To His Collection of Steinways, Hedge Fund Titan Adds Their Maker (DealBook)
John A. Paulson, the hedge fund billionaire, already owns three Steinway & Sons pianos; the medium model M grand, the larger model O and the nearly seven-foot-long model B, together worth tens of thousands of dollars. But Mr. Paulson, in investing parlance, was looking to increase his exposure. On Wednesday, his firm, Paulson & Company, agreed to buy the company that makes the pianos, Steinway Musical Instruments, for $512 million. … Though Mr. Paulson is not a pianist, he played the drums, clarinet and saxophone when he was a teenager and into his 20s, eventually setting them aside when he could not keep up the necessary commitment.
Airlines Preview Merger Defense (WSJ)
The Justice Department’s suit ignored several benefits the merger would offer consumers, including more flights to more destinations, the airlines’ lawyers said. The deal would reduce the airlines’ costs and allow them to offer lower prices and better service, they said. They also said it would be good for the airlines’ employees and creditors. “They got this one very wrong,” Washington lawyer Richard Parker, of O’Melveny & Myers LLP, who is representing US Airways, said of the lawsuit.
JPMorgan Said to Expect Multiple Fines for Whale Loss (Bloomberg)
JPMorgan Chase & Co. expects to be fined by authorities in the U.S. and U.K. over last year’s $6.2 billion trading loss, which led to criminal charges against two former employees, said a person familiar with the matter. The Securities and Exchange Commission signaled in a complaint filed yesterday against Javier Martin-Artajo, 49, and Julien Grout, 35, that the New York-based bank will be held accountable for providing inaccurate information to investors after the two men “fraudulently” mismarked their trades to conceal losses. … The bank also expects to be fined by the Department of Justice, the Commodity Futures Trading Commission and the U.K.’s Financial Conduct Authority, said the person, who asked not to be named because the discussions are private.
Ex-bosses at JPMorgan unlikely to face charges in ‘Whale’ scandal (Reuters)
The JPMorgan Chase & Co executives who supervised the traders at the center of the “London Whale” scandal are unlikely to face any charges over a trading debacle that cost the largest U.S. bank more than $6.2 billion, people familiar with the probe said. Neither Ina Drew, the bank’s former chief investment officer, nor Achilles Macris, a former top Chief Investment Office executive, are mentioned by name in the complaints filed in New York. … There is no allegation in the complaints that either Drew or Macris did anything wrong or encouraged Martin-Artajo and Grout to conceal the losses, which first began to be publicly disclosed in May 2012.
Henkel pulls toilet freshener after Ukraine takes offence (Reuters)
German consumer goods company Henkel has pulled a toilet freshener from the eastern European market after Ukrainians complained it looked like the former Soviet republic’s flag. A television advertisement for the Bref Duo Stick freshener run in Russia caught the attention of Ukrainians – many of whom watch Russian television – last week. In the ad, the yellow-and-blue freshener which is shaped like a small flag is put under the toilet rim. … Misuse of state symbols became a sensitive issue in Ukraine earlier this month, when the authorities found that Jared Hasselhoff, a bassist for American rock band Bloodhound Gang, had urinated on the Ukrainian flag during a gig in Kiev.
Confident Consumers Step Up Their Borrowing (WSJ)
Auto lending increased by $20 billion in the second quarter from the previous quarter, the largest gain in seven years, Federal Reserve Bank of New York figures showed Wednesday. Americans also increased their credit-card balances, reversing a first-quarter decline, and took out more mortgages. At the same time, total consumer debt declined by $78 billion last quarter to $11.15 trillion, putting it 12% lower than its peak in the fall of 2008 during the recession and at its lowest level since 2006.
Below-target inflation poses QE tapering risks for Fed (FT)
A decision by the Federal Reserve to start scaling back its asset purchases next month is heavily dependent on confidence among US central bankers that inflation will gradually pick up and move closer to 2 per cent. But data released on Wednesday by the labour department offered no such assurance. The producer price index (PPI), which measures inflation for businesses excluding volatile food and energy costs, edged up by only 0.1 per cent in July, and has increased by a modest 1.2 per cent over the past year – well below the Fed’s target.
Chinese Banks Feel Strains After Long Credit Binge (WSJ)
Chinese banks now are trying to strengthen their balance sheets ahead of an expected rise in bad loans coupled with slower earnings growth. Raising capital will likely be expensive for the banks because investors, who have sold off shares of banks, are worried about their deteriorating health and China’s slowing growth. “The problem [banks] face is that market sentiment is very bad,” says Mark Mobius, executive chairman of Templeton Emerging Markets Group, a part of Franklin Templeton Investments, who manages more than $50 billion of emerging-market equities.
Demand for physical gold jumps 53% in second quarter (CNBC)
Consumers around the world bought 53 percent more bullion in the second quarter from the year ago period, bringing total purchases of gold jewelry, bar and coins to 1,083.2 metric tons, according to WGC’s quarterly report on demand trends. Of this, India accounted for the biggest share at 310 metric tons, which is a 71 percent rise from the same period a year earlier, followed by China at 275.7 metric tons, marking an 87 percent increase.
Morgan Stanley Leads in Cutting Credit Correlation Risk (Bloomberg)
Morgan Stanley cut risk in its credit-correlation portfolio by 69 percent from this year’s peak as U.S. banks seek to reduce the capital tied to derivatives businesses built up before the financial crisis. The firm’s comprehensive-risk measure, which seeks to estimate potential losses in correlation positions over one year with 99.9 percent certainty, fell to $362 million at June 30, from a high of $1.16 billion in the first quarter, according to a regulatory filing by the New York-based company released this week. The risk-weighted assets tied to that business dropped $4.85 billion to $19.3 billion.
Buffett’s Berkshire Hathaway cuts Coca-Cola stake, buys more GM (Reuters)
Happy 13F day!
The Obama Rodeo Clown Is Becoming a Right-Wing Hero (NYM)
After a rodeo clown in Missouri donned an Obama mask for a routine whose core concept was that a bull ought to trample the president, the Missouri State Fair banned the clown for life for his “unconscionable stunt,” saying it was “inappropriate and not in keeping with the Fair’s standards.” In doing so, it created a great victim for some conservative, theatrical types to rally around. … Unsurprisingly, Glenn Beck is at the forefront of this, declaring on his radio show Wednesday, “today I officially declare myself a rodeo clown. Today I officially declare that we are all rodeo clowns.”