Opening Bell

Opening Bell: 07.31.14

BNP Paribas Reports Record $5.79 Billion Quarterly Loss (WSJ)
The French lender said on Thursday that a provision of €5.75 billion ($7.70 billion) set aside to help cover a nearly $9 billion U.S. fine—the largest-ever paid by a bank in a sanctions case—had pushed the group deep into the red in the second-quarter. BNP Paribas, France’s largest listed bank by assets, reported a €4.32 billion net loss in the three months through June, compared with a €1.77 billion net profit a year ago. “The group has learned lessons from these past events and is implementing a major reinforcement of its internal control,” said Chief Executive Jean-Laurent Bonnafé in a statement. Despite the substantial size of the penalties, which also include a one-year ban on certain dollar-clearing transactions, BNP Paribas said it had enough cash set aside with central banks and capital to absorb any potential future losses.

Argentina’s Default Clock Runs Out as Debt Talks Collapse (Bloomberg)
The nation missed a deadline yesterday to pay $539 million in interest after two full days of negotiations in New York failed to produce an accord with creditors from its last default in 2001. A U.S. judge ruled that the payment couldn’t be made unless those investors, a group of hedge funds led by Elliott Management Corp., got the $1.5 billion they claimed. As Economy Minister Axel Kicillof returns to Buenos Aires with no set plans for further discussions with the hedge funds he described as “vultures,” other creditors must decide whether to invoke a clause that entitles them to demand their money back. While an 11th-hour attempt last night by a group of Argentine banks to avert a crisis by purchasing the securities from Elliott fell through, bondholders probably will give the parties more time to reach a settlement, according to Bank of America Corp.

First round of Buffalo Bills bids tops $1 billion (NYP)
A Pennsylvania fracking mogul bid more than $1 billion for the Buffalo Bills on Tuesday — making it likely the team will attract a record sales price for an NFL team, The Post has learned. Terrence Pegula, who owns the NHL Buffalo Sabres, is one of only two known bidders for the storied football franchise, which was put on the block last spring following the March 25 death of owner Ralph Wilson Jr. Donald Trump also made a first-round bid for the Bills — bids were due by 5 p.m. Tuesday. It could not be learned whether other bids were received by Morgan Stanley, which is running the auction. A bidding group fronted by rocker Jon Bon Jovi that includes Larry Tanenbaum, chairman of Maple Leaf Sports & Entertainment, owner of the NBA Toronto Raptors and the NHL Maple Leafs, and the Canadian telecom titan Rogers family, which controls Rogers Communications, was expected to bid. The Bon Jovi group is expected to try to move the team to Toronto. That has made Bon Jovi Public Enemy No. 1 in the western New York city, which loves its NFL team. “Man, f–k Bon Jovi,” legendary Bills receiver Andre Reed, who will be inducted into the Hall of Fame this weekend, told New York Magazine. “You might as well just take this city, throw it in the river, and let it go down Niagara Falls.”

Barclays Under U.S. Pressure (WSJ)
On Wednesday, the British bank presented better than expected second quarter earnings, with its shares rallying over 4% on the news that its investment bank performed well. But the numbers were partly overshadowed by a number of litigation and conduct issues which rather than fading, seem to be getting worse. Barclays said it had to put aside another £900 million ($1.5 billion) to cover potential claims from customers who were wrongfully sold insurance products. It also disclosed that U.S. authorities extended for one more year an agreement that essentially puts the bank on probation while the government looks into allegations that the bank rigged foreign-exchange markets.

Buyout Shops Look to Rivals for Deals (WSJ)
Private-equity firms have all but stopped buying public companies, retreating from a cornerstone of their business as rising stock prices push acquisition targets out of reach. Public companies taken private accounted for 3.5% of the $89 billion of U.S. leveraged buyouts in the first half of this year, the lowest share on record, according to data tracker S&P Capital IQ LCD. In the first half of 2008, at the apex of a buyout boom, these types of deals represented about 68% of all buyouts by dollar volume. Instead, private-equity firms are buying companies from one another, a shift driven in part by the relative simplicity of completing an acquisition of a private company compared with a publicly traded one. Transactions between private-equity firms have made up 60% of U.S. leveraged buyout volume through June, according to S&P. That is a higher percentage than the ratio for any full year tracked by the firm, whose data date to 2002.

Greenspan Says Stocks to See ‘Significant Correction’ (Bloomberg)
“The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction,” Greenspan, 88, said Wednesday in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “Where that is, I do not know.”

Flight Attendant Warns Travelers To Flush Their Drugs Before Landing (AP)
An Australian airline apologized on Wednesday for a warning a flight attendant gave passengers who might have been flying high that there were drug-sniffer dogs awaiting them at Sydney airport. Many of the 210 passengers aboard the Jetstar flight from Gold Coast city on Sunday night had attended the Splendour in the Grass weekend music festival at Byron Bay and were returning home. “We have been told there are sniffer dogs and quarantine officers waiting in the domestic terminal,” Sydney’s The Daily Telegraph newspaper on Wednesday quoted the attendant as telling passengers via the Airbus A320′s public address system. “If you need to dispose of anything you shouldn’t have, we suggest you flush it now,” he added. The newspaper said the warning prompted passengers to rush for the toilets. Jetstar spokesman Stephen Moynihan confirmed the newspaper report was accurate. He said the public response to the announcement had been “mixed.” The airline said it routinely makes quarantine announcements on such flights that cross state borders. “The crew member’s words were poorly chosen and are plainly at odds with the professional standards we’d expect from our team,” Jetstar said in a statement. “We apologize to customers offended by the comments.” Read more »

Opening Bell: 07.30.14

Argentine Bond Standoff Puts U.S. Judge in Focus (WSJ)
As Argentina hurtles toward a second default in 13 years, the local press has lit upon a convenient villain: 83-year-old U.S. District Judge Thomas Griesa. Cartoons in Argentine newspapers have shown the judge with a vulture perched behind him, accusing him of cozying up to the bondholders that Argentine government officials call “vulture funds.” A journalist appearing on Argentine television said Judge Griesa is “not right in the head.” A newspaper ad placed by the Argentine government blamed the judge, who has presided over the government’s disputes with bondholders for more than a decade, for pushing the country toward default. Judge Griesa is squarely in the spotlight as Argentina faces a Wednesday deadline for more than $500 million in debt payments. Argentina is seen as unlikely to make the payments, bringing to a head a standoff with holdout hedge funds that have refused the country’s two debt-restructuring offers over the past decade. At the center of the dispute is Judge Griesa’s 2012 ruling that Argentina isn’t allowed to pay its restructured bondholders until it pays the holdouts—a decision that legal analysts call unprecedented and that the Argentine government contends puts it in a costly legal bind. A default could keep Argentina out of international credit markets and dent a struggling economy.

As Talks Falter, Bond Default by Argentina Appears Likely (Dealbook)
On Tuesday, a group of investors of Argentina’s euro-denominated exchange bonds urged the judge to issue an emergency stay on his ruling. But this is unlikely to be granted unless the holdouts request it, analysts said, or the court-appointed mediator, Daniel Pollack, recommends it…last week, Judge Griesa ordered the Argentine delegation and the holdouts to meet with Mr. Pollack and talk “continuously” until an agreement was reached. The response from Argentina was tepid; the delegation met twice with Mr. Pollack last week before returning home to Buenos Aires for the weekend to consult with the government. When a group of lawyers returned to Mr. Pollack’s offices on Tuesday, they arrived more than 15 minutes late. And despite Mr. Pollack’s insistence that they engage in “face-to-face conversations with the bondholders,” as of Tuesday evening, the Argentines had yet to sit down across the table from the holdouts.

Schneiderman probes Credit Suisse’s ‘dark pool’ (NYP)
New York Attorney General Eric Schneiderman has launched an investigation into whether Swiss bank giant Credit Suisse misled investors about its “dark pool” trading platform, The Post has learned. The probe comes a month after Schneiderman sued Barclays for allegedly lying about the presence of predatory traders in its dark pool. The British bank denied wrongdoing and has asked a judge to dismiss the suit. Regulators are taking a closer look at dark pools — lightly regulated alternative trading systems — because of concerns that high-frequency traders are leveraging them to their advantage. Credit Suisse is the operator of the largest bank dark pool in the US, accounting for about 14 percent of all trades, according to data from the Financial Industry Regulatory Authority.

Icahn cuts stake in Family Dollar (Reuters)
Activist investor Carl Icahn cut his stake in Family Dollar Stores Inc (FDO.N), a day after the company agreed to be bought by rival discount chain Dollar Tree Inc (DLTR.O) for $8.5 billion. Icahn said he was “determined” to dispose part of his stake rather than wait for the deal to close or for higher offers to emerge. Icahn, who had threatened a proxy war against the struggling discount chain if it did not put itself up for sale, said on Monday there were “a handful of potential buyers” who could be a better fit to buy Family Dollar.

Wall Street Bids Farewell to Alan Greenberg, Head of Bear Stearns (Dealbook)
The service began on time at 11 a.m. and lasted just about an hour, honoring the no-nonsense style of Mr. Greenberg, who was known as Ace. The mourners recalled his idiosyncratic business advice, his love of big-game hunting and his magic tricks. A representative of the Society of American Magicians, as is customary, snapped Mr. Greenberg’s magic wand in two.

Man Lied About Pen!s Amputation During Circumcision: Doctors’ Lawyer (AP)
An attorney for two Alabama doctors accused in a lawsuit of amputating a man’s penis in what was supposed to have been a routine circumcision filed a motion Tuesday seeking to dismiss the claims. Attorney Mike Florie says his clients, Dr. Michael Bivins and Dr. Alan Aikens, never performed a circumcision on Johnny Lee Banks Jr. that involved the removal of tissue or the amputation of the man’s penis. He said the suit’s claims are false. Banks’ attorney, John Graves, filed the lawsuit on July 22, accusing the doctors and their medical groups of malpractice, negligence and other wrongdoing. It seeks an unspecified amount of money. Graves says he stands firmly by the allegations but would not comment on specifics of the case. “I don’t file frivolous lawsuits,” he said. Read more »

Opening Bell: 07.29.14

Meet the SEC’s 6,500 Whistleblowers (WSJ)
Retirees were the largest group with 365 tips. Investors were second with 290 complaints. Engineers came in third. But whistleblowers come from all walks of life. They include a diesel mechanic, an antiques dealer and a longshoreman; there’s an agronomist, two people who listed themselves as “ex-wife” and a veterinarian. There are also a number of current and retired military servicemen and enough hospitality and service employees to suggest executives should watch what they say in restaurants, bars, hotels and taxis…Engineers, at first blush, might seem to be an odd profession for informants, but honesty, integrity and fixing errors are drilled into them during training, said Norman Fortenberry, executive director of the American Society for Engineering Education. “It’s fundamental in our code of ethics,” he said. The code states, among other virtues, that engineers “must be dedicated to the protection of public health, safety and welfare.” “It is a matter of both personal and professional pride,” Mr. Fortenberry said. The adult-entertainment industry, however, operates under an entirely different code. Among prostitutes, secrecy is sacrosanct, said Dennis Hof, proprietor of the Moonlight Bunny Ranch and other legal brothels in Nevada. “We have a sacred bond with our clients,” he said. “Money can’t take precedence.” Mr. Hof said any of his employees would be fired and disavowed if they were to release privileged information about any of the brothels’ clients. Air Force Amy, a popular Bunny Ranch mainstay whose real name is Deanne Salinger, said clients constantly reveal material, nonpublic information. At first she said she would approach Mr. Hof to see if they should invest based on any of the tips, but they agreed that it wouldn’t be wise. “I dummy up a lot, I really do,” she said. “I’ve been around a long time and you just don’t talk.”

BofA Deal With U.S. Is Hung Up Over Penalties Tied to Countrywide, Merrill (WSJ)
Bank of America has offered $13 billion to end the government’s mortgage-securities probe, including a combination of fines and consumer assistance, which could include credit for measures such as writing down the values of mortgages for struggling homeowners. But the Justice Department is demanding billions more—and wants a bigger chunk in fines, these people said. Bank of America, which has already shelled out some $60 billion for crisis-era legal problems, has told the Justice Department it is willing to pay for the past misdeeds of Countrywide and Merrill Lynch—but not at levels it considers overly punitive, according to people familiar with the talks. Bank of America scooped up Countrywide and Merrill with the encouragement of regulators after housing troubles nearly sank both firms. It wants the penalty related to the firms’ past misconduct to come in the form of consumer assistance or other so-called soft money that has a less severe impact on Bank of America’s bottom line than a cash fine, these people say. The Justice Department has so far rejected Bank of America’s proposal, and the U.S. could file a lawsuit within weeks if the two sides don’t reach a deal, according to people familiar with the matter.

Former Goldman Options Trader Becomes Argentina Taxi King (Bloomberg)
After 23 years trading stock options at Goldman Sachs Group Inc., Merrill Lynch & Co. and his own hedge fund, Russell Abrams is piling into his most exotic gamble yet: as a Buenos Aires taxi impresario. Abrams, 48, plans to invest as much as $100 million of his own money to build a fleet of Buenos Aires cabs, undaunted by the prospects for Argentina’s second default in 13 years, the fallout from the peso’s devaluation in January, inflation of about 40 percent and the economy’s first quarterly contraction since 2012.

Startups Uber and Airbnb Court Business Travelers (WSJ)
The fast-growing technology startups this week each announced new versions of their apps geared toward booking business trips. Both companies also struck deals with Concur Technologies Inc., the expense-reporting software used by more than 20,000 companies. Appealing to corporate clients would give the young technology companies a toehold in the business travel industry, which is expected to generate $1.21 trillion in revenue world-wide this year, according to the Global Business Travel Association.

New Venture Fund Binary Capital Focuses on Mission, Not Just Metrics (Dealbook)
Binary Capital closed its first fund on July 17, raising $125 million — a hard cap — in just three and a half months. It turned away nearly half as many dollars. The goal of the fund is relatively straightforward: invest in 15 to 20 very early-stage consumer technology companies that have the potential to have a global impact. The partners plan to contribute to that impact by giving a portion of their carried interest to charitable organizations chosen by their entrepreneurs. Eventually, they also hope to team up with global nonprofit groups to use their technology and resources for causes in the developing world.

Marijuana Is a Welcome Wedding Guest in Colorado and Washington State (NYT)
Earlier this month, when Ellen Epstein arrived at the Devil’s Thumb Ranch in Tabernash, Colo., for the wedding of her friends Lauren Meisels and Bradley Melshenker, she, like the other guests, found a gift bag waiting for her in her hotel room. But rather than a guide to activities in the area or a jar of locally made honey, the canvas bag contained a rolled joint, a lighter and lip balm infused with mango butter and cannabis, along with this note: “We wanted to show you some of the things we love the best.” [...] All of the floral arrangements, including the bride’s bouquet, contained a variety of white flowers mixed with marijuana buds and leaves. Mr. Melshenker and his groomsmen wore boutonnieres crafted out of twine and marijuana buds, and Mr. Melshenker’s three dogs, who were also in attendance, wore collars made of cannabis buds, eucalyptus leaves and pink ribbons. Before going into dinner, the guests were given a baby marijuana plant in a ceramic pot with their name and table assignment written on a card in green ink, in the kind of stylish script you might find on a container of artisanal goat cheese. The tables were named after different strains of marijuana, like Blue Dream, Sour Diesel and Skywalker (the groom’s favorite strain). Ms. Epstein, who was seated at Skywalker, said that everyone at her table, where the ages ranged from 40 to 70, passed around a device similar to an electronic cigarette — except that it contained hash oil instead of nicotine. “It didn’t feel weird or bizarre,” she said. “It kind of becomes a new cocktail.” Read more »

Opening Bell: 07.25.14

Sodastream trader makes 3,000% profit in two hours (CNBC)
Two minutes before 10 a.m. ET on Thursday, one options trader bought 500 weekly 30-strike calls in Sodastream for 15 cents each (or $15 per contract, given that each contract controls 100 shares) that expire Friday. It was by far the biggest Sodastream trade of the day in terms of the number of contracts. The purchase gives the trader the right to buy Sodastream shares for $30 at the close of Friday trading. The reason those options were so inexpensive is that the stock was trading at about $29.50 at the time, meaning the chance of the stock closing Friday above $30 was considered to be especially low. But then, shortly before noon, Bloomberg reported that the company is in talks with an investment firm about taking the company private. After a halt, the stock sailed as high as $36. The news created an instant windfall for the trader, as these options, which were bought for $7,500, became worth as much as $250,000.

RBS First-Half Profit Doubles, Sees 2014 Cost Cuts on Track (Bloomberg)
Royal Bank of Scotland Group Plc said pretax profit almost doubled in the first half and forecast that it will meet a target to cut costs by 1 billion pounds ($1.7 billion) in 2014. The shares soared. Pretax profit at Britain’s largest state-owned lender may have increased to 2.65 billion pounds from 1.37 billion pounds a year earlier, RBS said in a statement today. Operating profit probably jumped to 2.6 billion pounds from 708 million pounds, according to the results, which were released a week early. Chief Executive Officer Ross McEwan, 57, who took over from Stephen Hester in October, is setting up an internal bad bank, combining divisions and scaling back the investment bank as he strives to shore up earnings at RBS after the lender reported its biggest annual loss since the financial crisis last year. RBS said today that it’s still facing “significant conduct and litigation issues” that could hurt future profit.

Moody’s Profit, Revenue Rise (WSJ)
The firm posted earnings of $319.2 million, or $1.48 a share, up from $225.5 million, or $1 a share, a year earlier. Revenue improved 16% to $873.5 million. Analysts polled by Thomson Reuters had estimated earnings of $1.01 a share and revenue of $803 million. The company’s Moody’s Investors Service debt-rating operation—its biggest revenue contributor—posted a 16% increase in revenue to $621.7 million. Global corporate finance grew 22% to $320.9 million.

Goldman bankers to Babble on their own chatroom (FT)
Goldman Sachs is spearheading an effort among Wall Street’s leading banks to develop a chat tool called “Babble” that could replace the instant messaging service on Bloomberg’s ubiquitous terminals…The company’s internal messaging service, known as Instant Bloomberg, is one of the main ways for bankers and traders to keep in touch with their customers at pension funds, hedge funds and asset managers. Goldman’s chatroom project comes after tensions between big banks and Bloomberg were also heightened last year when senior executives at the bank confronted the company over its reporters allegedly using private terminal data to track bankers…The Babble project is said to be less about concerns over data privacy issues, and more about creating an alternative network which comes at a much lower cost and can also be plugged in to different systems and used by both banks and their clients.

A Divorce That Thrusts Ken Griffin and Anne Dias Griffin Into the Spotlight (Dealbook)
Divorces in Illinois play out in open court, though either party can request mediation or move to seal their file, according to James H. Feldman, the chairman of the family law practice at the law firm Jenner & Block. The split is unlikely to affect Citadel’s ownership structure, because Ms. Dias Griffin is neither an owner nor an investor in the firm’s funds. And the two signed a prenuptial agreement governing any split of their assets, according to the divorce petition. Under the agreement, Ms. Dias Griffin would be entitled to cash in the event of a split, but Mr. Griffin would retain the art and real estate, two people briefed on the matter said. But she could contest the terms.

Sniffing out a partner at a London pheromone party (AO)
In a bar in trendy east London, dozens of people mill about, sniffing from plastic bags. But there are no drugs inside – just slightly smelly T-shirts. These adventurous single men and women are at a “pheromone party”, an alternative dating trend based on the idea that smell plays a key role in the choice of a sexual partner. Each of them has agreed to wear the same cotton T-shirt for three nights in a row, with no deodorant or perfume, and to bring it to the party. The clothes, infused with the pure scent of the wearer’s body, are placed in transparent plastic bags with numbers on coloured labels – pink for women, blue for men. “Smell as many bags as you like, have fun!” encourages the organiser, Judy Nadel. There is some nervous laughter, then a sudden rush for the bags laid out on a big table in the middle of the room. Some people open the bags carefully, taking a timid sniff, while others plunge their noses right inside. “This one’s been worn for a few days,” quipped one young man, while his friend Steven Lucas, a 23-year-old law trainee, remarks that the clothes “all smell the same”. “It’s like sweat and a tiny bit of perfume, or just, like, clean,” he says. Those who get a sniff of their dream partner snap a picture of themselves with the bag. The images are then projected onto the wall, and the lucky owners of the chosen T-shirts have the chance to meet their admirers. Read more »

Opening Bell: 07.24.14

SEC Sends McGraw Hill Wells Notice Tied to CMBS Ratings (Bloomberg)
McGraw Hill Financial Inc. (MHFI) said it received a notice from the U.S. Securities and Exchange Commission that the regulator may seek an enforcement action tied to six commercial-mortgage backed securities that its Standard & Poor’s division graded in 2011.

Calpers Pulls Back From Hedge Funds (WSJ)
Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. Those having second thoughts include officials at the largest public pension fund in the U.S., the California Public Employees’ Retirement System, or Calpers. Its hedge-fund investment is expected to drop this year by 40%, to $3 billion, amid a review of that part of the portfolio, said a person familiar with the changes. A spokesman declined to comment on the size of the reduction but said the fund is taking more of a “back-to-basics approach” with its holdings. The retreat comes after many pension funds poured money into hedge funds in recent years in hopes of making up huge shortfalls.

Billionaire Ken Griffin files for divorce (Crain’s)
Ken Griffin, the billionaire founder and CEO of Citadel LLC, a Chicago-based hedge fund and financial services firm, has filed for divorce from his wife of 10 years, Anne Dias Griffin, a French-born hedge-fund executive. A statement from Ms. Griffin’s attorney, Robert Stephan Cohen, indicated the divorce could be contentious: “Ken Griffin unilaterally filed a divorce petition today with no notice to either me or my client, knowing full well that she had just left for summer vacation with their three young children and would therefore be unable to respond. Anne’s highest priority remains her family, especially the wellbeing of her children. She is hopeful that this personal matter can be resolved privately and in the best interests of her children. We have no further comment at this time.”

‘Bring It On,’ Frank Tells Dodd-Frank Critics at Hearing
Barney Frank, the panel’s former chairman, returned to Washington Wednesday to sit before the committee and provide a feisty defense of that year’s regulatory overhaul, the Dodd-Frank Act that bears his name. The hearing split along partisan lines in support of and opposition to the wide-ranging law passed in response to the 2008 financial crisis. “I know the chairman said the financial reform bill is as damaging as the health-care bill,” the now-bearded Massachusetts Democrat said, referring to the current Republican chairman, Jeb Hensarling of Texas. “Well my recollection is this Republican Congress votes on a fairly regular basis to repeal the health-care bill. But where’s your bill to repeal the financial reform bill? If you have the courage of your convictions, bring it on.”

U.S. Considers Issuing Debt With Maturities of More Than 30 Years (WSJ)
The U.S. government has asked big banks whether it should issue bonds that mature in more than 30 years, as officials consider tweaking the types of debt they sell. In a questionnaire sent to dealers last Friday, the Treasury Department asked 22 primary dealer banks, which underwrite U.S. government debt sales, about possible demand for ultra-long-term sovereign bonds. A Treasury official cautioned that at this stage, the U.S. wants to get the views of market participants. “We would give significant heads up” if the Treasury decided to sell ultra-long bonds, said the official, adding that nothing is imminent. The Treasury regularly asks primary dealers about auction demand and supply. Selling longer-maturing debt could help the U.S. borrow at low rates for long periods, but it could also be an unreliable type of funding, said analysts and investors.

Moody’s downgrades Atlantic City general obligation bonds to junk status (CNBC)
The credit rating service cut the city’s underlying rating to “Ba1″ from “Baa2.” It affects $245 million in outstanding debt. “The downgrade to Ba1 reflects the city’s significantly weakened tax base, revenue-raising ability, and broader economic outlook,” Moody’s said in a statement, adding that its outlook remained negative.

Deep-Fried Doritos Debut at SoCal Fairs (LA Weekly)
Every year, Charlie Boghosian, aka Chicken Charlie, tries to outdo himself with his deep-fried concoctions sold at California fairs. The man began his arterial onslaught modestly several years ago with deep-fried Twinkies and deep-fried Snickers bars. Seeking ever greater challenges, he took on deep-fried Oreos, deep-fried cookie dough, deep-fried Spam, deep-fried Pop-Tarts and of course, the Zucchini Weeni. Many thought he had reached the apex of his hot-grease powers in 2011 with deep-fried Kool-Aid. But that was until a CBS News reporter’s daughter, along for an interview, recently challenged Charlie to deep-fry her bag of nacho cheese-flavored Doritos. “I did and it was delish,” Boghosian told the Weekly. “What’s amazing is the deep-frying made it more crunchy.” Boghosian explained his process: “I dipped the chips in a very watered down fish-and-chip batter, and after they were finished frying, I topped them with a season mixture of mine similar to Cajun seasonings.” He quickly added the new deep-fried discovery to his fair-food menu. Now a week and a half into the Orange County Fair, “It has become a fan favorite,” he says…The deep-fried Doritos aren’t the only new addition to Boghosian’s menu this year. Proving that they don’t call him Chicken Charlie for nothing, he’s also debuting deep-fried chicken skins. “You know people always say the skin is the best part,” he explains. “I thought one day, let’s just get to the best part and not waste any time on the rest of the chicken. It worked. It’s amazing and delicious. It’s like chicharrones, only better.” Read more »

Opening Bell: 07.23.14

Herbalife Bashing Brings Bill Ackman Behind Where He First Began (Bloomberg, earlier)
During a more than three-hour presentation yesterday, billionaire investor Bill Ackman choked up while describing his family’s immigrant beginnings, called Herbalife (HLF) Ltd. Chief Executive Officer Michael Johnson “a predator” and labeled that company “a criminal enterprise.” Herbalife stock rose 25 percent. The increasingly public spectacle of Ackman eviscerating a company on stage, television and online after betting $1 billion that it will fail is raising questions about his credibility on Herbalife and whether there are limits to how short sellers make their case…Ackman has denounced Herbalife as a pyramid scheme since December 2012, spending $50 million of Pershing Square Capital Mangement LP’s money for a probe that included undercover investigators. He has since predicted that Herbalife’s distributors would leave in droves and that auditors wouldn’t sign off on the company’s financial statements. So far he is wrong about both.

John Paulson Makes Almost $1 Billion on OneWest Sale (Bloomberg)
John Paulson’s hedge funds made almost $1 billion on his investment in OneWest Bank, which is being purchased by CIT Group Inc. (CIT) for $3.4 billion in cash and stock. The $21.4 billion Paulson & Co. owns the investment through its Recovery Fund, which was created in October 2008, and a credit pool, according to a memo sent to clients. The funds spent $400 million to purchase a 24.9 percent stake in Pasadena, California-based OneWest in 2009. The sale values that stake at $788 million and Paulson also received $551 million in dividends. The total gain for the funds is $939 million. The transaction will take six to nine months to close and Paulson & Co. will be restricted from trading the stock for six months, the firm wrote in the memo.

US warned of up to 25 groups eyeing foreign switch to cut tax (FT)
Up to 25 more US companies are considering relocating overseas to cut their tax bills this year, a Democratic senator has warned, as he assailed investment bankers for encouraging the idea. The prediction came as concern mounts in Washington over a rise in merger deals, known as inversions, which US multinationals use to move their headquarters to countries with lower corporate tax rates…Ron Wyden, chairman of the Senate finance committee, intensified his attacks on inversions on Tuesday. “The inversion virus now seems to be multiplying every few days,” he said. “How many more infections can America’s economic body endure?” He complained that even as they hurt US employment and shrank the country’s tax base, the deals were being promoted by “fast-buck artists” such as investment bankers, private equity groups, lawyers and accountants.

Connecticut Supreme Court to Revisit Protection for Whistleblowers (WSJ)
The Connecticut Supreme Court will consider whether a 2006 U.S. Supreme Court ruling that restricted protections for workers who expose alleged wrongdoing by their employers should apply to cases brought under Connecticut law, which is friendlier than federal law on employee rights. Richard Trusz, 58, said he was fired from his Connecticut-based position as head of valuations at UBS’s real-estate investment arm, UBS Realty Investors LLC, in August 2008 after confronting senior management about properties that he considered overvalued, and therefore led to excessive fees for clients including state pension funds. The unit Mr. Trusz led was responsible for determining the market value of its real estate and mortgage investments. Mr. Trusz later sued the Swiss bank in federal court, saying his superiors engaged in “acts of intimidation and retaliation” and “treated him differently from others who didn’t complain” before terminating his employment. A UBS spokeswoman said recently that Mr. Trusz’s claims were “thoroughly looked into both internally and externally many years ago.” She declined to comment on Mr. Trusz’s valuation allegations and said the bank is continuing to seek dismissal of the lawsuit. The state will remain a haven for corporate whistleblowers if the Connecticut Supreme Court sides with Mr. Trusz. But if it applies the U.S. Supreme Court ruling, the state will fall in line with the federal standard.

Dodd-Frank not final chapter on reform: Dodd (CNBC)
Four years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, its co-authors told CNBC the law was doing its job, but said it certainly isn’t the last chapter in regulating Wall Street and private equity firms. “We didn’t pass the Ten Commandments. We talked about a bill here, giving regulators the ability to modernize the architecture of our financial services industry,” said former Sen. Christopher Dodd, who authored the law with former Rep. Barney Frank.

Justin Bieber could face citizen’s arrest if illegal activity takes place at new Beverly Hills penthouse (NYDN)
Police have talked to folks at Bieber’s ritzy new Beverly Hills building about the possibility of placing him under citizen’s arrest if they see any illegal activity, the Daily News confirmed Tuesday. Cops discussed the option after being called to his posh penthouse a half dozen times Saturday night into Sunday morning for noise complaints related to a rooftop party, a police source said. “We responded six times this past weekend, as late as 3 a.m. Four were for the party, and two were calls for screaming fans outside,” Sgt. Max Subin with the Beverly Hills Police told The News. “Our officers went there and advised residents there are three ways to handle any situations of this nature,” he said. “We can give a citation for municipal code violations. There’s the possibility of arrest by us for something done in front of us. And the third way is a private person’s arrest for a misdemeanor not committed in police presence.” Read more »

Opening Bell: 07.22.14

Argentina asks U.S. judge to put debt payment order on hold (Reuters)
Argentina asked a U.S. judge on Monday to put on hold an order requiring it to pay bondholders who did not participate in debt restructurings following the country’s 2002 default, while it seeks a “global resolution.” Ahead of a July 30 deadline to reach a deal or face a new default, Argentina filed papers asking a New York federal judge to stay a ruling that it pay the holdout investors $1.33 billion plus interest. Argentina, which has been in settlement talks, said any deal must take into account other bondholders and factor in a clause in its restructured bonds that could open it up to further liability. “As those risks remain, so does the necessity and appropriateness of a stay,” Argentina’s lawyers wrote.

Money Manager Foiled By Bad Bets (WSJ)
A former Olympic fencer who was one of the few hedge-fund managers to predict the financial crisis is floundering in more placid markets. Balestra Capital Partners LP, founded by Wall Street veteran James Melcher, saw investors yank more than $600 million—or more than 60% of its assets—at the end of the second quarter, according to investor documents. New York-based Balestra’s investments were down more than 14% for this year through the end of June, the documents show. The 74-year-old Mr. Melcher, who competed for the U.S. in fencing at the 1972 Summer Olympics in Munich, is an extreme example of the pain being inflicted on many of Wall Street’s so-called macro traders. Many of those traders, who bet on global economic trends, including wagers that make money when markets fall, have been negatively affected by low interest rates and damped volatility across many of the markets in which they operate.

Wall Street Adapts to New Regulatory Regime (WSJ)
Four years after the Dodd-Frank financial law became reality, Washington’s regulatory machine is altering Wall Street in fundamental ways. Banks are selling off profitable business lines, pulling back from the short-term funding market, cutting ties with businesses that could attract extra regulatory scrutiny, and building up defenses to help weather future crises. While profits are up as firms slash costs and reduce funds set aside to cover future losses, their traditional profit engine—trading—is showing signs of weakening as banks step away from some activity amid regulatory pressure.

Fantex Completes Second Football Player I.P.O., Though Demand Is Slack (Dealbook)
Shares linked to the future income of [E.J. Manuel, a 24-year-old quarterback with the Buffalo Bills] Manuel started trading on Monday on an exchange operated by Fantex, a Silicon Valley start-up that helps athletes raise money through public offerings of stock. The firm previously sold shares linked to Vernon Davis of the San Francisco 49ers. The offering of 523,700 shares received a significant amount of support from Fantex itself. Unable to sell all of the Manuel stock to investors, the company stepped in to buy 250,000 shares, or 48 percent of the total amount offered, according to Buck French, the chief executive. This level of support was expected, Mr. French said. Despite the slack demand, the stock was trading higher in its debut on Monday. After opening for trading at $10 at noon, the shares were up 15 percent in early afternoon trading.

Fox’s Time Warner bid could hit $105 a share (NYP)
…according to Moody’s Investors Service, which in a report Monday laid out a scenario where Fox could offer $105 per share for Time Warner without jeopardizing its credit rating. That’s $20 more per share than Time Warner turned down from Rupert Murdoch’s company earlier this month. Moody’s scenario also boosts the deal’s cash component to $35.34 billion, up from $28.88 billion in Fox’s initial proposal. The beauty of Moody’s analysis, however, is Fox’s not having to break the bank to reel in Time Warner. In fact, the credit rating agency projected a Fox-Time Warner combo could return to Fox’s coveted leverage ratio — 3.0 times debt to Ebitda — inside of 18 months.

Soros Chart Shows Euro-Yen Reaching 2008 High (Bloomberg)
The euro will surge to a six-year high against the yen by the end of 2014 as the European Central Bank isn’t printing money as fast as the Bank of Japan, according to Daiwa Securities Co…Japanese traders and investors refer to this gauge as a “Soros Chart,” after billionaire investor George Soros correctly predicted in the 1990s that the yen would weaken because of Japan’s burgeoning money supply. Also tracked are the euro, which recently traded at 137 yen, up 46 percent since July 2012, and the slowing inflation rate in the 18 nations sharing the common currency.

Angry husband sends wife Excel spreadsheet detailing sex-starved month (NYDN)
A woman’s fed-up husband sent her an Excel spreadsheet listing every time she shot down his attempts to have sex over the past month, including her excuses, according to a Reddit post. The user throwwwwaway29 posted the doc to the site on Friday along with a plea for advice, Deadspin reported. “Yesterday morning, while in a taxi on the way to the airport, Husband sends a message to my work email which is connected to my phone,” the woman wrote. “I open it up, and it’s a sarcastic diatribe basically saying he won’t miss me for the 10 days I’m gone,” she said. The spurned hubby’s rundown showed the couple had only had sex three times since June 3, despite 27 tries on his part to get frisky. One column listed the wife’s apparent excuses, including protests that she felt “gross,” was too busy watching TV or ate too much. The successful rolls in the hay were marked with an italicized “Yes.” The beleaguered wife called the dry-spell “a temporary slow-down due to extenuating circumstances.” Read more »