Opening Bell

Opening Bell: 06.20.14

Star-Struck Bankers Return to Hollywood to Finance Movies (Bloomberg)
When Jay Cohen sought funding for a new independent film company, Wing and a Prayer Pictures, he had bankers falling over themselves to finance it. “We had seven banks call and offer us lines of credit,” says Cohen, head of film financing and distribution at Gersh Agency in Beverly Hills, California, and an executive producer of the 1994 comedy “Swimming With Sharks.” “They had never met anyone involved in the company,” he says. From big banks like JPMorgan Chase & Co. (JPM) to billionaires like John Paulson, investors are putting their money into movies again after pulling back during the financial crisis, Bloomberg Businessweek reports in its June 23 edition. Filmmakers are able to borrow at the lowest rates since 2008, bankers say. “There is a lot more activity than I have seen in a long time,” says David Shaheen, head of JPMorgan’s entertainment industries group in Los Angeles. “There is increased comfort in the future of the business relative to a few years ago.”

Mexico’s Drug Cartels Scare Oil and Gas Investors (BusinessWeek)
Lawmakers in Mexico City are preparing rules that will allow foreign companies to drill in the country for the first time since 1938. But the violence may keep wildcatters away from the area, which is rich in oil and gas deposits. “Shale will not take off in Mexico like it did in Texas in the near future,” says Dwight Dyer, a Mexico City-based senior analyst for consulting firm Control Risks. “Unless the security situation along the northeastern border improves significantly, smaller companies will probably take their time before jumping in.”

Argentina’s comments put U.S. lawyers in awkward spot (Reuters)
At a hearing Wednesday afternoon in Manhattan, Argentina’s lawyer, Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, informed U.S. District Judge Thomas Griesa that Argentine officials “will be in New York next week” in order to begin negotiations with the hedge funds whose bond litigation has forced the country to the brink of a sovereign debt crisis. The very next morning, at a press briefing, Argentine Cabinet Chief Jorge Capitanich appeared to contradict Cleary’s representations to Griesa: “There is no delegation prepared for a possible trip to the United States,” he said, according to a Reuters report from Buenos Aires.

Toppled American Apparel CEO plots to retake helm (NYP)
The board of the struggling clothing chain has hired boutique investment bank Peter J. Solomon as a financial adviser as it braces for blowback from its surprise move to oust Charney as CEO, The Post has learned. Charney is looking to corral shareholder support to seize back the reins, according to sources. While he can’t oust current directors, he’s angling to gain a voting majority by packing the seven-member board with additional seats. “Dov isn’t going down without a fight, and there’s an argument to be made that the board has overreached,” said a source close to the situation. The board blitzed Charney at a Wednesday board meeting, citing personal-conduct issues. The board offered Charney, who has weathered sex-harassment allegations from female employees for years, a four-year consulting contract that he turned down, according to insiders.

Regulatory Scrutiny Transforms Washington’s Political-Intelligence Business (WSJ)
Alex Vogel spent the last decade building a Washington lobbying business with a successful practice feeding investors information about potentially market-moving changes in policy. But with federal investigators scrutinizing Washington’s interactions with hedge funds and other traders, Mr. Vogel is quitting his firm. His new venture, VogelHood Research, will make all its predictions based on computer algorithms using publicly available information—without ever talking to members of Congress or other policy makers. Mr. Vogel’s shift shows how Washington’s political-intelligence business is going through a wrenching transformation in the face of heightened legal and regulatory scrutiny, including insider-trading probes. In recent months, a number of lobbyists have left the political-intelligence business, and several lobbying and law firms have created new internal procedures and protocols to guard against violating insider-trading rules. Some hedge funds and other Wall Street firms have, meanwhile, scaled back their own information-gathering activities in the capital, and others are conducting reviews of their Washington operations, according to people familiar with the political-intelligence industry. The Wall Street Journal profiled the political-intelligence practice at New York broker-dealer JNK Securities in 2011. It later exited the business. A company official declined to comment for this article.

Kanye West wants to ‘redo’ Instagram (Guardian)
Kanye West has offered to redesign Instagram, suggesting that it would be “a simple task” for him to beautify the popular photo app. Speaking at a seminar at the Cannes Lions International Festival of Creativity, West cited the success of his instagrammed wedding kiss with Kim Kardashian, which is already the most-liked photo in the history of the app. “The world as a whole is fucking ugly,” West said on Tuesday, during an appearance at the festival. “The internet as a whole is fucking ugly, too.” West said he asked Instagram co-founder Kevin Systrom: “Why don’t you let us redo Instagram? Now, you know, Instagram is nice. It’s nice looking – I’m not knocking it. But in general, everyone spends all of their time looking at their screens or their phones. And just as a simple task, we could clean that up.” [...] Although he doesn’t have a public account, he follows Kardashian’s posts and took an active role in refining the couple’s famous photo clinch. “Can you imagine telling someone [like Kim], who wants to just instagram a photo, who’s then number-one person on Instagram, ‘We need to work on the colour of the flower wall?'” he said. “[But] the fact that the number-one most-liked [photo] has a kind of aesthetic was a win for what the mission is, which is raising the palette.” West said he worked on the photo for four days. Read more »

Opening Bell: 06.18.14

Argentina Plans Debt Swap to Skirt Order to Pay Holdouts (Bloomberg)
Argentina will seek to move its overseas bonds into local jurisdiction to skirt a U.S. court ruling forcing it to pay holders of defaulted debt in full. The swap will ensure holders of restructured bonds keep getting paid while allowing Argentina to avoid complying with the U.S. ruling, Economy Minister Axel Kicillof told reporters yesterday. Cabinet officials will meet with lawmakers today to discuss how to shift investors into local-law bonds while the government will also send lawyers to meet with U.S. District Judge Thomas Griesa in New York to discuss the ruling, he said. “Everyone stay calm,” Kicillof said. “This has been studied extensively so that the reconstruction of Argentina isn’t jeopardized.”

Fed seen holding steady policy course but could hint on exit (Reuters)
The Federal Reserve’s policy committee concludes its latest meeting on Wednesday with little change expected in its outlook for interest rates but the potential for new details to emerge on the planned exit from its current easy monetary policy. The U.S. central bank is widely expected to decide on a further $10 billion reduction in its monthly bond buying, staying on course to shutter the program entirely by year end. It will announce its decision and release fresh economic and interest rate projections at 2 p.m. EDT (1800 GMT). Fed Chair Janet Yellen will hold a news conference to discuss the results a half hour later. The interest rate “dots” plotting the views of each policymaker will be watched closely for any shift in the expected timing or pace of rate increases, and for whether officials lower their view of the long-run target interest rate in response to a diminished sense of the economy’s potential.

U.S. Treasury Secretary Expects Strong Economic Data in Second Half (WSJ)
U.S. Treasury Secretary Jack Lew said Wednesday that he expects strong economic data for the second half of the year after lackluster growth in the first quarter. “After a harsh winter that restrained growth in the first quarter, we are still expecting the underlying strength of the economy that was evident last year to result in a strong second half of this year,” Lew said in a speech in Jerusalem at a conference of the U.S.-Israel Joint Economic Development Group.

BitPay to Sponsor St. Petersburg (WSJ)
The annual postseason college football game played in St. Petersburg, Florida will for the next four years be known as the Bitcoin St. Petersburg Bowl as part of a sponsorship deal signed between bitcoin payment processor BitPay and ESPN Events. The arrangement marks one of the most high-profile marketing initiatives yet for a bitcoin-related business and comes as the digital currency continues to gradually make inroads into mainstream commerce. In an announcement Wednesday, BitPay and ESPN Events, a subsidiary of sports network ESPN, said the name change would take effect at this year’s Dec. 26 game and would continue each year through the 2016 game. The game will air on ESPN. Tickets, which start at $40 each, and associated merchandise will also be available for purchase with bitcoin through Bitpay’s processing services. The St. Petersburg game, which previously bore the name of the Beef O’Brady’s chain of sports-themed restaurants, is in its first year of a new college football affiliation with the Atlantic Coast Conference and the American Athletic Conference, each of which will field a team for this year’s event. BitPay’s foray into college football sponsorship coincides with a new drive toward bitcoin adoption by retailers and other merchants. Over the past three weeks, satellite TV provider Dish Network and travel site Expedia Inc. have both announced they would accept bitcoin.

Mike ‘The Situation’ Sorrentino arrested after tanning salon fight (CNN)
Former “Jersey Shore” star Mike “The Situation” Sorrentino was charged with simple assault after a fight in a tanning salon he co-owns with his brother. Video captured by Splash News showed a smiling Sorrentino walking out of the Middletown, New Jersey, police station after posting a $500 bond Tuesday afternoon. His right eye appeared bruised and scratches were visible on his neck. ‘The Situation’ goes to rehab “The Situation” gets his first acting gig The Situation told the photographer that the fight happened because his brother “was not running the store correctly, so I had to go in there and clean house, in more ways than one.” Read more »

Opening Bell: 06.17.14

Study Asserts Startling Numbers of Insider Trading Rogues (Dealbook)
A quarter of all public company deals may involve some kind of insider trading, according to the study by two professors at the Stern School of Business at New York University and one professor from McGill University. The study, perhaps the most detailed and exhaustive of its kind, examined hundreds of transactions from 1996 through the end of 2012. The professors examined stock option movements — when an investor buys an option to acquire a stock in the future at a set price — as a way of determining whether unusual activity took place in the 30 days before a deal’s announcement. The results are persuasive and disturbing, suggesting that law enforcement is woefully behind — or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines. The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading “arising out of chance” were “about three in a trillion.” [...] But, the professors conclude, the Securities and Exchange Commission litigated only “about 4.7 percent of the 1,859 M.&A. deals included in our sample.”

Deutsche Bank Entertained 45 Japan Pension Funds, Document Shows (Bloomberg)
Deutsche Securities Inc. spent 22.1 million yen ($217,000) wining and dining fund officials from 2010 to 2012, according to the document prepared by the investigative arm of Japan’s financial regulator and Germany’s biggest bank. Deutsche Securities Chief Operating Officer Bret Dandoy approved expenses for two overseas trips, and Chairman Norimichi Kanari joined in the entertaining on one occasion, the report showed…Japanese criminal law prohibits companies from providing benefits to public servants with the intention of obtaining business from them. Company officials who oversee public retirement funds as part of their assets under management are defined as civil servants.

Morgan Stanley’s Valeant E-Mails Call Client a ‘House of Cards’ (Bloomberg)
A few weeks ago, Morgan Stanley pitched its defense services to Allergan Inc., which was fighting a hostile takeover bid from Valeant Pharmaceuticals International Inc. Valeant was a “house of cards” with an unsustainable business model, Morgan Stanley bankers wrote in the e-mails to Allergan, which released them yesterday. Allergan decided not to hire Morgan Stanley — while Valeant recently did. The unusual disclosure of the e-mails was intended to bolster Allergan’s argument that Valeant is a flawed buyer — and shows how antagonistic the battle between the two pharmaceutical companies has become. Mary Claire Delaney, a spokeswoman for Morgan Stanley, declined to comment on the release of the e-mails. Valeant Chief Executive Officer Michael Pearson said in an e-mail that Allergan’s release “is a sign of desperation, and we look forward to proving the naysayers wrong.”

Fernandez says Argentina will not default on restructured debt (Reuters)
President Cristina Fernandez said on Monday that Argentina would honor its payments to holders of its restructured debt and to avoid a default despite suffering a setback in its long-running legal battle against “holdout” investors. The U.S. Supreme Court earlier on Monday declined to hear Argentina’s appeal over its battle with hedge funds that refused to take part in its debt restructurings. The court’s decision was unexpected and risks toppling Latin America’s No 3 economy into a new default.

IMF Cuts U.S. Growth Outlook, Sees More Scope for Zero Rates (Bloomberg)
The Washington-based IMF now sees the world’s largest economy growing 2 percent this year, down from an April estimate of 2.8 percent. The IMF left a 2015 prediction unchanged at 3 percent, and said it doesn’t expect the U.S. to see full employment until the end of 2017, amid low inflation.

New Hampshire woman busted for prostitution at Massachusetts library (NYDN)
A New Hampshire woman has been busted selling sex at a suburban Massachusetts library, police said. Brittany Macintyre, 20, was allegedly caught offering her services at the quiet public lending house in Tewksbury on Tuesday. Cops said they went undercover after a receiving a tip-off about her sleazy deeds. An officer said that, within moments of entering the building, he was approached by the suspected hooker. To respect the peaceful ambiance, the duo started passing written notes between each other, reports CBS Boston. Macintyre is said to have eventually offered to perform a sex act on the officer in exchange for $60. She was arrested on charges of prostitution, reports Nashua Patch, and was arraigned Wednesday in Lowell District Court. Read more »

Opening Bell: 06.12.14

Mickelson Role Said to Be Overstated in Insider Inquiry (Dealbook)
Phil Mickelson, the famed golfer, did not trade in the shares of Clorox just as the billionaire investor Carl C. Icahn was mounting an unsolicited takeover bid for the company in 2011, say four people briefed on the matter. Recent reports in The New York Times and other news organizations said that Clorox was among the stocks that federal authorities were examining as part of a two-year investigation into well-timed trades made by Mr. Mickelson and the sports gambler William T. Walters. Initially, authorities pursued a theory that Mr. Icahn shared private details of his Clorox bid with Mr. Walters, who then traded on the information and passed on the tip to Mr. Mickelson. Although Mr. Icahn and Mr. Walters remain under investigation over Clorox, the F.B.I. and the Securities and Exchange Commission have found no evidence that Mr. Mickelson traded Clorox shares. The overstated scope of the investigation came from information provided to The Times by other people briefed on the matter who have since acknowledged making a mistake.

Activist Funds Dust Off ‘Greenmail’ Playbook (WSJ)
More companies are resorting to an old tactic to get rid of activist investors: Pay them to go away. The practice, which involves buying back shares from activist hedge funds, has raised concerns among some investors because it bears similarities to “greenmail,” a controversial strategy popular in the 1980s. Back then, aggressive investors such as Carl Icahn and the late Saul Steinberg bought company shares and threatened a hostile takeover. Eager to avoid a battle, companies including Walt Disney Co. and Goodyear Tire & Rubber Co. bought back their stakes above market price, giving the activists a quick profit. The practice, widely criticized as corporate blackmail, largely died out by the early 1990s as companies beefed up defenses and lawmakers took steps to discourage it. But in the past 12 months, at least 10 companies have repurchased blocks of shares from activist investors, including Daniel Loeb and William Ackman, according to FactSet SharkWatch. That is more than in the previous six years combined. The practice differs from greenmail in two crucial aspects. The share buybacks aren’t at a premium to the market but typically at or slightly below the last trading price. They also don’t follow threats of hostile takeovers.

Europe Bankers Cringe at Rising U.S. Fines Amid BNP Probe (Bloomberg)
HSBC Holdings Plc (HSBA) Chairman Douglas Flint had some advice for bank executives meeting in London last week: Read up on how the U.S. uses financial warfare against its enemies in a foreign-policy shift that’s entangling lenders…At a June 4 meeting of the Institute of International Finance’s board, Flint, 58, advised participants including Barclays Plc Chief Executive Officer Antony Jenkins to read former U.S. deputy national security adviser Juan Zarate’s “Treasury’s War: The Unleashing of a New Era of Financial Warfare,” according to two people who were present. In his book, Zarate recounts how U.S. foreign policy is increasingly targeting financial activity by criminals, enemy states and individuals in sanctioned regimes. Caught in the middle are international lenders, whose desire to avoid business and reputational risk assures their cooperation.

Treasury Secretary Lew Warns of Lower Potential Economic Growth (WSJ)
In a speech to the Economic Club of New York, Mr. Lew said the U.S. growth rate is now projected to run a little above 2% a year, down from a 3.4% average from the end of World War II until 2007. If America can’t maintain stronger growth, the country could face deepening challenges from sluggish labor market and widening inequality, he said. “The choices we make over the years to come can alter this projection,” he said.

SEC Says Investor Accused of Fake Gold Bid Fled to China (Bloomberg)
The U.S. Securities and Exchange Commission said the man behind a fake $750 million bid for Allied Nevada Gold Corp. (ANV) profited from selling an undisclosed stake in the mining company and has fled the country. Luis Chang and Everbright Development Overseas Ltd., a company he controls, “furtively” bought Allied Nevada stock while disseminating false information about the company, the SEC said in a complaint filed June 9 in federal court in New York. Everbright then sold the shares into a “falsely inflated market” for a profit of more than $7 million, the SEC said.

Florida John Offered Salad In Return For Sex (TSG)
Liverman was arrested Monday morning during a reverse sting that netted nine other men for soliciting a prostitute. The hookers in question were actually undercover Daytona Beach Police Department officers. While negotiating a liaison with a female officer, Liverman–who was “operating a bicycle”–revealed that he did not have any money. “I’m hungry, you got food?” the undercover asked. Liverman replied, “I got a salad,” according to a booking affidavit. “I’ll give you a bl0w j0b for a salad,” the cop declared. Liverman replied, “You ready to go?” The document does not detail the location of Liverman’s salad (or its street value). Liverman was busted because he and the cop “agreed upon the sexual act in exchange for food,” investigators reported. Read more »

Opening Bell: 06.11.14

Bank of America Mortgage Settlement Is Said to Be Deadlocked (Dealbook)
Bank of America and the Justice Department have reached an impasse in negotiations over a multibillion-dollar settlement deal, raising the stakes in an investigation into the bank’s role at the center of the mortgage crisis. The talks stalled on Monday after the bank’s latest offer — more than $12 billion to resolve state and federal investigations into its sale of mortgage investments that later imploded — fell far short of prosecutors’ demands, according to people briefed on the matter. The Justice Department, which had imposed a Monday evening deadline for the bank to deliver its near-final offer, has sought a settlement worth roughly $17 billion, which would be the largest payout by any bank to date.

Detroit Denies Last-Minute Reprieve for Goats (Dealbook, earlier)
The hedge fund manager Mark Spitznagel has been denied a last-minute reprieve for his guerrilla urban farming project. And now, the 18 baby goats that he brought to the Brightmoor section of Detroit, to help clean up the overgrown area blighted by the city’s financial crisis, will now be sold to the butchers…The city’s decision signals the end of a campaign by Mr. Spitznagel, which began last Thursday, to bring as many as 60 goats from his farmstead in Northport, Mich., to Brightmoor to promote urban farming.The Idyll Farm Detroit plan, named after Mr. Spitznagel’s farm, was to enlist the help of local residents, paying previously unemployed adults to help herd the goats. Mr. Spitznagel and his team had not sought preapproval for the project from Mayor Mike Duggan’s office. Instead, they hoped to persuade the local government by moving ahead with their plan. The goats, however, were not well received by some local officials, and by Saturday, the goats were back on a truck heading out of Detroit.

Gross Raises Government-Related Debt to 50% of His Flagship Fund (Bloomberg)
Pacific Investment Management Co.’s Bill Gross raised his holdings of Treasuries and government-related debt in May to half his flagship fund’s total as the securities gained the most in four months. The proportion of the securities in the $229 billion Total Return Fund (PTTRX) was 50 percent last month, up from 41 percent in April, data on the company’s website showed. It was the highest since 54 percent in July 2010 for the world’s biggest bond fund. Gross, 70, is seeking to stanch 13 straight months of redemptions, saying the fund that’s trailed 62 percent of peers during the past 12 months, according to data compiled by Bloomberg, will again rank at the top by the end of the year. Pimco is betting on a “new neutral” era characterized by global growth converging toward lower, more stable speeds and interest rates that remain below their pre-crisis equilibrium.

World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start (Bloomberg)
The Washington-based lender predicts the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent. The U.S. forecast was reduced to 2.1 percent from 2.8 percent while outlooks for Brazil, Russia, India and China were also lowered. The setbacks may be temporary: the 2015 estimate for world economic growth was unchanged at 3.4 percent.

Venture capitalist guru eyes bitcoin boon (CNBC)
Saul Klein played a key role in starting up Lovefilm International, which has been dubbed the “Netflix of Europe”, becoming the company’s original CEO before it was acquired by Amazon in 2011 for a reported $317 million. He’s also held a position at Skype, acquired by eBay, and was co-founder at startups Kano and Seedcamp. But now, Klein told CNBC, he is being increasingly drawn to the world of virtual currencies and the potential they have for disrupting the mainstream with the advent of the smartphone. “It’s very, very transformational,” he said of bitcoin – the virtual currency which has already received attention from central banks, policymakers and regulators from around the globe. “Bitcoin has its own ecosystem…(and) is light years ahead of the other (payment) networks.”

Cops locate, ticket driver in Lamborghini crash-and-burn near GWB (NJ)
Police, unraveling the mysterious crash-and-burn of an expensive Lamborghini sports car near the George Washington Bridge early Monday, have located and charged its owner and driver in the incident. Deankarte E. Ditchfield-Agboh, a 33-year-old Palisades Park resident, has been issued summonses for abandoning a vehicle and leaving the scene of an accident, said Joe Pentangelo, an agency spokesman. Ditchfield-Agboh was interviewed by Port Authority police and is due in Fort Lee Municipal Court on Aug. 6, Pentangelo said. The Port Authority had been investigating the crash since finding the pricey, rare vehicle burning about 2 a.m. near Bridge Plaza North on the Turnpike westbound, meaning the car would have been leaving New York City, Pentangelo said. It was “burned extensively,” he said. Pentangelo initially said the car “showed evidence of a collision, but it’s unclear where the collision took place.” Efforts to reach Ditchfield-Agboh for comment at his home were to no avail. And an employee at his business, East Coast Auto Group in Lodi, said Tuesday afternoon that he was gone for the day. Read more »

Opening Bell: 06.10.14

Goldman Shuns ‘New Neutral’ After Doubting ‘New Normal’ (Bloomberg)
Goldman Sachs economists led by Jan Hatzius and Dominic Wilson are questioning the bet made last month by investor Bill Gross that Federal Reserve monetary tightening will be much less aggressive than in the past — when it comes. “We do not disagree that the Fed funds rate will on average be at least modestly lower over the next 20 years than it was over the 20 years preceding the crisis,” New York-based economist Kris Dawsey wrote in a June 6 report. “We lean towards the view that the difference will not be drastic.”

Uber Protests Spread Across Europe as Taxi-App Backlash Grows (Bloomberg)
Uber Technologies Inc. is set to draw more than 30,000 taxis and limos across Europe tomorrow in the region’s biggest protest against the smartphone app that is threatening to upend the car-service industry. At least 3,000 Parisian drivers are planning to block the Charles de Gaulle and Orly airports as well as the A1 highway that circles the French capital starting at 6 a.m. local time. Similar demonstrations are planned in Madrid, Milan and Berlin. In London, between 10,000 and 12,000 black cabs and private hire cars are expected to descend on the tourist hubs of Trafalgar Square and Parliament Square at 2 p.m.

Hedge fund billionaire splits with wife of almost 30 years (NYP)
David Tepper, the world’s highest-paid fund manager for the past two years, has split with his wife of nearly 30 years, Page Six can exclusively reveal. In what could be one of the most expensive hedge fund divorces yet, Tepper, 56, who runs $20 billion Appaloosa Management in Short Hills, NJ, and his wife, Marlene, have separated after 28 years of marriage, multiple sources confirmed. We’re told David and Marlene, who married in 1986 and have three adult children, have yet to formally file for divorce. A source said, “They have separated and are telling friends the marriage has run its course. They hope to settle things quickly, quietly and amicably.” But the split could prove extremely costly. Tepper, a minority owner of the Pittsburgh Steelers, has an estimated net worth of $10 billion.

SEC Official Points to Disclosure Failings by Private Equity Firms (WSJ)
Igor Rozenblit, co-head of the SEC’s private funds unit, called the private- equity industry to task over its communication and transparency with investors, saying at an industry conference in Boston Tuesday morning that there “does appear to me at least that there is some sort of disconnect between what [general partners] think their [limited partners] know and what LPs actually know.”

Unhappy with sex services? Don’t call us, Singapore says (CNN)
A foreign minister clearly frustrated with some of his own countrymen has taken to Facebook to expose some of the stranger requests received by consular staff. “Can the government get involved if a Singaporean gets illegal sexual services overseas, but is not satisfied and wants a refund? The answer seems obvious,” writes K. Shanmugam, the country’s minster for foreign affairs, with an almost audible sigh. The exasperated minister went on to list other examples with the plea: “We have to draw the line between what is personal responsibility and what’s not.” Personal responsibility could include the lovelorn citizen who asked the foreign office to convince his girlfriend to marry him. Read more »

Opening Bell: 06.09.14

Sex, Drugs and GDP: the Challenge of Measuring the Shadow Economy (WSJ)
The U.K., Ireland and Italy are among the nations now moving to include illicit doings when tallying their gross domestic product, the broadest measure of goods and services across an economy. The U.K. could add as much as $9 billion to the value of its GDP by including prostitution and about $7.4 billion by adding illegal drugs, by one estimate, enough to boost the size of its economy by 0.7%. Not to be outdone, Italy will include smuggling as well as drugs and prostitution. Both changes will begin later this year. Other nations in Europe are also poised to fall in line with a European Union call to standardize and broaden GDPs. The EU is following a “best practices” directive laid out in 2008 by the United Nations.

Valeant not just a serial acquirer: Bill Ackman (CNBC)
Valeant Pharmaceuticals is not just a roll-up vehicle that has to keep buying other companies in order to grow its business, hedge fund manager Bill Ackman told CNBC on Monday. He appeared on “Squawk Box” to defend his efforts to help Valeant takeover Botox-maker Allergan. “A bad roll-up is a company that uses an over-inflated stock price and a high multiple and non-cash GAAP earnings, heavily promoted by a CEO, to acquire companies at lower multiples,” he argued. Valeant Chairman and CEO J. Michael Pearson has built a business that “looks a lot more like a Colgate or Procter & Gamble than your typical pharmaceutical company,” Ackman cited as a reason he’s behind Pearson’s vision.

Credit Suisse Said to Mull Selling Stake in Fixed-Income Venture [Bloomberg]
The electronic platform, Wake USA LLC, is a joint venture with high-frequency trading firm Tower Research Capital LLC for U.S. Treasuries and other fixed-income products, according to a regulatory filing showing that the unit gained approval to operate earlier this year. Credit Suisse is in the process of moving clients over to that unit and may sell part of its majority stake to reduce capital requirements, said the person, asking to remain anonymous because sale talks are preliminary.

Lagarde Says IMF ‘Got It Wrong’ on Rallying U.K. Economy (Bloomberg)
The International Monetary Fund underestimated the strength of the U.K. economy when warning against the government’s austerity program, Managing Director Christine Lagarde said. “We got it wrong,” Lagarde told the “Andrew Marr Show” on BBC Television yesterday. “We acknowledged it. Clearly the confidence building that has resulted from the economic policies adopted by the government has surprised many of us.”

Second Wall Street bank picks Brazil in World Cup (NYP)
UBS picked host country Brazil as the odds-on favorite to win the soccer tournament, which starts Thursday. While the Swiss bank is picking the legendary squad to win, it isn’t as sure as the bankers at Goldman Sachs — which issued a report on the World Cup last week. UBS said Brazil has a 30 percent chance of winning — Goldman put the odds of Brazil hoisting the trophy at 46.5 percent.

Hershey sues Colorado edible pot company (AP)
The Hershey Co. has sued a Colorado marijuana edibles maker, claiming it makes four pot-infused candies that too closely resemble iconic products of the chocolate maker. The trademark infringement lawsuit was filed in U.S. District Court in Denver this week against TinctureBelle LLC and TinctureBelle Marijuanka LLC. It alleges TinctureBelle’s Ganja Joy, Hasheath, Hashees and Dabby Patty mimic Hershey’s Almond Joy, Heath, Reese’s peanut butter cups and York peppermint patty candies, respectively. Read more »