Hedge Funds Are Digging Gold Miners (WSJ)
The NYSE Arca Gold Miners Index, which tracks 39 gold-mining companies, has soared 26% so far this year, compared with a 8.9% rise in gold and a 4.5% increase in the S&P 500. The gold-miner rally is a boon for high-profile hedge-fund managers such as George Soros and John Paulson—as well as traditionally gold-focused traders like Peter Palmedo and Eric Sprott. Their gold bets were pummeled last year, when a rise in bond yields and muted inflation dulled gold’s allure, sparking a stampede that drove the precious metal’s price down 28% and the gold-mining index down 54%.
Judge in Argentina default case slams Singer lobbyists (NYP)
Federal court Judge Thomas Griesa said the ads run by the lobbying group, Task Force Argentina — financed by Singer to help fight his decade-long legal and political battle to win the right to collect on defaulted Argentina debt — were “wrong” to attack the country’s New York lawyers. One ad claims that one of the lawyers, Jonathan Blackman, of Cleary Gottlieb, personally called Argentina President Cristina Kirchner to suggest the country default — while a second displays a drawing of the lawyer’s head on a vulture…Griesa called the hearing after seeing two-page “legal notices” in US newspapers, placed by Argentina, saying it had paid its bondholders. The ad referred to the $539 million Argentina wired in late June to make a payment to the vast majority of its bondholders who accepted a debt swap years ago. But the court would not allow the payment to be made unless Argentina also pays Singer and other creditors the $1.65 billion they demand on defaulted debt they own. The payment to Singer wasn’t made, so Argentina defaulted on $15 billion in debt. “False and misleading statements by Argentina must cease,” said Griesa in an hour-long monologue. The 84-year-old judge said if the false statements don’t stop, he might consider holding the country in contempt.
Putin Starving Companies of Cash They Can’t Obtain Abroad (Bloomberg)
Russia is limiting corporate access to domestic financing even as the escalating Ukraine crisis increasingly isolates companies from overseas sources of cash. The government’s about-face on its pledge to end a freeze on pension cash being used by private money managers risks raising corporate borrowing costs as it deepens the country’s economic slowdown. Some of Russia’s biggest issuers are already locked out of international capital markets as punishment for what U.S. and European leaders say is President Vladimir Putin’s support of separatists in eastern Ukraine.
Kinder Morgan to Consolidate Empire (WSJ)
Kinder Morgan Inc. is consolidating its vast oil-and-gas pipeline empire into a single company in a $44 billion deal amid investor worries about the enterprises’ growth prospects. The reorganized company will abandon the financial structure it helped popularize in the late 1990s: the master limited partnership. These complex tax-oriented offerings have caught on among energy companies facing substantial investments in infrastructure because of the U.S. oil and gas boom. But Kinder now is so big that the MLP structure is limiting, said Richard Kinder, the companies’ founder and chief executive. Combining all four of its publicly traded units into one corporation, he said in an interview, “will allow us to further expand the reach of the kind of projects we can do.”
The Proper Care and Feeding of Your Spoiled 23-Year-Old (Bloomberg)
Rich people have enough money to solve almost all their problems but one: children who grow up to be entitled, materialistic and unhappy slackers. Wealth advisers to the rich see this all the time, says Coventry Edwards-Pitt, who helps clients manage their affairs at Ballentine Partners, a wealth advisory firm outside Boston. Often, children of rich parents can’t seem to strike out on their own, she says. They start doomed businesses and give up on one job after another, all while draining Mom and Dad’s bank account (or their own trust fund) into their 30s and beyond. It’s a phenomenon many parents and tax advisers do a lot to enable, albeit unintentionally, Edwards-Pitt argues in a new book, “Raised Healthy, Wealthy and Wise.” Most parents want their kids to become successful, self-sufficient adults. But smart tax planning can sabotage good parenting. To avoid the estate tax, the wealthy are told they can and should give their children $14,000, or $28,000 per couple, each year, which they’re allowed to do tax-free. That’s hardly enough to retire on, but it’s a cushion most people don’t have. Young wealthy adults may go from job to job as they seek their “passion” without putting in the hard work to actually get anywhere.
Man Armed With Leaf Blower Arrested For Doing Yard Work In The Nude (TSG)
A Massachusetts homeowner was arrested Monday for “open and gross lewdness” after passing motorists spotted him–leaf blower in hand–doing yard work in the nude, according to cops. As Richard Capra, 69, worked on the curb appeal of his Shrewsbury home, “several vehicles were slowing down taking photographs,” according to the Shrewsbury Police Department. Responding to 911 calls, Officer Timothy Charland spotted Capra “completely nude, blowing off his driveway with a leaf blower.” Capra was “intoxicated and belligerent towards police” when questioned. Capra, arrested on a misdemeanor charge, was later released from custody after posting $500 bail. He is scheduled for an August 15 appearance in Westboro District Court. Future arrestees will be happy to learn that Capra was “issued clothing” prior to being placed in a Shrewsbury patrol car.
TPG Said to Match KKR’s $3.2 Billion Offer for Treasury Wine (Bloomberg)
U.S. buyout firm TPG Capital offered A$3.4 billion ($3.2 billion) for Treasury Wine Estates Ltd. (TWE), according to a person familiar with the matter, matching a takeover bid by KKR & Co. (KKR) and Rhone Capital LLC. A global private equity firm bid A$5.20 cash per share in a non-binding offer for the maker of Penfolds Grange and asked that its identity remain confidential, Treasury Wine said in a regulatory filing today. The unidentified bidder is TPG, according to the person, who asked not to be identified because the details are private.
Citigroup, Swiss Firm Wage Court Battle Over Metals Payments (WSJ)
Banks have lent hundreds of millions of dollars to commodities traders in China in recent years, using metals such as copper, iron ore and aluminum as collateral. However, evidence suggests that large quantities of metal stored at the eastern ports of Qingdao and Penglai are unaccounted for and may have been used as collateral for multiple loans. The case between Mercuria and Citigroup is one of several brought by companies scrambling to limit their exposure to potential losses after the Chinese government launched an investigation into allegations of loan fraud at the ports.
Calpers Rethinks Its Risky Investments (WSJ)
The largest U.S. public pension plan is considering a dramatic retreat from some riskier investments, as it tries to simplify its $295 billion in holdings and better protect against losses during the next market downturn, according to people familiar with the matter. California Public Employees’ Retirement System is weighing whether to exit or substantially reduce bets on commodities, actively managed company stocks and hedge funds, the people said. The pension, which manages investments and benefits for 1.6 million current and retired teachers, firefighters and other public employees, is a bellwether for investment trends at other public plans. Any shift it makes will likely influence others because of its size and history as an early adopter of alternatives to stocks and bonds.
Man Builds ‘Star Trek’-Themed Cabin Out Of Junk — But Isn’t A ‘Trekkie’ (HP)
Doman, 69, has lived in the Guffey, Colorado cabin for 26 years. He has spent the last 14 of them adding on seven rooms — most of which follow a Star Trek theme. He’s spared the kitchen, though. For now. Doman’s domain closely resembles the set of various “Star Trek” series, mostly “Voyager” and “The Next Generation.” It was mostly put together using junk — everything from old pipes and curling irons to old car parts he found beside the road. “Journalists have said it’s a replica of the Enterprise bridge,” Doman told HuffPost. “It’s not. I call it ‘the Federation Room,’ but it’s my idea of a 26th century housing project.” His current project is building sleeping quarters that are fit for a Klingon ambassador…What may be most amazing about Doman’s house isn’t the way it looks, but the way it was built. He didn’t use blueprints — it was all in his head. “I do everything in my head,” he explained. “Ever since I had a rabies shot when I was 14 months old, I’ve had worse than a short-term memory. I can’t read very fast and every time I do Jello, I have to look at the box for directions.” Doman started building “The Next Generation” of cabins as a way to occupy himself during the winter months when it was too cold and snowy to build fences. Although he had to watch a lot of “Star Trek” episodes in order to get inspiration, and posed for the new Ripley’s book dressed as a Klingon, he insists he’s not a “Trekkie.” “I’m not,” he swore. “I haven’t been to any conventions.”