Opening Bell

Opening Bell: 05.22.12

JPMorgan’s Losses Are Rival’s Boons (WSJ)
A group of about a dozen banks, including Goldman Sachs Group and Bank of America have scored profits that collectively could total $500 million to $1 billion on trades that sometimes pit them directly against J.P. Morgan’s Chief Investment Office, according to traders and people close to the matter.

Facebook 11% Drop Means Morgan Stanley Gets Blame (Bloomberg)
Some investors say they felt misled by the underwriters. According to one London-based fund manager who asked not to be named, bankers indicated demand was so strong that he placed a bigger order than he thought he would get, leaving him with 40 percent more Facebook shares than anticipated. He sold most of that stock on the first day of trading.

Morgan Stanley Cut Facebook Estimates Just Before IPO (Reuters)
In the run-up to Facebook’s $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, unexpectedly delivered some negative news to major clients: The bank’s consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company. The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast. They say it may have contributed to the weak performance of Facebook shares, which sank on Monday – their second day of trading – to end 10 percent below the IPO price. The $38 per share IPO price valued Facebook at $104 billion.

Deutsche Bank: ‘Geuro’ an Alternative to Greek Euro Exit (CNBC)
Greece’s best chance of survival may be to stay in the euro but opt for its own parallel currency or “Geuro,” according to Deutsche Bank’s head of research, Thomas Mayer. In a research piece, Mayer said the Geuro would help Greece balance its primary budget without financial support from the ‘Troika’ of international lenders (the International Monetary Fund, the European Union and the European Central Bank). This would allow the incoming Greek government to reject the strict austerity program on which aid is contingent.

IMF Chief, OECD Call For More Euro Debt Sharing (WSJ)
International Monetary Fund head Christine Lagarde Tuesday called on euro-zone governments to accept more common liability for each other’s debts, saying that the region urgently needs to take further steps to contain the crisis. “We consider that more needs to be done, particularly by way of fiscal liability-sharing, and there are multiple ways to do that,” Ms. Lagarde told a press conference in London to mark the completion of a regular review of U.K. finances.

Greece Needs To Accept Bailout Terms, Says South Korea (CNBC)
South Korea’s President Lee Myung-bak says Greece needs to accept the terms of a $130 billion international bailout agreed in March and there will be no disbursement of money from the International Monetary Fund (IMF), unless the country does so.

Floating bales of marijuana a mystery (OCG)
The floating bundles, weighing a total of 8,068 pounds, were first seen by a boater near the harbor around 12:01 p.m. Sunday, U.S. Coast Guard Petty Officer Seth Johnson said. The bales were reportedly floating at least 15 miles off shore. The Orange County Sheriff’s Department sent three Harbor Patrol ships to aid in recovering the marijuana. A Coast Guard cutter was also sent to assist. Michael Jimenez, a Border Patrol spokesman, called Sunday’s incident unusual. In most scenarios when marijuana bales are found dumped in the water it is because a vessel is trying to flee from authorities. “At other events, they’ve dumped the bales to get rid of weight if they’re being chased,” he said. “Generally in these cases we’re aware they’re being dumped. What’s more unusual is that the bales were floating with no boat in sight.”

Fitch Downgrades Japan (WSJ)
Fitch Ratings downgraded Japan’s sovereign rating to A-plus and said it was maintaining a negative outlook due to the “leisurely” pace of the county’s efforts to remedy its dire fiscal situation. The firm’s long-term foreign-currency rating had been AA and its local currency issuer default rating had been AA-minus.

JPMorgan Veered From Hedging Practices At Competing Banks (Bloomberg)
JPMorgan’s biggest U.S. competitors say their corporate investment offices avoid the use of derivatives that led to the bank’s $2 billion loss and buy fewer bonds exposed to credit risk.
Bank of America, Citigroup, and Wells Fargo. say the offices don’t trade credit-default swaps on indexes linked to the health of companies. JPMorgan is said to have amassed positions in such indexes that were so large they drove price moves in the $10 trillion market. The loss has prompted shareholders to join regulators in scrutinizing how banks use their investment offices to hedge risks and manage deposits they aren’t using for loans. JPMorgan’s competitors confine corporate-level trading mostly to interest-rate and currency swaps — the most common derivatives — and put a greater percentage of funds into U.S. government- backed securities such as Treasury bonds.

Blackstone Moves Into Motel 6 (WSJ)
Blackstone Group LP is acquiring discount lodging chain Motel 6 in a deal valued at $1.9 billion, as the private-equity firm continues to invest aggressively through its $10 billion real estate war-chest.

Jon Corzine Got $8.4 Million In Year Before MF Global Collapse (NYP)
Corzine received a bonus of $1.25 million in addition to his salary of about $1.8 million last year. He also was awarded $5.35 million in now-worthless stock options. Other MF Global insiders, including Chief Operating Officer Bradley Abelow, also saw big pay days. Abelow, who is still working at the firm, was paid $2.7 million in cash, including a $1.25 million bonus, plus restricted stock valued at $1.5 million.

Woman Claims She Was Fired For Being “Too Hot” (Reuters)
A New Jersey woman said on Monday that she was dismissed from a temporary job at a New York lingerie warehouse because her male employers felt she was too busty and dressed too provocatively for the workplace. Wearing a form-fitting sequined black dress and black leather, sequin-studded boots, Lauren Odes, 29, said her Orthodox Jewish employers at Native Intimates told her that outfit and others like it were “too hot” for the warehouse. “We should not be judged by the size of our breasts or the shape of our body,” Odes said. Odes’s attorney, celebrity lawyer Gloria Allred, said she filed a gender and religious discrimination complaint with the U.S. Equal Employment Opportunity Commission in New York.

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67 Responses to “Opening Bell: 05.22.12”

  1. Guest says:

    Ulan Bator says Greece must accept the bailout terms.

  2. Guesticulate says:

    I'm starving, those Geuros sound delicious.

  3. Lowly Assistant says:

    Sharp eye, Blackstone!

    -Jesse Pinkman

  4. BrotherLehman says:

    Well, we looked at the agency's leisurely performance grading CDOs and other instruments during the housing bubble, it's leisurely pace at downgrading Greece, and the leisure suits their summer interns wear, and after careful consideration, we're downgrading Fitch.


  5. Jim Lahey says:

    “Generally in these cases we’re aware they’re being dumped. What’s more unusual is that the bales were floating with no boat in sight.”

    do we know if Jimmy Cayne owns a boat in the Orange County area? I know ~8,000 pounds of bud is a little light for old Jimmer, maybe it was his weekend stash?

  6. The Truth says:

    There is no evidence that my yacht was seen off Dana Point in the last few days. None at all.

    – J. Cayne

  7. Guest says:

    Facebook CEO status change in 3…2…1….

  8. El Zeta says:

    8,000? WTF happened to the other 12… Ah, nevermind.

  9. FKApmco says:

    Big boobs, curvy body and a whole lot of marijuana…ooh yeah.

  10. 2_chainz says:

    Smoking on that loud, life should be on Cinemax.

  11. Baller says:

    I expect in-depth DB coverage of the departure of the Gumball Rally from NYC this Friday (seeing how DB has previously covered mishaps from such 'rallies') as it leaves from virtually in front of two major banks at lunchtime…

    …but, Matt will probably write 28 pages on the technicals of capital constrained micro-cap companies in the African subsaharan region post-2008 instead; complete with 19 charts and footnotes twice as long as the actual write up. Can't wait.

  12. J Coorz says:

    I had a decent year last… 3 mil.

    My options grant is underwater, but I gotta tax guy says I can work these as a cap loss once I start hitting it again.

    All in all, I fig I bagged 5 mil for 16 months there. Mostly I was dickin around in my pers, and shooting size with the balance sheet. Missed that stuff ya know ?

  13. Fly on the Wall says:

    MS Attorney 1: So, Scott Devitt cut his revenue forecast, do we have to tell everyone?
    MS Attorney 2: Well, I think the important word here is materiality.
    MS Attorney 1: Right, so, is it material that the company will make less money?
    MS Attorney 2: ….I mean…. nobody seemed to think it was material that they don't have any real reason to raise capital… so I'd say…. maybe?

  14. The Underpants Zetas says:

    1. Throw 4 tons of weed in the ocean.

    2. ???

    3. Profit

  15. CME says:

    Facebook floor is $23.

  16. Korean Vet says:

    Facebook valued at $104 Billion at IPO, Bethlehem Steel been out of business for 10 years.

    Walter — Korean War Vet making sense of a world that doesnt really make much sense at all.

  17. guest says:

    Enough with "grexit". This is the dumbest portmanteau word ever. Willem Buiter and his team of droning, prolix economists at Citi, who think nothing of bombarding us with 75pp research reports on EMU esoterica, decide that it is worth inflicting on us a hideous neologism in order to save 4 keystrokes? And is it pronounced Greh-ksit? Is there a country pronounced Grehss that I'm unaware of? Of course, if they wanted a cutesy shorthand way of referring to Greek exit from EMU, they had available to them the Greek word for exit, which happens to be one of the only Greek words instantly recognizable to any literate Westerner, namely "exodos". I get it, you want to be the next Jim O'Neil, riding shallow thoughts to glory aboard the magic acronymic carpet called "BRIC". Forget it, man. Ain't gonna happen.

  18. Guest says:

    This bizarre case of floating marijuana……………..

    That's what happens when traffickers consume their own products.

  19. Gozer says:

    Hopefully her next job is selling burkas. . .

  20. guest says:

    We're gunna need a bigger boat.

    -UBS Salvage Quant

  21. Guest says:

    It's doesn't look strange. This is exactly how a guy who's just parted with $10bn would look.

    Mark Zuckerberg and Priscilla Chan looked like strangers in their wedding photos… now our expert analyses the body language of the 'eternal teen and diffident geek' Facebook founder

    Read more:

  22. Guest says:

    No wonder Goldman exited FB

  23. Guestard says:

    I'd hit it through a hole in the bedsheet!

  24. Jean R says:

    <img src=>FB recovered a bit after extended loss, will see what happens. <img src=>

  25. McKinsey Interviewer says:

    What weighs more? The amount of marijuana found in the ocean, or the decapitated bodies found on the freeway?

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