Budget Talks Cloud Outlook (WSJ)
Lawmakers returning to town this week will see whether they can agree on a plan to avoid the full brunt of the fiscal cliff, the combined $500 billion in tax increases and spending cuts set to begin next week. Little if any progress was made in the talks before Congress and President Barack Obama left town last Friday for Christmas. The president plans to leave his vacation in Hawaii late Wednesday night, returning to Washington on Thursday, the White House said. Aides in both parties say they expect a potential solution to start taking shape by the end of the week. But with so little time, hopes are dimming for anything other than a partial agreement, which would prolong the uncertainty and leave in place some tax or spending measures that act as a serious drag on the weak recovery. This could even trigger another recession, exacerbating the global economic slowdown.
Grand Bargain Shrinks as Congress Nears U.S. Budget Deadline (Bloomberg)
“At this point there’s zero percent chance of a big deal and maybe a 10 percent chance of a small deal before Jan. 1,” said Stan Collender, a former staff member of the House Ways and Means Committee and the House and Senate Budget committees who is now at Qorvis Communications in Washington. He has predicted a no-deal scenario since before Memorial Day, and said the past two weeks of inaction reinforced his projection. At this point, Collender said, whether the Senate moves first won’t matter. “Nothing will move House Republicans if they don’t feel like getting moved,” he said. “They’ve never been swayed by the Senate before.” The remaining option for averting the cliff, he said, would be if Boehner risks his House speakership to put to the floor a tax deal that would get a majority of Democrats to support it and few — perhaps less than 50 — Republicans. “The Republican caucus would never forgive him,” he said. “The statesmanlike thing to do would be to say I’m the speaker of the House, not the head of the Republican party. That is the equivalent of never running for speaker again.”
Some ‘Cliff’ With Your Coffee? Starbucks Urges Unity (Reuters)
Chief Executive Howard Schultz is urging workers in Starbucks’ roughly 120 Washington-area shops to write “come together” on customers’ cups on Thursday and Friday, as U.S. President Barack Obama and lawmakers return to work and attempt to revive fiscal cliff negotiations that collapsed before the Christmas holiday.
Herbalife Goes On Offensive (WSJ)
Herbalife Ltd. said it has hired a strategic adviser and will hold an analyst and investor meeting next month in an effort to thwart a wave of criticism reignited by investor William Ackman. In addition, Herbalife is working with law firm Boies, Schiller & Flexner LLP in connection with the dispute, according to people familiar with the matter. It wasn’t immediately clear what kind of counsel Boies Schiller might provide…The company’s moves, announced Monday, come after Mr. Ackman last week revealed that his firm has been betting against Herbalife shares for months in a negative wager that he characterized as “enormous.” He also said the nutritional-supplement maker operates as a “pyramid scheme.” He said distributors, or salespeople, for the Los Angeles-based company make more money by recruiting other distributors than by selling the company’s diet and nutritional products. Herbalife last week called Mr. Ackman’s stance “a malicious attack on Herbalife’s business model based largely on outdated, distorted and inaccurate information.”
NJ Pension Fund Sues NYSE-Euronext on ICE Deal (Reuters)
The New Jersey Carpenters Pension Fund on Friday filed a complaint in New York State Supreme Court in Manhattan contending that NYSE-Euronext breached its duty to maximize returns for shareholders. The lawsuit seeks class-action status on behalf of other NYSE-Euronext shareholders and aims to block the sale.
Titan to Withdraw Money From SAC (WSJ)
Titan Advisors LLC recently told clients that it had decided to withdraw its entire investment from SAC, said clients who received phone calls from Titan. “They’ve told us they still think SAC is a good firm but Titan doesn’t need the headline risk, and we sure don’t,” said Tom Taneyhill, executive director of the Fire & Police Employees’ Retirement System of the City of Baltimore, on Friday…Titan’s departure is significant given SAC’s long-standing relationship with one of Titan’s founders. Titan co-founder George Fox began investing in SAC in the mid-90s, several years after Mr. Cohen started what became the firm in 1992.
Madoff, in Christmas Eve Letter, Says Insider Trading Has Gone on ‘Forever’ (CNBC)
In a Christmas Eve letter from the medium security federal prison in North Carolina where he is serving a 150-year sentence for running a massive Ponzi scheme, Madoff tells CNBC that insider trading has been around “forever.” He also rails against what he calls a lack of transparency in the financial markets, and says the growth of hedge funds is forcing market players to take outsized risks in order to earn decent returns. […] “(O)ne would be led to believe that with the recent spate of insider trading prosecution that insider trading is a new development,” Madoff writes. “This is false. It has been present in the market forever, but rarely prosecuted. The same can be said of front running of orders.”
Venture Capital to Suppress Its Appetite for Risk in 2013 (WSJ)
Internet entrepreneurs have had the upper hand over venture capitalists in recent years but that balance of power is now showing some signs of shifting, a trend that could accelerate in 2013. Spurring the change is a dramatically lower appetite for risk from venture capitalists. Many investors rushed to get into Web startup deals in 2010, 2011 and in the early part of this year, often acceding to entrepreneurs’ demands for rising valuations in order to snag a stake in their companies. But following the disappointing stock market performances of recently public Web companies Facebook, Zynga, and Groupon venture capitalists are reining in their spending in areas like the consumer Internet.
Israel Hedge Funds Defy Iran Threat Multiplying in Tech Center (Bloomberg)
Tal Keinan, an Israeli fund manager, was ready for the question he’s always asked when he met with investors in New York in October: Why put your money with a manager whose country Iran has threatened to obliterate. “We tell them ‘if the Iranians attack, the worst thing that can happen is you lose your money manager not your money’,” Keinan, chief executive officer of Tel Aviv-based KCPS & Company, which oversees $1 billion in assets, said in an interview on Oct. 14. “The notion is trade global markets with global assets and clients, but just do it from Israel because of the concentration of talent here.” The country is becoming a magnet for hedge fund managers as lower operating costs, the world’s highest number of Ph.D.s and hi-tech startups per capita overshadow concern that Israel may be attacked by missiles from Tehran. The number of funds has grown to 60 overseeing about $2 billion from 13 in 2006, according to a survey of the local industry published in July by Tzur Management. Israel may be on track to replicate the growth that propelled Singapore’s industry from fewer than 20 managers in 2001 to 320 overseeing $48 billion in 2009, Yitz Raab, founder and managing partner of the Tel Aviv-based fund administration company, said in an interview on Nov. 11.
Even Cupid Wants To Know Your Credit Score (NYT)
The credit score, once a little-known metric derived from a complex formula that incorporates outstanding debt and payment histories, has become an increasingly important number used to bestow credit, determine housing and even distinguish between job candidates. It’s so widely used that it has also become a bigger factor in dating decisions, sometimes eclipsing more traditional priorities like a good job, shared interests and physical chemistry. That’s according to interviews with more than 50 daters across the country, all under the age of 40.
Report: Hedgies prime for comeback (NYP)
Banking giant UBS says so-called active investing could be making a comeback after several years of lagging performance, according to a recent report sent to clients. “Although the recent market environment has been difficult for active managers, conditions appear to be improving,” according to the report by UBS’s wealth-management group, which advises clients on their investment strategies. “We expect this to lead to better manager performance.”
London VC Spared Jail After ‘Groin Thrusting’ Sexual Assault On Tube During Olympics (TechCrunch)
Stefan Glaenzer, a partner in London VC firm Passion Capital has been spared jail after pleading guilty to, and being convicted of, sexual assault on the London underground during the Olympics period…In November, the former chairman of Last.fm admitted sexually assaulting an American tourist on a packed Central Line train by thrusting his groin into her back, Westminster Magistrates’ Court heard. His defence was that he was under the influence of cannabis.
Programming Note: We’re on an abbreviated, vacation-esque schedule this week (opening news roundups and limited updates whenever the urge to reach out and touch you moves us). We still want to hear from you, though, so if anything happens that you think might tickle our fancy, do not hesitate to let us know.