting away with it. (That’s just a for instance. You could also use it to cut steak). Thestreet.com estimates that Take-Two paid Simpson "anywhere between $50,000 and $125,000," for his work.

Shares of Take-Two were recently down 0.6% (14 cents), to $20.29.

Take-Two Game Has O.J. Simpson -- and a Knife [thestreet.com]

With all the controversy surrounding Michael Vick's dogfighting proclivities Chrysler Group's Dodge division decided now was a perfect time to release a viral video of a Dodge Nitro electrocuting a puppy to death. Note to Dodge, using force lightning against Mark Hamill, good, using it against a puppy, bad. The ad was created by the BBDO Netherlands division of Omnicrom, and carries the tagline, "charged with adrenaline," followed by that EXTREME Dodge guitar riff.

Chrysler is backpedaling faster than a pit-bull in Blacksburg and has pulled the ad from YouTube (although you can watch it in the Jallopnik link below), apologizing for the "fictional yet inappropriate treatment of an animal." Chrysler is also pulling the "come on, those crazy Europeans are morally bankrupt anyway," excuse, while "investigating the origins of the commercial."

Dodge Nitro Kills Dog, Makes Us Cry A Little [Jallopnik]
Chrysler pulls SUV ad with electrocuted dog [Reuters via CNN]

Former Institutional Investor managing editor, Rob Veksler, has decided the fuck with financial journalism and started a production company. As of this week, Hat Trick Media (htrick.com) will be up and running to cater to the needs of whoever gives Rob enough cash to make a commercial, a website, install their DVD player in his boxers, or run surveillance on a cheating spouse.

Asked of his projected income for Q1, Veksler said "anywhere between rent and the cost of 11 Spring Street in 1968." Eh?

hat_trick

Do you (check all that apply):

- Wish to sartorially flaunt your fearlessness and confidence in our global economy

- Have that “Suze Orman glint” in your eye

- Take offense to the word 'effeminate'

- Repeat and internalize the affirmation: “Making money is a rainbow of fun!” daily

- Often find yourself gazing at a devastatingly handsome, dapper young man outfitted in the perfect shade of pink for his complexion only to realize you’re looking in a mirror

- Go to Barnes & Nobles and select titles like “The 48 Laws of Power and You, Inc”

- Desire ‘Casual’ shirts that look like they “just came off the bedroom floor”

- Debate the nuances of pink versus salmon at Lexington Bar and Books

- Enjoy Prilosec

- Ask your girlfriend to drape cravats across your torso like butterflies

- Require the assistance of not a plebian “salesman” or low ranking “Sales Analyst” but a “Sales Associate”

- Stride around with a determined look on your face regardless of what you're doing

- Qualify for credit cards in white, black, blue, orange, red, yellow and pink?

- Feel a deep revulsion for broke men writing shopping pieces for liberal newspapers

If you checked yes for one or more of these options, head on down to the new Thomas Pink store on Wall Street (you know, across from Deutsche Bank and a block from the Cipriani Club). Everything's 50% off today if they sucker you into replacing your blue shirt with one of the pink and orange striped variety. It looks good on you!

Colors To Match Every Shade of Credit Card [NYT]
Look At My Striped Shirt! [TPP]

Reasons why the Dow, Nasdaq and S&P are all down over 1% today.

1. Disappointing earnings from Google, Caterpillar and Ericsson mixed with subprime worries and the flight to quality represented by the Treasury yield falling below 5%.

2. News that Dick Cheney will be in charge of the country this weekend for several hours while George Bush gets a colonoscopy (get out of U.S. markets before Dick bombs Iran, the New York Times offices or an abortion clinic (or all three)). Or the news that after the procedure, having clean innards and a polyp-free environment will bolster Dubya's ability to make those "from the gut" decisions.

3. The passing of Fifi, one of the world's oldest chimpanzees at age 60, in Sydney's Taronga Zoo.

What do you get when you take Mexico's largest construction company, Goldman Sachs, and more pesos than either knows what to do with? You get a $4.1 billion bid to run a couple of Mexican toll roads. Empresas ICA and Goldman Sachs Infrastructure Group I (a $6.5 billion fund Goldman has a 12% stake in) outbid richer than Bill Gates mogul Carlos Slim's company, Portugal's biggest highway operator and Moldavia's largest bear-baiting business. The bid is for a 30-year contract to run 340 miles of calles. The Empresas/Goldman bid was the highest of six offers and the winning bid will be announced in a couple of weeks, although the Mexican government wants to assure us that everyone is a winner thanks to the President's new infrastructure plan, from Bloomberg:

Communications and Transportation Minister Luis Tellez yesterday said the government's goal is to raise 287 billion pesos (about five American dollars) to build and upgrade highways by 2012, with funds coming from the government and private companies. "Que tal gringos? Aqui es el cuatro uno uno. [Mexican President] Calderon's infrastructure plan is muy aggressive,'' Gonzalez said. "This is excellent news for todos los construction companies. Mi serpiente grande de la noche es en fuego con su amore.''

ICA, Goldman Sachs Bid $4.1 Billion for Mexican Road [Bloomberg]

DealBook reports that the increasingly nauseating FaceBook (inverse proportion to number of widgets added per day) has gone and bought itself a company. These are the details: the company is called Parakey (Latin for ‘the ability to belt-buckle bob for a Harvard drop-out’). It’s a start-up which had previously been “trying to bridge the gap between information hosted on the Web and data stored on computer hard drives” (translation: two FaceBook users). Parakey was founded and staffed by two people, Blake Ross and Joe Hewitt, “best known for their contributions to Firefox” (translation: they surfed the net a lot using Firefox, not Explorer). The terms of the deal were not disclosed.

Facebook Makes First Buy [DealBook]

Golden child Google missed analysts unrealistic expectations of what the search engine is capable of in quarterly results yesterday. This is the second time the company has failed since its 2004 IPO. Investors unconsensually punished the stock in after hours trading, with shares falling up to 8.3% ($45.29), to $503.40, to say nothing of the cutting and “You sicken me” chanting by Larry and Serge in front of the bathroom mirror.

Google’s work force ballooned 13% and research costs shot up 88%, in an effort to put unauthorized crotch shots of tabby cats on Street Views. Some ideas for cutting back on soaring costs, which investment strategist Carsten Klude maintains are vital to a company like Google’s growth, include taking away the free lunches and not buying any more of the founders’ wife’s companies in an effort to get out of taking out the trash.

Google Drops on Profit Miss, Auction Spending Plan [Bloomberg]

One of our readers passed along this lovely photo of Steve Forbes with his daughter Moira. What on earth he's doing is up to you to decide. Here are DB's top three captions so far:

1. Did you ever imagine what that scene in Ghost would be like with Steve Forbes and his daughter Moira?... yeah, we didn't either.
2. Another layer of the fondue fountain succumbs to Steve Forbes' flat tax proposal.
3. Glorious chocolate means never having to say you're sorry to your daughter, Sumner Redstone.

Viewers of CNBC just witnessed a change in the network's programming line up. With the departure of Liz Claman yesterday, CNBC decided to immediately to expand Squawk on the Street to two hours. Claman had anchored Morning Call from 10 am until noon. Squawk has been extended to 11 am, while Morning Call has been reduced to a one hour program.

Claman's Morning Call reportedly has been the number one rated show during the business day on the network since it was launched in 2002. Squawk on the Street, which is regularly anchored by Mark Haines and Erin Burnett, reportedly has better demographics, however. We think that's television folk speak for being a hit with the kind of folks in front of whom advertisers want to put their products. Burnett was recently crowned the "Street Sweetie" in the New York Post. Prior to that, she came in first in a DealBreaker poll of which CNBC anchor "moves your market."

Erin Burnett was not seen on today's launch of the two-hour Squawk on the Street. Her place was taken by Michelle Caruso-Cabrera. She could not immediately be reached for comment on her absence because we didn't bother to ask her. But we've already received speculative emails from readers guessing at the reason for her absence. Speculation ranges from recovering from a late night out celebrating the capture of an additional hour of air time to first day nerves to contract negotiations.

Burnett's regular co-host, Mark Haines, was on set today, and opened the show with a elongated announcement that this is: "Liiiiiiiiiiiiiiiiiiiiiii-v from the financial capital of the world in the heart of lower Manhattan, this is the new super-sized, bigger, better, faster, Squawk on the Street." Throughout the first hour, Haines hosted with a higher than usual level of energy. Perhaps he is, like, totally psyched about the two-hour format. Or maybe the coffee in his personal thermos was just extra-strong today. As the second hour of the program opened, Haines alluded to his former multi-hour co-hosting duty on the network by announcing that "the second hour of Squawk Box begins...right now!" Squawk Box airs in the three hours before Squawk on The Street.

Claman is widely believed to be heading to the business news network set to be launched by News Corp in October. Although a spokesman for the new network has denied that a contract with Claman is in place, her departure is well-timed for moving to the network. She reportedly has a 90-day non-compete agreement with CNBC. October 15th, which is the launch date planned for the Fox Business Channel, is 90 days from yesterday.

The changes were announced yesterday with an email from CNBC Senior VP Jonathan Wald, which was reported on by Media Bistro's TV Newser.

The sentiments of the commentariat have decisively turned against the family that controls Dow Jones, reports Rachel Sklar at the Huffington Post. Although the Bancroft family's hesitation to sell to Rupert Murdoch's News Corp is often dressed up as a concern for the editorial integrity of the Wall Street Journal, it's also been described by a source familiar with the family's thinking as a form of status anxiety. Controlling the company that owns the Wall Street journal has conveyed heightened prestige on the family, a prestige they are being asked to surrender in exchange for Murdoch coin (and probably some News Corp stock).

“Without the paper, they are simply another rich family from Boston,” the source explained.

Sklar's reporting shows that the worst fears of a loss of prestige seem to becoming reality. Sklar quotes from various media commentators who more or less accuse the Bancrofts of selling out.

"The various deals to retain editorial control through promises and pledges, boards of graybeards and watchdog committees seem pathetic, really. It's the roilings of a genteel poor family needing to sell its beloved estate to the parvenus* but not wanting to allow the unwashed to decorate their homestead... If you're so outraged by Murdoch, then don't sell," Matt Cooper has written.

New York media maven Tina Brown says: "The fact is, they're cashing out, and they should just get on with it if that's what they're going to do."

Others seem even more dissatisfied with the Bancroft family, comparing it unfavorably with the Corleone family of the Godfather movies.

Tina Brown on the Bancroft Family: "Why Don't They Just Cash Their Check And Shut Up" [Huffington Post]

Toyota Loses Top Spot To GM In Global Sales In 2Q (Dow Jones)
We mentioned yesterday that the Detroit automakers needed to rev up production in light of the production stoppages at the Japanese companies, due to the earthquake. See, it's all about small victories, because a victory is a victory. Take this for instance. Toyota is generally seen as the world's biggest car company, but miraculously, GM reclaimed the mantle in q2. Just so happens that Toyota sales plummeted in Japan this past quarter, as the company has been slow to refresh its product line. Very un-Toyota like. Very impressive GM. It's still assumed that Toyota will resume its leadership role through the rest of the year.

Microsoft’s Profit Rises Despite Xbox Charge (NYT)
Microsoft's Xbox division is a black hole where money goes to die. But even if you factor in the $1 billion lost because of manufacturing defects, the company on the whole still posted a 7% gain earnings in its recent quarter, helped mainly by sales of Vista and Office. Those two things may be old dinosaurs in some respect, but even a few dinosaurs managed to survive. Okay, that's not true. But they're definitely not dead yet. Analysts were roundly positive on the company's results, which is a refreshing twist.

Wal-Mart Could Spend $1 Billion on Chinese Retailer, Report Says (Dealbook)
Wal-Mart will go big in China any way it can. It's on a mission. Either the company is going to rapidly expand its locations there, or it's going to make a major purchase of a Chines hypermarket, or it's going to do both, which is what we'd place our money on. If they're going to buy a chain, we really don't see how it could be anything other than Wu-Mart. All they'd have to do is change a couple letter on the sign and the integration would be complete. They probably wouldn't even have to take a one-time charge associated with the deal.

Financial IPOs Want for Love (WSJ)
Although there's been a boom in alternative investment vehicle IPOs, the stock market hasn't had much love for the hedge funds or private equity firms that have gone public. This raises an interesting and disturbing question: are public investors more rational and level-headed than the "smart money". After all, it seems that these days, everyone with money is clamoring to get in on hedge funds, etc. as they sneer at the common folks that have to simply go long on stocks and ETFs. But it would seem that while money keeps flowing into these funds, the public remains skeptical. Obviously, putting money into a hedge fund and investing in a company that manages hedge funds aren't exactly the same thing. Still, there's an interesting disparity between the attitudes.

$$$ Choose Your Seat Wisely [Banker's Ball]

$$$ Google: not so perfect anymore [CNN Money]

$$$ "Right now things are starting to come unglued" [The Big Picture]

Liz Claman has left CNBC after nine years with the network. She is headed for the competing business network Rupert Murdoch’s News Corp plans to launch this fall. CNBC veteran Alexis Glick had previously signed on as the director of business news for the new network.

Claman anchored Morning Call on CNBC, which airs from 10-Noon ET.

Renaming an institution like the Dow Jones Industrial Average and getting people to use its new name is a pretty difficult task. It’s doubtful that either residents or tourists living near or travelling to Auschwitz-Birkenau will take the extra effort to say "Former Nazi German Concentration Camp Auschwitz-Birkenau,” though Poland is hoping we’re wrong (it’s happened). Still, it seems like there’s a chance that Rupert Murdoch suddenly get all egomaniacal upon acquiring Dow Jones, and want to brand his territory.

Thestreet.com took a shot today and came up with: “The Fox Dow Jones Industrial Average,” “The Fox Business Network Average” and “The Rupert and Wendi Murdoch Industrial Average,” submissions that don’t want to call “awful” but maybe “not good.” Definitely “not funny.” Unfortunately, it’s easier to call out other people’s shoddy ideas than come up with your own, which is our way of saying, “we’ve got nothing.” (Carney nixed Asians Keep You Young Industrial Average). So, let us know if you’ve got anything.

Ready for the Fox Dow Jones Industrials? [thestreet.com]

With a recent bout of genius investors pulling out of Tom Hudson’s fund, Pirate Capital is down to $400 million in assets, from nearly $2 billion in 2006. London-based GAM pulled $300 million from the sinking ship last month, Naked Shorts reports, and was in good company with a bunch of smaller investors taking their money and running from a fund that employs Michael’s Bolton’s daughter in the increasingly irrelevant role of “investor relations.” Hedge Fund Alert speculated that GAM was troubled by “its size relative to Pirate’s capital base,” while Naked Shorts believes the pull-out had more to do with ideological differences between a “highly-regarded investor” and a low-rent circus clown partial to selling t-shirts out of the back of his car ship.

Yo ho ho and a bottle... [NakedShorts]

Viacom heir apparent Shari Redstone is expected to leave the media conglomerate’s board after a falling out with her volatile chairman father, Sumner Redstone, the Wall Street Journal reports. In anticipation of a pending sale of all or part of the company, Viacom stock traded up 3% this morning.

The Redstone acrimony seems to be the product of disagreements on the future of Viacom’s National Amusements theater chain, which Sumner wanted to spin-off and Shari to invest further in. There is speculation that the younger Redstone may buy National Amusements upon her departure.

Earlier this year, Viacom bought out Sumner’s son Brent’s stake as part of a law suit settlement, suggesting Shari’s parting may be similar.

Despite the reports, Shari’s spokeswoman said she is not leaving the board and remains, “committed and involved.”

Shakeup at Viacom: Is It in Play? [Dealbook]
Shari Redstone Is Expected To Leave Viacom's Board [WSJ]

The soon-to-be opened 15 Central Park West—what, you haven’t heard of it, hobo? Basically: the Kosher 740 Park—just added Sandy Weill and Daniel Och (-Ziff) to its list of inhabitants. Other Shul-enthusiasts on the condominium complex’s roster include Lloyd Blankfein and Daniel Seth Loeb, who bought a penthouse in the building for $45 million in 2005.

Interested in the property? Too bad—all the units have sold. However, developers Arthur and William Zeckendorf predict that there may be up to ten flipped apartments up for grabs when the building opens in the fall. So if you think you can stand living alongside the nouveau-riche, and are willing to risk having one of Loeb’s pet gerbils burrow a hole into your apartment, here’s the low-down:

-The building is coated in 2,832 panels of limestone from the same Empire Quarry in Indiana that makes up the skin of the Empire State Building.

-Working fireplaces (fireplace fetishizer Weill would sooner live in a studio on Rivington than a penthouse without an accessible means of burning things, you know this)

-Screening room

-Game room

-60-seat lobby dinging room (with private chef)

-Health club

-A waiting room for chauffeurs

-29 maid’s suites on low floors so you Louisa can work around the clock but not contaminate your personal space

-30 wine rooms surrounding “an octagonal tasting area”

-31 autofellatio rooms, all finished in English oak, with a lovely marble trim

-Pizza party Fridays

15 CPW [NYO]

You know outsourcing production to China is out of hand when the Swiss Army Knife could have a "Made in China" label on it as early as this year. This has some Swiss people very angry, measured by the ever decreasing number of marshmallows in our hot chocolate.

Alois Kessler, a lawyer and retired Swiss Army colonel, is petitioning the Swiss Defense Ministry over a WTO rule that may enable the knives to be made in China. Kessler is arguing that the knife qualifies for a WTO exemption and that non-Swiss bidders would fail to meet Swiss environmental and quality control standards.

Victorinox AG has been producing Swiss Army knives domestically since 1909. Customers include the actual Swiss Army, the pope, a couple of hipsters, that weird kid in your 6th grade shop class, senile veteran grandparents (that's not rust sonny, it's Kraut blood) and 5.5 million others annually.

Peter Lyoth, spokesperson for the Swiss Defense Ministry, proclaims the need for a new Swiss Army knife (pictured) and will not comment on whether it will be ordered from China or not.

Officer Petitions Military to Keep the Swiss Army Knife Swiss [Bloomberg]