Opening Bell: 07.14.14

Bitcoin by Bitcoin, the Winklevii ETF Inches Closer to Reality (Bloomberg)
It looks increasingly like the Winklevoss Bitcoin Trust (COIN) will actually launch. If it hits the market later this year, it will come a decade after the inception of the world’s largest gold fund, SPDR Gold Shares (GLD). COIN was modeled on GLD and in some ways is trying to be a new generation’s version of gold. The cyptocurrency would move closer to the mainstream in an exchange-traded fund wrapper. There’s still no guarantee COIN will be approved by the Securities and Exchange Commission. There are more than a thousand prospectuses for ETFs sitting with the SEC, and hundreds of reserved tickers sitting with stock exchanges. And this approval would be the first of its kind — a virtual asset.

Investigators Probe the Ways a Swiss Broker Courted Libyan Business (WSJ)
At a luxury villa in the Moroccan desert, an international brokerage firm hosted getaways for Libyans connected to the country’s oil-rich sovereign-wealth funds. The men spent their days lounging poolside and nights partying at clubs in Marrakesh. The jaunts were part of a campaign by Tradition Financial Services of Switzerland to win business in Moammar Gadhafi’s Libya, an effort that included hiring relatives of senior Libyan officials, according to people who attended and to former employees of the firm. The tactics evidently worked. Tradition for years handled investments for the Libyan funds, earning millions of dollars in commissions. Now its efforts are under scrutiny in wide-ranging U.S. and British corruption probes that are examining the lengths to which some Western financial firms went to gain a piece of Libya’s oil wealth.

Behind the Scenes of Citigroup’s $7 Billion Settlement (WSJ)
The negotiations are stoking banks’ fears that the Justice Department is getting increasingly heavy-handed against the industry, while investors are worried that bank penalties will be decided not by a formula but by the subjective measures of the government. The deal also could be seen as a key test for Citigroup CEO Michael Corbat, who was given the top job in 2012 with a mandate to improve the bank’s relationship with the government. Meanwhile, Mr. Holder has faced constant criticism from Congress and elsewhere that his Justice Department has been too soft on financial institutions.

Bankrupt Crumbs Might Be Saved (NYP)
Crumbs Bake Shop has a deal, which if approved by a bankruptcy judge, could reopen the cupcake maker, according to a court filing on Friday.
Crumbs, which specialized in oversized cupcakes and went public in 2011, shuttered its nearly 50 locations in 10 states on Monday. It filed for Chapter 11 bankruptcy on Friday. The new ownership comprises Marcus Lemonis, star of the reality show “The Profit” and known as the “business turnaround king” and Fischer Enterprise, the owner of Dippin Dots. The two would provide debtor-in-possession financing and subsequently buy the cupcake chain through a joint venture called Lemonis Fischer Acquisition Co, according to the filing. They would take Crumbs private and reopen its stores and resume operations.

Barry’s Bootcamp Considers Strategic Options Including Sale (WSJ)
Barry’s Bootcamp, a group fitness chain that counts celebrities among its clients, is considering strategic options including a sale or capital raise, according to people familiar with the matter. The company, which offers a bootcamp-style workouts in a nightclub setting, could fetch $100 million in a sale, two people said. One person said that figure would be on the high end and another said even more was possible. Investment bank Moelis & Co. is expected to contact potential buyers or investors in a process that would kick off later this summer or early fall, the people said. Founded in 1998 by fitness instructor Barry Jay, the company is considered fast growing, the people said. It currently operates out of 14 locations, mostly in the U.S. but also including Norway and London. Private-equity firms, which are increasingly investing in the health and wellness sector, are potential suitors for Barry’s, one of the people said.

Guy Who Called LeBron James the ‘Whore of Akron’ Forgives Him Now (NYM)
Esquire‘s Scott Raab, whose book The Whore of Akron is about how much he hated LeBron James for leaving the Cleveland Cavaliers, no longer hates LeBron James. No hard feelings, he says! “Broadway Danny Rose said it best — ‘Acceptance, forgiveness, and love,’” Raab wrote. “As human beings, that’s the only recipe for leading a righteous life in this world. Such words — from the famous and unfamous — come cheap. But you’re living those truths now, walking that walk. Who am I to hold a grudge?”

Dark pool probe builds pressure on Barclays boss (Reuters)
Barclays boss Antony Jenkins faces one of the biggest tests of his leadership this month when he decides whether the bank, Britain’s third largest, should fight accusations it deceived and defrauded customers in the United States. If Jenkins accepts the allegations, made in a lawsuit filed by New York’s Attorney General, he will face a dilemma arising from his pledge to jettison any business that does not fit into the bank’s new, squeaky-clean image. But the U.S. trading desk at the center of the allegations is part of Barclays’ equities business, an area it had planned to keep largely intact while shrinking its investment bank.

In A First Since the 1990s, A Large Bulgarian Bank Goes Bankrupt (NYT)
The decision to fold Corporate Commercial Bank, known as K.T.B., came after an audit showed that records relating to most of the bank’s loan portfolio were missing, the central bank said on Friday. The central bank, the Bulgarian National Bank, also accused the lender’s biggest shareholder of taking more than $136 million in cash from teh bank’s vaults before the run last month.

Portugal Isn’t Euro Zone’s Biggest Problem (WSJ)
The travails of Banco Espírito Santo may have struck many investors as a good excuse to take money off the table. The Portuguese bank is controlled via a cascade of family-owned holding companies and came under pressure when financial irregularities were uncovered at its ultimate parent, Espírito Santo International SA, a conglomerate with diverse interests all over the world. Not only was the Portuguese bank a lender to these family interests, but it had allowed units higher up the shareholder structure to sell bonds directly to its own customers. The market feared a black hole. But there are good reasons to believe that BES isn’t a serious threat to the financial stability of Portugal, let alone the euro zone. There are other risks that should worry investors more—and may have been a factor in last week’s selloff. The situation at BES looks better contained than initially feared. Its exposure to companies higher up the shareholder structure turns out to be just €1.1 billion ($1.5 billion)—that is manageable in the context of a €100 billion balance sheet and its €7 billion of equity, €2.1 billion above the regulatory minimum. Even if, in a worst-case scenario, BES came under pressure to honor guarantees given by its controlling shareholder to buyers of its bonds, the total exposure would rise by €700 million to €1.8 billion.

In Canada, a Central Banker’s Unusual Approach (WSJ)
Since taking over in June 2013, Mr. Poloz has pushed staff and himself to look beyond models for on-the-ground evidence to understand Canada’s economic challenges. His director of Canadian research traveled to Calgary to quiz energy companies about the investment outlook and to Toronto to talk to big retailers about competitive pressures in setting consumer prices. At policy meetings, a Bank of Canada staffer delivers regular reports showing where anecdotal evidence from the hinterlands differs from views inside the bank’s Ottawa building. In small round-table meetings, Mr. Poloz presses business people to poke holes in his views about the economy.

Seattle’s first legal pot shop runs out of marijuana (Reuters)
Seattle’s first and only recreational marijuana store had to close on Friday after running out of stock in just three days since Washington became the second U.S. state to allow pot sales to adults. Cannabis City opened in Seattle on Tuesday with at least 10 pounds (4.5 kgs) of marijuana for sale, and by close of business Thursday it was all gone. A message on the store’s phone line said it would re-open on July 21. There were widespread concerns that shortages of pot would afflict retailers this week after the state issued its first 25 licenses to outlets, under a heavily regulated and taxed system approved by voters in November 2012. Some business owners planned to limit the amount of marijuana early customers could buy to try to make stocks last. Amber McGowan, manager at Cannabis City, told Reuters on Thursday the store would likely not have enough inventory to stay open for all of its regularly scheduled business hours until a delivery that was due next week. She said the shop was only able to stay open as long as it had by limiting customers to 0.2 ounces (six grams) per purchase, rather than the legal limit of 1.0 ounce (28 grams). Frustrated consumers in Seattle, a city of some 630,000 people, made light of the shortages, with one Twitter user urging outlets to adopt a green “Pot Light” system for their windows to show they had stock – similar to the Hot Light employed by a well-known donut brand.

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Comments (9)

  1. Posted by InfiniteGuest | July 14, 2014 at 8:39 AM

    Turn on your pot light
    Let it shine wherever you go
    Let it make a happy glow for all the world to see
    Turn on your pot light in the middle of a young boy's dream
    Don't wake me up too soon
    Gonna take a ride across the moon
    You & me.

    – Neil Dimebag

  2. Posted by Guest | July 14, 2014 at 9:14 AM

    Oy vey! Anyone watch that World Cup game yesterday?!?!

    I sure get nervous when that many German fans assemble and cheer in a great big stadium. And don't even get me started about the post-game showers!

    - Panicky Jew

  3. Posted by Guest | July 14, 2014 at 9:39 AM

    If you hang out with slores
    you are bound to get sores
    antibiotics galore
    and no job at Glencore

  4. Posted by Guest | July 14, 2014 at 9:40 AM

    It was just last Friday that I was thinking to myself: at least there's one place left on the internet, however obscure and thinly read, that is still free from the name "LeBron James".

  5. Posted by Barrys Boot Camp guy | July 14, 2014 at 10:59 AM

    Yeah I watched it and thought to myself wow these argentians, brazilians literally only have a pot to piss in but have no problem paying a soccer player 75MM per year. They deserve to live like the shit under our shoe

  6. Posted by Guest | July 14, 2014 at 11:04 AM

    The NYSE is working on an ADR for the Winklevoss Bitcoin Trust. Proposed ticker: DOOSH

  7. Posted by Narcissus Bellicose | July 14, 2014 at 11:22 AM

    I was working on the deal for the Winklevii, but I realized it would work better as a forex option, so I'm floating that myself.

  8. Posted by Guest | July 14, 2014 at 11:44 AM

    I see that the Brazilian transsexual you were firing on at the club the other night spurned your advances and has left you with negative feelings for Latin Americans in general.

  9. Posted by LBJ Tha Gr34test 999 | July 14, 2014 at 12:52 PM

    What do you think? I'm smelling a three-peat !