Argentine Default Drama Nears Critical Stage (WSJ)
Argentina could make unfortunate history this week if it defaults on its foreign debt for the second time in 13 years as a showdown with creditors comes to a head. When Argentina last defaulted on this debt, in 2001, it was the biggest sovereign default ever. It led to a debt restructuring and the country’s deepest recession since the Great Depression. The political turmoil was so bad that the country had five presidents in just over a week. The seeds of the current drama were sown not long after that, when investors bought the country’s defaulted bonds but never accepted its terms for restructuring the debt. Now they are standing in the way of payouts that would avoid a default this week. Although there is little fear of contagion for other emerging markets and minimal concern Argentina would suffer the kind of economic implosion of 13 years ago, a default still could cost one of Latin America’s biggest economies dearly, keeping it shut out of international credit markets and crimping credit to companies. It also could complicate the transition to a new government after next year’s presidential election.
No meeting scheduled on Monday between Argentina and court mediator (Reuters)
Argentina does not have a meeting scheduled for Monday with a court-appointed mediator in New York in its debt dispute with creditors but talks continue, a government source said on Sunday, as the country looks to avoid a possible debt default next Thursday. Argentina, Latin America’s third-largest economy, has for years fought the “holdout” hedge funds which snapped up its junk bonds after its $100 billion default in 2002 and then refused the restructuring terms, suing for repayment in full. “There is no meeting scheduled for Monday. Talks are continuing,” the government source told Reuters.
J.P. Morgan Questioned for Conflicts of Interest (WSJ)
Regulators have questioned J.P. Morgan Chase & Co. executives in recent months about whether the firm steers private-banking clients to its own investment products, according to people familiar with the matter. The queries helped prompt J.P. Morgan to spell out more clearly to private-banking clients the differences between its own products and outside offerings, and how much of clients’ assets were invested in each, these people said. The latest changes were set in motion several months ago when the Office of the Comptroller of the Currency, one of J.P. Morgan’s primary regulators, began asking officials at the firm about the percentage of clients’ assets that were being directed to J.P. Morgan’s own funds and products instead of third-party options, these people said.
Deutsche Bank, HSBC Accused of Silver Fix Manipulation (Bloomberg)
Deutsche Bank, HSBC Holdings, and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix. The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed yesterday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit. “The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”
Goldman mortgage deal with federal agency could reach $1.25 billion: source (Reuters)
A deal to resolve a U.S. regulator’s claims against Goldman Sachs Group Inc over mortgage-backed securities sold to Fannie Mae and Freddie Mac leading up to the financial crisis could cost the bank between $800 million and $1.25 billion, according to a person familiar with the matter. The person said Goldman Sachs is discussing a settlement with the Federal Housing Finance Agency (FHFA), which filed 18 lawsuits against Goldman and other banks in 2011 over about $200 billion in mortgage-backed securities that later went sour.
Doughnut-Wielding Vandals Terrorize Neighborhood (AP)
There’s mischief afoot in one suburban Portland neighborhood, but police say it doesn’t involve the typical spray paint or broken windows. No, we’re talking pastry here — maple bars smeared on cars, doughnuts left atop windshield wipers, pastries littering a yard. One woman told officers she’s seen more than a dozen incidents of food smeared on cars. Not just pastry, but yogurt, cakes and eggs. She alerted police July 11. The next day, another woman told police her vehicle had been hit six times — twice with a maple bar, once with a cinnamon doughnut, once with pink yogurt, once with “bread soaked in a white slimy liquid” and once with red potato salad. The crime wave in a northeast Hillsboro neighborhood has been going on for six weeks, The Oregonian reported. Police think the victims of the night-time vandalism are chosen at random and kids are likely behind it. Lt. Mike Rouches says officers are investigating and extra patrols have been added. Still, he adds, “In my 25 years in police services, I have never investigated or seen a criminal mischief involving pastries.”
Negotiating? Intimidate Your Boss With Your Big, Fat Face (BusinessWeek)
…a team of researchers led by Michael Haselhuhn, a management professor at the University of California, Riverside, found that having a bloated face is worth more than $2,200. When a group of business school students were asked to negotiate for fictional signing bonuses, big-faced candidates earned close to $11,000, while narrower-visaged students earned a (paltry) $8,700. One reason wide faces win in tete-a-tetes such as these is that they lie. A second paper published in 2011 by the same authors found that business students were more likely to resort to outright deception to close a sale if they had round faces. They also cheated more in dice games, which is something to keep in mind the next time you use dice competitively. Women apparently miss out on the perks of a wide mug. When men see their own bulky faces in the mirror, they get a rush of power—whereas women do not, according to the study.
Herbalife Feud Gets Personal (WSJ)
…the fight over Herbalife Ltd. has taken on a more personal, distinctly 19th century flavor. Rather than a battle among faceless institutions, as is usually the case today, Herbalife features a handful of financiers— Bill Ackman, Carl Icahn and George Soros —in a high-stakes duel. If Mr. Ackman had his way, it is the management of Herbalife who would be in prison for running what he alleges is an “illegal pyramid scheme.” But his billion-dollar short bet tempted other financiers to profit from a rise in the stock as his charges, refuted by Herbalife, failed to dent its business. And Herbalife greatly boosted share buybacks recently, putting further pressure on short sellers, who borrow shares in hope of buying them back cheaper at a later date. The most recent chapter in the fight, though probably not the final one, was Mr. Ackman’s pledge last week to deliver a “death blow” to the company in a lengthy presentation. Instead, the stock had its largest daily gain ever, enriching Mr. Ackman’s opponents.
Trendy Chipotle burritos show how pricing power belongs to the hip (Reuters)
Chipotle is prospering even as it raises prices on burritos that are already expensive – about twice as much as those sold by Taco Bell. Besides its naturally-raised meats and organic ingredients such as beans and avocados, the company occupies the center of fast-casual dining – the booming “sweet spot of the restaurant industry,” according to Hottovy – in which customers order at a counter but eat quality products inside a hip space. And Chipotle is still growing. The chain runs about 1,700 restaurants in the U.S., and analyst Stephen Anderson at Miller Tabak estimates that it could grow to 3,100, expanding in less populated areas beyond its urban strongholds.
An $800 Pair of Kicks Plays Hard to Get (WSJ)
The sudden appeal of Buscemi—a year-old, $800-a-pair sneaker brand that has been snapped up by Justin Bieber, Sean “Diddy” Combs and other celebrities—marks a new chapter in conspicuous consumption. In the digital age, where nearly everything is a click away, there is growing pressure to flaunt possessions that no one else can buy. “You ain’t got THESE!!! Na na na na naaa!” tweeted Mr. Combs to his more than 9 million Twitter followers in October, linking to a picture of his new chocolate-hued Buscemis on Instagram. At the time, Buscemi shoes had been unavailable for two months, having sold out the entire original production run in a matter of days. When they returned to shelves in January, they quickly sold out again, and just reappeared two weeks ago. The shoes are stamped on the tongue with Made in Italy. Golden padlocks dangle from the ankle strap of each shoe; tiny keys are included. And in the year since they first went on sale, they have been out of stock far more often than they have been on shelves. The company says it is all part of a plan to stoke demand.
Traders Flee Russia ETF as Ukraine Standoff Continues (Bloomberg)
Traders took $12.3 million out of the Market Vectors Russia ETF, the largest U.S. dedicated exchange-traded fund tracking the nation’s stocks, last week through July 24, according to data compiled by Bloomberg. The moves added to redemptions of $90.8 million in July, putting it on pace to be the biggest monthly outflow since February. Withdrawals from the Russian ETF are accelerating as the U.S. and European Union seek to punish Putin for supporting separatists in eastern Ukraine with deeper sanctions intended to squeeze the $2 trillion economy.
British inventor creates giant buttocks to ‘fart on France’ (NYDN)
An eccentric British inventor has realized his dream of firing a “fart gun” from a massive model butt towards France. Colin Furze was apparently determined to make something loud enough the French could hear it from England. The countries are around 22 miles apart from where the fart gun was fired, in Dover, southern England. Furze built a pulse jet and attached it to giant buttocks and fired it from cliffs overlooking the English Channel. Apparently the reason he used a pulse jet is because it sounds like a fart. The event was videoed and a crowd turned out to watch Furze successfully complete his unique mission.