Opening Bell

Opening Bell: 07.28.14

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.” 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: 07.22.14

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 »

Opening Bell: 07.21.14

Barclays Dark Pool Drew Early Alarms (WSJ)
Trading firms and employees raised concerns about high-speed traders at Barclays PLC’s dark pool months before the New York attorney general alleged in June that the firm lied to clients about the extent of predatory trading activity on the electronic trading venue, according to people familiar with the firms. Some big trading outfits noticed their orders weren’t getting the best treatment on the dark pool, said people familiar with the trading. The firms began to grow concerned that the poor results resulted from high-frequency trading, the people said. In response, at least two firms—RBC Capital Markets and T. Rowe Price Group Inc.—boosted the minimum number of shares they would trade on the dark pool, letting them dodge high-speed traders, who often trade in small chunks of 100 or 200 shares, the people said. Meanwhile, a number of Barclays employees privately expressed concerns to top stock-trading executives that the firm was giving high-frequency traders too much access to its dark pool without fully informing clients, according to people familiar with the complaints. Investment firms worry that high-speed traders can detect their orders in dark pools and trade elsewhere using the information, moving the price against the companies.

Barclays Dark Pool Volume Fell 66% Week After Lawsuit (Bloomberg)
About 66 million U.S. shares were traded in the dark pool in the week of June 30, down 66 percent from about 197 million in the previous week, according to data from the Financial Industry Regulation Authority. The drop follows a 37 percent decline from 312 million in the previous week, data show. Barclays lied to customers and masked the role of high-frequency traders as it sought to boost revenue at one of Wall Street’s largest private trading venues, New York Attorney General Eric Schneiderman said in a complaint filed June 25. Barclays Chief Executive Officer Antony Jenkins, in a memo to staff, said the lawsuit represents “serious charges that allege a grave failure to live up to our values.”

U.K. Prosecutors Open Foreign-Exchange Rigging Investigation (Bloomberg)
U.K. prosecutors opened a criminal investigation into alleged manipulation of foreign-exchange benchmarks. “The Serious Fraud Office has today opened a criminal investigation into allegations of fraudulent conduct in the foreign exchange market,” the London-based agency said in an e-mailed statement today. Authorities around the world have been investigating whether traders rigged the $5.3 trillion-a-day currency market after the Financial Conduct Authority, the British markets regulator, began a review last year. Regulators and prosecutors are scrutinizing allegations that dealers at the world’s biggest banks traded ahead of their clients and colluded to rig the WM/Reuters rate, a benchmark that pension funds and money managers use to determine what they pay for foreign currencies.

Australia Regulator Censures Royal Bank of Scotland (WSJ)
Australia’s securities regulator has censured Royal Bank of Scotland Group PLC after the bank found some of its traders likely tried to influence the daily setting of the country’s benchmark interbank lending rate. As a result, an independent compliance expert will review the bank’s record with rules on contributions to interest-rate benchmark settings and will report back to the Australian Securities and Investment Commission, the regulator said. RBS also agreed to steps including a review of its communications-surveillance systems and giving refresher training to traders.

Kim Kardashian, Kanye West pay $500,000 for baby body double: report (NYDN)
British glossy magazine Grazia claims the couple held “auditions” in Los Angeles at a specialist agency to find a child who is the spitting image of North, according to The Mirror. The magazine also reports that the couple hired a body double nanny. Read more »

Opening Bell: 07.18.14

Buffett buys new Cadillac (AP)
Buffett sent his daughter, Susie Buffett, to the dealership to make the purchase. Warren Buffett says the saleswoman did a great job, including recommending that Buffett buy the XTS sedan he picked, not the CTS coupe that Barra had recommended.

Lawsky proposes new Bitcoin rules (NYP)
The proposed rules are the first step in companies obtaining a “BitLicense,” which would pave the way for a regulated exchange of the crypto-currency. The DFS started looking into new bitcoin exchanges for New York after the Japanese digital currency exchange Mt. Gox imploded earlier this year, apparently from hackers stealing $460 million in investor funds. The rules include anti-money laundering provisions that would include the identities and addresses of people trading the currency, as well as receipts for trades totaling more than $10,000 per day.

Ackman says Valeant’s bid for Allergan is a ‘happy’ one (NYP)
Ackman said Thursday he is trying to line up 45 percent of shareholders to call a special meeting to replace six directors — although he only needs 25 percent — because of what he called Allergan’s “unbelievably burdensome” requirements.

Morgan Stanley rebuilds in commodities trading (Reuters)
The Wall Street bank plans to hire about a dozen traders, sales staff and other professionals in the United States. It’s building up commodities trading and financing businesses that can profit despite tougher regulations, people familiar with the matter told Reuters.

A Case That Shows The Limits Of Insider Trading Laws (NYT)
In an unusual move, the judge in the case, Naomi Reice Buchwald, didn’t let most of the case get to the jury. After showing skepticism about the strength of the government’s case almost from the beginning, she dismissed two insider trading counts, leaving only a conspiracy charge for the jury to ponder. But conspiracy to do what? It’s no wonder a jury took less than four hours to find Mr. Rajaratnam innocent…Which raises a question: How might the jury have decided if it was allowed to consider all the evidence? The answer goes far beyond the Rengan Rajaratnam case, and raises some fundamental questions about the state of insider trading laws.

Shark Bites Off More Than It Can Chew, Chokes On Sea Lion (HP)
In a peculiar event that is almost too odd to seem true, a 13-foot great white shark in Australia died after choking on a sea lion. This video of a shark thrashing in shallow waters on Coronation Beach near Geraldton, Western Australia surfaced the day before the same shark washed ashore. “This could explain why the shark was exhibiting such unusual behavior in shallow waters off Coronation Beach. It is possible that the shark was trying to dislodge the blockage,” Dr McAuley, the principal research scientist who investigated the case, said in a Department of Fisheries press release. To make things even more interesting, this shark was also tagged in Southern Australia back in January, proving the incredibly mobile nature of the species. The Department of Fisheries in Western Australia concluded that the sea lion either damaged the shark’s internal organs, or the shark simply became stranded while trying to “get rid of the obstruction.” Read more »

Opening Bell: 07.17.14

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.” Read more »