Opening Bell

Opening Bell: 10.10.12

Banks Must Cut Deeper to Help Stock Prices, McKinsey Says (Bloomberg)
Banks must make deeper and more sweeping cost reductions if they want to restore profitability levels that are acceptable to investors, McKinsey & Co. said in an annual review of the industry. “It has to go a lot further,” Toos Daruvala, a director in the consulting firm’s North American banking practice and a co-author of the report, said yesterday in a phone interview. “Banks have done quite a lot on cost-cutting but frankly the environment has deteriorated over the last year” because of economic weakness, he said.

Argentina rejects Singer’s $20M in ransom for ship’s release (NYP)
At a court hearing today in Ghana, where hedge fund manager Paul Singer’s lawyers are holding the ARA Libertad hostage, a lawyer for Argentina argued that Singer had no right to detain the ship because it’s a military vessel and immune from seizure. Lawyer Larry Otoo called the seizure — a move by Singer to force Argentina to repay a $1.6 billion debt he says he’s owed — an embarrassment to Ghana and demanded the ship’s immediate return. The court is expected to rule Thursday on whether to release the ship. Singer, the head of hedge fund giant Elliot Management, is seeking to recoup some of the $600 million in bonds he purchased as Argentina was headed for default in 2001. Elliot bought the bonds at steep discounts, paying as little as 15 cents on the dollar in some cases, but has since won judgments of as much as $1.6 billion. Elliot’s NML Capital unit is pursuing Argentina’s assets all over the world in an effort to collect on its debt.

Goldman Pushes On Limits In Volcker Rule (WSJ)
Some executives at the New York company believe they have found a way to extricate the credit funds from proposed limits on how much can be invested in hedge funds and private-equity funds, according to people briefed on the efforts. The Volcker rule caps a bank’s total investments in hedge funds and private-equity funds at 3% of its so-called Tier-1 capital. It also prevents any single bank from accounting for more than 3% of a fund’s investments. Those limits are among the biggest components of the rule, named after former Federal Reserve Chairman Paul Volcker and designed to curtail risk-taking among financial firms. The rule is the most contentious part of the Dodd-Frank financial-overhaul law of 2010 but, like much of the rest of the legislation, the details of its implementation are still being worked out. Credit funds lend to companies that might not otherwise get financing, such as companies backed by private-equity firms, and tend to hold their investments to maturity while using a limited amount of leverage. Goldman has argued in meetings with regulators and in letters to them that these funds function like banks, just with a different structure, according to public records and the people familiar with the efforts.

Report: 20% of US Firms Cook the Books During Earnings (CNBC)
…a new report by finance professors at Emory and Duke University raises questions about the quality of earnings in general. In an anonymous survey of CFOs last year, the study found that at least 20% of companies are “managing” earnings and using aggressive accounting methods to legally alter the outcome of their earnings reports. Of the 20% of companies that manipulated their earnings to hit a target, Graham says, a surprising 40% did so to the downside, not the upside, to pad and improve future quarters’ earnings.

Banks Chasing Asian Millionaires Create Singapore’s Canary Wharf (Bloomberg)
Singapore’s Marina Bay area is emerging as the city’s new financial hub, with banks including Standard Chartered Plc and Barclays taking bigger offices as they pursue Asia’s expanding ranks of millionaires.

Corrections & Amplifications (WSJ via Lauren Tara LaCapra)
“Annie Hubbard, the woman appearing alongside Goldman Sachs’s chief financial officer, Harvey Schwartz, in a photograph with a page-one article about Goldman on Tuesday, was incorrectly identified as his wife. Mr. Schwartz isn’t married.”

Hulk Hogan ‘devastated’ by leak of sex tape filmed six years ago with friend’s wife Heather Clem (NYDN)
Hogan, 59, told NBC’s “Today” show that the tape happened during a “low point” in his failing marriage to ex-wife Linda Hogan. “Things were bottomed out completely,” he said. “I was with some friends, and I made a wrong choice. And now all of a sudden it surfaces, you know over six years later, and it’s just appalling.” The wrestling star tried to explain the kinky love triangle to Howard Stern Tuesday using a thinly veiled euphemism. “Let’s say I’ve been doing laundry, brother, for this person forever, and all of a sudden this person hates the way I do laundry. And that person says, ‘You suck. I hate you. F-you every single day. I hate the way you do laundry. I’m going to find somebody else to do laundry. Somebody younger, faster, stronger,’” he said, clearly taking a jab at his ex-wife. “But my buddy, you know, him and his girl say, ‘Hey, you can do our laundry any time you want!’ Both of them are saying that,” he told Stern. “Finally after the person I was doing laundry with for millions and millions of years left, and all of a sudden there was nobody there to do laundry, I was depressed… I go to my buddy’s house and he says, ‘Hey man you can do this other person’s laundry that I’m partners with.’ I said, ‘Sure.’”

Official Warmth And Public Rage For A German Leader In Athens (NYT)
…even as Ms. Merkel said that she had come as a “good friend and a real partner,” not a “taskmaster or teacher to give grades,” the approximately 40,000 Greeks who took to the streets in protest (a rather modest number, by Greek standards) treated the visit as a provocation by the arch-nemesis in the euro crisis whose austerity medicine is obliterating the Greek middle class. Some banners read “Don’t cry for us Mrs. Merkel” and “Merkel, you are not welcome here.” A small group of protesters burned a flag bearing the Nazi swastika, while a handful of protesters dressed in Nazi-style uniforms drew cheers of approval as they rode a small vehicle past a police cordon.

In Gupta Sentencing, A Judgment Call (WSJ)
Former Goldman Sachs Group Inc. director Rajat Gupta is the highest-profile of more than 70 defendants convicted of insider trading in New York federal court in the past three years. But this month he will likely receive a more lenient sentence than the 11-year-prison term given to Raj Rajaratnam, to whom Mr. Gupta provided his illegal leaks, legal experts say. The sentence may have reverberations beyond the 63-year-old Mr. Gupta, a former chief of consulting giant McKinsey & Co. It will be widely watched in executive suites nationwide because it will be among the first handed down to a major corporate figure in the recent insider-trading crackdown. Previous sentences have largely involved traders, lawyers, lower-rung corporate employees and others. Mr. Gupta, who was convicted in June of three counts of securities fraud relating to tips about Goldman and one count of conspiracy, didn’t trade or profit directly from his illegal tips. Before the conviction, he had a long and stellar career in corporate America and philanthropy. All this will be balanced against the nature of the crimes and the need to discourage others from similar offenses when U.S. District Judge Jed Rakoff hands down his sentence, scheduled for Oct. 24. Judge Rakoff often imposes sentences further below federal sentencing guidelines than some other judges do, according to a Wall Street Journal analysis…Since 2010, Judge Rakoff has imposed an average sentence of 21 months on insider-trading defendants who didn’t cooperate with prosecutors—about 38% below the guideline minimum, according to the Journal analysis. By comparison, U.S. District Judge Richard Sullivan issued seven sentences in that period averaging 6.3% below the guideline minimum. U.S. District Judge Paul Crotty issued three sentences at 20.3% less than the minimum.

Variety Being Sold To Penske, Third Point (Reuters)
Variety, the century-old entertainment trade newspaper once considered the bible of the movie industry, is being sold to online publisher Jay Penske and Third Point LLC for about $25 million, two sources with knowledge of the deal told Reuters. Penske and Third Point have struck a deal to buy the money-losing, 107-year-old newspaper from medical and technical publisher Reed Elsevier, which put it up for sale in March, the sources said.

IMF warns eurozone on capital flight (FT)
In its global financial stability report, the IMF concluded that capital flight from the eurozone’s periphery to the bloc’s core, driven by fears of a break-up of the currency union, had sparked “extreme fragmentation” of the euro area’s funding markets. The fund said this was causing renewed pressure for banks to shrink their balance sheets, particularly those in countries with fiscal woes.

A Fat, Mustachioed Orphan Finds a Home (NYT)
How do you transport a 234-pound baby to New York City? If he’s a 15-week-old walrus rescued from the open ocean off Alaska, the answer is a jumbo-size crate aboard a FedEx cargo jet, accompanied by a veterinarian and a handler. “If he’s calm and comfortable, no worries,” said Jon Forrest Dohlin, director of the New York Aquarium, which will receive the walrus calf, named Mitik, on Thursday. “But his needs and comfort come first. So he may very well travel with his head in our keeper’s lap.” Since late July, Mitik and a second orphaned walrus, Pakak, have been nursed to health with bottle feedings and exercise at the Alaska SeaLife Center, an aquarium in Seward that conducts research and responds to strandings of marine mammals. (Pakak, nicknamed Pak, will arrive at the Indianapolis Zoo on Thursday.) Mitik — or Mit, for short — was weak from illness and considerably smaller than Pakak when he was found by a hunting vessel several miles offshore. Mit initially suffered from bladder problems and could not take a bottle, requiring both a catheter and feeding tube. But he is now sucking assertively from a bottle and putting on a pound a day…With his multiple chins and doleful expression, Mit is also exhibiting an undeniable pluck that should serve him well in his new surroundings. Martha Hiatt, the aquarium’s behavioral husbandry supervisor, traveled to Alaska in September to help care for him. At first, she said, Pakak totally dominated him, but no longer. “If Mit is resting with his head on my lap, sucking my fingers, looking sweetly into my eyes, and Pak comes anywhere near us, he pops up, yells at Pak and tries to head-butt him,” she said. “Then he’ll turn to me and be all cuddly again. We say he is small, but scrappy — the perfect New Yorker.”

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75 Responses to “Opening Bell: 10.10.12”

  1. Guest says:

    This is such a Matt opening bell

    • Guest says:

      Not even one PG-13 story

      • UBS Comedian says:

        It's nice to see that even the stars have to do their own laundry though, it was getting pretty annoying having all my old friends from college making fun of me for not being able to afford to send mine out.

      • guest says:

        Um what do you consider the hulk kogan sex tape story? G-rated? Remind me to never let you take my kids to the movies.

        • Parenting Quant says:

          Wait, if it wasn't for that you were going to let anonymous members of the Dealbreaker commentariat take your kids to the movies? I think I might have some concerns.

  2. Guest says:

    What time is it? Did the clocks change?

    -Troll Not Used to Opening Bell Posted On Time

  3. E. Cartman says:

    If CLOs are banks, then I'm George Bailey.

    – Mittens

    • Mob Guy says:

      "Goldman has argued in meetings with regulators and in letters to them that these funds function like banks, just with a different structure, according to public records and the people familiar with the efforts."

      You could say that about a whorehouse, too.

      • Anna Gristina says:

        Hey! it's hard enough out here as it is, the last thing I need is to be subject to a million more regulations.

  4. khan says:

    I`m agree with Toos Daruvala that banks have done quite a lot on cost-cutting but frankly the environment has deteriorated over the last year because of economic weakness.

    • Linguistics Quant says:

      Well, why don't you do your part to stimulate it by investing in some ESL courses chief.

  5. Guest says:

    The Penguins of Madagascar aint gonna like Mit one bit…. hey, great idea. Let's put together an Anti-Mit commercial using the Penguins of Madagacar now that the Sesame Workshop put out a mean, Big Bird cease and desist letter….

  6. Guest says:

    The orphan title is misleading. I thought the story was going to be about Raj^2's sentencing hearing.

  7. Guest says:

    Is that a a baby pic of Cliff Assness?

  8. Out says:

    As long as we don't forget to stamp a deportation ticket to Gupta after/if he completes his sentence for his crimes in the United States.

  9. Guest says:

    Who knew Terry was so domesticated.

  10. Guest says:

    Doing your friends laundry is the NKI, no?

  11. Mudslinger says:

    We used to do laundry with elements of love and beauty, not of violence and death"
    – Linda Hogan

  12. Guest says:

    What's the guy from the "diabeetus" commercial have to do with this opening bell?

  13. Guest says:

    Linda McMahon's domestic staff:

    Can you feel the softness of what the Hulk is launderin'?

    Can you smell what the Rock is cookin'?

    Can you see what Andre the Giant is dustin'?

  14. Dow30Thou says:

    Thats some Heavy Duty stuff, brother. One minute you're taking your friend's wife for a RInse and Spin, the next you're in an Extended Tumble. Hand Wash only from here on out dude.

    • guest says:

      It appears Hulk Hogan is in hot water after recent revelations.

    • Guesteban says:

      Friends say he thought he was Free and Clear to enjoy his friend's wife's Downy soft Snuggles. Then the Tide turned. He's since lost the Bounce in his step and all his Cheer. That'll happen when the Arm 'n' Hammer of public opinion pounds on you like the Surf.

      Oxi Clean. That is all.

  15. Yahoo! Finance says:

    Daniel S. Loeb, activist hedge fund manager from Third Point LLC has hired walrus calf, Mitik. A move many people view as Loeb finally finding a protege.

  16. Don Henley says:

    I make my living off the Evening News
    Just give me something-something I can use
    People love it when you lose,
    They love dirty laundry

  17. guest says:

    "millions and millions of years"

    feels like that, doesn't it?

    -guy married ten (hundred, million)

  18. Jail Motives says:

    I'm going to tell Hulk's laundry analogy to the Mexican lady who does my laundry and see how that goes over.

  19. PermaGuestII says:

    "Take my wife… please"

    -Henny Youngman Clem, WWE friend

  20. Ask me a question says:

    UBS and Gentlemen,

    Mr. Matt Levine.

  21. Guest says:

    Love the Hulk story BROTHERRRR!!

  22. _guest says:

    "And that person says, ‘You suck. I hate you. F-you every single day. I hate the way you do laundry. I’m going to find somebody else to do laundry. Somebody younger, faster, stronger,’” he said"

    Steroids are a helluva drug…

  23. Guest says:

    Why is Bill Gross in a kiddie pool?

  24. Laxbro says:

    "But he is now sucking assertively from a bottle and putting on a pound a day"

    My Mom said the same thing to my Dad before she took half.

  25. Seymour Buths says:

    I live in a small studio apartment and can't do laundry at home. I wish there was a place you could do and, for only a few quarters per load, rent out a machine to do laundry. One day.

  26. Guest says:

    What is Bess out sick today or something ???

  27. Finally a site I agree with. I have read some real rubbish today, so its a treat to read something useful.

  28. An awesome post, I just passed this onto a fellow worker who was doing a little analysis on this. And he in fact bought me lunch because I found it for him smile.. So let me reword that: Thanks for the treat! But yeah Thnkx for taking the time to discuss this, I feel strongly about it and love learning more on this topic. If possible, as you gain expertise, would you mind updating your blog with more details? It is extremely helpful for me. Big thumb up for this post!

  29. Fantastic job here. I seriously enjoyed what you had to say. Keep heading because you absolutely bring a new voice to this subject. Not many people would say what youve said and still make it interesting. Properly, at least Im interested. Cant wait to see much more of this from you.

  30. The article is nice to read. The picture i like the most…its an eycatcher

  31. karan says:

    nice one !!!

  32. Oh, problems with Argentina… always the same

  33. Great post, very informative – thanks

  34. Lorimel says:

    Unbelievable …. 234 pounds at just 15 weeks old! I wounder if he got to fly first class? Ahe … the life of a Walrus!

  35. Don says:

    Wow… kind of hard to believe, but none the less… wow.

  36. Banks must prepare for the big investors.

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