$$$ More Probes Add to Barclays’s Woes [WSJ]
$$$ Corzine Searches for What’s Next [WSJ]
$$$ London Whale’s Boss Martin-Artajo Sued by JPMorgan [Bloomberg]
$$$ “The growth in [European government bond] futures volumes is unbelievable,” said one senior credit trader. “The same short interest still exists – economically it’s identical. If you thought the short interest was hurting the market then it makes no sense to say cleared derivatives are good and OTC derivatives are bad.” [IFRE]
$$$ Dear College Kids, If You Dress in an Ironically Racist or Insensitive Costume, You May Get Punched In the Nose Like I Did [Gawker Updates]
$$$ A private equity firm is looking for an associate in San Francisco [DBCC]
$$$ Citigroup Staff Uprooted for Weeks as Sandy Slams Wall Street [Bloomberg]
$$$ On Mayor Bloomberg’s sign-language interpreter: “The perception that we non-signers have that these hand movements and facial expressions are particularly ‘animated’ and ‘expressive’ is precisely due to our lack of experience with them as linguistic features.” [LL]
$$$ Baby walrus rides out hurricane at NYC aquarium WITH VIDEO [MSNBC]
Guy Who Shares The Same Name As “Hedge Fund Analyst” Spreading Lies About Hurricane Sandy On The Internet Would Appreciate Not Being Mistaken For Said “Hedge Fund Analyst” Spreading Lies About Hurricane Sandy On The Internet
For those of you who do not keep up with the drama in the Twitter […]
The more frequently you monitor your portfolio, the more likely you are to observe a loss.
This is likely to cause short-sighted decisions and could hurt your investment performance.
If you are checking your portfolio more than once per quarter, you’re doing it too much.
Click to read more.
Dan Egan, Betterment Director of Behavioral Finance and Investing
If I were the sort of guy who could come in to a company, yell […]
And it’s going to fire you without pay over them, realize they did so in error, not feel bad about it and tell you to shoot HR a cover letter and résumé if you’d like the opportunity to try and get your old job back.
Paul Boudwin knows what we’re talking about.
Boudwin’s ordeal began in July 2011, when the bank was reviewing its employment records to ensure it complied with new federal rules that, among other things, require a criminal background check for anyone who works at a mortgage originator. When he was hired by the bank in 2006, Boudwin disclosed what he says was a legal misunderstanding from his college days. He and his best friend ate breakfast at a Denny’s in Scottsdale, Ariz., near the Arizona State University campus. The place was a student hangout, and after they finished their meal, they mingled with other friends for a while. Each assumed the other had paid the check. When they left the restaurant an hour or so later, a manager confronted them outside, accused them of walking the check and called the police. They were arrested, paid a $50 fine and the $20 tab, tip included. The charge was later dismissed. “There was no intent for not paying for an omelet,” Boudwin said.
When Bank of America’s review last year turned up the information about the omelet incident that Boudwin disclosed when he was hired, it set off a bureaucratic process impervious to reason. In a letter included in the lawsuit, the bank said the charge amounted to a “disqualifying conviction” under the law, which prohibits anyone convicted of an offense involving dishonesty or breach of trust from working at a financial institution. Boudwin submitted court records showing the charges were dismissed. Bank officials assured him the matter would be sorted out, and the bank even filed for a waiver from the Federal Deposit Insurance Corp. on his behalf, court records show. However, the bank said because of the new rules, Boudwin couldn’t continue to work during the six to nine months it might take to get the waiver. He was put on an unpaid leave of absence, and his Wharton trip was canceled. He was told he would receive his back pay and bonus when he was reinstated, he said. In late February of this year, his boss called. Boudwin thought his ordeal was over and the FDIC had granted the waiver. Instead, his boss told him he was being fired. The bank was tired of waiting, he said his boss told him. Two weeks later, the FDIC granted the waiver, but Bank of America refused to reinstate Boudwin to his old position. He was welcome to reapply, but his seniority, bonus and back pay would be lost.
Unfortunately for Bank of America, Boudwin decided that appealing as that sounded, he’d prefer to win the money owed to him in court, and filed suit against BofA last week. Will his case set a precedent for financial service employees wrongfully fired over misunderstandings at Denny’s, IHOP, OHOP, and local diners everywhere? Stay tuned.
…when Falcone and five LightSquared colleagues met over a meal of white-truffle pasta and Barolo at a Washington restaurant in January, they failed to come up with anything they could have done differently, according to a person who was there who asked not to be identified because the meeting was private.– Falcone Waits For Icahn Doubling Down On Network
When JPMorgan, which earned the most of any of the six banks over the four quarters, decided to thank employees for their performance this year, it sent 161,680 individually wrapped buttercream-frosted, chocolate chip, oatmeal-raisin and sugar cookies to retail branches and call centers in the U.S., U.K., Philippines and India.– No Joy On Wall Street As Biggest Banks Earn $63 Billion
Cooperman, 68, said in an interview that he can’t walk through the dining room of St. Andrews Country Club in Boca Raton, Florida, without being thanked for speaking up. At least four people expressed their gratitude on Dec. 5 while he was eating an egg-white omelet, he said.–Bankers Join Billionaires To Debunk ‘Imbecile’ Attack On Top 1%
American International Group Chief Executive Officer Robert Benmosche, 66, a Kappa Beta Phi member who disclosed in October that he was undergoing treatment for cancer, was there. He looked energetic, the two attendees said. In 1930, the dinner was beefsteak. This year, the meal featured lobster salad, shrimp, pigs-in-a-blanket, lamb chops and pistachio ice cream.– Wall Street Secret Society Kappa Beta Phi Adds Dealmakers With Lehman Rite
Wall Street headhunter Daniel Arbeeny said his “income has gone down tremendously.” On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.–Wall Street Bonus Withdrawal Means Trading Aspen For Coupons
The clam-juice cocktails at the private Stock Exchange Luncheon Club, where brokers lined up three deep at the raw bar, contained tomato juice, cooled water from boiled chowder clams, ketchup, celery salt and the option of a freshly shucked clam. Add vodka and they called it a Red Snapper.–How America Ceded Capitalism’s Bastion To German Boerse Seizing Big Board
As someone once said, you can find out a lot about a man or woman’s character during moments of great crisis. Do they fall apart? Do they become shells of their former selves? Do the worst parts of them come out? Do they turn their backs on everything they supposedly once stood for? Or do they, even in moments of darkness, rise to the occasion and demonstrate the morals and values they held when times were good are the very same ones they choose to live by when times are bad? For Bloomberg News reporter Max Abelson, Hurricane Sandy was a test. Would he turn in an article containing few if any reference to the food people consumed during the natural disaster? Or would his commitment to bringing readers exhaustive details re: what his Wall Street subjects eat (see above, here, and here) burn ever bright, to the extent that sources and interviewees elaborating on their situation beyond provisions would find themselves cut off and told, “Just the food and drink, toots. I got a lotta calls to make”?
Luckily for us, it was the latter.
Herewith, an accounting of things stuffed down the gullets of Wall Street over the last two days:
* Murry Stegelmann, Kilimanjaro Advisors: expensive wine, green tea.
“I had to go to the wine cellar and find a good bottle of wine and drink it before it goes bad,” Murry Stegelmann, 50, a founder of investment-management firm Kilimanjaro Advisors LLC, wrote in an e-mail after he lost power at 6 p.m. on Oct. 29 in Darien, Connecticut. The bottle he chose, a 2005 Chateau Margaux, was given 98 points by wine critic Robert Parker and is on sale at the Westchester Wine Warehouse for $999.99. “Outstanding,” Stegelmann said. He started the day with green tea at Starbucks, talking with neighbors about the New York Yankees’ future and moving boats to the parking lot of Darien’s Middlesex Middle School.
* Wilson Ervin, Credit Suisse: the most depressing breakfast ever.
Erin…went to the bank’s office at 11 Madison Ave. afterward to work on evaluations of managing directors and financial regulation. He ate a lunch of Raisin Bran, coffee and a banana from the 7-Eleven downstairs, he said.
* Pablo Salame, Goldman Sachs: sushi, the piece of which Abelson or his research assistant counted.
* Wilbur Ross, WL Ross And Co: a painting.
“I was scheduled to come back Sunday night, and I decided not to, because everything during the week would be canceled anyway,” said Ross, chairman of private-equity firm WL Ross & Co. “I’m stuck in Palm Beach.”
He stayed in touch with colleagues using a fax machine along with phone and e-mail. His Florida home includes a painting by Rene Magritte of petrified blue apples, an image that is also depicted on a custom-made Van Cleef & Arpels watch he owns, he told Bloomberg News this year.
* JPMorgan employees: many of the culinary delights its cafeteria offers on a regular basis but NO DUMPLINGS.
JPMorgan, which sent out more than a dozen hurricane updates to its employees featuring detailed weather maps, kept parts of its 270 Park Ave. cafeteria open yesterday. Danishes and scones were available near the salad bar, and the bank’s deli had sandwiches with grilled vegetables. The dumpling bar was closed.
Wall Street Finds Sandy Silver Lining In Wine, Monopoly [Bloomberg]
Related: Things People Have Eaten in the Presence of Bloomberg Reporter Max Abelson [Daily Intel]
Let’s disclose some conflicts of interest. I want to be all “go read this post […]
A thing we sometimes do here is hold ad hoc seminars in reading press releases […]
Earlier this week, before a natural disaster struck the East Coast, UBS announced that it would essentially be getting out of the investment banking business and focusing its energy on wealth management, letting go of approximately 10,000 employees as it transitioned back to its tax evading roots. That was Monday morning, and while the bank had said that it planned to start cuts on Tuesday, most people assumed that the Swiss would wait at least 24 hours between the time Connecticut Governor Dannel Malloy told residents to seek safety from the storm on their roofs, or power for the many who lost it was restored, to can a bunch of staff. Those people, however, thought wrong. Apparently when UBS decides to do something, neither wind nor rain nor is gonna stop them.
Questions Cloud Market Reopening (WSJ)
The New York Stock Exchange said Tuesday that it plans to open as usual at 9:30 a.m. and that its trading floor and headquarters in lower Manhattan were “fully operational” despite widespread blackouts and flooding in that part of the city. The Nasdaq Stock Market and other exchanges will open as well. Bond markets will follow suit. While investors and industry officials breathed a sigh of relief, critics argued that the storm exposed how ill-prepared exchanges and their Wall Street customers are for such an event. Regulators on Tuesday said they plan to probe whether more needs to be done to get exchanges and the trading community ready for such disasters.
After Hurricane, Wall Street Back To Work (Dealbook)
On Tuesday, the scene around Wall Street was desolate. While the New York Exchange’s building appeared to be unscathed, many other offices in the vicinity were flooded. After an underground parking garage two blocks from the exchange was inundated with water, several cars floated to street level. Two Citigroup buildings were without power. The bank told employees in a memo on Tuesday that one of the buildings, 111 Wall Street, sustained “severe flooding and will be out of commission for several weeks.” Some JPMorgan Chase employees outside New York City were working in central New Jersey. At the bank’s main trading floor in Midtown Manhattan, employees, many in jeans, shirts and rain boots, booked hotels for the night and discussed strategy. The bank, which sustained minimal damages at a building downtown, expected to resume normal operations in Midtown. Credit Suisse also planned to open for business on Wednesday, with its main offices by Madison Square Park running on backup power. In downtown New York, Goldman Sachs was one of the few buildings with power. The firm has a generator in the event of outages, allowing its trading floors to continue to run. On Tuesday, televisions sets and lights inside the building were on, although few employees were there…In a memo to staff, Goldman announced its headquarters would be open on Wednesday. The firm also booked hotels in various locations to make sure employees could get to work.
Deutsche Bank Rides Debt-Market Wave (WSJ)
Deutsche Bank reported a surge in investment-banking revenues in the third quarter as a rebound in client activity fueled the best quarter ever for its fixed-income division. Deutsche Bank, Europe’s largest lender by assets, reported group revenues of €8.7 billion ($11.5 billion), up 19% from the third quarter last year. The result was better than analysts expected, but the bank’s legal problems and restructuring efforts nearly flattened net income. At €747 million, the total was up 3% from €725 million a year earlier. The bank’s revenue increase was driven in part by bond-buying initiatives announced by the U.S. Federal Reserve and the European Central Bank in recent months. The moves have fueled a resurgence in client activity, including in fixed-income trading—an area where UBS AG and other competitors have announced significant cut backs, allowing Deutsche Bank to gain market share.
UBS Moves Quickly On Job Cuts, Revamp (WSJ)
Scores of traders at UBS were locked out of the Swiss bank’s London offices Tuesday as the institution moved quickly to implement the first of thousands of job cuts in a strategic restructuring. The revamp effectively brings an end to UBS’s attempts over the past two decades to build a world-class investment bank, which brought the institution to the brink of collapse in 2008 when it incurred more than $50 billion in losses from the fixed-income business that it is now exiting. Instead, UBS’s strategy will center on its private bank, the world’s second-largest in assets after Bank of America and a mainstay of the group’s earnings. UBS confirmed Tuesday that it will cut risk-weighted assets by around 100 billion Swiss francs ($107 billion) by the end of 2017, eliminate about 10,000 jobs across the bank and reorganize its investment bank to deliver more products and services to ultra-wealthy clients at the private bank. The bank also said Tuesday that charges related to the moves, which come in response to a tougher regulatory and economic climate, helped push it into the red in the third quarter. UBS Chief Executive Sergio Ermotti said that London would bear the brunt of the cuts as the bank attempts to exit almost completely from fixed-income activities and move back to its wealth-management roots.
Storm Cripples US East Coast, Death and Damage Toll Climb (CNBC)
The U.S. death toll climbed to 50, according to The Associated Press, with many of the victims killed by falling trees. Damage estimates reached into the tens of billions, while the storm disrupted campaigning and early voting ahead of the November 6 presidential election. More than 8.2 million households were without power in 17 states as far west as Michigan. Nearly 2 million of those were in New York, where large swaths of lower Manhattan lost electricity and entire streets ended up under water.
New York Subway System Faces Weeks to Recover From Storm (Bloomberg)
If you laid the New York City subway system in a line, it would stretch from New York to Detroit. Now imagine inspecting every inch of that track. That’s the job ahead for Metropolitan Transit Administration officials, who must examine 600 miles of track and the electrical systems with it before they can fully reopen the largest U.S. transit system, which took a direct hit by Hurricane Sandy. Seven subway tunnels under New York’s East River flooded, MTA officials said. Pumping them out could take days, and a 2011 state study said it could take three weeks after hurricane- driven flooding to get back to 90 percent of normal operations. That study forecast damages of $50 billion to $55 billion to transportation infrastructure including the subways.
How CEOs Improvised In The Wake Of Sandy (WSJ)
When the approach of Hurricane Sandy left Lands’ End Chief Executive Edgar Huber stranded on a business trip, he retreated to an impromptu backup headquarters—in his mother-in-law’s apartment complex…Foot Locker CEO Ken Hicks disregarded the shutdown of his New York headquarters on Monday and worked at his office until 3 p.m. Then he picked up the work again six blocks away at his home in Manhattan’s Murray Hill neighborhood. When the power went out, he put on iTunes, lit a lantern and did paperwork for another 2½ hours. “You can be reasonably self-sufficient with a cellphone and a lantern,” the CEO says.
Celebrities React To Northeast Hurricane (NYDN)
“WHY is everyone in SUCH a panic about hurricane (i’m calling Sally)…?” Lindsay Lohan tweeted Sunday night. “Stop projecting negativity! Think positive and pray for peace.”
A Year Later, All Eyes Still On ‘Edie’ (WSJ)
Who broke the law by raiding customer accounts at MF Global Holdings? Investigators seem no closer to the answer than they were when the New York brokerage firm filed for bankruptcy exactly a year ago Wednesday, owing thousands of farmers and ranchers, hedge funds and other investors an estimated $1.6 billion. Their money was supposed to be stashed safely at MF Global, but company officials used much of it for margin calls and other obligations. The last, best hope for a breakthrough in the probe is Edith O’Brien, the former assistant treasurer at MF Global. Working in the company’s Chicago office, she was the go-to person for emergency money transfers as MF Global flailed for its life.
MBA’s Rethink Wall Street (WSJ)
Many of the nation’s top M.B.A. programs, including Harvard Business School and Stanford Graduate School of Business, reported declines in the share of students who took jobs in finance this year. And even those that posted some gains, such as University of Pennsylvania’s Wharton School, are still well below their prefinancial crisis levels…A Wall Street gig “isn’t as prestigious as it used to be” because the future—promotion opportunities, salary gains, even basic job security— is so unclear, says Mark Brostoff, associate dean and director of the career center at the Olin Business School at Washington University in St. Louis. Though the share of Olin students going into finance increased to 22% of job seekers this year from 15% in 2011, many of those gains came at boutique and regional Midwestern financial firms rather than on Wall Street. One factor affecting student demand: Banks expect young staffers to pick up the slack left by masses of laid-off midlevel employees, without necessarily offering more generous pay packages in return for the long hours. At Harvard Business School, for example, students heading into investment banking—7% of job seekers who accepted jobs, down from 10% in 2011—reported median salaries and signing bonuses were flat with last year, at $100,000 and $40,000, respectively, while other guaranteed compensation fell to $8,750 from $40,000.
Disney $4 Billion ‘Star Wars’ Deal Spotlights Content Bet (Bloomberg)
Walt Disney agreed to buy George Lucas’s Lucasfilm Ltd. for $4.05 billion, pressing Chief Executive Officer Robert Iger’s $15 billion bet on creative franchises by adding “Star Wars” and “Indiana Jones.” Lucas, 68, the sole owner, will get half in cash and the rest in stock, making him a major investor in the film, theme park and TV company, according to a statement yesterday from Burbank, California-based Disney. The first of a new trilogy of “Star Wars” films will be released in 2015, Disney said.
France Can’t Compete With Rest of Europe: WTO Chief (CNBC)
France is uncompetitive not only versus China, but against the rest of Europe, according to Pascal Lamy, director general of the World Trade Organization. “The competitiveness of France on foreign markets has been damaged for the last 10 years. This is nowhere more obvious than in Europe, where France has lost market share for the last 10 years,” said Lamy in an exclusive interview with CNBC in Paris.
Cop Tasers 10 Year-Old For Refusing To Clean His Car (CN)
A New Mexico policeman Tasered a 10-year-old child on a playground because the boy refused to clean his patrol car, the boy claims in court. Guardian ad litem Rachel Higgins sued the New Mexico Department of Public Safety and Motor Transportation Police Officer Chris Webb on behalf of the child, in Santa Fe County Court. Higgins claims Webb used his Taser on the boy, R.D., during a May 4 “career day” visit to Tularosa New Mexico Intermediate School. “Defendant Webb asked the boy, R.D., in a group of boys, who would like to clean his patrol unit,” the complaint states. “A number of boys said that they would. R.D., joking, said that he did not want to clean the patrol unit. “Defendant Webb responded by pointing his Taser at R.D. and saying, ‘Let me show you what happens to people who do not listen to the police.'” Webb then shot “two barbs into R.D.’s chest,” the complaint states. “Both barbs penetrated the boy’s shirt, causing the device to deliver 50,000 volts into the boy’s body.
U.S. Super Storm’s Record Flooding Lands Blackout Blow (Bloomberg)
Record tides from a wintry super storm combined with hours of pounding wind and rain to deal an unprecedented blow at the U.S Northeast’s power grid, flooding electrical substations and shutting down New York City’s financial district. At nightfall, Consolidated Edison Inc., New York City’s utility, killed power in parts of downtown Manhattan and Brooklyn as seawater encroached on crucial electrical equipment and warned more power cuts may be coming. Crews in Connecticut threw up a dike around a substation serving downtown Stamford and stood ready to shut down four others should floodwaters rise by the forecast 11 feet. “The last time we saw this threat was never,” Connecticut Governor Dan Malloy said at a press conference yesterday, warning the worst seawater flooding in 70 years could have tides lapping at the base of at least one inland dam. As of 8 p.m. in New York, the storm had knocked out power to some 3.6 million homes and businesses, according to the U.S. Energy Department. That figure may increase overnight. Power blackouts that may eventually affect as many as 10 million people in the region for as long as 10 days left homes in the dark, closed the stock market, and disrupted operations at refineries, pipelines and power plants. Damaged power lines, substations and other infrastructure will contribute to the $20 billion in total storm costs estimated by Eqecat Inc., a risk- management company in Oakland, California.
NYU Hospital Evacuated As Generator Goes Down (CBS)
New York University Langone Medical Center was evacuated Monday night, after power went out as a result of Superstorm Sandy, and generators subsequently began to go down. As CBS2’s Dick Brennan reported, power went down across Manhattan from 39th Street south to the southern tip of the island – a region that includes the hospital. Backup generators were in operation, but started to fail in the 11 p.m. hour, and an evacuation began.
Massive Transformer Explosion Rocks ConEd Plant (WP)
The explosion happened shortly before 8:30 p.m. at the building located in Stuyvesant Town…”There was an explosion about 5 minutes ago and I could see Blue sparks coming from the plant! The plant is dark and smoke stacks are not lit up!” Mario Camilla said in an email. Con Ed has since confirmed the spectacular blow out, which was also captured on video, and said it was a substation equipment failure. The utility said at more or less the same time it lost power at its central command station but it has now been restored.
Building Collapses On 14th Street (NBC)
A four-story multiple-unit residence at 92 8th Avenue between 14th and 15th streets collapsed Monday evening, according to the FDNY and witnesses. Susan Milyavsky was standing on the balcony of a friend’s apartment just across the street from the building when its front collapsed. “It was like it just melted off,” Milyavsky said. “It crumbled down.”
Idled Stock And Bond Traders Watch, Wait, And Position (WSJ)
Even with the U.S. stock market closed, investors found ways to trade. “You can work around it to a certain extent,” said Nanette Buziak, head of equity trading at ING Investment Management. On Monday morning, “where I would have been trading in stocks, we ended up trading what we needed to in futures. We’re also still trading where we need to in international markets.” […] But activity in the municipal-bond market ground to a halt Monday, as issuers postponed deals and trading wrapped up early. Some of the week’s biggest deals are being pushed back to later in the week or are on a day-to-day schedule, if they aren’t postponed indefinitely…A handful of other markets stayed active, but trading was thin and many people could not get to their desks. As a result, those who were around found themselves buzzing with activity, as traders hunted for scarce counterparties. “Actually, we are very busy today. Can I hang up now?” said Mamoru Arai, senior currency trader at Mizuho in New York, who said his firm was operating with only two traders on the floor today, compared with more than a dozen on a normal day.
NYSE To Test New Contingency Plan Tuesday (WSJ)
The broader plan outlined Monday night by NYSE and rival exchange groups BATS Global Markets Inc. and Direct Edge Holdings LLC would see the Big Board operator’s all-electronic NYSE Arca platform handle critical opening and closing auctions. The New York Stock Exchange and the smaller NYSE MKT exchange would remain closed under the plan being discussed, The plan deviates from a proposal floated Sunday by NYSE Euronext, which involved operating the New York Stock Exchange using Arca’s systems. This drew concerns from brokerage officials worried that they weren’t properly prepared for the unconventional approach. Under the plan outlined late Monday, all trading in NYSE-listed securities would execute on the Arca exchange, according to the notice from NYSE Euronext.
Labor Department Says Hurricane May Affect Jobs Report (Bloomberg)
The U.S. Labor Department will wait to gauge the impact of Hurricane Sandy before determining the status of the October jobs report, the last before next week’s presidential election. The monthly employment data are scheduled to be released Nov. 2 at 8:30 a.m. in Washington. The median forecasts of economists surveyed by Bloomberg call for payrolls to rise by 125,000 workers in October and for the jobless rate to increase to 7.9 percent from 7.8 percent. “We will assess the situation when the weather emergency is over and notify the press and public of any changes at that time,” Labor Department spokesman Gary Steinberg said in an e- mailed statement today.
As Sandy strengthens, Connecticut governor issues ‘Katrina-like’ warning (MN)
Governor Dannel P. Malloy called a quick press briefing at 9:15 p.m. after consulting with town officials and getting updates from the situation on Long Island. His biggest worries were for region one, which extends from Bridgeport to Greenwich, but he also has substantial concerns for residents along the Shoreline from Old Saybrook to West Haven. The governor said he was issuing “a Katrina-like” warning, telling residents to get to the highest place in their homes if they are already experiencing flooding, or if necessary to their roofs.
Behind Decision To Close Markets (WSJ)
Even if traders no longer flock to the exchange floors to buy and sell stocks and other securities, the software engineers and other technology staff who are responsible for maintaining those electronic systems still must be connected. And like the hundreds of thousands of East Coast residents immobilized by the storm, many traders couldn’t find transportation to take them to their firms’ trading floors. That issue took on added importance late Monday when parts of lower Manhattan flooded and were without power. Opening the U.S. stock markets without the New York Stock Exchange wasn’t an option, according to one person involved in the discussions over the weekend. While other, all-electronic exchanges could have opened for business, the Big Board’s role as the official opening and closing price-setter for many benchmark stocks would have posed problems for firms catering to retail investors and mutual funds that calculate their valuations against prices set on the NYSE. Some customers worried they didn’t have enough time to address any technical problems that may have surfaced as they rerouted systems to send orders to NYSE’s Arca electronic exchange. Others faced the prospect of not being able to handle any trades whatsoever, due to not having adequate backup plans, according to people close to the matter.
UBS To Reveal Investment Bank Exit Plans Tuesday (Reuters)
The move will focus Zurich-based UBS around its private bank and a smaller investment bank, ditching much of the trading business that saw it lose $50 billion in the financial crisis and one rogue trader lose $2.3 billion last year…Investors are keen for details on how the Swiss bank will wind down the fixed income unit without incurring big losses. Employees complain they have been in a state of limbo after months of rumors of cuts. “It’s becoming like torture, especially for those that don’t think they will be compatible with the new Orcel team,” said one employee, referring to Andrea Orcel, a close ally of Ermotti from Bank of America who arrived in July and is expected to run the investment banking unit’s remaining businesses. Bankers were already anxiously awaiting news of an initial 400 job cuts set to hit this week, though that will likely be just the beginning of a cycle of layoffs that will hit those in fixed income trading the worst.
Nomura Trails Goldman in Return on Equity Amid Losses Abroad (Bloomberg)
“The current levels of net income are absolutely not adequate,” Nomura’s Co-Deputy Chief Financial Officer Jonathan Lewis said in a phone interview yesterday. “Return on equity of 0.5 percent for the second quarter is not where we want to be.”
Investors Play Lehman Claims Games (WSJ)
In the Lehman case, some big investors have been buying the claims against the London unit for more than 100% of their original value, according to buyers and sellers, as well as the administrator for the subsidiary. This stands out, as IOUs from bankrupt companies typically fetch severely discounted prices of half or less than their original value. Claims against other Lehman units are selling for far less.
Milken’s Past Invoked In Gupta Sentencing (Dealbook)
Judge Jed S. Rakoff, the presiding judge in Mr. Gupta’s case, made a surprising reference to Mr. Milken during the hearing. It came after Mr. Gupta’s lawyer, Gary P. Naftalis, made a plea for a lenient sentence. Mr. Naftalis cited the hundreds of letters of support for Mr. Gupta, who in addition to his business accomplishments has played a leading role in fighting global disease. He read a letter from Barry Bloom, the former dean of the Harvard School of Public Health. “Dr. Bloom stated, ‘To my knowledge, as someone who has worked in global health for 40 years, with the sole exception of Bill Gates, no leader of the private sector or corporate world has invested so much of his time, energy, and personal credit to do so much for the poorest people of the poorest countries than Rajat Gupta,” Mr. Naftalis said. “I’m glad he didn’t say except for Michael Milken,” Judge Rakoff responded.
Storm Overwhelms Atlantic City (NYT)
“The city is under siege,” said Thomas Foley, the city’s chief of emergency management. “Sandy is pretty furious at Atlantic City. She must have lost a bet or something. As we say in our slogan, ‘Do A.C.’ She’s doing A.C., all right.”
[Stephen Foley via Felix Salmon]
…or possibly even Wednesday, according to Reuters, which reports “The U.S. stock market is expected to be closed on Tuesday” and while “every effort is being made to reopen markets” the following day, a final decision will be made once there is a better idea of the havoc Sandra will wreak, both downtown and in areas market participants are located. In related news, think of the dogs of Goldman Sachs.
They were crestfallen, whimpering in disbelief. The city’s dogs walked right up to an east side entrance of Central Park, saw the fence and could not fathom why they – and their owners – were not allowed in. For a little wind? Light rain? They had seen worse. “I may have to carry him away,” said John Blondel, nodding to Rollo, a spry-looking white Labrador who was 10 and a half years old. Rollo decided to engage in a sit-down strike in front of the 79th Street entrance on Fifth Avenue.
Mr. Blondel, 56, who is in the investment management division for Goldman Sachs, had driven from his apartment in the West Village to give Rollo his daily constitution. Later, he would work from home. “This is going to be it for a while,” he said to his friend. Soon, Rollo was joined by several other dogs dragging their walkers to yet another blocked entrance. “They’re just amazed,” Mr. Blondel said. When a gust of wind blew an opening in the temporary fencing, Rollo was wise to the opportunity. Mr. Blondel had to pull him back and head to the car.
US Stock Markets Seen Closed Tuesday [Reuters]
Hurricane Sandy, Live Updates [NYT]
*Unless your job doesn’t involve trading, in which case we expect you to be up at 6 and carrying on with business as usual from you kitchen table.
A pretty widespread fact of life is that if it costs you $9 to make […]
Bracing for Storm, U.S. Stock Markets to Close (Dealbook)
All United States stock and options markets will close on Monday as Hurricane Sandy approaches, reversing course as Wall Street braces for the storm to barrel through the heart of the country’s financial center. The decision, made late Sunday night, leaves the American stock markets closed for weather conditions for the first time in nearly three decades. The New York Stock Exchange had previously planned on closing only its physical trading floor, while allowing for trading on its Arca electronic exchange. It has now decided to halt all trading. The Nasdaq and BATS stock markets, which are built on electronic trading, also decided to close. The CME Group, which operates the Nymex commodities exchange, said earlier on Sunday that it would close its physical trading floor on Monday, though trading would continue on its electronic trading platforms. The Securities Industry and Financial Markets Association, or Sifma, said in an e-mailed statement that it was calling for bond trading, which is all done electronically, to close at noon Monday, though it left the final decision to member firms. The N.Y.S.E. last closed trading for weather reasons in 1985, when Hurricane Gloria lashed the metropolitan area.
Markets Go Dark Ahead Of Storm (WSJ)
Customers had complained to the exchanges and to the Securities and Exchange Commission that partial closures of the market would be too complicated, according to people with knowledge of the matter.
US Stock Markets To Possibly Stay Closed Through Tuesday (Reuters)
In a statement, the company said that “the dangerous conditions developing as a result of Hurricane Sandy will make it extremely difficult to ensure the safety of our people and communities, and safety must be our first priority.”
Citigroup, Goldman Sachs Shut Some NYC Offices for Storm (Bloomberg)
Citigroup and and Goldman Sachs are among Wall Street firms planning to shift operations to other cities and have staff work from home as Hurricane Sandy’s arrival in New York forces evacuations. Employees at Citigroup, the third-biggest U.S. bank by assets, won’t be able to enter Lower Manhattan offices on Greenwich Street and Wall Street, which include the main trading floor, according to a memo sent to workers and confirmed by Shannon Bell, a spokeswoman. Goldman Sachs, whose corporate headquarters at 200 West St. is also located in an evacuation zone, told the staff in an internal memo that most of them will work from home…European-based firms including Deutsche Bank AG, Credit Suisse Group AG and UBS AG, which have offices outside of the mandatory evacuation zone, are making arrangements to provide transportation and hotels for workers.
Christie: “Don’t Be Stupid” (AP)
A year after telling New Jersey residents to “Get the hell off the beach” as Hurricane Irene approached, Gov. Chris Christie has a new message for people on the coastline: “Don’t be stupid — get out,” Christie said Sunday afternoon at a news conference, where he updated residents on the status of the huge storm bearing down on the state.
Stock Pickers Game The Fiscal Cliff (WSJ)
A number of companies are seeking to get ahead of the tax increases by paying out big special dividends before Dec. 31. In the past two weeks, at least four Standard & Poor’s 500 companies have announced special payouts, including a $750 million payout by casino operator Wynn Resorts Ltd., a $1.1 billion dividend from hospital operator HCA Holdings Inc. and a $1.6 billion dividend from LyondellBasell Industries NV, a New York-listed chemicals group. The game for investors is to figure out which companies could be next. Jay Wong, a Los Angeles-based portfolio manager for Payden & Rydel, a money manager with $75 billion under management, is on high alert for potential payouts. He increased his stake in Wynn earlier this month in anticipation of a special dividend and is looking for others. He declined to be specific, citing a desire to not give his trades away.
Occupy Wall Street’s Stacey Hessler Splits From Husband (NYP, earlier)
The filing lists Curtiss’ occupation as banker and says he earns $65,000 a year. Her job is listed in court papers as “protester” and her employer as “Occupy Wall Street.” Annual salary: $0. Divorce papers cite “irreconcilable differences” for the split, saying the 19-year marriage “is irretrievably broken.” One OWS protester who knows her says that Stacey’s devotion to the movement caused the divorce but that she was unfazed by the breakup. “She didn’t seem sad about any of it,” the source said. “It was just so matter-of-fact.” As recently as last month, Stacey, 39, was sleeping in front of a Wells Fargo bank branch in the Financial District near Zuccotti Park, but it appears she scrambled back home to suburban DeLand to finalize the divorce. Wearing her professional-protester uniform — a bandana and patchwork clothes — she refused to say what her plans were or when she’d be leaving the house. But she did respond when a Post reporter asked about a YouTube video showing her making out with another protester during an Occupy “Kiss In” on Valentine’s Day. “I actually made out with four guys,” she said, laughing wildly.
Governments to debate 50 billion euro cut to EU budget (Reuters)
The cut will be proposed in the latest EU negotiating text on the bloc’s spending plan for 2014-2020, but is unlikely to be deep enough to satisfy Britain, Germany, France and other net budget contributors. They want strict limits on EU spending to reflect the austerity imposed by national governments to reduce debt, and called for cuts of 100-200 billion euros to the total proposed by the EU’s executive, the European Commission. The proposal is also likely to anger Poland and other former communist EU countries who are the major beneficiaries of EU funds, and oppose any cuts to the Commission’s blueprint which they argue is vital for their future economic growth. “As I see it now, the reduction from the Commission proposal will be 50 billion euros plus. That will be the basis for negotiations,” said the source, who spoke on condition of anonymity.
Greek Journalist Held Over List of Swiss-Account Holders (Bloomberg)
Kostas Vaxevanis, editor of the Greek magazine Hot Doc, was arrested in Athens today, according to a message posted on his Twitter account at 11 a.m. local time. An arrest warrant was issued yesterday after the magazine published what’s been dubbed the “Lagarde list,” an electronic file given to Greece in 2010 by then-French Finance Minister Christine Lagarde of about 2,000 Greeks with Swiss accounts.
Insurers Prepare For Impact Of Hurricane Sandy (Reuters)
Had Sandy hit in 2011, it may have been more of a problem for the insurance industry, which dealt with record-breaking losses around the world last year, mostly from U.S. tornadoes and Asia-Pacific earthquakes. But in 2012, most insurers’ disaster losses are down substantially, leaving them with more capacity to absorb the billions of dollars in costs some expect from Hurricane Sandy. “In terms of losses, I certainly don’t think it’s going to be the largest loss of the last 100 years,” Tom Larsen, senior vice president of Eqecat, said in an interview late Friday. “It’s not an end-of-days scenario.”
SEC Weighs Bringing Back Fractions in Stock Prices (WSJ)
The move would at least partly undo an 11-year-old rule that replaced fractions of a dollar in stock prices, like 1/8 and 1/16, with pennies. The idea of that change was to trim investors’ trading costs: One-cent increments can lead to narrower gaps between the prices at which brokers buy and sell shares—potentially reducing their opportunity to shave off profits. Those championing the fraction’s return say it would spur securities firms to buy and sell more shares of some companies by making it more profitable for them to do so. Opponents say fractions would increase trading costs for investors with little or no benefit to companies.
UBS, RBS Traders Suspended as Rates Probe Goes Beyond Libor (Bloomberg)
UBS and Royal Bank of Scotland suspended more than three traders in Singapore as regulators investigating Libor-rigging turn their attention to the rates used to set prices on foreign exchange derivatives. At least two foreign-exchange traders at UBS, Switzerland’s largest bank, have been put on leave as part of an internal probe into the manipulation of non-deliverable forwards, a derivative traders use to speculate on the movement of currencies that are subject to domestic foreign exchange restrictions, according to a person with direct knowledge of the operation. Edinburgh-based RBS also put Ken Choy, a director in its emerging markets foreign exchange trading unit, on leave, a person briefed on the matter said on Oct. 26.
Women who knew ‘cannibal cop’ worried they were on his ‘cook list’ (NYP)
“Freaked-out” female acquaintances of would-be cannibal cop Gilberto “Gil” Valle yesterday wondered whether they were on his alleged list of 100 ladies to kidnap, rape, torture, cook — and eat. “I was so shaken when I found out it was him,” said Beverly Seiger, who knew Valle, 28, from the Forest Hills, Queens, park he visited nightly with his wife and baby daughter. “I used to walk his dog. I’ve been to his house many times. He’s been to my house,” she said of Valle, whom federal prosecutors accuse of plotting with three fiendish pals to kidnap, cook and consume scores of females. “I don’t want to be on his list!” Seiger said. “I’m so thin, he would use me as toothpicks. “The women in this neighborhood now are freaked out,” she said. Another female resident asked a reporter, “Are we on this list? “I fit in an oven,” she said, referring to Valle’s alleged boasting online of having an oven “big enough to fit one of these girls if I folded their legs.”
If you’re a certain kind of dork you will enjoy the hell out of the […]
UBS is set to unveil a radical downsizing of its struggling investment bank next week in a move that will prompt the loss of up to 10,000 jobs across the Swiss banking group. Switzerland’s largest bank by assets will significantly shrink the trading side and complexity of its investment bank and as a consequence also cut thousands of jobs in its back office over the next few years, three people close to the situation said. The job cuts will amount to almost a sixth of the bank’s workforce of 63,500 at the end of June. They will not happen all at once and the precise number is still unclear… It comes on top of another – still ongoing – programme announced last year to cut 3,500 jobs. The new strategy, hammered out in several executive board meetings in New York this week and set to be announced next Tuesday, will lead to the closure of a sizeable part of UBS’s fixed-income trading operations and other capital-intensive areas of the investment bank.
Disruption on Wall Street, resulting in image problems for the industry, smaller bonuses and less […]
Citi today fired Mark Mahaney, its internet analyst, and was fined by Massachusetts securities regulators, […]
As Paulson and Co employees, clients, and people named John Paulson do not need to be told, the past year and half has not been the most joyous of times for the hedge fund giant. After making billions shorting subprime mortgages, the firm ended 2011 down 55 percent, was down 16 percent through the first half of 2012, and as of July, saw assets under management decline 44.9 percent to $21 billion from $38.1 billion, due to a combination of unfortunate performance and redemptions by investors so angry at the fund that they’ve felt the need to repeatedly tell anyone who will listen that parting ways with P&C was among the best if not the best decision they’ve ever made. One investor that hasn’t had to consider voicing its unhappiness to the press or even worry about losing money at all? The 92nd Street Y. Last November Paulson guaranteed that he would personally cover their losses, whatever they turned out to be, come year-end. And the generosity did not stop there: for this one investor only, Paulson offered his services pro-bono, waiving all fees. So while he probably didn’t expect representatives of the Y to rent a skywriting plane to proclaim their love and appreciation for him over midtown, lobby the city of New York to get 92nd renamed Paulson Street, or have his face tattooed to their chests, he probably also figured they wouldn’t turn around and hit him the mother of all slaps in the face.
In this case the declaration that despite the highly favorable terms of their arrangement, any involvement with P&C still felt a tad too risky for everyone’s comfort level.
In the midst of the financial crisis, the 92nd Street Y came up with a sweetheart deal for its endowment: investments in funds run by the likes of John Paulson, Marc Lasry, and other hedge-fund luminaries that were fee-free and guaranteed against losses. The strategy performed well for several years, said people familiar with how it worked, as the Y benefited from risk-free investing in some of the fund industry’s most successful strategies. But, concerned about the impact of a catastrophe in which a money manager couldn’t repay losses and eager to construct a more diversified portfolio, the Y recently opted to redeem its hedge-fund investments, these people said, and rebuild its financial strategy from scratch.
Paulson himself is worth $15 billion, so a catastrophe in which he couldn’t repay the Y’s losses would have to be a big one. And don’t give him some line about how you’re pulling out of all hedge fund investments and it’s not personal. You could have let him have this.
“I think people are getting to know the real Mitt Romney. I am thrilled that that is happening. He is really quite a guy. He is, in my opinion, intellectually and morally and managerially the man that is most qualified by far to be president of the United States. You’re having a guy this afternoon that is a great hero of mine, but Mitt Romney is even better than Ken Langone…I think the campaign is going good. I think Governor Romney is really getting the American people to see the real Romney. That is what we have needed all along. I wish his family would expose itself more…I’d like to see Mrs. Romney, I would like to see the boys out and all of that more.”
Tiger’s Robertson: hedge fund managers are scared [BloombergTV]
The Times’s detailed story today on Citi’s deVikrafication is a fun read and adds a […]