Opening Bell

Opening Bell: 12.09.13

Deutsche Bank creates new post to tighten controls (Reuters)
Deutsche Bank on Monday named 43-year-old Thomas Poppensieker as head of a new effort to tighten controls at Germany’s flagship lender, reporting directly to co-Chief Executives Juergen Fitschen and Anshu Jain. The move comes as Deutsche Bank pursues an ambitious cultural transformation plan led by Fitschen and Jain, and as it works through a long list of scandals, investigations and fines that came in the wake of the financial crisis.

Paulson Extends Comeback With Merger Bets as Stocks Rally (Bloomberg)
After wrong-way bets on the U.S. recovery, the euro crisis and gold had helped cut assets by about half from the 2011 peak, his main hedge funds are posting double-digit returns. The New York-based firm’s Advantage strategy, which suffered record losses in 2011, is up 30 percent this year through November, and the Recovery fund surged 55 percent, according to two people briefed on the returns, who asked not to be identified because the information is private.

Big Investors Change U.S. Trading (WSJ)
Some of the world’s biggest investors are changing the way they trade in U.S. markets in response to what they say are rising risks for institutions of their size. The strategies include conducting more “upstairs trades,” in which deals are executed among big institutions, bypassing the broader market, as well as other sophisticated order-routing techniques designed to avoid pitfalls that have become increasingly apparent to investment managers. Investors say such measures are increasingly necessary because the proliferation of algorithmic trading and other structural issues, including thefragmentation of the market, are hurting their ability to get the best prices and execute large trades quickly.

My Interview With Madoff (WSJ0
The 75-year-old, dressed in beige polyester pants and shirt with a matching canvas belt, showed no signs of stress. He told the occasional joke and said he was lucky to be in Butner, as it had a reputation of being “very laid back” and is kind of like a “camp.” “This is as good as it gets,” said Mr. Madoff.

Domestic Battery Rap Dropped In Water Pistol Case (TSG)
Giovanna Borge was busted in September following a confrontation with her beau in a Port St. Lucie apartment. Borge told officers that her boyfriend “said something to her that she did not like,” so she “took a water pistol and squirted him with water.” Following the pistol dripping, the pair tussled, with Borge claiming that her boyfriend struck her with a pillow and dumped a container of water on her head. But since Port St. Lucie Police Department officers decided that Borge was the “primary aggressor” during the September 27 incident, she was collared for “squirting water” on the victim to “antagonize and agitate him against his wishes.” Read more »

Opening Bell: 12.06.13

Bankers Balk at Bitcoin as Obstacles Mount (Bloomberg)
“Banks are scared to deal with Bitcoin companies, even if they really want to,” said Stephen Pair, co-founder and chief technical officer of BitPay Inc., an Atlanta-based company that processes payments for merchants in Bitcoin. Pair said BitPay has relationships with banks in the U.S., Canada and Europe; he declined to name them at the banks’ request.

Lampert’s Investors Check Out (WSJ)
Mr. Lampert’s hedge fund is returning billions to clients of Goldman Sachs Group Inc. who had invested with ESL Investments Inc. in 2007, according to people with knowledge of the matter. Under that deal, Goldman’s clients, such as corporate pension plans, put roughly $3.5 billion with Mr. Lampert, and they have asked for it back.

Luxury Homeowners Hope to Score Big During Super Bowl (WSJ)
Planning on attending Super Bowl XLVIII in style? Almost every five-star hotel in Manhattan is already booked. But Brian Krauss’s four-bedroom manor in Saddle River, N.J., its fridge stocked with beer, can be yours for $5,000 a night. Located 18 miles from New Jersey’s MetLife Stadium and a half-hour’s drive from New York City, the upscale suburb is home to rap royalty such as Wyclef Jean, Mary J. Blige and Ja Rule, who lives “just around the corner” from Mr. Krauss’s 5,700-square-foot house with its imposing stucco facade, the homeowner says. Mr. Krauss, chief executive of Praxis Footwear and a 49-year-old divorced father of two, has transformed his home into a luxe bachelor pad. There is a professional-grade home gym, a basketball court and a sprawling media room complete with a 70-inch TV, a baby-grand piano and three vintage pinball machines. Daily maid service is included, and you can play his acoustic-electric guitar—all for $35,000, the cost of one week’s minimum stay. “I priced it for what I thought was reasonable. What would it cost for eight people in a nice hotel?” said Mr. Krauss, who purchased the house for $1.375 million in 2011, then spent $300,000 on renovations and landscaping. Renting it out was his business partner’s idea. “At first, I was really against it,” he said. “Then I thought of all the times I’ve been a renter, in St. Barts, Malibu…..Here was an opportunity.”

Key Witness Lying About SAC Facts: Steinberg Lawyer (NYP)
“We think [Jon Horvath] is a witness who will say things either he knows [are] false or says whatever he thinks the government wants to hear,” Steinberg’s lawyer, Barry Berke, in a contentious showdown with prosecutor Antonia Apps, told Judge Richard Sullivan. In an exchange outside earshot of the jury, Berke claimed Horvath, a former SAC research analyst, lied to prosecutors to cut a deal. Horvath, who confessed to being part of a corrupt circle of inside traders on Wall Street, is the government’s main witness against his former boss Steinberg, a portfolio manager at SAC.

SEC browsing JCPenney’s liquidity, debt (NYP)
The SEC is also probing the retailer’s Sept. 26 stock offering that raised $810 million in cash in a bid to ease concerns about its liquidity, according to a Penney regulatory filing.

Mike Tyson says he used a fake penis to pass drug tests (NYDN)
The former heavyweight champion claims he used a prosthetic penis when he had to submit a urine sample before a fight, saying the fake member worked “really effectively” in masking his substance abuse. “You take it out – it has somebody else’s urine in it, of course – you hope it’s not a woman’s urine and they take a pregnancy test,” Tyson said on “Chelsea Lately” while promoting his autobiography, Undisputed Truth. “You just make noise, and normally if you’re a guy and you pull it out in front of them (the drug tester), they’re like, ‘Whoa, whoa,’” he said. “And then you do it.” “It’s connected to a jock strap.” Just in case a drug tester caught a glimpse of the fake penis, Tyson made sure it wasn’t too obvious a disguise. “(It was) Tan, brown, cream-colored.” Read more »

Write-Offs: 12.05.13

$$$ Ex-Dell employee avoids prison for help in insider trading probe [Reuters]

$$$ BofA: Bitcoin can become ‘major means of payment’ for e-commerce [CNBC]

$$$ Poker-playing hedgie may have overplayed hand [NetNet]

$$$ Securities trade group urges hardware revamp after Nasdaq August halt [Reuters]

$$$ Shareholders, say Icahn, deserve a bigger share. And Cook, he says, has been willing to consider his views. Icahn told TIME: “We’ve discussed a lot of things, and he asked a lot of questions, and really listened.” Icahn says his most recent conversation with Cook was a 20-minute phone call Nov. 21—which Cook’s assistant initially tried to schedule at 5 a.m. Pacific Time. “That’s usually when I go to bed! This guy’s tougher to get than the President,” laughs Icahn. [Time] Read more »

Opening Bell: 12.04.13

Wall Street Sweats Out Volcker Rule Impact on Revenue (Bloomberg)
Wall Street banks, which already shut proprietary trading units that helped fuel record profits, are girding to learn next week how much revenue the Volcker rule may cut from the $44 billion they say comes from market-making. With U.S. regulators scheduled to vote Dec. 10, the largest firms are getting little detail about the final terms of the Volcker rule’s ban on proprietary trades, and still have basic questions about what kind of market-making will be allowed, said three senior U.S. bankers. They’re also wondering whether they’ll have to change practices or curtail business in some less-liquid markets, the bankers said.

EU Fines Financial Institutions Over Fixing Key Benchmarks (WSJ)
Six financial institutions were fined €1.71 billion ($2.32 billion) by European Union regulators Wednesday for colluding in an attempt to manipulate key benchmark interest rates, the EU’s largest-ever penalty in a cartel case. The settlements involved penalties against some of the world’s biggest banks, including Deutsche Bank AG, Société Générale SA, Royal Bank of Scotland Group PLC and J.P. Morgan Chase & Co. The action brings to roughly €6 billion the total penalties levied by regulators against financial institutions in connection with probes into manipulation of the London interbank offered rate, or Libor, and other widely used financial benchmarks. Further penalties are possible.

Accuser’s credibility ripped in SAC manager trial (NYP)
Horvath earlier testified that Steinberg asked him to get “edgy, proprietary” information after trade ideas of his lost money in 2007, and Horvath said he took that to mean “nonpublic, material” info — or inside information. But Berke, getting his first shot at cross-examination of Horvath in Manhattan federal court Tuesday, used two hours of withering questions to reveal that Horvath used one of the terms even before he joined Steve Cohen’s SAC hedge fund. In a bombshell piece of evidence, a document called “Jon’s Trading Rules,” created by Horvath — which prosecutors didn’t know existed — Horvath asked himself the question, “What do I have that is proprietary?” With Steinberg barely suppressing a smile, Berke asked about “Jon’s Trading Rules.” A squirming Horvath first said it was written while he was at SAC. He then said he could not remember when he wrote it. Finally, he said, “I don’t remember creating this document.” Nor did Horvath remember the day he began working at the hedge fund, or the email Steinberg forwarded to him on his first day, Sept. 18, 2006. Written by former SAC analyst Nils Tristan, it used the word “edgy” three times to discuss the type of research information on companies SAC found useful. “If you hear something from the grapevine, there is a 90 percent chance it’s not edgy,” the email, written in 2004, said. “We no longer use that type of information.” The email also mentioned making sure information has been “triangulated by multiple proprietary sources.” Horvath conceded the words “edgy” and “proprietary” were used often during his time at SAC — and weren’t referring to illegal info — but said that Steinberg meant something different when he asked him to get that type of information in 2007. “I don’t think edgy proprietary has the same meaning as the conversation we had later,” he told the jury.

House of Morgan Divided on Junk as Returns Wane: Credit Markets (Bloomberg)
JPMorgan Chase & Co. recommends sticking with U.S. high-yield bonds next year as the best protection against rising interest rates. Morgan Stanley cautions that valuations are unattractive following a record five-year rally. Speculative-grade debt will return 5 percent in 2014 with default rates remaining below historic averages, according to analysts at JPMorgan, the largest underwriter of the notes since 2010. Investors need to lower their expectations and will see gains of 2.8 percent, Morgan Stanley said yesterday.

Deputies Looking For Men Who Stole Condoms, Family Planning Materials (ABC)
HILLSBOROUGH COUNTY, Fla. – The Hillsborough County Sheriff’s Office is looking for two men who stole about $460 worth of condoms and family planning materials. Detectives say the men stole the items from a CVS near Hillsborough Avenue and Memorial Highway around 3 p.m. on November 26. They placed the items in a backpack and left without paying. They drove off in a newer model four door white or silver Honda. Read more »

Opening Bell: 12.03.13

SAC’s Cohen Didn’t Know About Source of Dirty Tips, Analyst Says (Bloomberg)
SAC Capital Advisors LP fund manager Michael Steinberg told the analyst who gave him inside tips on Dell Inc. that the fund’s founder, Steven A. Cohen, wasn’t aware they were obtained illegally. Steinberg concealed the true source of the tips, Jon Horvath, the former SAC analyst who worked for him, told jurors in the federal insider-trading trial in Manhattan. Horvath said Steinberg told him at SAC’s Sigma Capital Management offices in Midtown Manhattan that he had told Cohen that the trading recommendations were based on “industry contacts” and “supply chain checks.” “I was in Mike’s office and he said, ‘I just got off the phone with Steve and I was telling him about Dell,’” Horvath testified yesterday. “I kind of cringed, because I didn’t want to be part of this conversation. Mike said, ‘I told him you had a Dell supply-chain check.’”

Gross Says Central Bank Cash Influx Raises Global Assets’ Risk (Bloomberg)
“Investors are all playing the same dangerous game that depends on a near perpetual policy of cheap financing and artificially low interest rates in a desperate gamble to promote growth,” Gross wrote in his monthly investment outlook posted on Newport Beach, California-based Pimco’s website today. The Federal Reserve, Bank of Japan, European Central Bank and Bank of England “are setting the example for global markets, basically telling investors that they have no alternative than to invest in riskier assets or to lever high-quality assets.”

Brazil’s Economy Posts Worst Performance in Two Years (WSJ)
Brazil’s continued lackluster growth comes at a delicate time for President Dilma Rousseff, who faces questions about her handling of Latin America’s largest economy ahead of next year’s presidential election. The government had initially forecast robust growth of 4.5% in 2013 but has since drastically tempered those expectations. Ms. Rousseff’s challengers are expected to make slow growth a key part of the 2014 campaign.

Amazon Tests Drones for Same-Day Parcel Delivery, Bezos Says (Bloomberg)
Chief Executive Officer Jeff Bezos unveiled the plan on CBS’s “60 Minutes” news program in the U.S., showing interviewer Charlie Rose the flying machines that can serve as delivery vehicles. Bezos said the gadgets, called octocopters, can carry as much as 5 pounds within a 10-mile radius of an Amazon fulfillment center. Amazon may start using the drones, which can make a delivery within 30 minutes, within five years pending Federal Aviation Administration approval, Bezos said. “It will work, and it will happen, and it’s gonna be a lot of fun,” he said in the “60 Minutes” interview broadcast yesterday.

Pope Francis worked as nightclub bouncer (NYP)
Before Pope Francis became God’s enforcer, he moonlighted as a nightclub bouncer. His Holiness told parishioners recently that he held a variety of odd jobs before embracing the call of the priesthood. As a college student in Buenos Aires, Jorge Mario Bergoglio, as he was known then, swept floors, ran tests in a chemical lab and even worked as bouncer to make extra cash, he said. The pontiff detailed his roundabout path to the priesthood during a visit to a church near Rome, after a parishioner asked him to pray for a relative who was seeking to be a Franciscan friar. Read more »

Opening Bell: 12.02.13

Diverse Menu of Bonds Is Served Up to Investors (WSJ)
With corporate-debt issuance racing toward a record, some large companies are rolling out unusual offerings in a bid to serve the bond market’s every nook and cranny. Recent weeks have brought a $500 million “green bond” from Bank of America Corp., which has pledged to use the proceeds to finance renewable-energy and energy-efficiency projects, and a $1 billion Goldman Sachs Group bond that offers variable interest rates for 10 years, much longer than normal. The sales underscore the robust appetite for debt issued by well-known, highly rated issuers and come at a time when low interest rates have put a premium on income-generating assets and a roaring stock-market rally has prompted some more-conservative investors to diversify.

Bull Market Shows No Sign of Death With Yellen Support (Bloomberg)
“The weakness in jobs is continuing fodder for the Fed to fulfill its most recent and steadfast comments about the support of the economy,” Holland, who oversees more than $4 billion in New York, said in a Nov. 26 phone interview. “Until the labor market gets better, the two parts of dual mandate have to be served,” he said.

No Penalties Planned in Swaps Probe (WSJ)
A four-year-old U.S. Justice Department civil probe into allegations that large banks and others conspired to thwart competition in the $24.3 trillion market for credit-default swaps is winding down and penalties aren’t planned, said people familiar with the matter.

Nobel Prize economist warns of U.S. stock market bubble (Reuters)
“I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets,” Shiller told Sunday’s Der Spiegel magazine. “That could end badly,” he said. “I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable,” he said, describing the financial and technology sectors as overvalued.

My life as a call girl in Love Guv ring (NYP)
Going full time as an escort with the Emperors Club was a life-enhancing experience. And the sex wasn’t as difficult as people might expect…the one I’ll always remember, my dream client, was a sexy French restaurateur. I knew who he was before we met in his room at the Hudson Hotel — I had Googled him, something I often did with clients. He greeted me at the door with a glass of wine and a gift bag from Victoria’s Secret, a kind gesture that wasn’t expected or required. I tried on the lingerie, and we took full advantage of the mirror against the wall. I didn’t expect I would ever be so turned on by a man who paid me to be with him, but this was a pleasant surprise. I insisted we fit a second round in before our time was up…Another client was an older man, probably 40 years my senior, with a thin upper lip that covered slightly yellowed teeth. And as Southern men are said to be, he was very much a gentleman. He knew me as Ashley because he had selected me from the higher-end “Icon Model” portfolio. He was the first of only two clients to meet Ashley. This meant he paid $5,400 for the two hours as opposed to the $3,000 I would have made as Raquel. Icon Models had interests like classical music and equestrian sports. They hunted pheasant, studied at Oxford, knew the difference between a watch and a timepiece and could participate in a debate over the superiority of Walker Black versus Laphroaig. They had pedigree, or at least the ability to appear like they did. They also had an expensive wardrobe, the ability to sit up straight, speak proper English and pretend for a couple of hours that they were genuinely interested in the hobbies and fineries of the ruling class. I wore my most elegant pieces: diamonds, Gucci dress, Prada heels, a golden silk pashmina and Agent Provocateur underneath. The only thing that wasn’t designer was my clutch, but it matched my shoes and was just big enough to fit a nice stack of cash. I sipped a martini, and he enjoyed a scotch on the rocks. He told me about his family. Unfortunately, his wife didn’t care to be affectionate with him anymore. It was not an unusual story, and I was happy to fill the void. He had children and grandchildren. We cuddled and caressed. He needed the affection. At the end, he told me that I was a wonderful companion and that he would love to meet again. Nobody had ever called me a wonderful companion. I put a lot of love into my visit with him, and I was touched by his compliment. Despite his age and looks, he was a great client. What I didn’t realize was that he would also be my last. The Emperors Club was busted; the FBI showed up at my door, and I had to hire an attorney. I signed a proffer agreement with the feds; they asked me to identify people in photos, but it was clear I had no information they didn’t already have from their surveillance.Read more »

Holiday Bell: 11.29.13

Citigroup Attempts to Sing Itself to Public Approval (WSJ)
The banking industry has spent countless hours and dollars trying to make up for the damage done by the financial crisis. Banks have run feel-good advertisements, waged aggressive lobbying campaigns, apologized to the public, tried to lend more, even sponsored public bike-rental programs in cities such as London and New York. Now Citigroup Inc. is trying to a new tactic: singing. On national TV. Citigroup’s London office recently opened up its Canary Wharf skyscraper to a BBC crew filming the popular TV series “The Choir.” The long-running British show—which is something of a cross between “Glee” and “The Office”—features teams of workers competing to be crowned workplace choir of the year. Bankers remain deeply reviled in the U.K., and Citigroup executives admit they are a bit nervous about whether they will be lampooned when their segment airs on BBC2 on Monday night. But they say it is a risk worth taking. “We ultimately won’t know how this will play out until it airs,” said James Bardrick, Citigroup’s co-head of European banking, who championed the project and is a tenor in the choir. “But if people get to see that we’re not a bunch of monsters hiding behind our screens and planning financial apocalypse, we’ll have done the industry a small service.”

UBS Revamps Forex Unit (WSJ)
s shaking up its investment bank, and has removed a top foreign-exchange executive, amid a burgeoning investigation into potential manipulation of currency markets. The bank is rolling its foreign-exchange and precious-metals business into another unit, according to an internal memo reviewed by The Wall Street Journal. As part of the changes, Chris Vogelgesang is stepping down as global co-head of foreign exchange and precious metals.

London leads 11 percent jump in bankers earning 1 million euros (Reuters)
More than 3,500 bankers in Europe earned 1 million euros ($1.4 million) or more last year after a big jump across the continent and in Britain, which had 12 times as many high earners as any other country. Figures from the bloc’s banking regulator on Friday showed that London-based bankers would have easily bust the European Union bonus cap rule coming into effect next year. Bonuses for the highest earners were almost four times fixed pay.

Wal-Mart Steps Up Security as Fights Break Out Over TVs (Bloomberg)
Malls are beefing up patrols with off-duty cops. Chains including Wal-Mart Stores Inc. are using quota systems for popular doorbusters from iPads to jewelry. Yet all was not peaceful. In one incident, uploaded to YouTube, uniformed security officers handcuffed a female shopper at an unidentified Wal-Mart store after a tussle over a television. Bill Simon, chief executive officer of Wal-Mart’s U.S. division, was asked about the incident on a conference call today with reporters. “Any time you get more than 22 million people together you’re going to have some behavior you’re not proud of,” said Simon, who also said “the number of incidents” was down from last year and that it’s “hard to tell what happened in any individual incident.”

Violence flares as shoppers hunt Black Friday deals (CNBC)
After buying a big screen TV, a Las Vegas shopper was shot around 9:45 p.m. PST Thursday as he tried to take his purchase home, Lt. David Gordon of the Las Vegas Metropolitan Police Department told NBC News. “As the victim was walking through his complex he was approached by a suspect who fired warning shots which caused the victim to release the television,” he said. As the thief tried to load it into a vehicle the victim approached him to try to get it back, Gordon added. “The suspect fired two more shots and the victim was struck in the leg,” he said. “He was not seriously injured.”

SAC tech analyst testifies: Give stock tips or lose job (NYP)
Former SAC Capital Advisors tech analyst Jon Horvath testified he was afraid he would lose his job if he didn’t come up with illicit stock tips for his boss, Michael Steinberg. “I thought my job was in danger. I thought he would fire me,” Horvath, the government’s star witness in the insider-trading case against Steinberg, told a Manhattan federal jury. Horvath, testifying Wednesday on the fifth day of the trial, said he received an ultimatum from the top SAC money manager after Horvath’s tech recommendations for Steinberg lost money in 2007. “What I need you to do is to go out and get me edgy, proprietary information that we can use to make money in their stocks,” Horvath testified that Steinberg told him after a bad losing streak.

Netherlands Loses Triple-A Rating (WSJ)
The Netherlands became the latest country to be stripped of its coveted triple-A credit rating Friday, after Standard & Poor’s downgraded the country to “AA+,” citing weakening growth prospects. S&P is the first rating firm to downgrade the Netherlands, saying the country’s growth prospects are “weaker than we had previously anticipated” and that the “real [gross domestic product] per capita trend growth rate is persistently lower than that of peers.”

Man fined for breaking bed, curtain rail and window sill having sex in his old flat (Mirror)
Adam Disney ‘got carried away’ during the impromptu bonk with his partner and trashed the home in the process. The bed collapsed as he had sex and the 28-year-old also damaged a window sill as he romped the night away. Puzzled neighbours heard noises coming from the flat in Wavertree, Liverpool, and wondered what was going on September 3. The home’s landlady spotted Disney, from Solihull, leaning out the window smoking a cigarette. Dan Lupton, defending at Liverpool Magistrates Court on Thursday said: “This is a curious case of the morning after the night before. “They had been drinking and the couple were passionate in their interest to have sexual relations. “On this occasion they were seeking to avail themselves rather quickly.” He added: “The closest place for them to seek refuge, in an effort to avoid offending public decency, was his former flat. “The window sill was loose and they hadn’t done a good job of securing the curtain rail. This was not a posh hotel room.” Once inside the flat Mr Lupton said the couple were “carried away with the intensity of physical relations” and in the course of events the bed collapsed and drapes were pulled down. He said the damage was not intentional but happened in the course of “sexual antics”. Disney was fined #100 after admitting criminal damage in the ‘shabby bedsit’ after a charge of burglary with intent to cause damage was downgraded. Read more »