• 04 May 2012 at 9:30 AM

Opening Bell: 05.04.12

BofA Sees $5 Billion Collateral Need in Credit Downgrade (Bloomberg)
A two-level downgrade of long-term senior debt ratings would have prompted the bank to post about $5.1 billion of collateral tied to derivatives contracts and other trading agreements as of March 31, the Charlotte, North Carolina-based firm said yesterday in a regulatory filing. It would have had to post an additional $1.1 billion of collateral if trading partners opted to tear up contracts in a two-level cut.

RBS claims ‘pleasing progress’ though loss triples (AP)
RBS, 82-percent owned by the British government after a massive bailout in the global the financial crisis, posted a 2011 first quarter net loss of £528 million. The lender said losses soared owing to an increase in the value of its outstanding debt to £2.46 billion. “As RBS’s credit spreads tightened during the quarter, a charge of £2,456 million was booked for (our) own credit adjustments,” RBS said in a statement. But the bank’s underlying performance was brighter, with RBS posting a first quarter operating profit of £1.18 billion. RBS also confirmed that it would repay the last of emergency state loans totalling £163 billion but the British government will still own almost all of the bank after a £45.5 billion bailout following the 2008 financial crisis. “The start of 2012 has shown pleasing progress at RBS within the context of a flat economic environment,” chief executive Stephen Hester said in the statement.

Employers in U.S. Added Fewer Jobs Than Forecast in April (Bloomberg)
Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent, and earnings stagnated.

Facebook Targets $96 Billion Value (WSJ)
With the pricing, Facebook is anticipated to raise as much as $13.6 billion, above earlier expectations of $10 billion. In a regulatory filing, Facebook said the company would seek to sell 337.4 million shares, with about half of those being sold by founders, employees and investors. The only U.S. issuers that have raised more money in an IPO were Visa Inc. at $19.7 billion in 2008 and General Motors Co. at $18.1 billion in 2010.

Zuckerberg Facebook IPO to Make Him Richer Than Ballmer (Bloomberg)
So that’s exciting.

Warren Buffett Has ‘No Plans To Invest In Facebook IPO’ (CNBC)
When asked whether the current attention surrounding Internet IPOs reminded him of the tech stock bubble of the late 1990s, the Oracle of Omaha said, “It is not a bubble … this is not what we were seeing in late 1999 all the way into 2001. We aren’t in any bubble phase of anything.”

Inmates Dance, Deputy Fired (ABJ)
Some inmates did the worm, others chose the old school robot. Each dance was performed to the beat of hip-hop artist Usher on command from a now-fired Summit County deputy. The inmate prize: use of a jail microwave. The charges are revealed in an internal affairs report released Wednesday. Deputy Dominic Martucci, 35, was fired for violating the department’s policies, including a mandate that inmates be treated humanely. Martucci is accused of ordering five inmates dance to Usher’s Yeah! song and then inviting other deputies to watch during an early evening shift on April 11. The inmates danced their way to regaining use of a microwave that they had lost earlier that day.

Fitch CEO: US Downgrade Not Likely Before Election (CNBC)
“We currently have the U.S. on a negative outlook, which actually suggests we think there is the potential for a downgrade,” Taylor said in an interview. “It’s too early to tell whether that will turn into an actual downgrade or not,” he said. “We think we still need to see what’s going to happen through the elections and what actions are put in place subsequent to the elections. I think it’s very clear that the U.S. does need to do something to deal with the debt problems built up since the financial crisis,” he added.

New Ripples For Gupta Case (WSJ)
Mr. Gupta’s criminal trial for securities fraud and conspiracy is scheduled to begin May 21 and expected to last about three weeks. Mr. Gupta has pleaded not guilty. His lawyer, Gary Naftalis, declined to comment for this article but previously has called the accusations “totally baseless.” The Manhattan U.S. attorney’s office also declined to comment. Federal prosecutors in Manhattan have taken note of the spike in trading in Goldman, which began as the firm’s board concluded a special meeting to approve the deal that afternoon, according to people familiar with the matter. Galleon traders also noticed the climbing stock, conversations recorded on government wiretaps show. “Someone had this before us, someone, whatever went on, something happened,” Galleon trader Ian Horowitz told Mr. Rajaratnam in a phone call the next morning, caught on tape by the Federal Bureau of Investigation.

Goldman Readies Low-Cost Bond PLatform (WSJ)
Goldman is preparing to roll out a bond-trading platform on which it will charge lower fees than on typical bond trades, according to people familiar with the matter, a move that could help retain customers tempted by rival trading venues being set up by BlackRock Inc. and others.

AIG Invests $7.4 Billion at 5.3% to Boost Returns, Adds RMBS (Bloomberg)
“We continue to be opportunistic with our investments in structured securities in order to improve yields, increase net investment income and offset the impact of a lower interest rate environment,” Wintrob said.

BofA Talks Deal On Ex-Broker Pay (WSJ)
The former Merrill brokers left the firm after the 2009 takeover by Bank of America and claim they are owed deferred compensation as a result of the deal. They were emboldened last month by an arbitration ruling ordering the Charlotte, N.C., company to pay more than $11 million to two former brokers with related complaints.

B’klyn man guilty of stealing $100K in benefits by dressing up as dead mom (NYP)
A Brooklyn man who snubbed a deal that could have sprung him from jail could instead serve dozens of years in prison after a jury convicted him today of stealing more than $100,000 in government benefits – by dressing up as his dead mom. Two videos of Thomas Prusik-Parkin’s wacky Norman Bates-like stunt – in which he wore a red dress and a platinum wig – were aired for jurors during the grand larceny trial.

78 comments (hidden to protect delicate sensibilities)
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Comments (78)

  1. Posted by RBS Sucks | May 4, 2012 at 10:10 AM

    Stephen Hester's wife is a lucky woman. Apparently he is extremely easy to please.

  2. Posted by Guest | May 4, 2012 at 10:11 AM

    Mark Zuckerberg kicks kittens and tore Mariano's ACL.

  3. Posted by Let them eat dog | May 4, 2012 at 10:14 AM

    When I was in jail, I had to do something very different to access the microwave.

  4. Posted by Hakuna Matata Guy | May 4, 2012 at 10:17 AM

    Do tell!

  5. Posted by guest | May 4, 2012 at 10:21 AM

    Did you use jelly or syrup?

  6. Posted by Purple Drank | May 4, 2012 at 10:22 AM

    I prefer the sizzurp

  7. Posted by Betty BRosmer | May 4, 2012 at 10:23 AM

    Well, after all, he's got an auction business and buys hidden treasures at onsite auctions of abandoned storage lockers.

  8. Posted by HFguy | May 4, 2012 at 10:34 AM

    High time Zukey put a instagram pic of himself for PR purposes.

  9. Posted by guest | May 4, 2012 at 10:34 AM

    If you think dressing up as your mom for $100,000 is embarrassing, try wearing these spirit point pins for minimum wage

    -BofA teller

  10. Posted by Shecky Tudor | May 4, 2012 at 10:34 AM

    One morning and RBS investment banker comes to work sporting a black eye. His colleague asks him, "How'd you get that shiner?"

    "My wife demanded that I go to the pharmacy and told me to "get some of those little pills that will give you an erection…"

    So I went to the phramacy and returned home. I tossed a box of pills on the kitchen table and said "here you go." She asked, "What are those?" and I said "diet pills"

  11. Posted by Chotchskie's | May 4, 2012 at 10:38 AM

    It's called "flair".

  12. Posted by JaMarcus Russell | May 4, 2012 at 10:38 AM


  13. Posted by Texashedge | May 4, 2012 at 10:42 AM

    Targeting a $96 billion valuation is smart. Seems like it's actually calculated from something, like a DCF or something. I mean, $100 billion would clearly just be an arbitrary round number.

  14. Posted by Cut Me | May 4, 2012 at 11:24 AM


  15. Posted by Prison Rat | May 4, 2012 at 11:28 AM

    Occupy Dancing With Stars (OdWS) or People for Ethical Treatment of Stars (PETS)?

  16. Posted by pazzo83 | May 4, 2012 at 11:39 AM

    or Not Funny Take a Lap (NFTaL)

  17. Posted by Hello guy | May 4, 2012 at 12:23 PM

    Um….is this thing on? No news today???

  18. Posted by Cut Me | May 4, 2012 at 1:26 PM

    RIP Adam Yauch

  19. Posted by 1999/2000 | May 4, 2012 at 4:43 PM

    What is this "DCF" of which you speak? Don't we still derive value based on "clicks" and "eyeballs"?

  20. Posted by AIG Quant via LEH | May 4, 2012 at 6:33 PM


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