$$$ Bear Stearns Sending Redundancy Letters [Reuters via NYT]

$$$ Thain's plans to go from MER-->GS2 proceeding nicely. [Bloomberg]

$$$ The Five ForcesCircles of Hell [GP]

$$$ Tips On Street Fighting from Yale Fantasist Aleksey Vayner [Gawker]

$$$ Still sticking to our pledge to not make fun of charity but, man, this hurts. [TimSykes]

We're told that the 150 employees BP just laid off will receive, at a minimum, six months severance.

ABC News reports that Cerberus Capital Management is in talks to invest $200 million for a stake in Blackwater. We originally suspected that this was merely a PR move by Feinberg's firm to really try and live up to its three-headed dog guarding the gates of hell name but when even Tonton Macoutes-employing Steve Cohen is chastising himself for not coming up with the idea, you have to wonder, perhaps Cerberus is on to something? In related news, the Hebrew Rambo, Daniel Loeb, has been heard shouting, "Whoa, why the hell didn't I think of this!? Major firearms manufacturers AND the staff to buy them? Total vertical integration and complete dominance in the AR-15/M-16 market with no threat of anti-trust because I'm only dominating one class of firearms! Fuck me, that Feinberg is good."

As an aside: Iraqi Army to Ditch AK-47s for M-16s [Military.com]
Hedge Fund in Talks to Buy Blackwater [ABC News]

UPDATE: Or not! Quick DL, now's your chance! Do it before Steve! Run, Jewboy, run!

CNBC’s Senior Testes-cum-Ovaries Correspondent Charlie Gasparino reports that the Federal Equal Employment Opportunity Commission has closed its investigation of allegations made by a former SAC Capital employee that his superior forced him to take female hormone pills. Junior trader Andrew Tong filed a discrimination lawsuit last year, charging that his boss, Ping Jiang, whose trading philosophy states that men must be more like women, sexually harassed him and made him take estrogen, which supposedly caused strain on Tong's marriage, and led to him wearing dresses. On Monday EEOC stated that after interviewing dozens of SAC employees, all of which claimed to be wearing tube tops and mini skirts "of our own volition," that it would not proceed any further. Though Steve Cohen et al are probably pretty pleased with the decision, we hear that Ping is sort of torn-- on the one hand, he's happy that Tong, whose lawsuit continues, has been stripped of a powerful ally. On the other, having been recently tossed aside by the hedge fund for merely not making them any money this year, he'd loved to see those "sexist pigs" fry. If he has go down with them, so be it.

EEOC Closes SAC Capital Female Sex Hormone Case [CNBC]

My darlings, you are in for a treat. I just got off the phone with Carney, who called moments after the Fed's 25 basis point cut announcement. Now, we won't be forced to slog through a piss poor attempt on my part to replicate the post-decision congratulatory remarks we've all come to know, love and expect from our fearless leader. Instead, please find a statement from the thoroughbred's mouth, which I lovingly transcribed, after the jump.

Home prices in the Hamptons, where rich and famous New Yorkers spend summers by the sea, fell in the first quarter as Wall Street job cuts and an economic slowdown took a toll on buyers.

The median price declined 7.1 percent to $882,500 and the number of sales dipped 29 percent from the last three months of 2007, according to a survey by appraisal firm Miller Samuel Inc. for New York-based Prudential Douglas Elliman Real Estate. Part- time Hamptons residents include Lazard Ltd. Chief Executive Officer Bruce Wasserstein and comedian Jerry Seinfeld.

Or you could take the advice of a sub-prime guru I know. Just wait until next year and buy it cheaper still.

Hamptons Home Prices Decline on Wall Street Job Cuts, Economy [Bloomberg]

BP has supposedly relieved about 150 employees ("Front office, some traders included") of their duties. No word on severance.

Non-consultant consultants, non-existent former executives, non-departure departures. I give you...GLG Partners. The London-based hedge fund, whose "star" emerging markets fund manager, Greg Coffey, resigned and then took back his resignation and then resigned again all in one week's time, has lost three more employees from its senior asset management team. Following in Coffey's footsteps are Michael O'Connor, who traded Asian debt, equity, and convertible bonds, Udo Herschel, who worked on capital structure arbitrage, and Ben Gill, who was with the company for six years and who was most recently a global macro fund manager. Don't take the mass exodus to mean anything, though, says GLG. The fund assured boutique shop Ladenburg Thalmann, which published a note about the surrealistic laugh factory this morning, that they're really NBD. Sayeth LT:

"...management has informed us that one of these individuals had been dismissed several months ago and one individual was a consultant on the payroll and will remain a consultant, but not on the payroll. The status of the third individual is not clear as he is seeking to address some personal issues. We do not have basis to believe that there is some sort of exodus occurring at GLG."

So, really, everyone should just chill. Also, don't worry about the fact that GLG has delayed its shareholder meeting a month, now rescheduled to take place in early June. There's a logical explanation for that which doesn't have anything to do with the hedge fund going down-- CEO Noam Gottesman, who, of former employee Philippe Jabre, told Bloomberg last year, "As far as I'm concerned, he doesn't exist," needs a few extra weeks to put the finishing touches on a power point presentation called "Former Individuals Under My Employ Who Are Now Dead To Me, Which Belies The Fact That THEY NEVER EXISTED IN THE FIRST PLACE. WHO DIDN'T EXIST IN THE FIRST PLACE? EXACTLY." Sources tell DealBreaker he's also still searching for a sufficiently regal-looking pointer with which to draw the audience's attention to a larger than life projection of O'Connor's head while noting, "Exhibit A," and then, with great flourish, hitting delete.

More Executives Exit GLG Partners [Financial News]

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No surprise that, having won Wendy's, Nelson plans to let the blades fly in today's 13D/A filing. Still... ouch.

Agreement and Plan of Merger ----------------------------

On April 23, 2008, Triarc, Wendy's International, Inc. ("Wendy's") and a wholly-owned subsidiary of Triarc ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into Wendy's, with Wendy's as the surviving corporation (the "Merger") and as a result of the Merger, Wendy's will become a wholly-owned subsidiary of Triarc. Pursuant to the Merger Agreement, each outstanding share of common stock of Wendy's will be converted into 4.25 shares of fully paid and non-assessable shares of Class A Common Stock (the "Merger Consideration").

Just in case you missed it, we ran a reader poll yesterday to predict what the Fed will do at 2:15, in memoriam of our fearless leader, Bon Quarney. Lon loved breaking out his crystal ball on such occasions (and what visions! Don't get me started reminiscing...), and while the DealBreaker Fed Poll was his baby, we know Don would've wanted us to carry on with pomp and circumstance in his absence. In endeavoring to replicate that which was Mon's market moving insight to a T, we now ask that you answer the same question a second time. So drop what you're doing and start prognosticating. Last chance to get in. Be part of something historic. The free world's fate hangs in the balance. And I do not mean that in jest-- even though the poll asks "What will the Fed do?" which is to say, "Let's predict what the Fed will do," DealBreaker Readers (capitalized to emphasize how important you are) know that we're actually telling the Fed what to do. Deciding for them. They're actually sitting there waiting for our poll to close. So take this thing seriously, and when you cast your ballot, realize that it's not just a poll-- it's Klarney whispering in Bernanke's ear.

For the bargain basement price of $400.00 you can read Standard & Poor's thinly veiled mea culpa and distill from their "super new not old at all" methodology that Junior "AAA" tranches of defaulted, mortgage backed CDOs will recover about $0.35 and Senior "AAA" $0.60. Your tranche is rated "A"? Punt.

Criteria: Recovery Assumptions Revised For Certain CDOs Backed Predominantly By U.S. RMBS [Alacra Store]

GM Reports Preliminary First Quarter 2008 Financial Results
What, did GM become a Wall St. bank? The company lost $3.3 billion in the quarter, related to various things including GMAC stuff and a strike at American Axle. The good news: on an adjusted basis, it only lost $350 million, which is at least believable. If they'd reported an adjusted profit -- as these companies are sometimes prone to do -- we wouldn't be buying it. The automaker also reduced its units sold forecast in light of the economy.

Shortages Threaten Farmers’ Key Tool: Fertilizer (NYT)
All of the sudden, fertilizer is hot hot hot? What was it that Cramer said the other day? He said Monsanto was the new biotech stock (or something like that) and that fertilizer players were the new Pfizer or some such -- basically fixing the issue, but not curing it. Is the fertilizer shortage a big problem? We have no informed opinion other than to say that eventually this endless cycle of shortages (grain, land, water, energy etc.) will probably snap at some point in some way.

Fed expected to cut key interest rates one more time (AP)
Has anyone one made a "hit me Bernanke one more time" joke before? Surely. But anyway, the markets are expecting one more cheap hit of cheap money and Bernanke is, in all likelihood, going to deliver. Why can't he be firm and just say no? Who knows, but he just won't. If you're a hawk, the good news is: this may be the last one. Right.

Microsoft's Next Move on Yahoo is Imminent (WSJ)
The report says Microsoft's next "move" is imminent, though it really sounds like a non-move more than anything else. Rather than decide what it wants to do (go hostile or walk), Microsoft is expected to do a time-buyer, nominate a slate of its own directors, but not really bring a case to shareholders. Good: more delay.

$$$ Citi knocks another one out of the park. [WSJ]

$$$ Pilgrimage, Part VII: “You Don’t Want to Let Him Down” [JeffMatthews]

$$$ V [WallStrip]

Presented without comment:

The Bank of England has imposed a permanent news blackout on its £50bn-plus plan to ease the credit crunch.

[...]

Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years - the period after which all but the most sensitive state documents are released.

Any Bank of England employee leaking the names of institutions involved will face court action for breach of contract.

(Oh, ok, one comment: How the hell do you meet a reporting requirement if you can't disclose your sudden 3 billion GBP liquidity injection?)

Bank Bail-Outs To Be Kept Secret [This Is Money via Typically Clever DB Commentary]

A few readers have noted that the wheels are coming off here in the absence of our fearless leader, Ron Blarney, and his capacious intellect and market moving insight. While I could never hope to bring the same gravitas that he has demonstrated in his coverage of the rice market, I will now endeavor to honor the memory of Lon Varney, via his famed ‘What Will The Fed Do?’ poll. Bon always took such pride in the predictive prowess of the DealBreaker Fed Poll, and while it is indelibly linked to him and him only, I know he would’ve wanted us to carry it on in his absence. And, I bet you his annual take home (2 large) that he’s looking down on us and smiling. To those of you who think I am the local yokel—btw, how dare you—and that it is sacrilegious of me to attempt to climb on the shoulders of a giant, please realize that I approach this subject with the greatest humility, and self-awareness that I could never come close to Don Klarney’s level of magisterial prognostication.

Facts:

The Strategic Petroleum Reserve has a capacity of 727 million barrels.

As of April, 700 million barrels were held in the reserve. This should leave 27 million barrels left to fill.

Early this year the Bush Administration indicated it wants to have the reserve full by September. Assuming this is a 7 month effort, that's a rate of about 3.8 million barrels per month or around 128,000 per day. (This is "paid for" by producers who pay their taxes with oil rather than cash).

At best, just because of practical considerations, the reserve can pull out 4 million barrels per day.

Halting additions to the reserve and opening the spigot as wide as it goes will produce a "supply increase" of around 4.2 million barrels per day.

Daily consumption of oil in the United States: 20+ million barrels per day.

Short run demand elasticity of oil vis-a-vis gasoline price: 0.08 - 0.10.

Question 1: What are we to make of this assertion in the Wall Street Journal:

"We are in an extreme circumstance," the senators wrote. "I support an immediate halt in the deposits of domestic crude into the SPR as we enter the busiest driving season of the year."

The letter comes one day after a group of truckers and other citizens arrived at the Capitol asking the government to intervene as prices keep rising. With the average price of gasoline at the pump reaching a record $3.60 a gallon last week, according to government data, truckers and people who get to work by car are struggling.

Question 2: What is the likely impact on gasoline prices of: (a) A halt in additions to the SPR? (b) Opening the spigot as wide as it goes?

Extra credit question: Who finds these people who end up in Congress?

When I was a little girl, my father told me a bedtime story. It seems that after the destruction of the VFK ball-bearing plant in Schweinfurt in 1943, when Germany suffered severe shortages of ball-bearings (a critical war making commodity), a huge storm washed up a large freighter filled with high-quality Swedish ball-bearings. The Swedes made the best, it seems, and their neutrality allowed them to trade with Germany- and hold out war-time prices for their goods.

Excited, the Germans immediately seized the bearings and sent them to various factories supplying the German war machine. So significant was the find, the Captain who's unit discovered the cache was decorated by Hitler personally. Of course, this was all a clever ruse. Some clever OSS agent had thrown together the plan as a follow-up to the Schweinfurt raid to cause a massive shipment of subtly imbalanced bearings to be beached on German controlled shores. The impact on post 1943 equipment should be predictable for anyone who knows even a little about engineering. Modern examples of what amount to economic warfare are equally entertaining. So tell me that the CIA is not behind the massive influx of the modern, cultural equivalent of imbalanced ball-bearings to Iran. That would be, of course, Barbie.

"The irregular importation of such toys, which unfortunately arrive through unofficial sources and smuggling, is destructive culturally and a social danger," according to Prosecutor General Ghorban Ali Dori Najafabadi of Iran. "Undoubtedly, the personality and identity of the new generation and our children, as a result of unrestricted importation of toys, has been put at risk and caused irreparable damages."

Well, I suppose that depends on the generation of Barbie that has been sent to Iran. Was it realistic-body-type multi-cultural Barbie? Or was it 1987 Barbie? If the former, then the Mullahs are, to put it mildly, fucked.

According to CNN, this is not a new crisis, and Iran has launched more than one cultural counter-offensive over the years.

Also in 2002, Iran introduced its own competing dolls -- the twins Dara and Sara -- who were designed to promote traditional values with their modest clothing and pro-family stories. But the dolls proved unable to stem the Barbie tide.

Imagine that.

Now if only they had made Ken anatomically correct. Or, perhaps, even a bit augmented.

I love free trade.

Iranian Official Calls Barbie "Destructive" [CNN]

Here’s a lil’ pick me up for all you bankers thinking you’re the only ones taking it up the tailpipe-- JWM Partners, the fund started by John Meriwether after things started to go downhill at LTCM, which recently lost 24 percent in its $1 billion fixed-income hedge fund this year through March 14, just laid off ten employees and two partners have “quit.” DealBreaker has obtained a portion of the heartfelt note Meriwether sent to the unlucky staffers, which you’ll find after the jump.

What do you do when your private equity returns are dwindling because you have billions of idle cash sitting around and no deals to invest in? Invest in public equities, of course. Well, "of course," is sort of strong, particularly when your core competency isn't public equity analysis.

Believe it or not, public equity analysis as a preamble to non-control investments in publicly held firms is a much different and more difficult, different endeavor than LBO analysis. Going to the second-string of private equities because your offering memorandum is quite broad and because your traditional 30% returns are being degraded by the amount of cash you've left sitting around doesn't really inspire much confidence. Ask Blackstone, for instance, what they think of their Deutsche Telekom investment, picked up two years ago at $17.27 (a premium to the stock price at the time- which makes it an interesting PIPE deal). Today DT's ADRs are floating around $17.90- and something like 25% of that value is underpinned by the Dollar's sad exchange rate against the Euro. On pure equity analysis, Blackstone would be looking at a 25% loss over two years. Well, unless some genius over there actually figured on the sad prospects for the dollar and planned carefully for a basically break-even investment after two years. Ouch.

I would say I'd be selling my Blackstone shares, if I owned any. I'd say short Blackstone, but, well, it's probably a bit late for that.

Schwarzman, Kravis Cash Pile Grows With Risk of Reduced Returns [Bloomberg]

How do you pull a bunch of LBO commitments off of your balance sheet? Sell them to the borrowers, and finance the transaction. How does that pull the debt off your balance sheet? Denial, my friends, ain't just a river in Egypt.

Citigroup sold $8 billion of the debt to private-equity firms this month only after giving buyers $6 billion of financing at cheaper rates than it can borrow itself, according to people familiar with the transaction, who declined to be identified because the terms aren't public. Deutsche Bank AG and Royal Bank of Scotland Plc are also offering credit to buyers to help cut their holdings. (Emphasis mine).

[...]

Banks escaped about $65 billion of LBO commitments in the past four months in part by lending money to private equity firms such Blackstone Group LP's GSO Capital Partners and Apollo Management Inc. Wall Street is getting rid of the debt individually, in packages or placing it into structures such as collateralized loan obligations, which pool loans and slice them into pieces with various ratings to sell to investors.

"They're substituting one credit for another but they're still ultimately on the hook for the debt,'' said Robert Willens, a former managing director Lehman Brothers Holdings Inc. who runs a tax-advisory firm in New York.

The rest of the inventory was reduced because acquisitions such as Blackstone's $6.6 billion of Dallas-based credit card processor Alliance Data Systems Corp. were canceled, eliminating the bank commitments.

By offering to finance the sales, banks can receive higher prices for the loans.

Now maybe it's just me, but providing loans at rates lower than your own cost of capital to firms to buy your loans sounds, shall we say, uniquely Wall Street. Then again, perhaps the increased price financed debt purchases commanded made up the difference. If nothing else, this is an interesting data point for how desperate banks are to shed the debt, and what effects fire sales have on price (i.e. very and brutal).

UPDATE: One DB tipster indicates that some loan financing deals (that sounds funny, doesn't it) are leveraged up to 10:1. Ouch.

Pandit's `Closer to End' Means No Escaping LBO Loans [Bloomberg]

DealBreaker's exclusive "SC 13D" alert again pays dividends on the 15 minutes we spent setting it up. Today we discover that HBK investments, you might remember them from not-so-distant accusations of "abusive and improper" short selling in the private investment in public equity (PIPE) markets, or just because they manage around $14 billion, is throwing its weight (about 9.1% of Circuit City's common stock as well as 8% and 5% of Class A and Class B common respectively) behind the deal, going so far as to indicate that HBK "might also be prepared to provide financing for such a transaction." And why not? According to their 13G they picked up their initial stake last summer. Doubtless, a transaction would be help soothe the bath they've thusfar taken (the stock was floating around $12-$14 last summer). Now they've gone active. To wit:

Panel to Look at Foreclosure Practices (NYT)
A Senate panel will look at whether banks are exacerbating the foreclosure crisis by adding all kinds of fees and stuff for borrowers that are already struggling. The efficient markets believer in us finds this hard to believe -- that banks would do stuff to make foreclosures more likely. But on the other hand, if you know you're about to lose a borrower in the next month or two, maybe you would try to squeeze as much juice out of the lemon as you can. Good thing the Senate will get a definitive answer for us on this.

Calpers Chief To Step Down In Latest Exit (WSJ)
Time to make some real cash. CEO of Calpers Fred Buenrostro has decided to step down, and will likely pursue opportunities in the private sectors. Buenrostro had been at Calpers since 2002, and he says he has a good succession plan already in place, so nothing to worry about. Just a few days ago, the CIO of Calpers said he would leave to launch his own green fund (its California after all).

No Break in the Standoff of Microsoft and Yahoo (NYT)
Still no sign of action from either side, and still no talking -- at least according every single published report we've seen anywhere. If Microsoft and Yahoo are having secret talks, they're doing a damned good job of hiding it.

Deutsche Bank reports 1Q loss on $4.2 billion in write-downs (AP)
Another $4.2 billion, but only a $220 million quarterly loss for Deutsche Bank, so the writedown wasn't totally out of proportion with the rest of the quarter. Basically, they did worse than break even, but no losses into the billions. That's a victory. Also, worth noting that Deutsche Bank had telegraphed this result, so no real surprise either way.

$$$ Deals: The Feeling's Mutual, and Beefy
In our M&A Roundup for the week ended April 27, Liberty's Safeco purchase and that Wendy's-Arby's combo help lift overall values. [CFO.com]

$$$ Rubenstein Sucks! [Talking Biz News]

$$$ Headhunters: Friend Or Foe? [Mergers and Inquisitions]

THE TIM SYKES STORY

Mon., April 28

5:45 p.m.

3M Auditorium, University Of Minnesota, Carlson School of Management

Timothy Sykes, author and former hedge fund manager was made famous by turning $12,000 in bar mitzvah money to over $1.65 million in just four years by trading penny stocks. Trader’s Monthly magazine named Sykes to their ‘Top 30 under 30′, a list recognizing the top 30 investment professionals under the age of 30. Tim Sykes will present his investing strategies and a forum of faculty members will critique his ideas and determine whether his strategy deserves merit or whether his success is the result of luck. Free dinner provided by Chipotle.

Those who’ve been paying attention will recall that we love us some Vikram Pandit. He, of that happy, gay, elfin visage; he, of that infectiously intoxicating laughter/unbridled joy even in the face of phenomenal failure; he of that smile that can only say “Christmas in Bombay.” We love him so much that we bought into Citi’s new slogan “Make Vik Smile,” and picked up 400 shares of Citi the same day the company announced its latest trillion dollar writedown. So this, Takeaway # 2 from the NYM article, was particularly hard to take:

A longtime Mack associate, recruitment manager Jerry Wood, said that if Mack made Cruz the next CEO, their old colleague Vikram Pandit, who by then was running the institutional clients division at Citigroup, would raid the company for disgruntled Cruz antagonists. “Vikram has a paycheck in one hand and a voodoo doll of Zoe in the other, and we’re going to lose all these people if they think the future is Zoe Cruz,” he said, according to two people familiar with the conversation.

No, god damn it, no! Vikram isn’t supposed to be an evil, conniving, backstabber. He’s not even supposed to be a shrewd businessman. He’s supposed to be Lil’ Vik, of infectious good cheer, even when there’s nothing to be cheerful about! Since we cannot deal with any evidence to the contrary, we’re going to retreat to our crying room until somebody scrubs the internet (and our consciousness) of this b.s. But first, we’re going to do this.

New York Magazine has a very good article about Zoe Cruz, the Morgan Stanley co-president who involuntarily resigned last November because (pick one) a. (In some people’s estimation) she was to blame for the company losing a few billion dollars b. A lot of people disliked her and told Mack they would leave if he made Cruz CEO c. Mack had to blame either himself or Cruz for some losses and he chose her. d. She was, you know, a girl, and the boys didn’t like that. But it’s extremely long so we’re going to highlight the takeaways in several installments.

Take away #1:

At one time or another, Morgan Stanley employed at least a handful of tools who found this funny:

It shouldn’t really come as a shock that News Corp-owned Fox Business would encourage its employees to get all MySpacey on the corporate blog but hi-yo, Alexis Glick! The FBN anchor recently spent four days on vacation with her husband in London and posted about the trip this morning. You think you’re reading an interminably long and boring entry about two tourists going to football games, taking pictures of Buckingham Palace and using the word 'bloody' and then at the last second, the Glickster slips in an insinuation that those to had sex!

Round of applause for John Thain and the enormous restraint he demonstrated in the five months since taking over Merrill Lynch. He could’ve changed the letterhead, shaved his head and asked people to call him LB from Day One, but he resisted, pandered to the “culture of Mother Merrill,” and even ingratiated himself to the team with a few slipups reminiscent of their former CEO, just to make everyone feel at home. Ultimately, though, the temptation to make the firm “not so much Merrill as Goldman” proved too strong. He would’ve had to have the strength of a pro-wrestler/master beekeeper to hold out much longer, and as you well know, Thain is merely a former high school wrestler, and though very passionate about honey, amateur beekeeper at best. So the statement from MER today that JT has hired former GS colleague Thomas Montag to head trading worldwide should come not come as a shock, nor should the whispers (in our head) that he’s rallying hard to bring in erstwhile Goldman Sachs CEO Jon Corzine in some sort of capacity. Though, according to the rumors, the would be hire has less to do with turning Merrill into Goldman than Thain attempting to assuage his guilt about ousting his mentor back in the day, and also to bring Wall Street’s greatest bear hugs back into his life, via payroll. Additionally, DealBreaker has obtained an internal memo sent out to senior management this morning entitled “Drop Everything: Things We Must Do to Become More like Goldman”

We went on record the other day saying that we try and stay away from making fun of charitable donations of any kind. And, damn it, UBS woman who boxed us into the corner, we’re sticking to it. Just know that we’re grappling with a banging our head against the desk level of frustration here, k? K. Former Bear Stearns chairman and chief executive Alan “Ace” Greenberg announced that he will be gifting twenty five longtime workers of the late firm with $360,000 of his own money. Once a month, for the next six years, the former employees will receive $200 each.

Gift to the Mailroom, From the Boardroom [NYT]

Mars, Buffett Team Up in Wrigley Bid (WSJ)
Next weekend's Berkshire Hathaway annual shareholder meeting is gonna be sweet (rimshot)! Word is that the company is going to team up with Mars to buy out Wrigley, really putting a strangleholde on the candy industry. The value for the deal is pegged at $22 billion. Exact terms are unclear. BRK may provided Mars with the financing to do the deal and then become a major Mars shareholder. But, given all the talk about how the chocolate makers may or may not have an oligopoly, probably smart for some other end sellers to find strength in numbers.

Continental Airlines Chooses Not to Merge
Forget what ya heard. Continental does not plan to merge with another airline. Some reports over the weekend suggested the carrier was in talks -- mergers are the hot thing now, after 5 or 6 airlines have gone bankrupt, and while others have agreed to tie up. But Continental specifically sent out a press release saying it all wasn't true. From a letter sent to employees (and now to shareholders): "We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths -- which we believe would be placed at risk in a merger with another carrier in today's environment."

Eos Airlines Crashes (PE Hub)
Oh right, speaking of bankruptcies, Eos is the latest. The company isn't doing some in-bankruptcy operation. Nope, just shutting down completely. Yesterday was its final day of flying between New York and London (Stansted). What we need is about 10 more of these, including some huge ones, and the remaining ones might actually be able to perform better. BTW, it looks as though the Eos website is down too. Who wants to pay for hosting? Nobody.

Oil Rises to Record on U.K. Pipeline Shutdown, Nigerian Attack (Bloomberg)
You might be able to make the argument that this is the most common headline of the last four years. Like really. Anyway, oil is near $120 now, so that's probably a foregone conclusion. And that means $125 is too. Even without Nigerian attacks, the trend seems to be solidly up.

$$$ Kerviel starts new job at computer consulting firm [INHT]

$$$ Investment Bankers, Know Thyself [BB]

$$$ AAPL [WallStrip]

Bear is looking for summer associates.

The streets of Chiang Mai, Thailand's second city located near the northern end of the country, are nearly empty during summer middays. Most people you encounter will be tourists, backpackers and the drivers of tuk-tuks, the three-wheeled taxis that are everywhere in South East Asia. Thais know that the midday sun--or heated haze--is to be avoided.

So where are all the Thais? A great many are at home, safely shaded and cooled by those slow-motion fans that cool residents of South East Asia but provide no relief to visitors. But those Thais who need to get out of the house--especially those with some extra disposable income--head to the mall.

Recent visits to a few of the malls in Chiang Mai suggests that hotter days drive up mall visits. It's been unseasonably warm in the last few weeks, and business is booming. If you want to profit from fear of imminent environmental doom, the mall is where to do it in Thailand.

I'm officially on vacation here in Thailand, so I haven't bothered to find out who owns the malls or the bigger Thai stores. But I did notice a few American companies with Thai mall exposure: Dairy Queen, Pizza Hut and Duncan Donuts.

So the next time you hear about the "inconvenient question" you'll have a convenience store answer: Long the DQ Blizzard!

--John Carney is trying to find ways stay cool in Thailand.

Recently laid off from your buldge bracket bank because the buyout business has dried up? Well Bangkok may be where you want to be. Beside the obvious benefits--cheap domestic help and bespoke clothing--the land of smiles may be poised for an M&A boom.

Firms here cannot use tax losses on the books of acquired companies to offset profits of the combined entity. But that may be changing thanks to a newly announced government plan to boost investment.

The tax laws now in place discourage deal making because mergers erase value by eliminating carried tax losses. The change couild unleash value now trapped inside firms, making deals much more attractive. Firms with tax losses on the books will suddenly have a valuable asset.

This is probably somehow related to rice or Buddhism but I've probably said enough on that for now.

--John Carney is "on assignment" in Thailand.

There's a deep irony to all the talk about the global food crunch (they laugh at our "credit crunch" here, you can't eat credit) portending dark deeds in Thailand. This country is hardly in danger of running out of rice, short term or long term. In fact, it supplies the international market with 30% of its rice. This eclipses many countries, such as China, that produce far more rice but have limited exposure to global markets due to export curbs. Thailand, despite the dire talk of rice price hikes, probably stands to reap huge profits from the Food Crunch.

What's more, Thailand could produce even more rice than it does. Large parts of its rice fields are underproductive, in part because they are not properly irrigated. Many fields that could produce multiple crops a year produce just one or two. Price controls and other government mucking about contribute to the low-productivity. But, if I were asked, I'd probably say an even bigger role is played by the heat here. It's really, really hot in the summer. And it's summer right now. It takes a lot of baht to motivate Thai farmers to work in the summ er. Leisure in this kind of weather is a highly prized commodity. But if prices get high enough, the farmers will dismount from the hammocks and get to planting.

So if Thailand has plenty of rice and could produce more if the price was right, what's all the fuss about? To understand the issue, you have to realize that in this part of the world rice quite literally has a religious dimension. In the mornings you can find women on the streets given rice to monks to "make merit"--which is Buddhist for scoring religious points. At images of the Buddha throughout Thailand, people leave offerings of rice. High prices are seen as interfering with the religious obligations of the people. Keeping rice prices low is a way of staying right with Buddha.

It's also pretty much part of every meal. So imagine, if you will, if $117 oil meant we had to cancel Sunday church services and Saturday bbqs. Rice, in Thailand, is food plus religion. And when it gets expensive, dangerous forces can be unleashed.

--John Carney is probably eating too much rice on his vacation in Thailand.

Thailand may have spent the Cold War on the free market side of the Bamboo Curtain but rice socialism still reigns. Price shocks have politicians scrambling to raise rice productivity through irrigation projects, while consumers are now facing new purchasing limits on rice at markets.

Consumers are limited to buying just three bags of rice at the markets. It's a form of demand side price control made necessary by the supply side price controls exercised by the government. Rice is only allowed to be sold to consumers within certain price bans, which would lead to shortages if market processes were allowed to work themselves out. To avoid market created shortages, the government has decided to preemptively create its own shortages by limiting purchases by consumers.

The next move may be for the Commerce Ministry to release its Strategic Rice Reserves. No really. The government hordes rice in case of shortages here, the way the US government hordes oil. But this possibility may actually lead to further shortages in the long run, as rice farmers may plant fewer crops for fear of downward price pressure from government reserves being released.

All of this is feeding into rumors of a possible military coup. Some say that Thaksin Shinawatra, the populist politician who was ousted in the last coup, may be preparing to come back the same way he was forced out: through a military backed overthrow of the government. He's popular with the monks and the have-nots of Thailand, and has been spending time in temples across the country. Supposedly this temple tour is to atone--or make merit--for past sins. Thaksin insists that it only looks very much like a political campaign.

The rumors of a Thaksin coup have sparked rumors that his opponents could stage a pre-emptive coup to establish their own version of military rule before Thaksin can build his. No one expects Thailand to become another Burma, but talk of competing coups has many saying it is only a question of who does it first.

-- John Carney, who is vacationing in South East Asia, has never stage a coup, military or otherwise.

Traders in Thailand may be about to receive some much needed tax relief. Speaking to a conference of economics reporters in Bangkok, Thai finance minister Suapong Subwonglee (I'm sorry, that's what names are like here) said the government is considering waiving capital gains taxes for bond traders. this tax exemption is already enjoyed by equity traders, and the differential tax treatment creates exactly the kind of market distortions you would expect. The sting of capital gains taxes for debt trading is being felt even more now that we've got a global credit crunch under way.

The proposed reform has its critics, of course. Some worry the move might encourage irresponsible debt trading, perhaps triggering the kind of losses seen in US and European investment banks. Thai banks have largely avoided these losses, save for some CDO missteps.

What's more, this is Thailand and that means there are religious implications to the timing of everything. Some have said the timing of this tax change is particularly inauspicious. Astrologers have been cited in the major daily papers, and there is talk of the "dark god" Rahu.

Most of this kind of economics--if that's what it is--is beyond me. But then again, in the US Democrats seem to spend more time talking about trade policies in churches than Thai politicians do in temples. Does Jesus care more about economics than Buddha?

--John Carney, DealBreaker's editor in chief, is enjoying his vacation in Thailand despite the evidence to the contrary provided by all these posts.

Before I get accused of being obsessed with rice, let me explain that this is all anyone wants to talk about here. A week ago I could get them talking about Wall Street, Bear Stearns, the Fed and losses, losses everywhere, another bank on the brink. But now it's all rice, all the time.

Indonesia's put in export limits. Hong Kong demand is still expected to be high. Fertilizer, which is already getting pricey, is said to be setting up for another price explosion. But the real action, as always, is in the blame game. Whose fault are rising rice prices?

Some have sensibly pointed to the growth of biofuels as pushing prices higher. Others blame the high price of oil, which they say creates the demand for biofuels. But beware of the folks who blame oil. It sounds like a deeper level of analysis but it's largely a myth. Market forces are not creating the demand for biofuels. Government policies are. But its far more psychologically satisfying to blame those conniving Arabs.

The Greens--some of whom are genuine ideologues and others are biofuel profiteers--are blaming the ever present demons: speculators. It's those damned commodities traders, they say. This excuse works even better than the Arabs because commodities traders lack political clout and haven't quite figured out how to organize as part of the ethnic grievance industry. (It doesn't help that there isn't an ethnicity called "commodities traders." Yet.)

--John Carney, DealBreaker's editor, is trying to figure out how to convert biofuel into food while on vacation in Thailand.

In a post yesterday re Ian “Oyster Boy” Roncoroni, you might have detected a slight attitude on our part. See, on Wednesday, we sent OB a cheese steak from Delmonico’s to say “thanks for the page views” his feat of eating 244 Oysters in an hour at Ulysses got us. By Thursday afternoon, we’d heard nary a whisper of appreciation from Roncon. His lack of gratitude really rubbed us the wrong way, and we expressed the simmering anger we were feeling toward him while also introducing a new treat for you: THE SANDWICH FAIRY. The original purpose of TSF, in which we will send a delicious sandwich to randomly selected analysts/associates/traders/ceos/fund managers of our choosing several times a week starting in May, was two-fold. 1. To show you idiots how much we love you 2. To measure just how egregious Oyster Boy’s lack of a response was, relative to his Street brethren. We also offered him a choice—get back to us with a demonstration of gratefulness, or die. Last night, we received this:

From: Ian Roncoroni

To: tips at dealbreaker at com

Date: Thu, 24 Apr 2008 22:14:53 -0400

Subject: thank you!

Thank you, dealbreaker, for the cheesesteak. i actually tried to thank you as soon as it came, but when i clicked the "email" button, it didn’t forward me to the right spot. maybe if i had been more than a hack in the financial services, or gotten into Princeton for more than my ability to dance around a mat, i couldve figured it out! (or, should i go with the "i was too busy tipping him with my ten dollars cash instead of putting it on your credit card to write a thank you" excuse?) At any rate, i really did appreciate the cheesesteak! I wasn’t hungry in the least, but i figured, in the spirit of the article, i had to choke it down. (yes, like man butter.) THANK YOU, dealbreaker.

You chose wisely, OB. And your decision comes with benefits, for all. First, for you: 'member that death threat we directed your way? We’ve decided to drop it. Second, for everyone else: Ian’s appreciation has inspired us to up the ante. Moving forward, each special delivery from TSF will also include a bottle of Champale and a copy of Penthouse (or similarly themed publication). All of Wall Street has OB to thank for the additional largesse. And, Oyster Boy, we're sorry you won't be receiving the tasty malt beverage and a quality spank rag, but somehow we suspect your apartment is stocked already.

The first recipient of our delicious generosity will be commenter “Lowly Assistant,” who more than deserves a treat on account of his sob story about having to hike all the way to Union Square to pick up sandwiches for his superiors, and transport them back, via subway and not cab, to Broad Street. Lowly, if you’re listening—get in touch so we can make the necessary arrangements.

The rest of you: know someone who you think deserves a visit from The Sandwich Fairy? Send your nominations to tips at dealbreaker dot com. And by deserving, we mean it both ways. First, for quintessential Wall Street scuzzbuckets, deserving in the ironical way; and second, for the genuine salt of the earth individuals on Wall Street who make this country great and truly deserve a Sammy/champale/porn goodie bag. There must be thousands of the former, and five or six of the latter.

It seems likely that Microsoft's bid for Yahoo is slipping further and further away from possibility. And, if so, what does this mean for the two firms? Growing irrelevance.

Monkey Boy has been hedging for the last week and a half. Microsoft had originally taken a hard line, and I suspect Ballmer's ego will not permit him to raise any bid by much. Microsoft's stock also doesn't look like the currency it was even a month ago. Yahoo, likewise, has been rather heel-digging. Microsoft, to some extent, bet on poor earnings by Yahoo. In fact, they were just good enough to keep the hope of Yahoo's independence afloat. Microsoft then faced its own earnings issues.

I must admit, I am not a Microsoft fan. (I'm typing this on a MacBook Pro, in fact). To my way of thinking Vista is just short of a disaster. The howls of protest that have risen as the phasing out of Windows XP approaches are somewhat remarkable, and somewhat predictable. Microsoft has become unwieldy and rudderless. Their unbridled rage at everything Google smacks of fear to me. Justified fear.

Yahoo, while prone to clever developments (I love Yahoo Pipes and Yahoo Finance is still quite useful), seems to be languishing and struggling to stay ahead of the curve.

A combination of the two would at least create some momentum. Then again, it would also distract the two firms. To me, this looks quite a lot like Blockbuster - Circuit City. An unmitigated disaster if consummated. Slow, blood draining death if not.

We'll see.

And no, I’m not talking about the acquittal of Sean Bell’s killers. We all know the only thing cops can’t get away with in this city is sodomizing suspects after they’ve been arrested. That’s a no-no (prior to the arrest: go nuts). I’m talking about Angelo Mozilo, and the gross injustice that was his compensation for 2007. The Lord of Orange’s pay fell forty nine percent to $22.1 million, from $43 million in 2006. Before you start crowing about how he’s lucky Countrywide paid him at all, just realize that this is going to come back to bite CFC and its shareholders in the ass. It’s a well-known fact that several times a year, Mozilo likes to round up a few thousand Countrywide staffers, heads out to a cattle ranch in Montana, and throws upwards of $500,000 in small bills out the window CFC’s G4, then watches in delight as the lucky employees pick up and return every last dollar. Moz has always bore the cost of the event. Now, it’s going to come out of Countrywide’s pocket.

A Losing Year at Countrywide, but Not for Chief [NYT]

Admit it, if you were Wesley Snipes and facing 3 years in prison for a tax evasion scheme, you'd try to bribe the prosecutor too. Well, not bribe, but maybe a big payment, you know... pay a... fine. $5 million in a lump sum might do. Or maybe not. It sort of reminds one of an encounter with Mexican police.

"You, vandalizing that payphone, you are under arrest."

"What are you talking about? I was calling my girlfriend."

"You've been drinking."

"Uh, yes."

"You're under arrest. Public intoxication."

"Uh, maybe I can... just pay a fine? Right here? How about, say, $5 million?"

I think it works better in Mexico.

One comment that alarms me came from the prosecutor:

This case cries out for the statutory maximum term of imprisonment, as well as a substantial fine, because of the seriousness of defendant Snipes' crimes and because of the singular opportunity this case presents to deter tax crime nationwide.

Am I the only one uncomfortable with the prospect that nationwide deterrence would be a legitimate cause for augmenting criminal penalties?

Apparently, the argument was at least somewhat compelling. Snipes got 3 years. Ouch.

Wesley Snipes Gets 36 Months In Prison [WSJ Law Blog]

Arby's owner buying Wendy's for $2.34 billion in stock (AP)
Wendy's won't have to worry about investor Nelson Pelz pushing them around anymore. That's cause he's going to own the company. Pelz' company Triarc has agreed to pay $2.34 billion for the fast food chain, which has been struggling of late. Among its longstanding problems: the death of Dave, who charmed audiences in his commercials. He was probably the best-known restaurant founder to appear in commercials since the mustachioed bald man in the Dunkin Donuts commercials. That was his place, wasn't it? Amusing fact about Wendy's: the company cited money spent on looking for ways to boost his share price as an excuse for its profit slide in its latest quarter. Pathetic.

Load Up the Pantry (WSJ)
This is from a couple days ago, but in light of the topic du jour, thought it was worth pointing out that a columnist at the Journal recently called for Americans to stock up on food. The best is his first line: "I don't want to alarm anybody, but maybe it's time for Americans to start stockpiling food." It's one of those things: if you say you don't want to alarm anybody, you're about to say something alarming. Anyway, good thing he's (just) talking about food and not telling fox to stockpile their dollars under their bed.

Microsoft Net Falls 11%; Outlook Low-End (WSJ)
This earnings season continues to confound the analysts. Everyone seemed to think that Google would come in light. It didn't and the stock added a fifth of its value. With Microsoft, everyone assumed the company would show all kinds of upside. It didn't. It wasn't horrible, but light-ish. Meanwhile, the company made its strongest noises to date that it could walk away from the Yahoo bid if Yahoo keeps holding out. Will they? At this point, it's still a little hard to believe, but Yang & Co. have to be a little nervous.

Ford Posts a Profit, Surprising Wall Street (NYT)
You know what we're going to say: don't believe it. Ford says it made a profit of $100 million, so they can take a bow for that. But come on. The company lost $15 billion over the last couple of years, and it expects to go back into the red for the remainder of 2008. So to believe that they really made $100 million is to believe that Q1 was a major anomaly from the overall trend.

$$$ Rice-Hoarding in America... [JeffMatthews]

$$$ ...don't worry about it [TSC]

$$$ Criminals target energy, financial markets, Mukasey says [CNN]

Ian Roncoroni—what the hell? Not so much as a thank you email for the Delmonico’s cheese steak we sent you yesterday afternoon? Where’d ya think it came from, the Cheese Steak Fairy? Even though we specifically told the girl on the phone to note that it was “from DealBreaker.com”? Not to put to fine a point on it, but do you know who you're fucking with? DB did something NICE for you. That doesn't happen too often. We are currently taking under advisement whether or not we should destroy your life (see Vayner, Alexey; Cayne, Jimmy; Blarney, Ron; Varney, Lon; Klarney, Don).

Despite the simmering anger we feel toward you, we must acknowledge that tingly good feeling derived from sending roasted animal carcass slathered with processed cheesestuff to a random financial services hack we have never met. To recapture that feeling while we debate the relative merits of fucking you up quick two times, we at DB have decided to send a delicious sandwich to randomly selected analysts/associates/traders/ceos/fund managers of our choosing several times a week starting in May. This serves multiple functions: First, despite our unrelenting mockery, we loves us some fucking Wall Street idiots and want to show how much. Second, we want to measure just how egregious your utter lack of response is, Ronco, relative to your brethren. I bet Carney's annual take home (two large) we get a nice response from everyone who receives the DB largesse, from the mightiest (Stevie) to the meekest (the entire team at Citi). It's on; your fate hangs in the balance, Oyster Boy.

Even though they launched this awesome new ad campaign some months back, Microsoft said profits from last year fell eleven percent, according to the Journal, which says it will have more information in a bit. Until then, amuse yourselves by watching the Ballmer video we all know you have bookmarked (as you well should).

Leon Black is logged into Bloomberg and idling.

Who's going to be the first to ask him why they laminate all their materials?

Given recent events (and the testy guilt of their staff), this story is more befitting of musically-inclined UBS but, alas, the Godfather of Soul never trusted the Swiss with his money. And this is quite an insult considering he did trust would be murders of "adult entertainment" providers (more on that later). The guardians of James Brown’s estate are suing Morgan Stanley for allegedly allowing the estate’s former manager, David Cannon, to withdraw millions of dollars held in an account set up to produce $1.1 million a year for Brown’s “personal use.” Trustees Adele J. Pope and Robert L. Buchanan Jr. claim that beginning in 2000, Cannon transferred $4.2 million to himself, before draining the $10 million account entirely by 2002. Morgan Stanley said today that Cannon had been authorized to manage the fund as he saw fit, and is contesting the suit. We’re sure Morgan Stanley has retained the best counsel money can buy but considering the fun fact that the latest iteration of Brown’s will was drawn up in 2000 by H. Dewain Herring, a Columbia, S.C., lawyer who is serving 30 years in prison* for murdering a strip club employee in 2006, they should be prepared for a fight.

Stewards of James Brown Estate Sue Morgan Stanley [NYT]

*Specifically one where security is lax

Muffie Benson-Perella (muffie AT dealbreaker.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.

I really don't think Portfolio is being fair to Cody Willard.

The Fox Business host is mocked in the most condescending of tones by Jeff Bercovici, who given his appearance, should probably not be throwing stones. This is a pity, because he looks a little like Dan Loeb (Danny, I left messages, call me, ok?). Well, all right, Dan Loeb after a some really bad coke and wrong turn somewhere in New Jersey.

The world of finance is very image conscious. Cody understands this implicitly. His Samson-like tendrils are a statement. A strong and powerful message. "I am here," they silently protest. Financial media is even more image conscious than finance is. So it stands to reason that Cody would be particular about his hair.

Still, Cody, we might have to work on that tie.

FBN's Willard: 'I Love My Hairstylist to Death' [Portfolio]

Well, I just had a lovely conversation with UBS’s head of investment bank corporate communications. She was calling to ream me out about our Rock Band story from yesterday, because apparently it has to do with charity—the tryouts were for a competition being held during a May 6th dinner, at which UBS is being named the recipient of the “Heart of Gold Award” by the Volunteer Center of Southwestern Fairfield County—and we made light of the auditions, held in the UBS cafeteria. She mentioned several times that our insinuation that the whole thing was really a prescreening for upcoming layoffs “wasn’t amusing at all.” In my defense, none of the tipsters who told us about the auditions mentioned anything about charity, which we rarely, if ever, poke fun at. I should have done my due diligence, but the notion, while silly, that UBS would be putting together a Rock Band team to compete against other local businesses, not unlike a corporate softball team, didn’t seem that far fetched. Nor did the conspiracy theory that senior execs had taken our December suggestion that firms ought to play one big game of Assassin to determine who gets laid off seriously, decided to run with it, and put their own musical spin on things.

Also in my defense? That post was moderately funny. I’m comfortable saying that. If it wasn’t “amusing” enough for you, well, then I guess you’re a more critical arbiter of comedy than me. The bottom line is that the purpose of this site is to offer funny stuff about finance. If yesterday’s piece wasn’t good enough for you, Chuckles, tell you what—you write something "amusing" about UBS, and I’d be more than happy to put it up. Either that, or eat 250 oysters. Until then, get out of my face.

Related: UBS’s Fetish For Using Dulcet Tones As A Salve To Ease Sack-Rippingly Bad News

*But, seriously, it's nice that you do charity.

Start a rumor, pay the price. We know you love watching Wall Street and imagining yourself as the Big Swinging Dick who profited by talking up (or down) Blue Star Airlines. But that's maybe not such a good idea. Just ask Paul Berliner. Remember all that stuff about how Blackstone was revising its offer for Alliance data down? No? Well, trust us, it was a big deal at the time. Yeah, that rumor? Paul.

Makes you wonder what else he might have been responsible for. Bear Stearns liquidity? Cold Fusion? The breakup of the Rolling Stones? You never know. Could have been Paul, right? Ok, maybe not.

SEC Fines Ex-Schottenfeld Trader Over Blackstone Deal Rumors [Bloomberg]

If you’re like us, you spent last weekend (and the yeast-less days following) being plagued by the fear that, for various reasons, Jeff Epstein hadn’t been invited into anyone’s home for Passover. Blissfully, that concern was put to rest today. The Post reports that the massage enthusiast has been in Israel since Saturday to celebrate the holiday. (It is unclear how extensively traditional the Seders he attended were, though all accounts note several rousing, no holds barred games of find the afikomen in my pants with the harem of Bat Mitzvah-aged women he had in tow). Epstein is apparently also “meeting with Israeli scientists about medical research he's funding and taking a tour of military bases with [Friends of Israel chairman] Benny Shabtai." RE paying men, women and children to stand around awkwardly on several occasions while he jerked off into a towel, Epstein’s representative would like every to note that “the alleged victims have all acknowledged they lied about their age." They all said they were they were 30, and they looked 35. Epstein would’ve called bull shit, but he respects the ladies.

Just Visiting [Page Six]

Following up on our exclusive, breaking, 13D news insight, we now bring you the news that after sufficient sacrifice on the activist altar, Wendy's antagonist is, for the moment, appeased.

You can't really blame Wendy's for being a reluctant target. At one time the firm was expecting as much as $4 billion cash offers from potential suitors. Trian and Triarc (Peltz' hedge funds) were offering just $900 million in cash and the rest in stock, or a combination with Arby's.

Wendy's to Unveil Deal With Peltz [WSJ]

Nelson Is Angry [DealBreaker]

Yesterday, Lewis spent time at the annual meeting defending the Countrywide acquisition, and telling investors that both companies would be much more prudent with underwriting future mortgages.

BofA, So Good [NYP]

Jeff Immelt: Is anyone from the damn public relations office back yet?

Vice President: The new girl, Tina.

JI: Wait, the hot little number who's schtoinking that editor at that financial paper?

VP: The Wall Street Journal?

JI: Right. The Streetwise Journal.

VP: The Wall Street Journal.

JI: Get her sweet buns in here. Now. Oh, and I'd like my eggs poached this morning.

VP: Right.

When the Swiss are worried, you really need to watch it.

No lesser financial news giant than Forbes reports (via Thomson Financial News) that former Credit Suisse CEO Oswald Gruebel (a likelier name for the antagonist in a spy novel with a plotline involving stolen gold you have probably never encountered) quipped "We've narrowly escaped a system collapse. This has never happened before." One is tempted immediately to think of World War II, the Great Depression, the Cuban Missile crisis, but this ignores the "system collapsiness" of these events from the Swiss View. To the Swiss these are but small tremors. Trifles.

So the next time someone tells you the sub-prime mess is overblown, or that Bear Stearns should have been allowed to fail, just point them to Oswald Gruebel, and remind them that the primary Swiss concern with World War II was that it increased shipping costs.

International Financial System Was Close To The Brink [Forbes]

Credit Suisse Q1 write-downs of $5.3B drives $2.1B loss (AP)
The big write-downs just keep coming. A $5 billion write-down and a $2.1 billion loss at Credit Suisse. Surprisingly, its the banks first loss during this whole mess, so in some respects, they're really behind the curve. Said CEO Brady Dougan: "I am confident that we will continue to serve as a safe haven for clients in uncertain and volatile markets, and to seize the opportunities that arise in times of market dislocation to create long-term value."

Debt Collection Done From India Appeals to U.S. Agencies (NYT)
Now they're outsourcing the debt collectors too! What a ridiculous outrage! In these economic times, we should hope that debt collection would be the one growth industry, there to provide millions, or at least hundreds of thousands of jobs to laid-off Americans. But nope. The debt collection industry -- rather than feeling a duty to the American worker -- has decided to shift more labor to India, apparently because it's cheaper, while still rather effective. Profiteers, all of them.

Apple Riding a 51% Jump in Mac Sales (NYT)
The Mac is back. Ok, it's already been back for awhile, and you'll have to forgive the obnoxious McCain reference. But it is back big. And now Apple is right back to square one: it's a computer company again. Sure, the iPhone is a big deal, and the iPod Touch (iPhone sans-phone) may be the future of the iPod, but for real growth, look no further than those things you find on tables at coffee shops, with stickers on 'em. And they're still just a sliver of the overall market.

CEO Says Microsoft Could Forgo Yahoo (WSJ)
Ballmer is trying to make Yahoo shareholders nervous, implying that Microsoft could, in the end, change its mind, particularly if Yahoo balks at the current price. Negotiating tactic much? Probably. But also probably a little truth, since, well, Microsoft could live without Yahoo. Oh and Microsoft employees are said to be growing increasingly wary. Not surprisingly. It's like being 17, and your parents are about to have a new kid.

Thai rice hits new record, feeding food fears (Reuters)
In places where rice is a diet stable, spiking rice prices are disturbing. In the US though, it's probably a good thing. Unless you must have your crispy duck with rice, it's really just wasted space in your stomach. Empty calories without much to show for it. Yeah, some sticky white rice can be nice. And arguably its the sina qua non of good sushi rolls, but really. No need. So we're sort of happy that Wal-Mart is now rationing the stuff. And since Wal-Mart=retailing, there's basically a big public rationing going on, the likes of which have not been seen here in quite awhile.

$$$ Frankonomics [LoSC]

$$$ In Subprime Mess, a Bonanza of Billable Hours [DealBook]

$$$ Steel Dynamics Inc. (STLD) [WallStrip]

Ken Griffin has poached yet another JPMorgan senior exec. This time it’s Derek Kaufman, most recently global head of fixed income in the bank’s proprietary positioning group. Last week we felt badly for JD and his mounting personnel losses. Now we're convinced he's behind them. Slowly but surely, his plan for a Bear-saturated JPM is coming to fruition.

Citadel continues hiring spree for senior managers [Financial News]

Back in December, we floated the idea that any company looking to reduce headcount ought to get creative about it. Performance is very hard to quantify, and if you’ve got send thousands of people packing, why not have some fun with your firings? Our suggestions were: 1. A giant game of Assassin and 2. Some sort of survival challenge revolving around a lethal strain of syphilis. No one took the (genius) idea seriously. Until now.

UBS apparently sent out a company-wide email yesterday to recruit employees for its first inaugural Rock Band team, which will supposedly compete against other businesses. Auditions are being held today at 5 in the UBS cafeteria. Sounds like fun, doesn’t it? Yeah, until you realize that this whole thing is a guise for preselecting people for upcoming layoffs. At least that's what it sounds like to us. The only question is, will team members be given the benefit of the doubt (and employment) until they lose to Uncle Jim's Hardware? Or are people getting the axe the moment they show up for tryouts?

You’ve got a Delmonico's cheese steak coming your way, on Dealbreaker, delivered by Charlie Gasparino. Tip generously, or you’ll be looking at the business end of a hissy fit. Interested in receiving your own free lunch or snack? Get out there and make something happen. Nothing is beneath you, nor us.

Earlier: The Gaunlet Has Been Thrown Down. Who Will Pick It Up? We're Looking At You Leon Cooperman. Stevie-boy. L-TRAIN.

Don’t let the fact that they’re firing upwards of 9,000 employees fool you—JPMorgan is trying desperately to recreate that Bear Stearns magic over on Park. The Post reports that Jamie Dimon is rallying hard to retain the services of many of the senior executives who led the bank to its brilliant demise, at all costs. Obviously no dream team would be complete without the big guy himself, but barring the cancellation of a year-long bridge tour which is scheduled to finish at the Vatican, he’s unavailable. Dimon is willing to settle for the next best thing, however, if only he’ll have him: “Jimmy Cayne protégé,” Donald Tang. The former Bear vice chairman considered is “one of the top Asian investment bankers in the US and a bridge to the coveted Chinese market,” character flaws Dimon is willing to overlook in his desire to rebrand JPMorgan as the premier destination for anyone interested in learning to count cards.

Dimon Juiced By Bear Tang [NYP]

The British are annoyed. It seems the brand London Interbank Offered Rate ("LIBOR") has been somewhat sullied. Just about everyone sensitive to interest rates has had the bad news broken to them that LIBOR is the source of their ills. In the equation "LIBOR plus 2%" the "2%" isn't the problem. LIBOR is.

Well, that's not all of it. You see, the Brits are responsible for Structured Investment Vehicles too. Nicholas Sossidis and Stephen Partridge-Hicks are generally "blamed" for introducing us all to that particular bit balance sheet smoke and mirrors. You guessed it. Brits.

But then, it is sort of hard not to want to resent LIBOR as a structure, given its recently revealed susceptibility to manipulation by, ahem, Brits.

As for SIVs, there is nothing more reprehensible than giving Americans more excuses to move liabilities off of balance sheets without actually removing them off of balance sheets. Damn Brits.

NYBor [FT Alphaville]

Just because you are very far from Wall Street doesn't mean the pie is no longer situation in the sky. Just a day after Vietnam shocked this part of the world with record setting prices for kind-of-crappy rice, traders and analysts began spreading the word that rice prices are bound to come back down to earth once those damned little Philipinos have bought their share.

Rice futures don't care, however, and continue to rise based on fears that exporting countries may impose curbs to keep domestic supplies high and prices low. Governments all across South East Asia fear the popular backlash from high domestic rice rpices. China already has quotas in place, as do Egypt, Vietnam and India. Thailand could be next.

Some savvy investors say global food trends--corn being turned into fuel, for instance--are driving up demand for rice. As other grains and carb sources are chewed up by the green revolution, the world may increasingly turn to rice (already the most popular food on the planet). More corn in the gas tank means less rice in the curry.

Related: Sam's Club limiting sales of rice [Reuters]

--John Carney is eating all the rice he can.

True Story: Yesterday at around 5pm at Ulysses on Stone Street…Ian Roncoroni, an energy otc options broker for Power Merchants Group…ate 244 Oysters in 1 hour. He also collected $3500 bucks for his efforts.

Johnathan Knee channels Rilke in admonishing young professionals to think twice about banking. Apparently, Knee thinks the young finance professionals are a shallow, thoughtless bunch, content to drift through the world, driven to and fro only by the winds stirred up by parental accomplishment wake-turbulence, unable to direct even a fraction of the introspective energy required to see past what is effectively a simple, single-line, plotted course mapped out more by peer pressure and lack of true vision than any kind of real drive.

He paints the neo-financier class as too disaffected to even rise to the level of fickle. Too dull to exhibit real independence. Too competitive to wonder about self. Too lost to find the elusive goal of deep, self-fulfillment, at least of the sort required to bring even a modicum of contentment to existence.

I suppose Knee also expects the neo-financiers are too focused on money to pull very hard on the rudder. He doesn't speak these words, but the undercurrents are clear enough. That word "money" makes not a single appearance in his piece suggests he thinks it important to deemphasize it to the neo-financiers, even only if implicitly. This is, of course, a thinly veiled insult to his target audience, like the mother who manipulates the six year old with reverse psychology.

Though it all he exhibits that condescending, caregiver tone that exposes his attitude for what it really is, exactly paternal contempt neo-financiers fled to the open arms of finance to escape in the first place.

In all, his piece is a stinging indictment of neo-financiers, cutting edges dulled only by the background against which it is told: massive layoffs. He draws a cruel and mocking picture.

And every word of it is right on the money.

Must I Bank? [WSJ]

Ambac Financial Group, Inc. Announces First Quarter Net Loss of $1,660.3 Million
For the quarter, Ambac showed a loss of $1.6 billion or $11.69 per share. Seeing as the stock only trades at around $6 per share, then the company sports an PE ratio of -.50, which is actually kind of impressive. Last year, for a little perspective, the company earned $2 bucks. Then again, last year they were trading close to $90, so the stock's gotten a little cheaper to reflect the new situation (duh). From the release: "As previously reported, Ambac has written very little business since late 2007 as fixed income investors awaited the results of rating agency reviews and resultant actions. In the U.S. municipal market issuance was down 22% quarter on quarter.

Apple Buys Chip Designer (Forbes)
A bit of a shocker: Apple, which has basically never bought anyone, has bought out a boutique chip designer called PA Semi, which could conceivably make chips for its various devices, like the iPhone. The company confirmed the purchase to Forbes in response to a query. Apple's got a massive, presque-Microsoft-like cash horde that it's built up, and though it's still growing fast, there's some growing pressure on them to do something with it. This hardly makes a dent in the pile, but it's something.

Yahoo’s first quarter good; Not good enough for a higher Microsoft bid; Yang wants more (Between the Lines)
That pretty much sums up last night Yahoo numbers. The company managed to beat expectations (though really, they just hit the "whisper" number), and it guided up a little bit. But not so much that it's obvious that Microsoft must now raise its bid. They might raise their bid, just to get the deal done and be done with it all. But hard to say that Yahoo conclusively proved its worth beyond $31 per share. Note that Microsoft releases results tomorrow, and technically, its three week deadline ends Saturday. So expect some action.

Clinton Defeats Obama in Pennsylvania, Vows to March On (Foxnews)
The long national nightmare goes on.

SEC Rebuffs Lawmakers Over Bear (WSJ)
If you think about it, Congressmen are the real royalty in this country. Sure, Presidents have too much power and that's a problem. But you never see Presidents just arbitrarily demand documents (they probably do it in private...) or demand thta someone sit in front of them and answer questions on live TV. Imagine if Bush brought up the CEO of some organization that he didn't like, got the cameras rolling and then just badgered him for three hours. It'd be an outrage. So good to see the SEC standing up to a congressional demand, denying requests for certain documents on Bear. We're ready to chip in for the SEC legal defense fund just for once.

$$$ Deals: Delta Flies Away with the Honors
In our M&A Roundup for the week ended April 20, a tepid week was led by its $7.12-billion proposed acquisiton of Northwest. [CFO.com]

$$$ Clear Channel banks offer to arbitrate [TheDeal]

$$$ Bernanke on tax returns [NewsGroper]

$$$ Exelon Corporation (EXC) [WallStrip]

The year 1997 is never far from the thoughts of many Thai businessmen and economists. That was the year financial markets forced Thailand to abandon its currency peg, and the Thai baht fell from 26 baht per dollar to 56 baht per dollar. In the US, this devaluation is mainly remembered--if at all--as precipitating the collapse of the once high flying hedge fund Long Term Capital Management. Here in Thailand it is remembered for its domestic consequences, especially the transformation of the Thai economy into one heavily dependent on tourism.

For Thais, 1997 is ripe with meaning--psychological, financial and even metaphysical meaning. The Thais view the events of 1997 in religious terms, as demonstrating the cosmic justice central to Buddhism. Years of unsound economic policy had resulted in the accumulation of bad karma. The painful adjustments that followed were the working out of this imbalance, making merit for past excesses.

It's not quite standard monetary theory but before you laugh at the Thais for their superstitions, remember that a Red Sox fan recently attempted to curse the new Yankee Stadium by burying a David Oritz jersey in the foundations. And the Yankees, as if in competition to prove they are even more superstitious than Sox Nation, formally "excavated" the jersey. And while it might seem odd that the Buddhist Thais have defied the market process that forced them to devalue their dollar, they are hardly the first to incorporate Mammon into their holy pantheon. And the lessons about monetary excess that they've learned serve them well. In fact, sitting in a cafe in Chiang Mai, listening to this theory of time, money and karma, I couldn't help but be reminded of the work of both the Chicago and, especially, Austrian schools. And I wondered if Ben Bernanke might want to take a couple of lessons in Buddhism.

--John Carney, who is in exile in Thailand, thinks superstitions are bad luck.

International Equine Acquisitions Holdings is turning itself into a hedge fund that will make money off of ponies!* IEAH, founded five years ago by Michael Iavarone and Richard Schiavo, already owns 80 horses in training, 15 broodmares and a handful of future stallions, including Big Brown, who’s favored to win this year’s Kentucky Derby. In its new iteration, Iavarone says the fund will offer “liquidity and options that people in the horse business have never had before.” The firm hopes to raise $100 million and possibly go public before the end of the year. With aspiring jockey Larry Robbins, and his hefty donation, on their side, they can’t lose.

Equine hedge fund tries to outpace the market [Reuters]

*(Don’t care for horses myself but I used the exclamation point because I get the sense I’m in the minority on this one. Show of hands, how many of you foam at the mouth over this stuff? Okay, now among those of you with your hands in the air, how many of you would say your predilection has to do with polo match connotations? And how many would say you’re more inclined to chalk it up to a deeply repressed desire to play with one of these? These are questions IEAH is going to ask you during the qualified investor screening process, better get used to answering them now.)

In July of 2005, "Endeavor Acquisition Corporation (A Development Stage Enterprise) was formed in Delaware. Just before Christmas 2005, the company raised around $130 million in a "blank check" IPO, as a "Special Purpose Acquisition Company," effectively a promise to go buy something worth owning, eventually.

The thing about SPACs is that they don't generally start with an investment in mind, and they have particular restrictions on how long they can spend looking. In some cases, management must pay the fees paid out by the SPAC if it liquidates. This can get pricey. Think $1 million and above. In this case, Endeavor had 18 months from the "consummation" of the IPO to sign a letter of intent. After that, it was required to liquidate.

Said the firms filings:

Our efforts in identifying a prospective target business will not be limited to a particular industry, although we intend to focus on service businesses in one of the following segments: • business services; • marketing services; • consumer services; • health care services; and • distribution services.

They had about 6 months left when they filed an 8-K announcing their intention to acquire American Apparel, "a leading provider of cotton leisure wear geared toward contemporary metropolitan adults and sold through company-owned retail locations and online," which I suppose might have been termed a "distribution service company," after a long night in Tijuana.

Jeff Immelt: Ok, this gun thing with Jack is killing me. It's flashy enough and out there enough to make headlines, the story won't die and, while the phrase "If he misses again I'll get a gun and shoot him" is outlandish enough to be ignored if it came from any other personality, this is Jack fucking Welch here. Nothing he says seems crazy to the market. I'm so sick of everyone fawning over him. Look, I want some really serious ideas about how to address this. I want- hey. Wait a minute. Where is Linda?

Vice President: She's on vacation, sir.

JI: What?

VP: She is out of town and unreachable.

JI: At a time like this? Who the hell thought that up?

VP: It was quite sudden, actually. She rushed out of the office right after the CNBC piece.

GLG Partners announced today that standout portfolio manager and practical jokerster Greg Coffey, who resigned from the London-based hedge fund on April 14, only to withdraw his resignation on April 15, has once again decided to leave the firm. Like we're going to fall for that one again.

Earlier: ‘I resign. No, no. I kid... I kid...’

GLG's Coffey Quits Again [FINalternatives]

Eddie Lampert lost about $475 million yesterday when shares of his Sears Holdings fell $7.24 to close at $97.48 (now at $96.61), after Bank of America temporarily closed a billion dollar line of credit. Lampert, a close personal friend of DealBreaker, told us that he’s not too worried about the drop, and shareholders shouldn’t be either. To prove his point, Big E sent out a quick letter to the interested parties last night. Find it after the jump.

We love wildly irresponsible predictions. If they don't come to pass, well, it was just comedy. If, however, they do....

So when RBS announces not just that they are writing down $12 billion, but that they are looking to raise $20+ billion in capital (the largest rights issue in British banking history), and there is absolutely no truth whatsoever at all that the government applied any pressure on the bank, none, really, we smile a little. It's a sad smile though. Seriously.

As if that is not enough, add Shades of Schwartz(tm): Fred Goodwin, RBS' Chief Executive, promised (for real this time) that RBS would not need to raise any new capital. $0-$20 billion is not really that wide a spread, when you think about it though.

But if you are an existing shareholder, don't worry. They still plan to pay their pending dividend... in shares.

RBS Takes Further Write-Downs, Plans $23.78 Billion Rights Issue [WSJ]

Count on Bloomberg to give Congress a financial literacy quiz. Of course, also count on Bloomberg to slant so severely in the direction of fiscal conservatism so as to dull its credibility to near-zero figures. Still, occasionally we get a half-way amusing passage out of the piece.

8. The purpose of the tax code is:

a) To empower astute government bureaucrats to pick economic winners and losers. (For a history of recent picks, see ethanol subsidies, which contributed to food shortages, hundreds of millions of dollars in food aid for developing countries and an increase in greenhouse gases.)

b) To ensure full employment for lobbyists;

c) To encourage ``good'' behavior, such as homeownership, and discourage ``bad'' behavior, including smoking and drinking.

d) To create enough lucre to pay for the 11,610 pork-barrel projects in fiscal 2008, the second highest ever and a 337 percent increase from 2007, according to Citizens Against Government Waste, a private, non-profit group dedicated to eliminating waste in the federal government. This is after ``Congress adopted earmark reforms last year,'' the CAGW says.

Credit Suisse announced this morning that it will be cutting 500 jobs in investment banking and “administrative support” divisions. Spokesman Bruce Corwin claimed the layoffs are due to shrinking client demand, though one might note the “coincidence” between the start of the tortuously long summer lines at the Shake Shack and a sudden reduction in headcount. Luckily, for any interns tasked with spending three quarters of his/her June/July/August waiting to order someone else’s Shroom Burger, we’re told that the cuts are worse than what’s being reported. Supposedly over half the real estate finance group “will be gone before the end of the day,” and there will be “severe carnage” across the entire firm. Severance packages are said to include two months pay, period.

On the bright side, let’s give it up for whoever’s idea it was to break the layoffs news (and the inevitability forthcoming news of blown earnings) on the same day rival Swiss bank UBS came out with a fifty page report detailing in easy bullet-proof form* how it went about systematically destroying value over the last year or so. That was smart. Very smart.

Credit Suisse Says It's Cutting 500 Jobs as Client Demand Wanes [Bloomberg]

*Helpful for anyone interested in following suit but unsure where to start.

Remember when hating the French was as American as apple pie? Those were the good old days of Freedom Fries and Liberty Kissing. (Although the promised land of anti-French sentiment, downward price pressure on the best burgundies and champagne, never really materialized. Apparently people who "raise up their glasses against evil forces" don't drink the best French wines.)

These days the country that hates France the most is China. France is seen as behind the opposition to China's Tibet policies. They are blamed for the protesters who are using the Olympics as an opportunity to tarnish China's image around the globe. This pisses off the Chinese, especially the young professional class, so much that the Chinese government had to ask them to chillax a bit.

Why all the aggro? Chin a sees the Olympics as their moment in the sun, when they would display to the world the glories of the Chinese way of life. These protests are storm clouds that threaten to blot out that mighty sun. It looks to them like the protesters--who really aren't that French, as far as I can tell--are politicizing the Olympics.

We can't help but think that this is pretty much awesome. Whoever managed to get the French and the Chinese to start exchanging blows deserves a medal. But what we really want to know is what the Chinese are calling French Fries. And what will this do to the global price of potatoes?

--John Carney hopes that the Laotian government doesn't mind him writing this kind of thing from its northern provinces.

Clearly they did not get "The Memo." When you start to sell off $5 - $7 billion in assets, tap credit lines to support liquidity needs, start shopping around for a "financial partner" and announce a severe dilution to shareholders to shore up flagging capital and pay dividends, your shares are supposed to appreciate. I mean, you'd think these guys were operating back in 2007 or something.

CIT's Shares Fall Following Capital Plan [WSJ]

It's the hot season in Thailand. The sun blazes, the air simmers and I'm covered in perspiration that simply has nowhere to go in this heat. It's like sex without air-conditioning on the hottest day in August in New York City. A slow, limp breeze blows across the Phuket beach off the Andaman Sea, providing only slight relief. Far more relief comes from gin and tonics--perhaps too much, I realize too late into my fifth cocktail.

"Even Jamie Dimon says it will get worse before it gets better," I find myself telling the Thai businessman who is buying me drinks in exchange for my ill-conceived ideas about US real-estate. I'm pretty sure he has no idea who Jamie Dimon is but I say the name with such gravity that I'm pretty sure the businessman, who either exports or imports (my Thai is still pretty bad) textile machinery, probably thinks this "Jamie Dimon" character is the Secretary of the Treasury, the Chairman of the Federal Reserve and JP Morgan himself, all rolled into one. And, in a sense, I guess he is.

Where was I? Oh, right. Gin and real estate. I'm telling Mr. Textile Importer/Exporter about how the rapid decline in home price has left many (so-called) homeowners owning more than there home is worth. And this prompts them to default and walk away from their homes, leaving the banks with the keys to declining assets. That's when Mr. TIE interrupts.

"In Thailand this is not possible. The bank would foreclose but the borrower would still be liable for any additional losses," he says.

In some states, I tell him, it's possible for banks to pursue other assets of defaulting borrowers but they rarely do. It's a costly pain in the neck, and many borrowers don't have much in the way of assets by the time they are giving up their home.

He explains that what's really wrong with the US is that we have no honor. Actually, that's not how he puts it. He says in Thailand the financial and legal consequences of defaulting would be secondary. A defaulting borrower would suffer a serious loss of face and incur negative religious points, or karma. Some real estate investors are still "making merit"--performing redemptive religious acts--for losses following the 1997 crash.

I down the rest of my gin and try to reassure him. Not everyone with overleveraged real estate will default, I say.

"In the US we may not worry about losing face," I say. "But we do worry about losing our FICO scores."

--John Carney, who has never owned a house, is "on assignment" in Thailand.

RBS Takes Further Write-Downs, Plans $23.78 Billion Rights Issue (WSJ)
That's some coinage right there. First RBS said is lot over $11 billion for all the usual reasons. And now RBS has asked shareholders to approve a nearly $24 billion raise. It needs the cash, having suffered double through all this nonsense after its $10 billion acquisition of ABN Amro. But RBS' pain is the good news of other banks, as $24 billion should generate a buck or two in underwriting fees. Goldman Sachs, Merrill Lynch and UBS will manage the offering.

Wall Street Journal Editor Expected to Resign (NYT)
That was quick, to say the least. Four months after taking the job, under new boss Rupert Murdoch, WSJf managing editor Marcus Brauchli is out the door. There are differing accounts of why, though none suggest there was a major rift. Maybe more like a minor one. We shall see on that. The news happened to come out the same day as WSJ's big push into expanding its opinion section. Maybe Brauchil really didn't like that move.

Oil steadies near overnight record (AP)
The Guinness book of World Records must be frustrated, as it has to re-do the section for "world's most expensive barrel of oil" on a seemingly hourly basis. Actually, on this we'd refer you to Paul Kedrosky, who has a modest proposal re: oil price records. Basically, after a new record has set, you set up some silence period, where we can't talk about records again. Only at the end of the period can we point out that oil has set a new record. He calls it a "market noise abatement act" and we like it.

Nomura Employee Investigated for Insider Trading (Bloomberg)
Insider trading investigation at Nomura. Apparently these kinds of things can really hurt a bank's reputation: "Japan's Pension Fund Association, which manages 13.2 trillion yen of retirement assets, will stop placing stock- broking and bond-trading orders through Nomura until the regulator has completed its probe and Nomura has shown it's in compliance with regulations, Taku Yamamoto, head of the Pension Fund Association's equity group, said in a phone interview."

$$$ Ever wonder what Jesus would do if he went to Wharton? [IvyGate]

$$$ The Conference Room: How You Get Fired In Finance [Mergers and Inquisitions]

$$$ A real shareholder wouldn't sue Blackstone [NewsGroper]

$$$ Hannah Montana Downfall Futures Spike on New Photos [1-2]

Working late and feeling suicidal? Let a bathrobe-clad Tim Sykes, and threat of TimTV, help you finish the job.
(Or, on the brighter side, help you realize that you could've turned out a number of ways and this wasn't one of them.)

I've finally reached my breaking point with the Germans. Other transgressions could be chalked up to a quirky sense of humor befitting a nation obsessed with David Hasselhoff, but this latest one goes beyond "slightly off color," and Heidi Fleiss Eichman, it just goes too damn far. Deutsche Bank announced via internal memo today that it will no longer be footing the bill for whores, of any kind. Neither the kind you have actual sex with, nor the kind you watch on TV and masturbate to in your hotel room. Though the crackdown is said to be a cost-cutting measure intended to please shareholders and harping analysts alike, it's apparently incited spiteful rage in Oppenheimer's Meredith Whitney, who doesn't even write about the company, but was banking on its employees buying her husband's herbal supplement, Mamajuana Energy. It seems three-quarters of DB had pre-ordered the berry-flavored liquid (yours for only $4.99!). Who knows what sort of retribution she's got in store for the Germans, but if the drug is as effective as Mr. and Mrs. Meredith claim, it'll be pretty difficult to work up that Whitney-brand rage. Given the propensity for lies inherent in both pro-wrestling and financial analysis, however, we're going to go out on a limb and say Mamajuana is a sham, and Deutsche Bank should watch its back.

Top German bank responds to credit crunch by staff from putting brothels on expenses [Daily Mail via CWS]

It almost seems like there are three kinds of pending buyouts. The deals where the financial sponsors want out, the deals where the lenders want out, and the deals where both want out. Where Alliance Data Systems sits among these options is anyone's guess. Believe it or not, the fact that Alliance filed suit last Friday, pushing for a $170 million breakup fee as compensation for the failed deal doesn't really clear matters up on this count.

Back in February, Alliance dropped its first lawsuit against Blackstone, yes, this would be the second one now, then indicating that Blackstone had made nice-nice like with Alliance and promised on the souls of its grandchildren to consummate the deal. Back then, the risk arbitrage guys who were betting the deal was likely to close were thrilled. Alliance's stock shot up 6% on the news to $55.00 or so. That sounds impressive, until you notice that Blackstone's offer was $81.75 last May.

Fortune has an incredibly insensitive article today asking "Can anyone run Citigroup?", the implication being that CEO Vikram Pandit can't. We're willing to hear arguments that run counter to our belief that with Vikram in charge, Citi is not only "too big to fail" but, as one commenter so brilliantly put it, "too happy to fail," but we can't help feeling as though it's a little unfair to be ruminating on these things so early in Lil' Vik's tenure, which is just barely four months old today. I'm ballparking it, but it seems as though Chuck was given something like years to fuck up before anyone said "Hey wait a second." Plus, we're pretty sure that Pandit's grad school professor already told us that his student could get the job done last week. If that wasn't a case closing vote of confidence, I don't know what is. And it sort of just makes me want to shrug my shoulders or, even more dramatically, throw up my hands and say "I give up," this notion that we can't accept what someone's teacher from over twenty years ago said and move on. But that's not my job so let's talk about this for a second.

Can anyone run Citigroup? Personally, we're inclined to say yes. Let's be honest, it's not as though shareholders, the board, et al's standards are exceptionally high. It's not like they're shooting for "success" at this point, though if they are what would success be defined as? Not becoming Bear? Basically, expectations are very, very low. I'm going to spell it out for you-- they're just looking for a mammal. That's their bottom line, and they're really very flexible on that, too. But nobody wants to admit that, Fortune included, so every so often we're forced to go through the asinine question of who can get the job done. Enough of that. Anyone can run Citigroup, even the guy we jokingly/seriously nominated a few months back (when you have the corpse of a genocidal maniac in charge, other banks will know not to mess, this much I promise you). The real question is: can anyone run Citigroup into the ground? Like really, really into the ground? Interested parties (my shorts) would like to know.

Can Anyone Run Citigroup [Fortune]

Ok, fess up. Who is it? Who shit the bed? I want to know, for no other reason than morbid curiosity and occupational hazard. We're not leaving here until somebody comes forward (5 pm). We received a tip earlier that Simons might have something to get off his chest but we're skeptical/biased to the beard.

Hedge Crashes Bond Yields [NYP]

Muffie Benson-Perella (muffie AT dealbreaker.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.

Quick, name the source of this quote: “The shortage of fossil fuels will happen far earlier than a real change in global warming, it will happen in the next 50 years.” I'll give you a hint, it is one of the foremost authorities on petroleum products.

No, but good guess.

It was Dr. Franz-Josef Paefgen, Chief Executive of Bentley. Personally, when it comes to energy matters and finance, I can't think of a better source than someone like Paefgen, who must have his well-manicured finger directly on the pulse of the petroleum marketplace. He cuts a stylish figure across the showroom and is always quick to address the concerns of clients and investors with a soft touch and a quick smile.

Two foot tall Bank of America announced today that net income for the first quarter fell 77 percent to $1.21 billion (23 cents/share), from last year's $5.26 billion ($1.16/share), clearly missing analysts' 30 foot high proverbial hurdle of a 45 cents/share profit.

But don't let the face-plant, or the word that BoA's been laying people off, or this stock photo of CEO Kenneth Lewis looking very un-Pandish, or the fact that the wee-small bank is down about two percent, get you all depressed. Things really aren't as bad as they seem-- First of all, the bank still has vague designs on boosting profits twenty percent. It won't, of course, but watching the attempt should be amusing. Then there's the excitement surrounding soon having His Orangeness, Angelo Mozilo, in the building, which hasn't yet worn off. AND Punk analyst Richard Bove shared some extremely glass half-full thoughts on the matter of whether or not BoA's "earnings" were a failure this morning. Said Bove: "If you were to tell me that deposits were falling dramatically, that the company's cash flow had turned negative, then I would say you'd better get out of this stock and get away from the company, but that's not happening."

Even the man who claimed several months back to not be having "fun" anymore was in good spirits. Moments after Bove's discussion, a tipsy Lewis was heard telling a couple first years, shocked and confused as to why he was talking to them, but flattered nonethless, "He's right, you know. Thank god we have all those grandmothers making retail deposits and boosting our cash flows. They will come in handy in absorbing the liquidity drain caused by $1.47 billion sized write downs of collateralized-debt obligations, $439 million in losses on high-risk loans and increased capital costs caused by the damn Moody's credit downgrade. I swear, I'm going to sacrifice three live roosters tonight to give thanks for the fact that we have all those liquid IRA and retirement accounts around, because we still have to fucking absorb that lead balloon Countrywide." Of course, their being read in on the situation lead to their being escorted out of the building by a pissed off HR officer, who's spoken to Lewis before about "keeping it in the lock box," but the dismissals will only help BAC's bottom line so, again, not as bad as it sounds.

Bank of America Net Income Falls 77% on Writedowns [Bloomberg]

When I was a little girl, one of my classmates, an obnoxious, blond, little tot named "Anders," was fond of saying "You can't afford it!" to everyone who was in earshot. Later in life, I became certain Eddie Murphy had known Anders (though the timing, geography and demographics of this notion are difficult to compute) owing to his Delirious "We got ice cream" routine.

I have some ice cream, and I'm gonna eat it all, I'm gonna all- all my, ice- ice- cream. You don't have no ice cream. You didn't get none. Cause you on the welfare, You can't afford it, You can't afford it. And yo father is an al-co-hol-ic. Wanna a lick? Psych!

One sunny afternoon in the locale of Equity Private's early development, Anders taunted the newly arrived, token American student in the class over the new watch which Anders possessed, and the American did not. Strangely, I remember the watch being a very pleasant shade of pink, but that's for another time. In any event, Anders barely managed to get the words "You can't afford it," (in fairness, it was more of a "You can't affooooooord it") out before becoming the recipient of the most crushing blow to the groin any pre-teen could have been expected to deliver. Who said Americans can't play soccer?

Perhaps this is a somewhat circuitous narrative to arrive at the following basic point:

However like schoolyard the posturing, you probably shouldn't be taunting a company backed by Carl Icahn with "You can't affoooord it!" That is, unless you are wearing a lot of protective gear.

Can Blockbuster Afford Circuit City? [WSJ]

A bit of "You can't affooooord it" taunting after the jump. Warning: NSFW (unless you work at SAC).

You will be happy to hear that the people of Thailand are very concerned about Wall Street.

The country is still recovering from its own financial crisis- the collapse of the Thai Baht in 1997, that took much of the domestic economy down with it- and it is deeply concerned about the economic condition of the United States. The collapse of Bear Stearns and the seemingly bottomless losses at other investment banks and brokerages have captured Thai attention, imagination and sympathy.

At least until today, when Thais turned their eyes back on Asia after a bid from their ancient rival, Vietnam, shook up the rice markets. Rice exporters have lately been bidding to fill the demand from the Philippines, which is said to require at least 500,000 tones of rice on this go around. For medium quality rice, $900 per ton is what $100 a barrel was to light sweet crude: a psychological breakpoint. Vietnam just asked for $1,200 per ton for 25% (read: pretty crappy) rice.

That price has sent shock waves across Asia. There is widespread fear that this may foreshadow a price explosion, particularly in higher quality rice. Here in Thailand, where the phrase "to eat" literally translates as "to eat rice", the price of rice is rather a serious matter.

The irony of Vietnam- the once communist foe of Asian market economies- pushing the rice price envelope is not lost on the Thais. But they do seem to miss the irony implicit in the criticism by countries with market-based economies leveled at Vietnam for offering rice at a price that the market- if not Thai psychology- demands.

- John Carney, DealBreaker's Editor in Chief, is presently cornering the rice market while on vacation in Thailand.

When rated in terms of importance, the report from UBS on $37 billion in write downs probably bears no small resemblance in Zurich to the Warren Commission report in Washington, D.C. The Warren Commission was, of course, put together by Kennedy's successor. Ironic, then, that the UBS report would be assembled by Peter Kurer, UBS' legal counsel and the man tapped to succeed now disgraced UBS Chairman Marcel "Thank you, Herr Trump" Ospel. In this case, however, Oliver Stone will be pleased to know that the damage was done by a three-unit, classic, triangle ambush which, according to the Wall Street Journal, was composed of "in-house hedge fund Dillon Read Capital Management, which was closed last year after racking up losses; the collateralized debt obligation, or CDO, desk; and the asset-backed trading book."

Of course, Oliver Stone wouldn't be happy with us if we didn't find a patsy. UBS is happy to comply and offer up Huw Jenkins, who, in as close to a "he acted alone" conclusion as we are likely to read, was faulted for "...keeping bank management and Chairman Marcel Ospel in the dark about the losses until August, several months after Dillon Read had been shut down."

Peter Kurer is expected to be sworn in as President during a hurried ceremonywin shareholder approval for the Chairman's slot on Wednesday.

UBS Issues Excerpt of Report On How Losses Came About [WSJ]

NatCity Close To $6 Billion Cash Infusion (WSJ)
Seeing as the moniker 'merger monday' (we were sure we were going to wake up to some Yahoo-Microsoft news this morning) is all but dead, perhaps it's time to start talking about 'infusion monday'. There does seem to be a pattern of the WSJ reporting on some fresh cash infusion, late on Sunday or early on Monday, and they're always basically correct, unless the paper has low-balled the number in some way. This time its National City taking $6 billion in private equity cash.

Bank of England unveils controversial £50bn mortgage plan (Guardian)
We've sort of lost track of all the various efforts from the US government to stem the housing/credit crunch. Anyway, here's what we've got going on across the pond. the Bank of England has unveiled what it calls, cleverly a "Special Liquidity Scheme". Basically, the government will take on some £50bn in unmovable mortgage backed assets in exchange for highly liquid and safe government bonds. Does £50 billion not seem like enough to you? You're not alone. Already, some economists are asking for another £100 billion to have a dent. Ingrates.

Clinton Needs Record Margins, Turnout to Catch Obama (Bloomberg)
It's been such a blissed out seven weeks. We've felt totally comfortable tuning out the election coverage, ignoring Intrade stats, and keeping it on CNBC, rather than the occasional switcheroo to MSNBC. But all that (obviously) changes today (on the eve of the Penn. primary) and tomorrow (the primary itself). So yeah, even though Hillary seems favored, she's gotta lot of catching up to do. For the record, Clinton is at like 90 percent to win Pennsylvania on Intrade.

Selling Chat on Fox, and a Sex-Enhancing Potion on the Side (NYT)
Just, wow. NYT boldly profile John Layfield, the ex-pro wrestler, who, like Lenny Dykstra, has gotten into writing and pontificating about investments. Both Dykstra and Layfield have also done some side, non-finance businesses. Dykstra had a chain of car washes. Layfield: he sells an OTC sex potion called... Mamajuana Energy. You read that right. Mamajuana Energy: "Mr. Layfield says he first sampled the concoction in a dive bar in the Dominican Republic while on vacation and was hooked." Oh right, and his wife is the famed Meredith Whitney, who is also an investor in Mamajuana (pronounced, unbelievably: mama-Ja-wana).

$$$ First year analyst seeks good looking lady who "shudders at the idea of human interaction." [craigslist]

$$$ TheStreet.com’s Factually Inaccurate Pump And Dump [TS]

$$$ XM/Sirius Merger [WallStrip]

SAC needs a credit risk officer. Since so many of you have done a bang up job with that stuff this year, the competition should be fierce.

Career Center [DealBreaker]

Suddenly, once some sunshine is beamed in their general direction, a host of banks clear their throats and look down at their shoes before reporting LIBOR closer to the "shadow interbank money rate market." The revelation was so dramatic that it apparently caused a 5.4 magnitude earthquake in Illinois this morning.

This spurs many questions, one of which is not "Gee, I wonder if they were artificially depressing LIBOR," since the answer to that is actually painfully obvious. More interesting is who runs the membership committee for the various "shadow markets" I have increasingly heard about and why haven't I gotten an invitation to apply?

There's this shadow interbank money rate market, there's the "shadow economy," "shadow government statistics," and "shadow prices." I feel like there is this whole hidden shadowy world to discover. Very depressing. I never got to go to the "no girls allowed" treehouse club either.

And, frankly, it's kind of a bummer. Now that it has been exposed, the Shadow LIBOR market will vanish.

LIBOR Surges After Scrutiny Does Too [WSJ]

Most people (or at least those who study hedge funds as closely as I do, which is to say “HF Experts”) agree that Old Lane has been among the most disappointing shops (“non blow up” category) in recent memory. So this should come as no shock:

Particularly embarrassing for new CEO Vikram Pandit—whose firm has now taken some $39 billion in write offs—Old Lane Partners, the hedge fund he founded that was acquired by Citi last year, was forced to write off $202 million in intangible assets related to its multi-strategy fund.

Still, you’d think it hurt Vikram’s pride, at least a little. And yet:

Observation: Gordon Browne in Washington, D.C.

Observation: Gordon Browne meets with all the regulars AND Bernanke.

Observation: Browne was a senior (the most senior?) British financial official for 10 years.

Observation: The Pope's visit has kept the Browne visit out of the papers.

Observation: Bank of England grudgingly admits financial intervention might be required.

Observation: USSP5 swaps spiking significantly.

Observation: It's Friday, meaning two day lull in markets for crisis management.

The billions upon billions of dollars that Citi wrote down under the umbrella of "stuff we fucked up on" today (and the resulting "negative revenue" of $5.1 billion) shouldn't give investors the confidence that C has the vaguest notion of what it's doing. And yet, the bank's stock is up almost seven percent. There is only one logical explanation for this surge. People want to see more of this:

1. Announce massive writedowns

2. ?

3. Profit

Citigroup Swings to Loss On Hefty Write-Downs [WSJ]
Citigroup's Results Propel Futures [WSJ]

Merrill Post Third Straight Quarterly Loss, To Cut 4000 Jobs [WSJ]
Great Expectations for Merrill CEO [WSJ]

JPMorgan Selling $6 Billion In Preferred Stock [WSJ]
Earnings Slump at J.P. Morgan, And Continued Stress Is Expected [WSJ]
J.P. Morgan, Intel Rally Markets [WSJ]

Over on D-Squared Digest, Daniel Davies challenges all comers to a round of "moron poker," wherein the participants "on-up" each other with links to the bottom stories of the day- the more daft, the better. We think it should be called "Moron Hearts" instead, technically, but, ok, we're game. We are certainly (and proudly) the Street's clearing house for all things moronic.

His lead is with this piece by Alice Miles on subprime. Following the rules, we'll cite this piece over on The Consumerist, previously seen in our very own "write-offs," insisting that the repeal of Glass-Steagall is responsible for all our subprime woes.

Three months ago, at the World Economic Forum in Davos, Switzerland, I commented to one of the best-known men in American finance that he seemed pretty glum. He agreed, and said that was true for virtually every financial executive there.

But he said, there was one exception. John Thain, the newly appointed chief executive of Merrill Lynch, was smiling a lot, he said, and with good reason.

Back at home, an uninvited Jimmy Cayne was also feeling no pain.

Related: World Economic Forum: Meeting Of The Minds Or Five-Day Long E-binge? Or Both?

Looking Up, But From A Deep Hole [NYT]

Presented without Comment:

April 18, 2008

Mr. James V. Pickett
Chairman of the Board
Wendy's International, Inc.
4288 West Dublin-Granville Road
Dublin, Ohio 43017-0256

Dear Jim:

I am writing to you in my capacities as President of Trian Fund Management, L.P. and Vice Chairman of Triarc Companies, Inc.

As a large shareholder of Wendy's, Trian is very concerned about the current direction of Wendy's. On April 17, 2008, Trian and Triarc were informed that the Wendy's special committee had rejected two acquisition proposals made by Trian and Triarc. One proposal called for the combination of Wendy's and Arby's while the other involved an acquisition of 100% of Wendy's for over $900 million in cash with the balance in stock. Our proposals would have required the approval of the shareholders on each side of the transaction and neither of the proposals was conditioned on the receipt of third party financing. Our most recent proposals were summarily rejected in less than 24 hours.

The more I watch the dynamics of the political prosecutor, the more I believe that attorneys general should ideally be individuals who labor out of the public eye in modest solitude, their ambitions and drive segregated from the basic duty of representing "The People" against would-be wrongdoers. Particularly in the face of what the financial press has dubbed a "worldwide backlash against capitalism" the dangers presented by cults of personality married with broad investigatory powers are significant. Are we so taken with charisma, be it dark or light, that we are doomed to endure these cyclical characters?

Apparently, no one, including the Wall Street Journal, has learned from the saga of Eliot Laurence Spitzer, his naked ambition, or his aggressive tactics in bringing low both the various financial institutions that became his favorite shoe pounding crusade, and political opponents like Joseph L. Bruno upon which he unleashed various state police surveillance teams. That "fast-and-loose" became Spitzer's calling card, along with the adroit ease with which he manipulated the press and the public, should have been alarm bells aplenty, hinting urgently at the deep, throbbing vein of hypocrisy and duplicity you just sort of knew (but likely could not articulate) lurked beneath the contours of Spitzer. That he even revealed his fatal flaw at all is more a function of some ingrained pathology of self-destruction, than the realization any kind of inevitability. No one who pointed to questionable behavior in Spitzer could do so credibly. He was, most likely, already investigating them. Yet, he was beyond careless- hung by his own tactics, the wiretap, the money trace and the threat of public exposure. But how many public officials are simply better at concealing their ethical malignancies?

And so, what are we to make of his successor, Andrew Cuomo? Well, certainly the Wall Street Journal has de facto dubbed him the new Spitzer in the growing investigation of Auction Rate Securities. This is ironic given the history of mild animosity between the two. Indeed, the Journal takes pains to paint Cuomo's investigation as an industry-wide one, though Cuomo himself has been happy to egg along that particular interpretation. Whatever one's view on the investigation, and personally I think the behavior of various parties in the Auction Rate business are, in equal measure, poor business sense and mild ethical lapses- the former being anything but criminal and the later being potentially criminal, it is difficult not to wonder if Cuomo too will draw the gravity-bound character arc that begins with the iconic smiling Wall Street Journal hedcut and ends with a flashbulb-whitewashed behind-the-podium portrait on page six.

Auction Rate Debt Market Faces Probe [WSJ]

Citi Reports First Quarter Net Loss of $5.1 Billion, Loss Per Share of $1.02
What's another $10 billion or so in writedowns? After all, the company booked a 63 percent gain in transaction income and international revenues were strong. And it hardly needs mentioning that ex-writedowns, Citi actually turned in something like a $5 billion gain, which is actually a monster quarter. Pandit: "During the first quarter, valuations of our sub-prime related exposures in fixed income markets and leveraged finance assets have further declined and credit costs in our consumer lending businesses have increased."

Citi beats doomsday scenario (Fortune)
Well, you've gotta start somewhere, and beating a doomsday scenario is better than beating nothing, so we're sure they're glad to take it. The $10 billion writedown was less than the most dire forecasts of an $18 billion write down (again, hats off).

Google Quiets Growth Fears (WSJ)
It was probably one of the most scrutinized quarters of all time, as analysts pored over morsel after morsel of Google data. And the general view was that it was going to be tough, with only an outside chance of a solid score. Well they did it, solidly beating expectations on the revenue and earnings front, while sending shares of comScore into a tailspin after hours -- comScore being the traffic analysis firm that had been warning the loudest of a deceleration in paid clicks.

Iceland, a Tiny Dynamo, Loses Steam (NYT)
Wow, an article about Iceland in the NYT, and it's not in the travel section (there's someone over at travel who loves Iceland). Anyway, yeah, you probably know the story. The little mis-named island that could has been running into trouble (it probably means they're going to have to put their plans to go 100 percent hyrdogen on the backburner). Anyway, maybe the island need to get its name back in the travel section some more -- you know, to boost those tourism dollars.

$$$ Blame The Subprime Meltdown On The Repeal Of Glass-Steagall [Consumerist]

$$$ Merrill's Muppet Moment [DealBook]

$$$ Yankees pitcher rules Taiwanese economy [TheDeal]

$$$ IP Litigation Arbitrage Tactics [GP]

Chairman Clifford T. Phillips III: Ok I'd like to call this hearing to order. The witnesses have been sworn and I'd like to get started right away since we have limited time. Our pension system in this state is in crisis.

As members of this committee may know we have made great strides in providing our state workers with some of the most competitive and progressive defined benefit programs in the country. We have been able to attract and support the best talent in the state and through aggressive hiring, grow total man hours worked by state employees, despite the fact that we have had to struggle with the highest absenteeism rate in the nation. I am proud to say that despite this, real wages for our employees have outpaced the rest of the country by 15% per year for the last 10 years. No, no, please, ladies and gentlemen, hold your applause. Let me continue.

We have reduced the vesting of 120% last year's salary and health benefits in our state pensions to age 48 and, for the first time, added a cost of living multiple that raises cash portions of the pension benefits by 1.2x the CPI so that our retired state workers never have to worry about the Bush Administration's ridiculously low inflation estimates again. This finally puts us in front of San Diego.

We have done our part to support the workers of this great state, now it is time for our financial advisors to meet their commitments to our loyal and sacrificing workers. And this is why we are here. We have expected of the gentlemen before us, our pension fund's financial advisors, and we have made it very clear that we require of them nothing less than 16-18% annual returns. This is not optional, gentlemen. This is what we have mandated. This is what we require. This is what we expect. At this point our state pension fund is beset by a 46% funding ratio. So let me begin by asking you, where are our returns?

William Ackerchapman: First of all, Mr. Chairman, I want to thank the committee for giving me the opportunity to speak this morning. The crisis we face is not a crisis of returns but a crisis of costs. The unfunded obligations of the state pension fund are out of control and need to be-

Earlier: How Do You Think Lloyd Blankfein Got His Big Break? Protesting His Pay For Carving Gus Levy's Beef In The '70s Via Yom Kippur Sit-In

Here’s some news sure to please the xenophobes who populate this site—BNP Paribas has been making cuts in leveraged finance, high yield, and fixed income all week. Severance for junior staff is apparently 2 months salary, and analysts are receiving prorated bonuses on top. With the 35 hour work week, that apparently comes to about $2500.

Though conventional wisdom states that nothing or no one will ever be able to whip the diversified whorehouse that is Citi into something resembling a profitable company, at least one person willing to go on record believes Vikram Pandit “has the smarts” to do just that. We’re speaking, of course, Pandit’s finance professor from grad school, who took a cue from Bernanke’s thesis advisor yesterday and went to bat for the old boy in an interview with Portfolio. According to Rajnish Mehra, who served on the CEO’s dissertation committee at Columbia, Citi “is in safe hands” with Vik because his thesis “tackled the [now relevant] question of asset pricing with heterogeneous agents.” So don't worry, shareholders, about that prediction that C is headed to $10-- Mehra says he even went back over Pandit’s work just to make certain he was remembering the right kid from over twenty years ago and, sure enough, he was (like anyone could forget that smile).

Citi at a Crossroads [Portfolio]

Hey, so I was doing this story, you know, for my job with the Post? Yeah, yeah, I know. Anyhow, check it. Believe it or not, this guy John Paulson, he is this guy who made a lot of money by shorting sub-prime. I mean a lot. Like enough to buy Bear Stearns. Or enough to buy Delta Airlines. Like, with change. No, really. He did it by shorting stock. You know, when instead of buy low, sell high, you sell high and buy low. Cool huh? Yeah, and he made like a billion percent! And this one time, Congress was going to try and raise the tax on all these hedge fund guys like Paulson. But that didn't work. Anyhow, all these rich hedge fund guys, they get all this money and homeowners can't even buy eggs and sugar. But that's capitalism, you know? Sometimes you get the bull, sometimes the bull gets you. Is that how it goes? You know what I mean.

No, I can't talk for long. I have to go do a story on Britney Spears' manager's bank accounts. No, I know but it's better than all these student loan stories and local debt stories they have had me doing. What? Oh, I don't know. They have had me doing these business articles since last year. Yeah, I don't know, I miss Columbia.

No, yeah, I gotta go to. My editor wants some coffee. See ya!

1 Man, 1 Year: $3.7 Billion Payout [Washington Post]

As some of you located downtown might’ve noticed, cafeteria workers employed by Aramark at banks throughout the city (JPMorgan, Citi, etc) have been calling on client and owner Goldman Sachs to “spread the wealth” a little more evenly for over a month now via freedom marchesto/protests outside of 85 Broad, to not much success. That ends today at 3. We just received word that striking staffers, “oppressed” by Goldman in a manner they feel is reminiscent of the way the Pharaoh oppressed the Jews, will be holding a Passover Seder outside of 1 New York Plaza, presided over by Rabbi Michael Feinberg. Union leader Dennis Diaz hopes the meal/demonstration will get the Egyptians inside to realize the slave-like conditions they’re forcing Aramark employees to work under. That’s right, people—hitting them where it hurts. Jew Guilt.

Though it remains to be seen if the stunt will garner any results, we’ve been hearing rumors that for this feat of genius, senior officials on the prop desk have plans to offer whoever’s idea this was the position of running Josh Birnbaum’s portfolio upon his departure.

Earlier: What Are You Doing Tomorrow?

Though the words “Jeff [Immelt] has a credibility issue” did indeed exit the mouth of Jack Welch yesterday on “Squawk Box,” the former General Electric CEO showed up on the CNBC morning show again today to clarify that under no circumstances should they have been misconstrued to mean that there are issues surrounding Jeff Immelt’s credibility. If that’s how you took it, WOW. Said Welch, “Much to my shock and horror remarks I made on Squawk Box about the performance of GE CEO Jeff Immelt were interpreted to mean the exact opposite of what I intended. You see, what you took as my suggestion that Immelt couldn’t manage a Taco Bell if his life depended on it was actually my way of saying the guy’s an outstanding CEO. Besides, Taco Bell is a tough operation to handle, trust me. The hours suck with the all night drive-thru. No one would know that better than me. I could tell you some stories.”

Welch did not, however, take back his threat to “get out a gun and shoot” his successor, should the “shit for brains” CEO (which is to say “genius”) miss earnings again, ‘cause guess what? He meant it. And not in the up/down, in/out, I was just messing, by “I’ll fucking kill you” I meant “I’ll fucking give birth to you” way, but in the I swear to god, I will not hesitate to end your life if that's what it takes to get some results out of this bitch. Check out the name tag button on my lapel, grandma Immelt. You're in my bizzaro world now.

GE's Welch Defends Immelt, Says Remark Misinterpreted [Bloomberg]
Welch says GE's Immelt has `credibility issue' [AP]

There is absolutely no doubt that, to the extent such exists, the best reading in public filings with the SEC are in a few areas. Letters to management attached to SC 13Ds filings are always amusing, particularly when penned by a scribe with the dark sense of humor or acerbic with of Loeb or Chapman. Occasionally you might even find an S-1 that has potential. But for the real gold, sometimes you have to go to good old SC 14A, particularly in the face of a good, solid proxy fight. It is also hard not to be entertained by Rule 424 filings for things like sovereign bond issues. Consider these headings under "Recent Political Development" for a bond issue by the Republic of the Philippines:

Election Protest of Legarda
Arrests in Connection with Coup Attempts
Impeachment Complaints Filed Against President Arroyo
Communists and Affiliated Groups
Abu Sayyaf and Moro Islamic Liberation Front
Government Expropriation of Ninoy Aquino International Airport Terminal 3
Proposed Amendments to the Constitution

I mean really, when have any of Apple's filings been so entertaining?

I was curious how high level the Q&A section of the Merrill Lynch call might be and what the "rest of the world" thought of the chaos on The Street. So I enlisted help. I pestered a good friend of mine who is a Junior studying economics at a prominent university, until she agreed to transcribe the Q&A (after I threatened to tell her boyfriend about the shopping spree from last month she caved). Here are her raw notes:

I (Heart) Jeff Heart, since he doesn't seem to be able to operate his phone. Now thats a questioner.

UBS: You guys are screwed with these impaired securities, right? Even though you tell us they have limited impact on our P&L.

ML: Nah, we are just going to hold them forever.

UBS: You guys are screwed because your leverage ratio is huge right?

ML: Did you not hear John, idiot? John said this. Did you not hear John? We don't really disclose that. Not really.

UBS: Uh, what about liquidity and can I borrow a cough drop?

ML: Ok, so John mentioned our liquidity pool, and there was our 10-K, and John answered this. Sheesh.

Oh, and apparently "they" don't have to repay any of the debt they borrow.

(In case you hadn't seen it on DealBook the other day).

Merrill Lynch posts steep first-quarter loss on write-downs (AP)
At first blush, Merrill's earnings don't look so good, though who knows how these things play out during the day. The company posted another wide loss -- $2.14 billion -- which was deeper than analysts estimated. Revenue also came in below expectations, which may be the real story here. Here's the actual release. While the headline gives the basic numbers, the subheadline trumpets: "Record Quarterly Net Revenues in Global Wealth Management." Well that's something. Another something: 4,000 jobs are expected to be cut, says the company in the report.

U.S. Proposes Auctioning Runway Slots to Curb Delays at La Guardia (NYT)
This is interesting: The US Department of Transportation, in hopes of finding some way to ease flight delays, is looking to trial a system of auctioning runway slots at La Guardia. We're not sure how well it would work, and it's just a modicum of the regulatory reform we'd like to see, but we like it. Why not go for it. If you can find some way to determine a market price for something that's not being priced on a market, then we're all for it. Of course, the response to the proposal has been laughably predictable. Governor Paterson called the proposal "woefully misguided", while saying it would end up costing consumers more (as we say, better to pay in money than in time). While the president of an industry group said: "It is truly mystifying, with the airline industry in a financial meltdown due to overwhelming fuel prices, that D.O.T. decides now is the time for a costly economics experiment at La Guardia.” Dumb.

SLM Has Loss as Student Loan Business Looks `Broken' (Bloomberg)
Another horrendous quarter from Sallie Mae, which remains unable to sell its portfolio of student loans. How come though. Do they really think the bright eyed college kids of America will one day turn out to be deadbeats. Well, they're probably right. At least everyone we know is.

Yahoo-Google Deal Advances (WSJ)
A week later, and Yahoo's search ad test with Google is going well... so well that the two are closer to signing a real deal, whereby Yahoo would outsource search ads to Google on some ongoing basis. It's not exactly clear how that would work, nor would such an agreement necessarily thwart Microsoft. Nor would this necessarily pass anti-trust muster. But the trial is due to an end in a week, but there'll probably be movement before then.

$$$ Ben Bernanke on why "all Greenspans are brats." [NewsGroper]

$$$ MuffBP TV [MM]

$$$ Bank of England ready to do something about the mortgage crisis [Telegraph]

$$$ HARTFORD, Conn. — Former General Electric Co. chief executive Jack Welch said Wednesday that he would "get a gun out and shoot" his successor, Jeffrey Immelt, if he allowed GE to miss earnings targets again. [AP]

So it seems there's been a slight mix up at Merrill vis-a-vis capital. CEO John Thain was under the impression that they had some*, while senior executives beg to differ. Sources tell CNBC's Charlie Gasparino that after Thain told anyone who would listen that things were a-okay, MER Chief Financial Officer Nelson Chai muttered to himself, "I wish he hadn't say that," before sighing audibly, and strategizing new and inventive ways to spin what many believe will be a $6.5 billion writedown announcement this week. Close personal friend of DealBreaker E. Stan O'Neal tells us that Thain had been under the impression that he'd be able to sell the stuff he stole from his daughter's apartment for at least twenty grand, when in reality, the computer, iPod and tank tops didn't go for more than 9.

Merrill May Need to Raise More Capital, Insiders Say [CNBC]

*or "enough"

Apparently Bear's Financial Analytics and Structured Transactions group will continue existing at that bank on Park; "all current and new hires have been ask come along for the ride less than two block walk."

Obviously when we're talking about JPMorgan and Bear Stearns (and really just life in general but in this particular case, the little deal that's going on between these two specifically) the question we have to be constantly asking ourselves is, where does Goldman fit in? And, more to the point, how does Goldman benefit? You already know that Lloyd Blankfein has scored the Laz-y Boy Cayne spent so many hours lovingly rolling joints in while he was at the office, but the firm has also called dibs on BSC mortgage derivatives trader Peeyush Misra, who made Bear upwards of $100 million a year. Oh and Josh Weintraub, head of Bear's "private-label mortgage group," is headed to RBS Greenwich, though that doesn't have much to do with Goldman, so I'm not sure why you'd be interested.

Bull market for Bear traders [Fortune]

It had to happen eventually, I suppose.

Annoyed with the lack of transparency exhibited by Blackstone (because how could anyone know that place wasn't a fishbowl of transparency?) an investor in the firm has decided to sue. Color us surprised. There is no way we could have guessed that this was on the horizon.

Institutional Investor published its annual ranking of the highest paid hedge fund managers today. There are no suprises. John Paulson came in first with $3.7 billion, followed by George Soros with $2.9 billion, James Simons with $2.8 billion, Philip Falcone with $1.7 billion and so on and so forth (backing up the truck was Viking Global Investors' O.Andreas Halvorsen with a measly $520 million). Pretty much what you were expecting all along, right? Right. What you probably weren't expecting, however, is the news that No. 2, Jorges Soros, has announced plans to take some of last year's income and get into the vino business. He's already bought up some land in Napa for a vineyard to be named at a later date, and is apparently circulating marketing materials to qualified investors interested in getting in on the fun. DealBreaker has obtained said materials. Find them after the jump

Learn from the experts:

Moody's Training [Moodys.com]

Related:

S&P Report on Subprime Write-downs [The Big Picture]

Ever fantasize about a cat fight between JPMorgan CEO Jamie Dimon and Citadel founder Ken Griffin? Fantasize no longer-- we'll get to see the middle aged men pulling each other's hair and rolling around on the floor of [neutral territory that doesn't come to mind] yet. According to the Post, Dimon is royally PO'd at Griffin for hiring JPMorgan fixed-income chief Patrik Edsparr, who'll start as chief of Citadel's European division in July.

Awkwardly, Edsparr, who hadn't yet figured out the best way to break the news to his boss (I always find a sheet cake helps), was forced to tell execs at JPM about his new gig on March 14, when they asked him to come over from London to work on the Bear deal. Even though Griffin is said to be calling execs at the firms from which he is poaching talent to "smooth over ruffled feathers," and may have rung up JPMorgan to ask "We cool?", insiders say Dimon is very upset and has spent the last month self-medicating by plowing through trays of spanakopita and stacks of Bear pink slips, while trying to figure how to make Griffin pay.

Are we excited for a week and a half of Dennis Kneale and his funky glasses, who are filling in for Dylan Ratigan on "The Call"? If it means we'll finally get an answer to Charlie Gasparino's question "does Dennis Kneale use hookers?" we are.

What better way to rub in the sting of tax season than a DealBreaker quiz on the top grossing CEOs for 2007?

No, you don't really hate tests, you just spend too much time reading the comments. Onward!

Match the top 6 CEOs with their 2007 pay package (no Google/Journal cheating or Bess won't love you anymore):

A. Ray R. Irani, Occidental Petroleum Corp.

B. Richard S. Fuld Jr., Lehman Brothers Holdings Inc.

C. John A. Thain, Merrill Lynch & Co.

D. Vikram S. Pandit, Citigroup Inc.

E. Lloyd C. Blankfein, Goldman Sachs Group Inc.

F. Kenneth I. Chenault, American Express Co.

1. $78.52 million.

2. $68.5 million.

3. $60.98 million.

4. $46.23 million.

5. $40 million

6. Top 6? Hah! Not!

So much for the Bank of America securities players hoping to make it to the show. Their dreams ended today in the AAA club with Charlotte layoffs announced this morning. No word on severance, though employees are apparently being handed foam fingers as they're escorted out of the building.

Forgive me, but I have a hard time paying attention to the likes of Wells Fargo when it comes to market advice. (Then again, Goldman doesn't thrill me either, so maybe I'm the problem). It is, therefore, somewhat difficult to restrain myself from comment when their chief economist digs into bullish "market players" with the stinging description "bordering on delusional."

Remind me for a moment why I am listening to the chief economist at the firm whose latest contribution to financial innovation is... wait for it... online safes? (You just can't make this stuff up).

Goldman Sachs And Wells Fargo Warn 'Delusional' Investors On Stocks [The Telegraph]

Wells Fargo Plans To Sell Online Safes For Storing Vital Records [The Mercury News]

"Oil Industry" and "Massive Capital Expenditures" undoubtedly appear on the same page in many documents. Despite the propensity to castigate "big oil" for its massive profits, in the end it is a cyclic commodity business with rather intense price volatility and increasingly debilitating exploration and production costs. (Which keep getting worse and worse and worse). That said, it seems the second guessing on Exxon's 2007 budget has begun. The tale could well be a case-study in the consequences of short-term focus by the public markets (or a savvy PR office resisting a brewing "windfall profits tax.") Says the Journal:

In 2007, Exxon repurchased $31.8 billion of its shares, up five-fold from the amount acquired in 2003. That activity helped earnings per share. It didn't increase oil output.

Wall Street analysts generally have cheered this financial conservatism, on the notion that big oil companies tend to waste money when they start drilling with too much gusto.

Shareholders love buybacks, of course. But given the multi-year scratch to strike periods involved in bringing oil finds to production, there are few businesses with a more direct need for long-term vision.

Lee Raymond left in 2005 (with much outrage over his $400 million take home) but I'm somewhat tempted to see if any current executives might have compensation packages disproportionately related to Exxon's late 2007 share price.

But seriously. I mean, if you can't trust big oil, who can you trust?

Exxon's Stingy Capital Spending May Haunt It [WSJ]

Since I come from a buyout background, it is hard for me to imagine anything more unsettling than the revelation that LIBOR might be... well... fixed.

The London InterBank Offered Rate (see what I did with the formatting there?) is a disproportionately serious figure used as the basis for Greenspan-only-knows how many debt structures. That its utility as a baseline risk measure would be called into question (even in the absence of any real manipulation or inaccuracy) is, in itself, very alarming.

LIBOR isn't a market priced rate. There is, at least so far as I am aware, no LIBOR index (LIX?) to trade on. Instead, a rather old and more than Byzantine mechanism is used to report the figure to Reuters. Specifically:

Every morning by 11:10 London time, "panels" of banks send data to Reuters Group PLC, a London-based business-data and news company, on what it would cost them to borrow a "reasonable amount" in a designated currency. The dollar Libor panel, for example, consists of 16 banks, including U.S. banks Bank of America Corp. and J.P. Morgan Chase & Co. and U.K. banks HBOS PLC and HSBC Holdings PLC. Reuters uses the reported borrowing rates to calculate Libor "fixings." To reduce the possibility that any bank could manipulate an average by reporting a false number, Reuters throws out the highest and lowest groups of quotes before calculating averages.

Of course, what the banks report to Reuters is a "best guess," of sorts, and, accordingly, in times of limited liquidity, reliability of the figure is less than stellar. But add to this the prospect that banks are understating the figure to disguise their distress and you have a rather volatile brew.

If you can't rely on banks, who can you rely on?

Ok, so that was a joke.

Bankers Cast Doubt On Key Rate Amid Crisis [WSJ]

Stressed Banks Underreporting LIBOR Rates [Naked Capitalism]

Blood On The Floor At WaMu (Forbes)
Congratulations to CtW Investments for successfully forcing out Mary E. Pugh, the chair of WaMu's finance committee. The group had been pushing for this, and last night, after the company posted a big loss, Pugh resigned. The firm also put out an announcement claiming shareholders had withheld over 50 percent of their votes for certain other WaMu directors, underlining their claims that the folks on top ought to go.

House Approves Bill Banning Private Debt Collection Of Taxes (Dow Jones)
We didn't even know that taxes were actually collected by private parties. There's something very... feudal about that. Apparentlyit's just when a payer is delinquent on their taxes that a private agency could get involved, not generally. We'd like to see it the other way. Where private organizations, like H&R Block, are actually responsible for remitting some quota of tax dollars up to the feds. And how they get the money is their own business. We suspect they'd offer free tax filing for one thing. Or do you think they'd resort to intimidation and breaking legs?

Wall Street Winners Get Billion-Dollar Paydays (NYT)
Amidst all the implosions, some hedgefunders ad a great year. That guy John Paulsen, as everyone knows, id pretty well, earning himself some $3.7 billion (that's good, but sucks to be him on tax day). Also, and this surprised us for some reason, George Soros is thought to have made $3 billion last year. Not sure why that's so surprising. Honestly, we sort of assumed he was washed up, which is why he spent so much time on causes.

Intel Net Falls 12%, But Forecast Is Bright (WSJ)
Three months ago, a rough report from Intel totally tanked the market, confirming for many that the recession was here and now. Last night, its report wasn't so bad. Yeah, profit fell as expected, but the outlook didn't show further deterioration. Things aren't perfect yet, overall worse than they could've been. Shares were up 7 percent after hours.

JPMorgan Chase Reports First-Quarter 2008 Net Income of $2.4 Billion; Earnings Per Share of $0.68
There's the report from JPM, and there's some snap analysis from Bloomberg. Looks like the company pretty much led analysts to the right conclusion, as that $.68 number is just what they were expecting.

$$$ Testosterone Causes Traders To Cheat, Risk Sabotaging Relationships With Economy [Jezebel]

$$$ Citi to Disband Management Committee [DealBook]<