Opening Bell: 08.06.14

Bankers Called Up for Ukraine War as Rolls-Royce for Sale (Bloomberg)
A knock on the door for Andriy Gerus came on a Monday morning in July. Fresh from getting his MBA in London, a managing director at Ukrainian investment company Concorde Capital was preparing to go for a stroll with his baby in Holosiyiv, a leafy district of Kiev, when a surprise visitor handed him a military summons. “I imagined myself with a gun, marching,” Gerus, 32, said at a cafe in central Kiev. “Everyone has two choices: to comply with Ukrainian law, go with your conscience and prepare for mobilization or avoid joining the army by relocating and risk three to five years in prison. I prefer the former.” The war is coming home for thousands of Ukrainians as part of the latest wave of mobilization ordered last month by President Petro Poroshenko to defeat a pro-Russian insurgency simmering since April in the easternmost regions of Donetsk and Luhansk. By putting professionals like Gerus near the frontline of the country’s bloodiest battles since World War II, Ukraine is trying to offset a mismatch in military capability in a conflict that’s pitted it against neighboring Russia, which it accuses of backing the rebels and whose defense spending is about 56-fold Ukraine’s outlays on the army.

BATS to Settle High-Speed Trading Case (WSJ)
BATS Global Markets Inc. is in advanced talks with regulators to settle allegations that one of its units gave unfair advantages to high-speed traders, according to people close to the negotiations. The expected pact is a major reason that BATS, the second-largest exchange operator in the U.S. by volume, last month forced out its former president, William O’Brien, the people said. Any deal would mark the first regulatory action out of a nearly three-year investigation into whether some exchanges offered certain types of orders that gave sophisticated traders an edge over investors in their markets. The settlement would cover allegations related to conduct at Direct Edge Holdings LLC, the company Mr. O’Brien led before it merged with BATS last year.

Hedge Funds Betting Against Banco Espírito Santo in Line for Big Gains (WSJ)
One of the biggest funds to bet the bank’s shares would fall was Marshall Wace LLP, which initially made the wager on May 15, according to a filing with the Portuguese regulator. The shares were then trading at around 99 euro cents. The London-based hedge fund would have made a profit of around €27 million ($36 million) from the position if it closed the position at 12 cents, the price when the shares were suspended. The firm, which manages $18 billion in assets and is headed by founders Paul Marshall and Ian Wace, increased its position from 0.51% of the bank’s share capital to 0.85% by mid-June, before slowly reducing it to 0.51% as of July 30. Trading in Espírito Santo’s shares was finally halted from trading last Friday at 12 euro cents.

Standard Chartered Faces More U.S. Fines as Profit Drops 20% (Bloomberg)
Standard Chartered Plc said it faces further U.S. fines over the British bank’s flawed efforts to block money laundering and posted a 20 percent earnings decline on losses in Asia. Adjusted pretax profit, which excludes adjustments to the value of the company’s own debt, fell to $3.3 billion in the first half from $4.1 billion in the year-earlier period, the London-based bank said in a statement today, matching the average of 11 analysts’ estimates in a Bloomberg survey. Standard Chartered said it’s likely to face more penalties after New York’s banking regulator found “certain issues” with its anti-money laundering systems. That adds to the pressure from disgruntled investors on Chief Executive Officer Peter Sands, 52, as he navigates faltering economies in Asia, where the bank gets about three-quarters of its earnings. The bank posted a $127 million loss in Korea for the period, and said it made provisions for a fraud in China.

Fox Rationale for Time Warner Unraveled With Share Drop (Bloomberg)
While the buyout plan unraveled, yesterday’s abandonment of the bid sent Fox shares rocketing. Time Warner, meanwhile, lost most of the gain it enjoyed while CEO Jeff Bewkes fought off Fox’s bid. No one event changed Fox’s thinking, the people said — rather a gradual realization over several days that there wasn’t going to be a deal that would benefit investors of Fox. Large and small shareholders of both companies, especially arbitrage or event-driven market participants, assumed the deal would get done in the upper $90-a-share range and traded accordingly, said one of the people.

This Man Is An Athlete In The Sport Of ‘Cloud Chasing’ (HP)
With e-cigarettes gaining popularity and dedicated vape shops popping up in cities all across the country, perhaps it won’t come a shock that there are so-called “professional vapers” out there who compete against one another to blow the biggest, baddest clouds of smoke. The activity is known in the vape world as “cloud chasing.” [...] During the event, dubbed the “X-Games of vaping” by an attendee, contestants took turns exhaling clouds of epic proportions. To win the competition, a vaper had to create the biggest and densest cloud. According to Mashable, the professional vapers at the event weren’t smoking e-cigarettes, per se. Instead they used modified devices to burn vegetable glycerol and liquid nicotine…The “sport” apparently started as a West Coast trend, but cloud competitions have popped up in recent months in New Jersey, Illinois and New Mexico. Earlier this year, an International Cloud Championship was held in California; and in March, vapers competed against one another at Vape Blast 2014, described as “the first Texas vape convention.” Some people have given the sport a thumbs-up. “It’s kind of impressive,” wrote Digg.com.

Norway Becomes Magnet for Riskiest Foreign Currency Bonds (Bloomberg)
DNB ASA, Norway’s biggest bank, estimates that companies based outside the Scandinavian nation have now become a “major driver of volume.” In the six months through June, about half the high-yield debt issued in Norway came from companies with “weak or no links” to the country selling debt in currencies other than kroner, DNB estimates.

Double Punch For ‘Inversion’ Deals (WSJ)
…on Tuesday, a spokeswoman confirmed that Treasury “is reviewing a broad range of authorities for possible administrative actions that could limit the ability of companies to engage in inversions, as well as approaches that could meaningfully reduce the tax benefits after inversions take place.” The spokeswoman said legislation passed by Congress is “the only way to fully address inversions,” but that Treasury was looking “to at least provide a partial fix.”

Wells Fargo loosens standards for jumbo mortgages (Reuters)
The bank has eased its lending standards on mortgages it acquires from other banks, said spokesman Tom Goyda, for “jumbo” loans that are too large to receive a guarantee from government-backed mortgage companies. In late July, the San Francisco-based bank lowered the minimum credit score on these fixed-rate jumbo mortgages to 700 from 720, Goyda said. Credit scores range from 300 to 850, and levels below 640 are often considered subprime. The lower requirements for jumbo loans are the latest effort by Wells and other banks to loosen mortgage criteria that are still tight by historical standards. Of the large banks surveyed by the Federal Reserve in July, thirty-nine percent said they were somewhat relaxing requirements on prime residential mortgages, and all banks reported that demand for prime mortgages was at its highest level in a year.

Bacon prices soar due to pig shortage (AP)
Bacon prices have shot up around 10 percent this year alone and reached an all-time high of $6.11 per pound, according to the Bureau of Labor Statistics. Santiago said a half-pound slab of bacon now costs about $3.99, as opposed to last month when they were about a dollar cheaper. “We don’t like to raise prices, but this is what we do for a living,” he added. “People are still buying it.” Thomas Perone, owner of Pig Guy NYC, said he’s not happy about the skyrocketing price of pig products, but is absorbing the costs of the increase for now. “The price of pork is through the roof right now,” he said. “It’s ridiculous.”

87-year-old nudist running for sheriff in Washington (LA Times)
Dave Olinger of Oak Harbor, located about 90 miles northwest of Seattle, is a man of his word and convictions and, oh yeah, a nudist. “I think he watches too much of that Jon Stewart,” his wife, Kay, said of the “Daily Show” being a contributing factor to her husband becoming a write-in candidate for Island County sheriff. Olinger, who has a political science degree from UC Berkeley, said the incumbent sheriff, Mark Brown, was running unopposed and as a Republican. “It is a position that is not supposed to be associated with a political party,” Olinger said. Now Olinger is trying to even the party odds, he said, and should he get 1% of the vote during Tuesday night’s primary, he will be on the November ballot. Olinger’s wife said he was serious about the race but was generally carefree otherwise. “Well, it’s not as if he walks around everywhere naked, but he does like to lay out in the sun naked,” she said. Because of this, Olinger was first going to try and get on the ticket as a member of the nudist party, but later decided the Democratic Party worked just fine, he said.

14 comments (hidden to protect delicate sensibilities)
Show all comments ↓

Comments (14)

  1. Posted by Shaz's beard | August 6, 2014 at 10:00 AM

    Vape Blast 2014, described as “the first Texas vape convention.”

    Go on

    -J gunds

  2. Posted by The Tunger | August 6, 2014 at 10:02 AM

    Bacon is so god damn delicious.

  3. Posted by aspergersorahole | August 6, 2014 at 10:35 AM

    Waiting for the LinkedIn "article" using O'B as an example of how an abrasive personality can be your downfall.

  4. Posted by Guest | August 6, 2014 at 11:04 AM

    I would pay $20 a lb for bacon. It is like crack for the taste buds. Goddamn now I want a BLT

  5. Posted by Jesse Pinkman, CFA | August 6, 2014 at 11:05 AM

    "Kind of like skateboarding"

    What are the fuck are these fools smoking?

  6. Posted by Wilbur | August 6, 2014 at 11:08 AM

    WHY!!!!!!!!!!!!!!!!!!!!

  7. Posted by Spider Pig | August 6, 2014 at 11:19 AM

    Oink oink motherfucker! you just got oinked!

  8. Posted by Guest | August 6, 2014 at 11:29 AM

    I'm sure Zerohedge will have a complete breakdown of how the fragmented markets are a catalyst to the impending economic collapse

  9. Posted by HR Quant | August 6, 2014 at 12:24 PM

    Hmm, given Lloyd's previous comments about banking not being akin to getting out of a higgins boat on Omaha beach, might getting called up for Ukrainian military service immediately following your MBA be the 27th round interview for a job with GS somewhere in emerging Europe?

  10. Posted by Hobbes | August 6, 2014 at 12:24 PM

    The Gundlach jokes have taken a turn for the worse lately. Down at the bottom with the Tilton and Shazar ones now.

  11. Posted by Jon Shazar | August 6, 2014 at 12:36 PM

    Your wright. Jon Shazar is the greates!

  12. Posted by Shaz's beard | August 6, 2014 at 1:17 PM

    Mommy Shaz????

  13. Posted by Ukraine | August 6, 2014 at 2:30 PM

    This comment shows how out of touch you bankers are. Ukraine is being invaded. Unemployment is at 19% and inflation is skyrocketing. If this banker was a real man he would have voluntered a long time ogo.

  14. Posted by gest | August 6, 2014 at 2:32 PM

    this opening bell is crushing my will to live.