Opening Bell

Opening Bell: 02.28.13

EU Bonus Rules Meet Anger (WSJ)
The new rules would prevent banks from promising bonuses that exceed an employee’s salary—though, with shareholder approval, bonus payments could rise to double the salary. The rules, which are supposed to kick in at the beginning of next year and appear to be the world’s toughest, still need to be approved by EU member states and the full European Parliament. European banking executives and trade groups say the rules—which are likely to apply to all European bank’s employees around the world—will put the industry at a severe disadvantage relative to U.S. and Asian banks, and that it will provoke unintended consequences. Banks early Thursday weren’t yet publicly commenting as they digested the news. But executives privately didn’t hold back. “It’s a disaster,” said a senior investment-banking executive at a top European bank. “It’s a crazy policy” that could jeopardize European banks’ abilities to hire employees in the U.S. or Asia.

Jockeying Stalls Deal On Spending Cuts (WSJ)
With mandatory across-the-board spending cuts set to begin Friday, the White House and congressional Republicans are poised to let the deadline pass, each calculating that their hand in negotiations only grows stronger if they scorn a quick compromise. The first face-to-face meeting on the issue between President Barack Obama and congressional leaders won’t happen until Friday—the deadline for Mr. Obama to set in motion $85 billion in broad spending cuts. None of the participants expect the morning meeting at the White House to produce a breakthrough. In the run-up, with no serious talks under way, each side is maneuvering to ensure the other catches the blame if the cuts kick in.

Cuts Unlike To Deliver Promised US Budget Savings (Reuters)
The $85 billion cut to budget authority amounts to about 2.4 percent of the $3.6 trillion the U.S. government is expected to spend in the fiscal year that ends on Sept. 30. The actual amount of savings is much less – $43 billion in the current fiscal year, according to the Congressional Budget Office. That’s because federal agencies don’t spend all of the money they are allocated in any given fiscal year. A $1 billion aircraft carrier, for example, may take years to build. Even at that lower level, the effects are likely to ripple across the world’s largest economy in a way that will work against deficit-reduction efforts.

Scrutiny Of Heinz Trades Grows (WSJ)
The Financial Industry Regulatory Authority, a Wall Street self-regulator, and the Federal Bureau of Investigation are reviewing numerous trades in Heinz stock shortly before the buyout announcement sent the share price soaring Feb. 14, the people said. The inquiries add to an investigation the Securities and Exchange Commission disclosed Feb. 15 into what it called a “highly suspicious” $90,000 purchase of stock options the day before the deal, a position with a potential profit of $1.7 million. The FBI also has said it launched a criminal investigation into options activity ahead of the deal.

Flowers Foods Set To Buy Wonderbread From Hostess (NYP)
After no other bidders emerged to challenge it, Flowers Foods is set to snare Wonder and a slew of other bread brands being sold by bankrupt Hostess Brands for $360 million.

How The Pope’s Retirement Package Compares To Yours (CNBC)
Let’s start with the basics: The pope emeritus will receive a monthly pension of 2,500 euros, according to Italian newspaper La Stampa. That translates to almost $3,300, or close to the monthly maximum of $3,350 that Social Security will pay to an American who retires this year. Few people will actually qualify for that amount. For starters, you would have to wait until 70 to retire. You would also have to spend most of your working life earning Social Security’s taxable maximum pay, which is set at $113,700 this year. “That’s quite rare,” said Richard Johnson, director of the program on retirement policy at the Urban Institute. He pointed out that the average Social Security check is about $1,200 a month — not enough to pay for the typical American retiree’s expenses. “For most people, if you look at the median, Social Security counts for about 40 percent of their income. So it’s important, but people rely a lot on other savings, like pensions or 401(k) savings,” Johnson said. A big nest egg is not something the pope emeritus has to worry about. The Roman Catholic Church will cover his living expenses, provide him with a spacious home inside the Vatican and pay for everything from cooked meals to housekeepers, according to The Telegraph. Such services are not available to the typical American senior, unless he or she pays for an assisted living facility or resides in a nursing home, Johnson said…Health care costs are one of the big risks that older Americans face, and while Medicare pays for the bulk of their expenses, many things are left uncovered, Johnson said. Meanwhile, the pope emeritus will continue to be a member of the Vatican’s generous private health care policy, the BBC reported.

Blackstone Profits From Regulation With Citigroup Deal (Bloomberg)
Blackstone has devised a way to profit from regulation: It’s helping banks meet tougher capital rules without the pain of selling assets or raising equity. The firm last year insured Citigroup against any initial losses on a $1.2 billion pool of shipping loans, said two people with knowledge of the transaction, who asked not to be identified because the matter is private. The regulatory capital trade, Blackstone’s first, will let Citigroup cut how much it sets aside to cover defaults by as much as 96 percent, while keeping the loans on its balance sheet, the people said.

RBS Moves To Appease UK (WSJ)
The 81%-state-owned bank unveiled a series of moves to ease government and regulatory pressure on the bank to become more U.K. focused and better capitalized. Chief Executive Stephen Hester confirmed that it would list around 25% of the U.S.-based RBS Citizens bank in the next two years “to highlight the valuable nature of the business.” RBS also said it would further pare back its investment bank, shedding jobs and cutting risk-weighted assets to £80 billion ($121.3 billion), from £101.3 billion at the end of 2012.

Unemployment aid claims fall by 22,000 last week (AP)
The number of Americans seeking unemployment aid fell 22,000 last week to a seasonally adjusted 344,000, evidence that the job market may be picking up. The four-week average of applications dropped 6,750 to 355,000, the Labor Department said Thursday. That was the first drop in three weeks.

Too Big To Fail Hurting Too Small To Compete Banks (Bloomberg)
Investors such as Joshua Siegel, founder and managing principal at New York-based StoneCastle Partners LLC, see bigger changes at the other end of the spectrum. Small banks will seek mergers because their management teams are aging and new regulations are too costly to bear, he says. “If you need one major overriding theme of the industry in the next three, five, seven, 10 years: massive consolidation, thousands of banks,” says Siegel, whose firm managed $5.1 billion as of the end of last year and invests in small banks. In the U.S., “I do see probably anywhere from 2,000 to 4,000 banks being swallowed up, and what you’ll see then is a more- concentrated system.”

Dennis Rodman Tells Kim Jong Un: You Have A Friend For Life (NYP)
Rodman and Kim sat side by side at an exhibition game in Pyongyang on Thursday, chatting as they watched players from North Korea and the US play in mixed teams, Alex Detrick, a spokesman for the New York-based VICE media company, told The Associated Press. Rodman later addressed Kim before a crowd of thousands, telling him, “You have a friend for life,” Detrick said. The encounter makes Rodman the most high-profile American to meet with the young North Korean leader, said to be a diehard basketball fan.

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47 Responses to “Opening Bell: 02.28.13”

  1. Guest says:

    I wonder if Matt will post a response to Bloomberg's response* to Matt's Response to Bloomberg's response to Matt's article about Bloomberg's article?

    – Guy who realizes it's sort of over, but would rather stoke the fire than have to read another Shazar post

    *http://www.bloomberg.com/news/2013-02-27/about-that-83-billion-bank-subsidy-we-still-mean-it-.html

    • Guest says:

      I'm glad these guys at Bloomberg are getting butthurt over losing an arugment to a blogger with superior chart abilities. This pathetic response says nothing more than 'agree to disagree.' Matt, please just blow them out of the water with your response.

      -Guy who hasn't been this excited since Icahn told Ackman he would have kicked his ass in Queens back in the day

    • VonSloneker says:

      This agression will not stand…man

      – The Dude

    • CNBC got it first says:

      BREAKING: Major financial news network subsidizing lives of entire editorial team who do nothing but battle with a blogger who destroys their arguments whilst tanked on margs and studying for various standardized tests for fun.

  2. HotKarl says:

    Lays the wood to Carmen Electra back in the day and now hobnobs with Kim Jong Un…what a rucky guy!

  3. HotKarl says:

    'the pope will continue to be a member of the Vatican's generous healthcare plan'

    Well thank God altar boys can't get pregnant as i imagine abortion services aren't covered under the Vatican healthcare plan.

  4. Guest says:

    I cry foul on the Pope's pension story. I think it's been fabricated by an over-zealous financial planner because the reality of the matter is that they hadn't ever needed a pension plan for a pope in the past 600 years!

  5. Altar Boy says:

    I hear the Pope's package will also be well taken care of during retirement

  6. E. Texas Gas Trader says:

    If your energy reps in Houston are a little slow to respond this morning it's because of the Houston Livestock Show and Rodeo currently in progress. Besides the regular rodeo there were a bunch of "shag rug rodeos" all over Houston last night as well. And unlike the way you LADWAP buyers say it, "rodeo" is pronounced "RO-dee-oh" in Houston.

  7. B XVI says:

    Need to check out that Bieber sweetie while he retains his boyish looks.

  8. Inquiring Mind says:

    My web broeser won't let me view the enlarged versions of DB photos. Is that a squirt top on the ketchup bottle.

  9. Innuendo says:

    You know how you need to sometimes turn the Heinz bottles upside down and smack the bottom? Yeah.

  10. Ivygate says:

    "…$90,000 purchase of stock options the day before the deal, a position with a potential profit of $1.7 million."

    Hold your roll before you attempt to demonize me. I'm just trying to pay back my student loans.

    -Gen Y w/ BA, MBA, Pharm D, JD and no real work experience outside of that student employee position fresh year in Providence

    • Laxbro says:

      Almost went to Brown because I had such a crush on this weird slam. Everyone thought she was gross, and because of the social pressure, the harsh reality was that a relationship was prob never viable. But like Siler when he spotted Laney Boggs, I always knew that wallflower was just some contact lenses and a trip to Barneys away from being a smokeshow. Never got my paws on her, but we still chat here and there. She does something for Google and she's still wearing clothes that make her look too average. Her exes she's talked about and that I've seen on her Facebook sound like and appear to be closet homosexuals. Sometimes I listen to the same obscure music she listens to on Spotify and consider a flight to SJC but then I get a text from a girl 3 blocks away and forget about her.

      • Shazar says:

        Are you talking about my ex?

      • Spotify bro says:

        Speaking of spotify and slams. When I was relatively new to it and unaware of the numerous connections it uses to get to facebook (despite signing on through a non-facebook account), I sent a song to my ex…after a 7 hour lunch/happy hour session, which was obviously a great idea…at the time. Of course it had some stupid caption like "chill song for a chill girl" or equally as lame. I had no idea I did this until two days later when I found it on my facebook feed, chock full of the comments you'd expect from making myself look like an idiot, including a threat from her then boyfriend (but he's 5'5", so not really a threat, more of a suggestion I guess). Felt pretty bad for a couple of days because she was a tight bodied expat from Brazil, with a perfect representation of their trademark characteristic. I thought I'd blown my chance of the imminent goodbye one-nighter before she shipped back to the motherland.

        Got a call from her about a month later at 1:00 am, when she just coincidentally happened to be at a bar in my neighborhood and was calling "because she couldn't remember what song I sent her".

        Moral of the story; don't discount the power of spotify.

  11. VonSloneker says:

    Only Nixon could go to China and only a ridiculous, peacocking, has-been could go to North Korea.

    – B. Woodward

  12. UBS MD says:

    If they're going to put caps on bonuses I think we can all agree its only fair that they also put floors.

  13. Shazouwe says:

    Once, at Minetta's, I was sodomized by a ketchup bottle.

  14. Guest says:

    Hey, is Dick Bove publishing yet?

    –Guy who somehow, many years ago got on Dick Bove's email list, but never got taken off when he never did any biz with his many employers, and now has a bad feeling that this time its different

  15. Kim Jong Un says:

    Now you understand Dennis. The changing of the worrd is inevitabre! But I'm still so ronery. Could you fix me up with Carmen Electra?

  16. Mark Klein, MD says:

    I think this bonus cap is a great idea, and that's why I'm poorer than you.

  17. Mr. Basketball says:

    "They should be more familiar with each other" said the North Korean newspaper reader, as Kim and his father had both played on every NBA Championship team since 1980.

  18. Fernando says:

    please keep posting stuff like this keep it up – Rockland County Computer Repair

  19. Shazar says:

    Good one!

  20. PermaGuestII says:

    "Special" in the short bus sense of the word, presumably.

  21. Hobbes says:

    Thanks Captain Obvious.

  22. Guest says:

    Just don't forget drinking fountains. I swear the entire Las Vegas Strip has maybe three drinking fountains. If he can guarantee that each of these new buildings has a drinking fountain by every entrance, that would be a big draw in the desert.

  23. DingALing says:

    Try your mother