Morgan Stanley Beats Analysts’ Estimates on Fixed Income (Bloomberg)
Morgan Stanley, the best-performing stock this year among the five largest Wall Street banks, reported profit that beat estimates on a smaller drop in fixed-income trading revenue than analysts projected. Second-quarter net income rose to $1.94 billion, or 94 cents a share, from $980 million, or 41 cents, a year earlier, the New York-based company said today in a statement. Excluding an accounting adjustment tied to the firm’s own debt and a tax benefit, profit was 60 cents a share, topping the 56-cent average estimate of 24 analysts surveyed by Bloomberg. Morgan Stanley posted an 8 percent decrease in fixed-income trading, while larger rivals Citigroup Inc. and JPMorgan Chase & Co. (JPM) saw declines of 12 percent and 15 percent, respectively.
Barclays, Deutsche Bank Said to Face U.S. Senate Hearing (Bloomberg)
Barclays Plc and Deutsche Bank AG face scrutiny over their sale of products to a hedge-fund firm that allowed it to skirt borrowing limits and avoid taxes, according to people with knowledge of the matter. The U.S. Senate Permanent Subcommittee on Investigations plans a hearing next week on what it calls abusive transactions by financial institutions, according to a notice from the panel. The companies, which aren’t named in the notice, are Barclays, Deutsche Bank and hedge-fund manager Renaissance Technologies LLC, the people said. Representatives for each of the firms plan to testify at the July 22 hearing, the people said.
Wall Street Techs Take Secrets to Next Job at Their Peril (Bloomberg)
The plan was for Kang Gao to do his exit interview with Two Sigma Investments LLC, a $21 billion quantitative hedge fund in New York, and jump to Citadel LLC, a rival firm in Chicago. Gao never got that chance. Unbeknown to him, that final meeting had been recorded for investigators at the Manhattan District Attorney’s Office, and instead, the 29-year-old native of China found himself sitting in a New York City jail. He’s accused of stealing Two Sigma secrets and faces a potential four-year prison term. Gao is the fourth Wall Street analyst or programmer to be ensnared in a crackdown by the D.A.,Cyrus Vance Jr., on intellectual property theft from financial firms. His decision to charge Gao, former Goldman Sachs Group Inc. programmer Sergey Aleynikov and ex-employees of the Dutch firm Flow Traders BV, signals a willingness to criminalize financial industry disputes formerly relegated to contract litigation.
Icahn and Ackman share reconciliatory hug (NYP)
Carl Icahn and Bill Ackman on Wednesday were back in each other’s arms — literally.
Ackman, unveiled as the “mystery” guest at the CNBC/Institutional Investor Delivering Alpha conference, walked onto the stage as Icahn was finishing an interview and gave his fellow activist investor a bear hug. The men received “Bill & Carl Reunited” T-shirts — a reference to the much-watched live TV debate-cum-battle the two had in 2013. They made up months ago after Ackman called Icahn to “forgive him” — although they remain on opposite sides of the Herbalife battle. “He was thoughtful and supportive of what we’re working on with Valeant,” said Ackman, regarding his latest activist campaign to take over Allergan. “I was thinking, it’s almost crazy that we’re at loggerheads.” Icahn said. “What the hell are we fighting about?”
Taco stand owner claims ex-business partner stole his idea for Pinterest (NYDN)
A Manhattan judge has given the green light to a lawsuit by an Ivy League-educated lawyer who says his former big shot business partner stole the idea for Pinterest out from under him. Theodore Schroeder, 37, can now proceed with his claim Brian Cohen “misappropriated” his idea for a virtual bulletin-board social network. In a court battle similar to the Facebook fight between the Winklevoss twins and Mark Zuckerberg that inspired the movie “The Social Network,” Schroeder says he spent “thousands of hours” developing what became Pinterest, and never got paid a dime. In court papers, Schroeder says he was going to Columbia Law School in 2004 when he and classmate Brandon Stroy “worked together to develop an idea for a socially networked bulletin board.” Schroeder, owner of a gluten-free taco stand in Atlantic City, says he taught himself “the necessary computer and programming skills” to develop the site Rendezvoo in 2006. Schroeder then convinced his partners that the site’s “social networked bulletin boards” should be able to “share any interest” users have, the court papers say.
Nestle Apologizes For ‘Penis’ Shape On Candy Bar (HP)
Robin Jacobs, 31, said he was eating a Milkybar during Sunday’s World Cup final and was stunned to see what he called an “inappropriate” image. “What on earth is a penis doing on a kids’ chocolate bar?” he asked, per Metro. “There’s no point denying what it looks like. It is obvious –- we can all see it.” Jacobs reportedly griped he will now remember the 2014 World Cup for the “Milkybar penis.” He said he ate the candy anyway, outlets noted. Nestle sent the following statement to The Huffington Post: “Nestlé is surprised and sorry to hear that Mr. Jacobs thought the picture on the Milkybar resembles male genitalia, it is in fact an image of a horse’s head, the Milkybar Kid’s horse. There was no intention to mislead or depict anything offensive on our product and we apologise for any confusion or embarrassment this may have caused.”
Young guns provide top investments for future (CNBC)
Josh Birnbaum, 41, CIO at Tilden Park Capital Management, is investing in mortgage putbacks, which involve originators being forced to buy back mortgages from the holder. They happen usually in cases of fraud or deceit, and Birnbaum believes there is opportunity—$50 billion worth. He called it “one of the largest settlement opportunities to come out of the” financial crisis, which was precipitated in large part by fraudulent and reckless bank lending. Investors in mortgage bonds have been demanding restitution on the loans, and regulators have come down hard on financial institutions involved…Jeffrey Smith, CEO and CIO at Starboard Value, likes packager MeadWestvaco, which he said could be poised for a breakout after lagging the performance of its competitors…Deepak Gulati, 36, CIO at Argentiere Capital, has a variety of ideas. They include going long on volatility, which has been dormant for all of 2014. He also likes stock indexes in Japan, Korea and China as well as the European financial sector and U.S. energy stocks. Finally, he is tech-focused as well, with an emphasis on Amazon, Texas Instruments and Salesforce.com.
Blackstone Second-Quarter Profit Surges 89% on LBO Performance (Bloomberg)
Economic net income, a measure of earnings excluding some costs tied to the firm’s 2007 initial public offering, rose to $1.33 billion, or $1.15 a share, from $703.2 million, or 62 cents, a year earlier, New York-based Blackstone said today in a statement. Analysts had expected earnings of 72 cents a share, according to the average of 15 estimates in a Bloomberg survey.
China Plays a Big Role as U.S. Treasury Yields Fall (WSJ)
The world’s most-populous nation boosted its official holdings of Treasury debt maturing in more than a year by $107.21 billion in the first five months of 2014, according to the U.S. government data. The buying has been fueled by China’s efforts to lift its export-driven economy by weakening its currency, the yuan, against the dollar, market analysts said, a strategy that encompasses hefty purchases of U.S. assets. China officially holds roughly $1.27 trillion of U.S. debt, about 10.6% of the $12 trillion U.S. Treasury market.
Time Warner win would make Murdoch U.S. media king (Reuters)
While Time Warner, whose assets include the HBO cable channel and the Warner Bros movie studio, rejected the $80 billion bid, Murdoch is unlikely to abandon the pursuit and has the “disciplined determination” to get the deal done, people close to the situation said. Investors expect he will eventually raise the offer and increase the cash component – 40 percent – to win the prize. Murdoch’s proposal, fresh on the heels of his high-profile divorce and a damaging phone-hacking scandal that involved his British tabloids, is aggressively bold even for a media mogul whose ambitions are legendary. A combined Fox-Time Warner would have a massive array of media and sports content and be in a very powerful negotiating position with cable and satellite distributors – some of whom have themselves announced mega-deals and newer ways of getting to consumers, such as online video distributors Netflix Inc and Amazon.com Inc.
3,000 Ping Pong Balls Rain Down On Highway (AP)
A pilot who dropped 3,000 pingpong balls that were redeemable for prizes missed a crowd assembled for the stunt and instead hit a nearby interstate. Organizers immediately called off the contest. Aaron Moon and helpers on Saturday told revelers at Blackfoot Pride Days not to risk retrieving the pingpong balls amid high-speed traffic because organizes still planned to pass out the prizes. Most of the pingpong balls could have been exchanged for candy, but some were worth gift certificates up to $100. Moon says a new pilot attempted the drop this year, but apparently didn’t understand that pingpong balls lose speed quickly and drop straight down.