Moody’s Threatens to Cut Credit Ratings of Banks (DealBook)
Believing that the government is now more likely to let large banks fail in a crisis, Moody’s Investors Service threatened on Thursday to downgrade the credit ratings of several big financial firms. If it follows through, Moody’s could reduce the ratings of Wall Street giants like Goldman Sachs, Morgan Stanley and JPMorgan Chase as much as two grades. Such a move might weigh most heavily on Morgan Stanley because a two-notch downgrade would leave the company just above a junk credit rating. But the effects on the bank may also be muted. Confidence in large banks, judging by their stock prices and other financial indicators, appears to have risen since Moody’s cut their ratings last year.
SEC’s White Vows Technology Safeguards Following Nasdaq Failure (Bloomberg)
U.S. Securities and Exchange Commission Chairman Mary Jo White said she would push to adopt proposed automated-trading rules after system caused a three-hour halt on the Nasdaq Stock Market. The failure that affected Nasdaq’s system for reporting quotes and trades bolsters the regulator’s case for the proposal issued in March, White said in a statement yesterday. Stock and options exchanges have pushed the SEC to limit the scope of the rule, including how much information about disruptions must be provided to regulators. … White, who told Congress earlier this year that she would scrutinize market stability efforts, also said yesterday she would “convene a meeting of the leaders of the exchanges and other major market participants to accelerate ongoing efforts to further strengthen our markets.”
Computer Bugs and Squirrels: A History of Nasdaq’s Woes (DealBook)
1987: A troublesome squirrel | Just two months after a historic stock market crash, a stray squirrel touched off a power failure in Trumbull, Conn., that shut down the Nasdaq for 82 minutes, preventing an estimated 20 million shares from being traded. The squirrel lost its life.
1994: Another squirrel, and computer bugs | After running for years without interruption, Nasdaq suffered a series of technical breakdowns that summer. To cap it off, a squirrel chewed through an electric company’s power line, leading to a 34-minute interruption when the exchange’s own backup power system in Trumbull failed to kick in. “No one is yet ready to describe the recent problems as anything more than a run of bad luck,” The New York Times wrote at the time.
JPMorgan Said to Face ‘Whale’ Fines as Soon as Next Month (Bloomberg)
U.K. and U.S. regulators are preparing to impose fines as soon as mid-September on JPMorgan Chase & Co. (JPM) after an investigation into the bank’s London trading losses last year, a person with direct knowledge of the matter said. The U.K.’s Financial Conduct Authority and the U.S. Securities and Exchange Commission are in negotiations with the New York-based company to settle their probes, according to the person, who asked not to be identified because the talks aren’t public. In the U.S., the Commodity Futures Trading Commission and the Justice Department are also investigating events surrounding the losses.
Sunbathers watch in shock as Russian Navy hovercraft plows onto beach (NYDN)
A massive vessel of war plowed onto a Russian beach in broad daylight, startling dozens of beachgoers who were just out to enjoy the sun. The 187-foot long military hovercraft glided onto a beach in Mechnikovo, Kaliningrad, as sunbathers took a break from tanning to gawk. Witnesses heard a “terrible roar” and saw “big waves,” but overall appeared to remain calm, Metro reports. A woman holding a child walked slowly away from the scene, but turned back for a better look. That’s when paratroopers stormed out of the 550-ton ship and ordered everyone and their towels off the beach. … After the drill was over, the civilians were allowed to return to their fun in the sun. But they were shaken up. “What are the reasons for such military activity on a Sunday?” one witness asked.
Brazil, Indonesia launch measures to shore up their currencies (FT)
Brazil and Indonesia have moved to stem the declines in their currencies and shore up confidence at the end of a torrid week for emerging markets where local borrowing costs hit a two-year high. The central bank of Latin America’s largest economy said late on Thursday that it would launch a currency intervention programme worth about $60bn to ensure liquidity and reduce volatility in the nation’s foreign exchange market. Then on Friday, Indonesia’s chief economic minister Hatta Rajasa told reporters that the government would increase import taxes on luxury cars, introduce tax incentives for companies investing in agriculture and metals industries and aim to reduce oil imports. The move, of which more details on plans were expected later in the day, suggests that Jakarta may have given up on trying to shore up its currency through intervening in the markets.
Low inflation mystery could be a hitch in Fed’s plans (Reuters)
Experts are divided over why inflation has cooled, but it could be a sign of lasting damage dealt to the economy by the 2007-09 recession. If so, it could get in the way of the Federal Reserve’s plans to end a bond-buying stimulus program by the middle of next year. … Consumer prices rose 1.3 percent in the 12 months through June, roughly half the pace recorded in early 2012, according to the Fed’s preferred inflation gauge. The slowdown is also evident in a less-volatile core index, which strips out food and energy costs. Very low inflation scares policymakers because it raises the chances an economic shock – say, a meltdown in Europe or China – could tip prices and wages into a downward spiral known as deflation.
German GDP Growth Gains Steam (WSJ)
Germany’s economy rebounded sharply in the second quarter from a weak start to the year, gaining steam from a pickup in investment and robust consumption, official data showed Friday. Gross domestic product swelled 0.7%, corresponding to an annualized rate of 2.9%, the national statistics office said. The figures confirm official estimates issued last week. That makes Germany the fastest growing of the world’s largest industrialized economies in the second quarter.
How BlackBerry Handled Past Wealth (NYT)
BlackBerry’s corporate filings show that over the years it distributed $3.5 billion to shareholders. … That is an impressive amount, especially considering that the entire company is now worth only a little more than $5 billion. But loyal shareholders did not receive any of that money. To get the money, an investor had to sell. The money was spent on share buybacks, and most of those buybacks came in 2008 and 2009, when the company was flying high. … The result was a classic “sell low and buy high” strategy, one that did wonders for the executives.
Uber Filing in Delaware Shows TPG Investment at $3.5 Billion Valuation; Google Ventures Also In (AllThingsD)
According to a Delaware filing by Uber Technologies, it has sold stock in the fast-growing privately held transportation service to private equity giant TPG. In addition, according to sources who have seen other stock documents, Uber has also taken a major investment from Google Ventures. The overall valuation for the San Francisco company, according to the document — filed on August 1 — and also sources, is $3.5 billion.
Fans furious over Ben Affleck being picked to play Batman in upcoming Man of Steel sequel (NYP)
The Oscar-winning “Argo” filmmaker will don Batman’s cape and cowl for the upcoming Batman-and-Superman flick, Warner Bros. said in a surprise announcement yesterday. The studio said Affleck, 41, will star opposite 30-year-old Henry Cavill, who will reprise his role as Superman from “Man of Steel.” … Orlando Bloom, Luke Evans and Scott Adkins were all mentioned, but the studio settled on Affleck, who played another superhero when he starred as Daredevil in the 2003 flick of the same name.
An Edmonton dentist’s plan to clone Beatle John Lennon (G&M)
Can a Canadian dentist use a rotten tooth to bring back the late, great John Lennon via the miracle of cloning? Imagine. That’s the goal of Edmonton dentist Michael Zuk, who claims he has sent the dead Beatle’s molar, which he purchased at an auction last fall for $31,000, to Penn State University, where he says “scientists are considering ways to extract the genetic code from the fragile specimen.” … “I am nervous and excited at the possibility that we will be able to fully sequence John Lennon’s DNA, very soon I hope,” he says. “With researchers working on ways to clone mammoths, the same technology certainly could make human cloning a reality.”