Opening Bell: 12.18.13

Goldman Dances to the New Street Beat (WSJ)
The Wall Street company, which clung to its trading roots even after a regulatory overhaul drove rivals to change course, is now reining in riskier activities, shrinking its balance sheet and steering clear of trades that don’t produce the double-digit-percentage returns its shareholders crave, Goldman executives and people familiar with the company’s plans said…Goldman, which derives about half its revenue trading stocks, bonds and other securities, has begun moving away from trades that require it to set aside more capital. The company is demanding to be paid more from clients for the money it does commit. At the same time, it is shrinking the inventory of securities it holds for clients, a step that frees up capital and boosts its returns. The goal is to eke out more profit from its trading unit, which in recent quarters has struggled amid tepid client activity. The changes have been gradual, as Goldman waited for the regulations to take shape, and the company’s overarching strategy remains intact.

Jury Still Out On SAC’s Steinberg (NYP)
Jurors in the federal insider-trading trial of SAC Capital moneyman Michael Steinberg ended their first day of deliberations without a verdict. They will resume Wednesday at Manhattan federal court. Steinberg is the first of eight employees of Steve Cohen’s SAC Capital caught in the feds insider-trading probe to go to trial. Six others have pled guilty while the eighth, Mathew Martoma, is scheduled to go on trial in January.

Ex-SAC manager Martoma fails to end part of insider case (Reuters)
A federal judge on Tuesday rejected former SAC Capital Advisors LP portfolio manager Mathew Martoma’s request to dismiss some insider trading charges because they were based on transactions not covered under U.S. securities laws. U.S. District Judge Paul Gardephe in Manhattan said Martoma’s alleged trades in American depository receipts of Irish drugmaker Elan Corp (ELN.I) qualified as domestic transactions covered by U.S. securities laws. As a result, the judge rejected Martoma’s request to dismiss one of two securities fraud charges, as well as related allegations in a conspiracy count. The defendant has pleaded not guilty to the three counts, and faces a January 6 trial.

UBS, Credit Suisse Payout Hopes Ebb as Regulators Tighten Leash (Bloomberg)
Prospects for fatter dividend payouts from Switzerland’s biggest banks are receding as Swiss authorities ratchet up capital demands. UBS AG (UBSN), the nation’s largest bank, was told to hold more capital for legal risks this quarter, while the finance minister said last month leverage rules might be tightened. Credit Suisse Group AG (CSGN), the No. 2 bank, is in talks with the regulator that may also lead to a demand for more capital, though it would be much smaller in scope than for UBS, a person with knowledge of the matter who asked not to be identified said this month.The tighter requirements, on top of stricter rules implemented over the past five years, arrived as the banks were preparing to start paying higher dividends. UBS Chief Executive Officer Sergio Ermotti, 53, pledged to pay out more than half of profits to shareholders once the company reaches a common equity ratio of 13 percent — a level that probably would have been achieved this year without the fresh demands. “The message from regulators is very clear: ‘if you think you can pay dividends, forget it,’” Oswald Gruebel, who served as CEO of both Zurich-based UBS and Credit Suisse, said by phone. “They don’t want to let banks pay any dividend. It’s totally open how long this will last.”

Duck penis studies, lifecoaches for Senate staff: $30B in government spending questioned (NYP)
While the White House and Congress griped this year about the pain of automatic budget cuts, the federal government still managed to spend billions of dollars on seemingly frivolous projects – from a $384,989 grant for Yale University to study the duck penis to $1.9 million for “lifestyle” lessons for Senate staffers. Nearly $30 billion in questionable federal spending is detailed in the “Wastebook” that was released Tuesday by the Sen. Tom Coburn (R-Okla.), who annually compiles the report…Taxpayers also got stuck with the bills for: $17.5 million for special tax exemptions for Nevada brothels, including tax deductions for groceries, wages for prostitutes, rent and utilities…$630,000 spent by the State Department to buy followers on its Facebook and Twitter accounts…$325,525 for a National Institutes of Health study that found wives would be happier if they could calm down faster during arguments with their husbands…$150,000 to support the Puppets Take Long Island festival in Sag Harbor.

Bank of Canada sees less volatility from Fed tapering (Reuters)
Market volatility spurred by the U.S. Federal Reserve’s plans to scale back its massive stimulus program is far less of a concern now than it was earlier this year, Bank of Canada Governor Stephen Poloz told Reuters on Tuesday. Investors understand the Fed’s thinking much better than they did when Chairman Ben Bernanke first mentioned the possibility of tapering the U.S. central bank’s $85 billion in monthly asset purchases on May 22, Poloz said. The market’s huge one-way bets on the Fed continuing its so-called quantitative easing suddenly had to reverse at that time, causing market turmoil, but Poloz argued that the impact now will be much smaller.

Banks to Revamp Leveraged Muni Funds After Volcker Curbs (Bloomberg)
Wall Street banks are trying to prevent the Volcker Rule from forcing them to wind down funds that use borrowed money to bet on the $3.7 trillion municipal-bond market. The rule, named for former Federal Reserve Chairman Paul Volcker and approved by regulators last week, limits banks’ ability to run investments known as tender-option bond funds. The investments form a $70 billion segment of the local-debt market, according to the Securities Industry and Financial Markets Association. The funds issue short-term securities and use the proceeds to buy longer-maturity local-government obligations, profiting from the difference in interest rates. The purchases help lift demand for tax-exempt debt by giving investors a way to make leveraged bets on munis. Banks are searching for ways to restructure the funds to keep them in compliance with the law, which goes into effect in 2015.

SEC Brings Fewer Enforcement Actions, Slows Early-Stage Probes (WSJ)
As the agency pushes into a new era of enforcement not dominated by the financial crisis, it is bringing fewer cases, according to figures released by the SEC Tuesday. In addition, the rate at which the SEC is starting early-stage probes, known as matters under inquiry, has fallen to its lowest level in at least a decade, according to previously unpublished figures released separately to The Wall Street Journal. But the more selective approach presents risks for SEC Chairman Mary Jo White if she fails to win some blockbuster cases to support her get-tough rhetoric, legal experts said. Since taking over the top job at the securities regulator in April, Ms. White has promised more aggressive and wide-ranging enforcement, saying the agency should “be the kind of cop…[that] makes you feel like we are everywhere.” Now, the agency is under pressure to bring more headline-grabbing actions to convince both Wall Street and Main Street that Ms. White’s talk carries weight. “The only way to do that is to have a run of significant cases and get very good settlements or, when you go to trial, make sure you win—and, right now, they’re not doing either one of those,” said Thomas Gorman, a former SEC enforcement lawyer who is now a partner at the law firm Dorsey & Whitney LLP.

$1M in meth found in upscale Lake Nona home (WTFV)
Federal agents and deputies said they got a tip the drugs were stashed on Kristen Park Drive in Lake Nona, so they set up surveillance and made the bust last week…Inside, agents found 80 pounds of meth worth $1 million hidden in a closet under the stairs…In the driveway was a car with a stuffed Walter White toy. Actor Bryan Cranston played White on the television show “Breaking Bad.” Fans of the show know White as the master “chef” who cooks crystal meth with his partner, Jesse Pinkston.

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Comments (53)

  1. Posted by Guy In Disbelief | December 18, 2013 at 7:37 AM

    Do my eyes deceive me? Is yesterday's OB is just about 22 hours late or so?

  2. Posted by Taxed | December 18, 2013 at 7:38 AM

    Studying duck penises? Tell those quacks not to put that on our bill!

  3. Posted by Shazar | December 18, 2013 at 7:40 AM

    Wait, you mean I'm busting my butt to get out an opening bell on time when I could be studying Duck Penises?

  4. Posted by Yale | December 18, 2013 at 7:43 AM

    Yeah, that was it. We were um, studying them.

  5. Posted by JPM Quant | December 18, 2013 at 7:46 AM

    The worst part is that I can't even make jokes about this story in the chat.

  6. Posted by guest | December 18, 2013 at 8:50 AM

    that whole Yale thing.

  7. Posted by guest | December 18, 2013 at 8:51 AM

    "$325,525 for a National Institutes of Health study that found wives would be happier if they could calm down faster during arguments with their husbands"

    I will not bring up this factoid when I get home tonight
    I will not bring up this factoid when I get home tonight
    I will not bring up this factoid when I get home tonight
    I will not bring up this factoid when I get home tonight

  8. Posted by Turnip Truck | December 18, 2013 at 9:13 AM

    "reining in riskier activities … and steering clear of trades that don’t produce the double-digit-percentage returns its shareholders crave"

    Take less risk and get higher returns? Man, wish I'd thought of that.

  9. Posted by J. Merriweather | December 18, 2013 at 9:27 AM

    We did, it ended, poorly.

  10. Posted by C. Sptizer - Sheen | December 18, 2013 at 9:36 AM

    To be fair, the alleged "wasteful" spending includes "$17.5 million for special tax exemptions for Nevada brothels, including tax deductions for groceries, wages for prostitutes, rent and utilities."

    I'd hardly call that a waste.

  11. Posted by ThatsVVacc | December 18, 2013 at 9:43 AM

    Trust me, going to school to study dicks isn't as good as it sounds.

    - R. Martinson

  12. Posted by Guy who digs Becky | December 18, 2013 at 10:02 AM

    What was the deal with all the deleted posts yesterday? New unwritten rules or was Bess having a bad day?

  13. Posted by My Guess | December 18, 2013 at 10:07 AM

    The same person or people who were downvoting everything were probably also "reporting" everything as spam, causing the deletions. Hooligans.

  14. Posted by VonSloneker | December 18, 2013 at 10:21 AM

    But-a you should-a bring it up-a. It's-a the, how you say, "learning-a opportunity" for your wife-a.

    - Costanza Miriano, Matrimonio Quant

  15. Posted by My Guess | December 18, 2013 at 10:27 AM

    Ah. It's happening again. Same folks downvoting everything are also "reporting" comments and getting them auto-removed.

  16. Posted by Guest | December 18, 2013 at 10:44 AM

    To the agency that put the ad for the "cruelty-free animal adventure" together: I can think of a number of appropriate images to go with your headline, but a howling wolf would not be one of them.

    - Guy who knows how wolves survive in the wild

  17. Posted by DB IT Hamster | December 18, 2013 at 10:44 AM

    Cocaine's a hell of a drug.

  18. Posted by 3rd Time | December 18, 2013 at 10:50 AM

    Bess isn't deleting. Some asshole is "reporting" comments, probably the serial downvoter from yesterday. For example, this is the 3rd time I've posted this explanation.

  19. Posted by Guy who digs Becky | December 18, 2013 at 10:56 AM

    Got it, thanks. I didn't know a report meant a deletion.

    I guess we have a new venture to find out who the guy is.

  20. Posted by Guest Juror | December 18, 2013 at 11:14 AM

    Guilty. Neeeexxxt!

  21. Posted by Guest | December 18, 2013 at 11:15 AM

    So if you do a trade with Goldies, you now know you are being double digit ripped off.

  22. Posted by Guest | December 18, 2013 at 11:18 AM

    In an efficient market, how does Goldman know that a trade is going to produce double digit returns?

  23. Posted by Hobbes | December 18, 2013 at 11:18 AM

    Please tell me how swallowing is the same as studying.

    - Rebecca Martinson's biology prof

  24. Posted by Bored Guest | December 18, 2013 at 11:43 AM

    It takes both sides of the trade!

  25. Posted by Banksterrrrrrr | December 18, 2013 at 11:45 AM

    Illuminati, Magnets, Market manipulation, the tears of widows and orphans etc., etc…

  26. Posted by J. Corzine | December 18, 2013 at 11:53 AM

    Let's just say it cuts both ways.

  27. Posted by DB compliance | December 18, 2013 at 11:56 AM

    Volker rule implementation is being extended to comments section.

  28. Posted by Killin it ? | December 18, 2013 at 12:10 PM

    Have you seen our boy Matt's purported perks and compensation package ?
    http://www.newrepublic.com/article/115966/bloombe

  29. Posted by Guest | December 18, 2013 at 12:15 PM

    Chances are that you know less than nothing about the wild, and aim like Dick Cheney at the short urinal.

    -Everyone who had to hear about a coworker's camping trip.

  30. Posted by Shazar | December 18, 2013 at 12:25 PM

    Yes, I've always kept an eye on Matt's package

  31. Posted by Dennis Kneale | December 18, 2013 at 12:26 PM

    Wait, you're saying I got ripped off by those golden retrievers?

  32. Posted by Ray D. | December 18, 2013 at 12:39 PM

    I believe you mean Hyenas. Fuck wolves.

  33. Posted by Guest | December 18, 2013 at 12:42 PM

    Oh, I know plenty about the wild. I've been to more ski resorts than I can count, have a wardrobe full of North Face gear, have been on fishing tours in Idaho, Colorado, and Alaska, have a stable full of horses at my farm in Kentucky, and drive a four-wheel drive sport utility vehicle. I'm a veritable expert on the wild.

    - Every banker from east of the Mississippi

  34. Posted by Plebian | December 18, 2013 at 12:44 PM

    "Goldies"??

    Fail.

  35. Posted by Rebecca M. | December 18, 2013 at 1:09 PM

    The only campus that I cannot get laid on.

  36. Posted by Rebecca M. | December 18, 2013 at 1:13 PM

    So I can ace the taste test portion. Duh!

  37. Posted by .Bo | December 18, 2013 at 1:17 PM

    "Michael Lewis makes around $8,000 per 1,200-word column."

    Matt must bring in, like, 4 times that.

  38. Posted by JPM/LondonWhale | December 18, 2013 at 1:45 PM

    So did we. Same result.

  39. Posted by guest | December 18, 2013 at 1:46 PM

    He's not mentioned in the article (which refers to the famous people that write for it: Michael Lewis, etc), but okay.

  40. Posted by M. Levine | December 18, 2013 at 2:13 PM

    whoah whoa woo…

  41. Posted by M. Levine | December 18, 2013 at 2:16 PM

    I'm paid by the footnote.

  42. Posted by Guy who digs Becky | December 18, 2013 at 2:20 PM

    Hey Bess, this could make for a lively afternoon post!

    440 pound virgin sends his first lay to the ER: http://nypost.com/2013/12/18/virgin-ends-up-in-er

  43. Posted by quant me maybe... | December 18, 2013 at 2:41 PM

    How come the Opening Bell didn't lead with the fact that through some miraculous chemistry Keith Richards has made it to his 70th birthday, today?

    –> guy who is pretty sure he's going to outlive us all.

  44. Posted by Dept of Pronouns | December 18, 2013 at 2:56 PM

    How do you outlive yourself?

  45. Posted by J Shazman | December 18, 2013 at 3:23 PM

    What if I told you there was a way to travel through time, so that if say, you died at 12:30PM, it would be timestamped as 9:30AM. Would you be interested in that?

  46. Posted by R. Gronkowski | December 18, 2013 at 4:17 PM

    Can it go to Florida also?

  47. Posted by quant me maybe ... | December 18, 2013 at 8:09 PM

    By not reading Dealbreaker

  48. Posted by Iklan Facebook | January 11, 2014 at 9:23 AM

    thanks…

  49. Posted by jasa facebook | January 11, 2014 at 9:25 AM

    its ok…

  50. Posted by abito sposo | March 22, 2014 at 6:06 AM

    Studying duck penises? Very interesting topic! ahahahhaha

  51. Posted by Sewa Villa | April 7, 2014 at 12:02 PM

    thakns…

  52. Posted by Pancake Durian | April 7, 2014 at 12:03 PM

    Pancakedurian

  53. Posted by Jasa SEO | April 7, 2014 at 12:04 PM

    sipp…