Opening Bell

Opening Bell: 02.04.13

UK Regulators Could Split Banks (WSJ)
U.K. Treasury chief George Osborne on Monday will announce new powers for regulators to split up banks that flout rules designed to ring-fence retail banking from riskier investment-banking activity. In a wide-ranging speech on banking in Bournemouth, England, Mr. Osborne is expected to say the new powers are needed so that taxpayers will never again be on the hook when banks fail, as they were during the financial crisis. “We’re not going to repeat the mistakes of the past. In America and elsewhere, banks found ways to undermine and get around the rules,” Mr. Osborne will say, according to the extracts of his speech. “We could see that again—so we are going to arm ourselves in advance. In the jargon, we will “electrify the ring fence.”

New Details Suggest a Defense in SAC Case (NYT)
In bringing its charges, the government said that SAC not only sold out of its position, but also bet against — or shorted — the drug companies’ stocks before the public announcement of the bad news. The SAC short position, according to prosecutors, allowed it to earn big profits after shares of the companies, Elan and Wyeth, plummeted. “The fund didn’t merely avoid losses, it greedily schemed to profit further by shorting Elan and Wyeth stock,” said April Brooks, a senior F.B.I. official in New York, during a press conference on Nov. 20, the day Mr. Martoma was arrested. Internal SAC trading records, according to people directly involved in the case, indicate that the hedge fund did not have a negative bet in place in advance of the announcement of the drug trial’s disappointing results. Instead, the records indicated that SAC, through a series of trades, including a complex transaction known as an equity swap, had virtually no exposure — neither long nor short — heading into the disclosure of the drug data.

Blackstone To Become Investment Bank? (FT)
Blackstone, one of the world’s largest alternative asset managers, has quietly secured a securities underwriting licence as its expanding capital markets operation strays into investment banking territory. The licence marks the latest stage in the transformation of big listed private equity groups as they become more broadly based alternative asset managers. Apollo and KKR , two of Blackstone’s biggest rivals, also have securities underwriting licences. The move highlights the pressure listed private equity groups are under to generate new sources of fee income to satisfy their public shareholders. “The private equity business is lousy for shareholders,” says the head of capital markets for one buyout firm that is not listed.

Obama: more tax revenue needed to address deficit (Reuters)
President Barack Obama said on Sunday more tax revenue would be needed to reduce the U.S. deficit and signaled he would push hard to get rid of loopholes such as the “carried interest” tax break enjoyed by private equity and hedge fund managers.

Herbalife Is The Subject Of ‘Pending’ Probe (NYP)
The Los Angeles-based distributor of nutritional products is the subject of a law enforcement investigation, The Post has learned. The existence of the probe emerged after the Federal Trade Commission, responding to a Freedom of Information Law request by The Post, released 192 complaints filed against Herbalife over the past seven years.

New Orleans Braces From Fallout From Blackout (AP)
The outage, blamed on an unspecified “abnormality” in the Superdome’s power system, was an embarrassment for New Orleans, which was hosting its first Super Bowl since 2002 and was eager to show off how it has been rebuilt since Hurricane Katrina. Mayor Mitch Landrieu called Sunday night’s outage “an unfortunate moment in what has been an otherwise shining Super Bowl week for the city of New Orleans.” He said he expected to receive “a full after-action report from all parties involved” in the coming days…For 34 minutes, the players tried to stay loose, the fans milled about in darkened corridors, and stadium officials scrambled to figure out what went wrong. The Ravens barely hung on for a 34-31 victory over the San Francisco 49ers, needing a goal-line stand in the closing minutes to preserve the championship. “It really hurt us,” Baltimore fullback Vonta Leach said. “We had lot of momentum.” There is sure to be some fallout for the city and the Superdome — especially since New Orleans plans to bid for the title game in 2018, in conjunction with the 300th anniversary of its founding. Escalators stopped working and credit-card machines shut down, though auxiliary power kept the playing field and concourses from going totally dark. “We sincerely apologize for the incident,” Superdome spokesman Eric Eagan said. Most fans seemed to take the outage in stride, even starting up the wave to pass the time. “So we had to spend 30 minutes in the dark? That was just more time for fans to refill their drinks,” said Amanda Black of Columbus, Miss.

Question of Aiding Cyprus Places Germany in a Bind (NYT)
In recent days, Germany has signaled that it is reluctantly edging toward a bailout for Cyprus, a haven for Russian cash, after lifelines have been extended to Greece, Ireland and Portugal to prevent potentially calamitous defaults. While Cyprus makes up just a sliver of the euro zone economy, it is proving to be a first-rate political headache. “I don’t think that Germany has ever in the history of the euro zone crisis left itself so little wiggle room,” said Nicholas Spiro, the managing director of Spiro Sovereign Strategy in London. “But Germany wants the euro to succeed and survive, and they are saying we can’t afford a Cyprus bankruptcy.”

BlackRock Sued by Funds Over Securities Lending Fees (Bloomberg)
BlackRock is accused in a lawsuit by two pension funds of reaping “grossly excessive” compensation from securities- lending returns associated with iShares Inc. “Defendants have systematically violated their fiduciary duties, setting up an excessive fee structure designed to loot securities lending returns properly due to iShares investors,” the funds, which invest in iShares, said in a complaint in federal court in Nashville, Tennessee.

Two Top Barclays Executives Resign (WSJ)
Barclays, whose chairman, chief executive and chief operating officer all resigned last summer in the wake of a series of controversies, said Sunday evening that finance chief Chris Lucas and Mark Harding, its general counsel, will both be retiring in coming months…Messrs. Lucas and Harding were longtime Barclays veterans who worked closely with former CEO Robert Diamond, who resigned last summer after the bank admitted that it had tried to rig benchmark interest rates and paid a roughly $450 million penalty.

Youngest American Woman Billionaire Found With In-N-Out (Bloomberg)
Lunchtime at the flagship In-N-Out Burger restaurant in Baldwin Park, California, is a study in efficiency. As the order line swells, smiling workers swoop in to operate empty cash registers. Another staffer cleans tables, asking customers if they’re enjoying their hamburger. Outside, a woman armed with a hand-held ordering machine speeds up the drive-through line. Such service has helped In-N-Out create a rabid fan base — and make Lynsi Torres, the chain’s 30-year-old owner and president, one of the youngest female billionaires on Earth. New store openings often resemble product releases from Apple, with customers lined up hours in advance. City officials plead with the Irvine, California-based company to open restaurants in their municipalities. “They have done a fantastic job of building and maintaining a kind of cult following,” said Bob Goldin, executive vice president of Chicago-based food industry research firm Technomic Inc. “Someone would love to buy them.” That someone includes billionaire investor Warren Buffett, who told a group of visiting business students in 2005 that he’d like to own the chain, according to an account of the meeting on the UCLA Anderson School of Management website.

Mint officially ends distribution of Canadian penny (CP)
The phasing-out of the penny will lurch ahead today with the Royal Canadian Mint officially ending its distribution of one-cent coins to Canada’s financial institutions. The move comes nearly a year after Finance Minister Jim Flaherty announced the demise of the penny, whose production cost came to exceed its monetary value. But as it faces extinction in the pockets and tills of most Canadians, the humble penny is still in demand in some artistic circles where it retains significant value. Renee Gruszecki, a Halifax-based academic and archivist, has spent the past year making a living through a jewelry business devoted primarily to preserving the country’s stray cents. About 30,000 strategically sorted pennies fill Gruszecki’s home and eventually find their way into the accessories produced at Coin Coin Designs and Co. Gruszecki, a long-time collector of lucky pennies, believes her pieces will help preserve a symbol that is both an object of superstition and a Canadian icon. “The maple leaf is synonymous with everything Canadian. We all identify with it,” she said in a telephone interview. “Now it’s just no longer going to be present among us, so I’m saddened by that.” The Bank of Canada’s Currency Museum has already taken steps to preserve the penny’s place in Canadian culture. A mural consisting of nearly 16,000 one-cent pieces has been assembled at the museum to commemorate the coin’s history, said assistant curator Raewyn Passmore. The mosaic, which depicts a giant penny measuring about two square metres, is comprised of coins ranging from the lustrous to the tarnished.

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50 Responses to “Opening Bell: 02.04.13”

  1. .Bo says:

    No debauchery from the great state of Florida over the weekend?

  2. African Union says:

    "Africa celebrates 49ers Super Bowl vicotory with free t-shirts and hats"

  3. Guest says:

    "New Orleans Braces From Fallout From Blackout"

    Oh, who cares. The Niners where playing in the dark the whole game.

    -UBS Sports Quant

  4. segoviacobain says:

    I know I've been financially unfaithful, and you want to cut up my credit cards, but I have a disease, an addiction, and that makes me a member of a protected class, so not giving me more money to blow is, wait for it…………….. a hate crime.

    — O

  5. WTF__k says:

    Don't underplay the seriousness of this outage. One of my recurring nightmares is having a power outage while riding the escalator.

    Wait, what?

    • Mitch Hedberg says:

      An escalator can never break, it can only become stairs. Instead of a sign saying "out of order", it should just say "Temporarily stairs. Sorry for the convenience."

      -UBS Standup Quant

  6. Guest says:

    Did Ray Lewis stab in celebration? Nothing like a good celebratory stab.

  7. A new low says:

    Fuck you Shaz.

    Blackstone, Blackout ….

    While you're are it why not throw in Blackdeath, Blackball, Blaxploitation, etc

  8. guest says:

    Honest to god…What type of a douche puts chicken wings in loafers?

    -Murray Hill Brah

  9. Not clever just dumb says:

    Daddy didn't go anywhere last night. Gross

  10. VonSloneker says:

    Mmmmm…burger billionairess. I think I'm in love

    – H. Simpson

  11. Incitatus says:

    "The mosaic, which depicts a giant penny measuring about two square metres…"

    So THAT'S where that went!
    -B. Wayne, Gotham City

  12. guest says:

    Bess, are you ok with the DB IT staff moonlighting as Superdome lighting crews?

  13. guest says:

    Getting buried in a U.K. parking lot is the NKI!


  14. Guest says:

    Wtf… I thought BX already had IBD?

    Please advise

  15. PORTAGENT says:


  16. Random Thought Guy says:

    I miss the lion-dog.

  17. S-D- says:

    Its Dipset all day – aka da movement. Holla!

  18. PE candidate says:

    More tax revenue, eh? 47% wish they listened.

  19. Flo says:

    "The SAC short position"

    – guy that tried that with his wife this weekend and was denied

  20. PermaGuestII says:

    "Girl With Dead Billionaire Grandparents Now Billionaire"

  21. Guest says:

    Can't wait to see bloomberg's orgasm when someone finally becomes a trillionaire.

  22. Literary Critic says:

    -1 for using "quip." Other than that, few concerns.

  23. VonSloneker says:

    Smashcut to a disappointed Rachel Dratch sitting half dressed on the side of a rumfled twin bed. Prune Activia, a Snapple and an Edward Jones business card with a sweetly worded goodbye on the bedside table…

  24. Bored Guest says:

    She doesn't lock her phone? Draws some scrutiny.

  25. Guest says:

    Please don't invoke Nervous Jew in your smarmy charades. He is nervous enough.

  26. Deleveraging says:

    This was the best you could come up with after a weekend in your mother's basement?

  27. Orville says:

    I recall a place in Boston that had the best soft custard and lemon ice that 10 cents could buy! The owner was a real nice guy too.Sponsored several little league softball teams. they were given free ice cream to celebrate each game, and there was a patio outside for all to enjoy !

  28. Laxbro says:

    tough but fair. it'll take a few days to wash the Square off me.

  29. Laxbro says:

    ha. I had sobered up by the time I left and she was still cute. if she was a monster I wouldn't have given her my number, she wouldn't get any kiwi fruit or chai tea and I prob would have told the front desk to clear the room immediately.

  30. Laxbro's Mom says:

    The worst part is he'll talk about Shazar posts at the dinner table as if the rest of us are interested.

  31. Im_a_Dude says:

    Its Nervous Jew, not Cheap Jew, so your little tale never could have happened.

  32. Guest says:

    Fiscally savvy Jew.