Opening Bell: 01.02.14

A Few Brave Investors Scored Huge, Market-Beating Wins (WSJ)
In early September, on the heels of a drop of more than 5% for stocks over the previous month, David Tepper turned more bullish, despite widespread concerns about rising interest rates. Mr. Tepper, who runs Appaloosa Management LP, a $21 billion hedge-fund firm, began buying “calls,” or options that pay off when the market rises. Mr. Tepper felt these bullish positions were inexpensive relative to the cost of options that bet on a drop in the market, according to someone close to the firm. The market climbed during the last four months of the year, and the firm’s biggest hedge fund rose about 42% in 2013, after fees, likely earning several billion in profits for Mr. Tepper and his investors, this person said. Mr. Tepper says he remains “cautiously bullish,” arguing that stock prices, based on earnings, aren’t yet expensive given how low interest rates are likely to remain. Paulson & Co.’s $2.7 billion Recovery Fund began the year with bullish stock positions amounting to more than twice its bearish positions, or about twice the average of rival hedge funds measured by J.P. Morgan Chase & Co. The firm, run by John Paulson, added to its bullish trades this spring, piling into mortgage insurers, international banks and real-estate stocks, according to documents shared with investors. The fund jumped 55%, after fees, through the end of November, the latest figures available. As a result, Mr. Paulson could earn hundreds of millions of dollars, based on the fund’s 20% performance fee. His other strategies also reported double-digit gains, except for his gold fund, which is small compared with the firm’s others. It posted significant losses, according to a person close to the firm.

Buffett beats S&P for second straight year (CNBC)
Berkshire’s Class A shares finished 2013 at $177,900, just below their 52-week high of $178,900 set in late July. That’s up 32.70 percent from their $134,060 close in 2012. It’s the biggest annual gain since 1998 when the shares soared 52.2 percent.

JPMorgan Halts Latvia Dollar Deals After Probes, Bank Group Says (Bloomberg)
JP Morgan, which has been told by U.S. regulators to bolster money-laundering safeguards, has stopped clearing dollar transfers for Latvian lenders, according to the Baltic nation’s banking association. “JPMorgan was a meaningful partner, no doubt,” Martins Bicevskis, president of the Latvian Commercial Banking Association, said in an interview. “But that won’t hinder working further and looking for other partners.”

Buyout Shops Double Down With Debt Play (WSJ)
When buyouts go badly, many are now purchasing debt of companies they took private, putting them in a position to use restructurings or bankruptcies to shed jobs, pensions or onerous debts and give themselves a second chance at making money on the deal. The moves are sparking controversy in some cases and have become a hot topic among private-equity executives and restructuring advisers. The Loan Syndications and Trading Association, a New York trade group backing banks and other secured lenders, is developing guidelines for buyout firms to follow when purchasing debt of companies they own so they can avoid conflicts and legal skirmishes, said Elliot Ganz, the association’s general counsel. The guidelines could take as long as a year to implement, he said. “The market isn’t waiting for us. They’re doing the deals the way they’re doing the deals.”

Pot tourism ready to light up in Colorado in 2014 (CNBC)
As Colorado becomes the first state in the nation to allow recreational marijuana sales beginning Jan. 1, a budding pool of “potrepreneurs” have high hopes for an influx of out-of-town pot tourists. Colorado High Life Tours, which promises “fun, affordable and discreet” cannabis-centered excursions, is expanding its private and public limo and bus tours. “You’ll be able to buy a little pot here and there, see a commercial grow, visit iconic Colorado landmarks and take lots of pictures,” said company owner Timothy Vee. “It will be like a Napa Valley wine tour.” [...] Travelers…won’t find much information about pot tours alongside official city and state tourism brochures, vacation guides and websites promoting Colorado’s skiing, hiking and cultural activities. Pamphlets created by a coalition of marijuana industry organizations seek to fill in the gaps, informing tourists of what they can and cannot do while in Colorado and offering such advice as “Do not eat the whole brownie” and “Remember, Uncle Sam says ‘Stay off federal lands with that devil’s lettuce.’ ” [...] Prior to Jan. 1, Colorado High Life Tours has mixed sightseeing with stops at glass-blowing shops, marijuana grow centers and has offered customers “free samples”—because buying pot was not yet legal. “You live and learn,” said Vee. “On our tours, we’re getting a lot of empty nesters that haven’t smoked pot in 20 years. We’ve also had people who have never smoked pot take our tours and had one couple get high and so paranoid that we had to interrupt the tour and take them back to their hotel.”

Pope’s sharp words make a wealthy donor hesitate (CNBC)
At issue is an effort to raise $180 million for the restoration of St. Patrick’s Cathedral in New York being spearheaded by billionaire Ken Langone, the investor known for founding Home Depot, among other things. Langone told CNBC that one potential seven-figure donor is concerned about statements from the pope criticizing market economies as “exclusionary,” urging the rich to give more to the poor and criticizing a “culture of prosperity” that leads some to become “incapable of feeling compassion for the poor.” Langone said he’s raised the issue more than once with Cardinal Timothy Dolan, archbishop of New York, most recently at a breakfast in early December at which he updated him on fundraising progress. “I’ve told the cardinal, ‘Your Eminence, this is one more hurdle I hope we don’t have to deal with. You want to be careful about generalities. Rich people in one country don’t act the same as rich people in another country,’ ” he said.

Chinese Banks Eye Global Bond Market (WSJ)
China’s banks have long tapped foreign equity investors for funds, but they are set to count on overseas bond buyers for billions of dollars in cash in the next few years. The country’s banks will need to raise up to two trillion yuan ($330 billion) from share and bond sales in the next five years, according to McKinsey & Co. With growing levels of bad debt in a slowing domestic economy, weakness in stock markets and rising capital requirements, Chinese banks can no longer rely on share sales and the country’s four-trillion-yuan bond market for cash.

U.S. Merger Activity in ’13: Back at the Trillion-Dollar Level (Dealbook)
While global deal-making was basically flat for a fourth consecutive year, annual volume in the United States was up 11 percent in 2013 compared with the previous year, according to Thomson Reuters. Companies from New York to San Francisco announced more than $1 trillion worth of deals during the year, the most since the financial crisis. That led the United States to account for 43 percent of all deals worldwide, the biggest proportion since 2001. What’s more, activity picked up over the final two quarters, with volumes rising sharply from the first six months of the year.

Gold Rebounds With Silver After Worst Annual Retreats Since 1981 (Bloomberg)
Gold rallied from its worst year in more than three decades as a decline to a six-month low was seen spurring physical purchases, potentially prompting some investors to reverse bets on lower prices. Silver jumped. Bullion for immediate delivery traded at $1,212.55 at 10:12 a.m. in Singapore from $1,205.65 on Dec. 31, when prices sank to $1,182.27, the lowest level since June 28. Gold slumped 28 percent in 2013 for the biggest annual loss since 1981.

Painted pooches: Pet owners pay groomers to dazzle up dogs with bling, bows (NYDN)
Sugarplum went into the salon as a reddish-blonde dachshund mix and came out with pink and green ears, a rainbow tail and a bow in her fur. “It’s like having a little unicorn creature,” said Sasha Sinnott, an attorney from Pasadena who was nearly giddy about her dog’s makeover. For some dog owners, simple bathing and combing is not enough. So they pay groomers to turn fur into an artist’s canvas, where vibrant sweeps of chalk and paint transform pooches into fantasy fur balls that draw both compliments and strange looks. For an extra 10 or 15 minutes at the groomer, the everyday dog can get an outlandish redesign with a temporary paint tattoo, Mohawk, feather extension or glued-on jewels. Then there are the “extreme groomers,” who turn their own pets into elaborate creations like zombies, flowers or even whole jungle scenes, transformations that can take months as hair grows, paint is applied, fur is braided or extended, and shapes are sculpted. “For me, it is about a closer connection with my pets. People are now showering their pets with the amenities and affections that they would like themselves,” said Lauren L. Darr, founder of the International Association of Pet Fashion Professionals.

36 comments (hidden to protect delicate sensibilities)
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Comments (36)

  1. Posted by Shaz's beard | January 2, 2014 at 8:18 AM

    7AM opening bell? Shazzy still hammered from his appletini?

  2. Posted by Dumbass Oil Trader | January 2, 2014 at 8:37 AM

    BP upset about strip club actions of a few.

  3. Posted by Guest | January 2, 2014 at 8:55 AM

    “It’s like having a little unicorn creature,” said Sasha Sinnott, an attorney from Pasadena who was nearly giddy about her dog’s makeover.

    She's single, gents. Be my guest.

  4. Posted by KingCo | January 2, 2014 at 9:11 AM

    Langone added, "Could you also please dump that whole 'camel through the eye of a needle' crap from the New Testament? It's really pissing me off."

  5. Posted by guestimate | January 2, 2014 at 9:14 AM

    Not sure if Paulson making money is a good thing or bad thing. Last time he made money… well…

  6. Posted by Guest | January 2, 2014 at 9:32 AM

    You know, at some point you sit down and decide on the things that are intolerable and the things you can live with.

    At least for me, the lady friend taking the dog to Dip-A-Pet is borderline tolerable. Dressing up the dog in a fake "service dog" outfit so she can take the dog everywhere and be a universal scourge on people with allergies: nope, have a nice life.

  7. Posted by Dogs love it | January 2, 2014 at 9:43 AM

    1st picture looks like it could be from a Sarah McLachlan commercial

  8. Posted by Rich Guy Apologist | January 2, 2014 at 9:43 AM

    The "eye of a needle" and rich guy passage of the Bible is often misinterpreted. Back in the days when the dinosaurs were told that there was no room for them on Noah's Ark, the "eye of a needle" was actually a gate into the compound of Rehobatheth and was huge for the time only the wealthy were allowed entry into the compound through that gate which was built for large camels. So, you see, rich guys can easily enter the Kingdom of Heaven as it is scripturally correct and proper.

  9. Posted by quant me maybe... | January 2, 2014 at 9:44 AM

    Wanna bet that Levine is doing the opening bell, not Jon or Bess?

    –> Guy who ran a correlation of past and present opening bells as well as Levine opening bells at Bloomberg and is now suspicious.

  10. Posted by Guest | January 2, 2014 at 9:50 AM

    You're an idiot.

  11. Posted by Dustin O'hare | January 2, 2014 at 10:07 AM

    “Replies Very Selectively” aka don’t even bother sending Bess a message on OKC! #typicalManhattanchick, #ifyoudonthaveperfectteethandbitcoinsfuckoff. Please tell me why my car is in the front yard and I’m sleeping with my clothes on, came in through the window last night and your gone.

  12. Posted by Shazman | January 2, 2014 at 10:11 AM

    What about renting a retrard for disneyland lines ?

  13. Posted by Culverhouse Jr. | January 2, 2014 at 10:14 AM

    His holdings were all "gold denominated" which was a sure sign of gold topping. So he got punned.

  14. Posted by White Goodman, MBA | January 2, 2014 at 10:30 AM

    Opening Bell actually being on time is like New Year's resolution gym goers. I give it less than two weeks.

  15. Posted by UBS Exegesis Quant | January 2, 2014 at 10:31 AM

    Nice try. Needles aren't people – they don't have eyes.

  16. Posted by Guest | January 2, 2014 at 10:36 AM

    What about my vow to quit drinking for a while. Will it survive the wildcard ?

  17. Posted by ThatsVVacc | January 2, 2014 at 10:45 AM

    I've always wanted to try this, but unfortunately Shazar and I just couldn't agree on a fair wage for his services.

  18. Posted by I am so hungry | January 2, 2014 at 10:50 AM

    You know you are in the promised land when animals look and are treated better than people.

  19. Posted by segoviacobain | January 2, 2014 at 10:50 AM

    I can think of at least ten girls in this office who'd do the junket to Boulder for a weekend. No bitcoins required.

  20. Posted by Guest | January 2, 2014 at 10:53 AM

    Is that like the Cleveland steamer ?

  21. Posted by guest | January 2, 2014 at 10:55 AM

    You would know!

  22. Posted by Delaware MD | January 2, 2014 at 11:11 AM

    What does Rehoboth have to do with any of this?

  23. Posted by Tried it before | January 2, 2014 at 11:13 AM

    I think he wants to incorporate some oregano, a Motel 6, and built up sexual frustration on some unsuspecting female marketing analysts.

  24. Posted by DinkinsNostalgia | January 2, 2014 at 11:33 AM

    What – no item on DiBlasio vowing to raise taxes on incomes over $500k?
    Pretty sweet news.

  25. Posted by Guest | January 2, 2014 at 11:36 AM

    Bid/Ask JAN – SHAZ – Straddle ?

  26. Posted by Chris Christie | January 2, 2014 at 11:36 AM

    Come to papa, baby.

  27. Posted by segoviacobain | January 2, 2014 at 11:43 AM

    I'm very flattered that you believe we have an analyst of any kind here at SubBasement Securities!

  28. Posted by Guest | January 2, 2014 at 11:52 AM

    Don't know what's wrong with the potential donor. It's not like Jesus would walk into a soup kitchen and go on a table flipping rage.

  29. Posted by Can't read hashtags | January 2, 2014 at 12:11 PM

    What's a teet hand?

  30. Posted by guest | January 2, 2014 at 12:27 PM

    you know the entire month of december until break was 7am Opening Bells, right?

  31. Posted by UBS MD | January 2, 2014 at 12:37 PM

    Uh, this is a blog for finance professionals, not celebrities and pro athletes. Who the hell in finance makes over $500K other than CEOs?

    -Tired joke quant

  32. Posted by Guest | January 2, 2014 at 12:38 PM

    yes I've been very focused on that

  33. Posted by Im_a_Dude | January 2, 2014 at 12:49 PM

    The dog or the lawyer?

  34. Posted by RBS | January 2, 2014 at 1:37 PM

    UBS jokes never get old.

  35. Posted by Guest | January 2, 2014 at 3:28 PM

    Until 'break'? Your dorm re-open yet or are you still at Mom's?

  36. Posted by Un coder | January 2, 2014 at 3:41 PM

    if you dont have perfect teeth and bit coins fuck off