Opening Bell

Opening Bell: 02.26.14

Billionaire Paulson Said in Talks to Buy Puerto Rico Resort (Bloomberg)
Paulson & Co. is seeking to acquire La Concha Resort and the Condado Vanderbilt, neighboring beachfront hotels in the capital city of San Juan, according to two people with knowledge of the transaction. The firm will pay about $200 million for the properties, in which the territory’s Government Development Bank owns a stake, said the people, who asked not to be named because the deal hasn’t been completed.

JPMorgan to cut 8,000 jobs, lowers 2014 profit target (Reuters)
JPMorgan Chase & Co (JPM.N), the largest U.S. bank, announced thousands of job cuts on Tuesday as the mortgage lending business slows, and said it was lowering its profitability target. The company said it expected total headcount to fall by 5,000 to 260,000 in 2014. Around 6,000 full-time and contractor jobs in JPMorgan’s home loans unit and 2,000 jobs in its branch and credit-card network will be cut. At the same time, the bank expects to add 3,000 new jobs in its control function, including areas like compliance.

Tell-all on Pimco was ‘overblown,’ Gross says (NetNet)
“All this discourse about an autocratic style from my standpoint and conflict between Mohammed and myself is overblown,” Gross said during an interview on “Street Signs.”

BofA Discloses New Probes Amid Surge in Possible Legal Costs (Bloomberg)
Bank of America Corp., the second-biggest U.S. lender, disclosed new probes into mortgage and foreign-exchange units and boosted an estimate of potential legal losses by 20 percent to $6.1 billion. The developments were reported in an annual regulatory filing today by the Charlotte, North Carolina-based company. The fresh estimate of litigation expenses, which concerns costs that aren’t covered by reserves as of Dec. 31, compares with $5.1 billion at the end of the third quarter.

Many big U.S. corporations pay very little in taxes: study (Reuters)
Citizens for Tax Justice looked at 288 profitable Fortune 500 companies and said that 26 of them – including Boeing Co (BA.N), General Electric Co (GE.N) and Verizon Communications Inc (VZ.N) – paid no federal income tax in the five-year period. The group also said that 111 of the 288 companies paid no federal income tax in at least one of the five years measured. In a reflection of how the tax code’s complexity leaves many issues open to question, corporations sometimes dispute the way Citizens for Tax Justice calculates its numbers. Some of the companies singled out took exception to the findings. GE spokesman Seth Martin said: “For each year cited by Citizens for Tax Justice, GE paid income taxes in the U.S., as well as billions in other state, local and federal taxes in the U.S.”

‘Horny’ and drunk Florida woman arrested for calling 911, begging cop for sex: report (NYDN)
Maria Montenez-Colon, 58, was arrested Friday night in the misuse of 911. The officer drove to her home in Punta Gorda after she reportedly told a dispatcher that she wanted her late husband’s Corvette back after giving it to her son, authorities said. But it appears she really wanted to satisfy her lust for lawmen. The cop says Montenez-Colon was drunk when he arrived and immediately started making sexually suggestive comments such as “You are so sexy” and “Are you married?” But she saved the most lascivious for when he asked how he could help her. “You can f–k me,” she said, according to an arrest report obtained by The Smoking Gun. She allegedly grabbed the cop’s arm and tried to rub her hands across his chest so he told her that her behavior was inappropriate. Read more »

Opening Bell: 02.25.14

Total Haul for KKR Co-Founders Is $327 Million for Banner Year in 2013 (WSJ)
The total haul for Mr. Kravis was about $161.4 million, a sum that includes dividends, payouts from the firm’s funds and compensation such as salary and the use of personal assistants, according to KKR’s full-year financial statement filed publicly Monday. Mr. Roberts came away with about $165.5 million in total for last year, according to the filing. Mr. Roberts owns more KKR stock than Mr. Kravis, who has given some of his stake to a charitable trust, according to securities filings.

@GSElevator Tattletale Exposed (He Was Not in the Goldman Elevator) (Dealbook)
The Twitter account, which has an audience of more than 600,000 followers, has been the subject of an internal inquiry at Goldman to find the rogue employee. The tweets, often laced with insider references to deals in the news, appeal to both Wall Street bankers and outsiders who mock the industry. Late last month, the writer sold a book about Wall Street culture based on the tweets for a six-figure sum. There is a good reason Goldman Sachs has been unable to uncover its Twitter-happy employee: He doesn’t work at the firm. And he never did. The author is a 34-year-old former bond executive who lives in Texas. His name is John Lefevre…Upon being contacted late last week after several weeks of reporting uncovered his identity, he confirmed his alter ego. “Frankly, I’m surprised it has taken this long,” he said by phone. “I knew this day would come.” Mr. Lefevre, who worked for Citigroup for seven years, said the Twitter account started as “a joke to entertain myself.”

Six Bitcoin Exchanges Work to Reassure Customers (WSJ)
“This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry,” the statement said. “There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.”

JPMorgan Chase to cut thousands more jobs (FT)
JPMorgan Chase is planning more job cuts in its mortgage business on top of the 13,000-15,000 positions already due to be slashed because of plunging demand for home loans. Several thousand more cuts are planned, according to people familiar with the matter, and could be announced at JPMorgan’s annual investor day on Tuesday. They are part of a new efficiency drive at the largest US bank by assets that also encompasses staffing branches with fewer employees.

Second Madoff aide testifies at trial, denies knowledge of fraud (Reuters)
Longtime Bernard Madoff assistant Annette Bongiorno on Monday testified that she had no idea her boss was operating a vast Ponzi scheme, despite the decades she spent helping run the trading business where it originated. Bongiorno said she recorded backdated trades, sometimes months after the fact, but never suspected there was anything illegal about it. “Did anyone ever suggest to you that there was something wrong with that practice?” her lawyer, Roland Riopelle, asked her. “The only person who ever suggested that to me was you,” she replied.

Madoff secretary thought Ponzi boss was a ‘hero’ (NYP)
She said Madoff used to stutter when she first began working for him, and that on her first day at work he couldn’t complete a sentence when he asked her to order him ham-and-cheese sandwich. Madoff, she recalled, got so frustrated that he blurted out, “Just get me a ham sandwich!”

Dennis Rodman North Korea Mission to Become Fox Movie (THR)
20th Century Fox has bought the comedy pitch Diplomats, inspired by Dennis Rodman’s so-called “hoops diplomacy” mission to North Korea, as a directing vehicle for Ride Along’s Tim Story…The ever eccentric Rodman became a lightning rod last year when he visited North Korea and befriended the country’s dictator, Kim Jong Un. In January, he returned to the secretive country, which has an atrocious human rights record, and organized a basketball game in Pyongyang. He even sang “Happy Birthday” to the despot. Diplomats is described as a two-hander that takes its cues from the antics of the 6-foot-7 former NBA player Rodman, known as “The Worm.” Read more »

Opening Bell: 02.21.14

J.P. Morgan Holder Pulls Independent-Chair Proposal (WSJ)
A J.P. Morgan Chase & Co. shareholder has pulled a proposal calling for the largest U.S. bank to split the chairman and chief executive posts held since 2006 by James Dimon. A small Toledo philanthropic organization called The Needmor Fund had backed the nonbinding resolution asking J.P. Morgan to name an independent chair for its board. But J.P. Morgan said in a news release that it had reached an agreement with the group to withdraw the proposal. The decision by The Needmor Fund means that Mr. Dimon won’t face a vote from shareholders this month about whether they support the idea of having different people in the roles of chairman and CEO role, a company spokesman said. The bank said it agreed to an “ongoing dialogue” with the proponents and to hear any questions “directors might consider in reviewing the implications of combining or separating the roles of CEO and chair.”

Upstarts Hope to Make 2014 a Blowout Year for Hedge-Fund Debuts (WSJ)
A host of notable hedge-fund startups are expected to begin operating in 2014, each with at least $500 million—and in one case $2 billion—to invest. Bankers and lawyers who work with such funds say this is likely to be the busiest year for launches since the financial crisis. The resurgence comes even as the industry broadly has underperformed recently when compared with rebounding stock markets…Among the new entrants this year are veterans from established funds venturing out on their own, including Herb Wagner, formerly of Baupost Group LLC, Matthew Sidman, out of Highfields Capital Management LP, and Jim Parsons of Viking, according to people familiar with the matter. Baupost and Highfields are also closed, according to people with knowledge of the matter.

Murdoch Buys 4 Floors of NYC Condo Tower for $57 Million (Bloomberg)
Murdoch, 82, who is also chief executive officer of Twenty-First Century Fox Inc., went into contract to purchase two units at One Madison, a triplex penthouse spanning the 58th through 60th stories and another full-floor apartment beneath it, his spokesman, Steven Rubenstein, said. The properties total about 10,160 square feet (944 square meters), according to a statement from Related Cos., one of the developers of the tower on East 22nd Street in Manhattan’s Flatiron neighborhood.

Energy Holdings Prepares for a Breakup (wSJ)
One of the biggest leveraged buyouts of an American company is preparing to file for bankruptcy protection, brought to its knees by heavy debt and a misguided bet on the direction of natural gas prices. Energy Future Holdings Corp., previously called TXU Corp., is lining up loans to keep two subsidiaries operating during bankruptcy proceedings after months of talks have failed to produce an agreement with creditors on reworking its $40 billion-plus in debt, according to people familiar with the matter.

Loeb: Spirituality is good for Wall Street (NYP)
“Meditation, contemplation — it’s not just for monks and hermits,” Loeb told attendees at an American Enterprise Institute in Washington.

World’s Largest Oyster Is Size Of A Man’s Shoe (NPR)
The world’s largest oyster is nearly 14 inches long and resides in Denmark, according to the folks at Guinness World Records. And it’s still alive and growing, according to Christine Ditlefsen, the biologist at the Wadden Sea Centre whose world record was recently certified. The oyster was found in October in Wadden Sea National Park, a shallow area off of the North Sea on Denmark’s southwestern coast. Its size and shape could be said to resemble a huge plaintain. But when they found it, the Wadden staff compared the oyster to a large and sturdy shoe. “My staff called me immediately and said we’ve found this oyster that’s as big as a 44 shoe,” Klaus Melbye, the head of the Wadden center, told the food website Fine Dining Lovers in October, when the discovery was first reported. Here in America, a European size 44 is equal to a men’s shoe size of 11 (or a largish 10-1/2; shoe sizes aren’t the most scientifically calibrated things). But the oyster might outgrow that comparison, because it could live another 10 years. Read more »

Opening Bell: 02.19.14

Fed adopts tough capital rules for foreign banks (Reuters)
The Federal Reserve on Tuesday adopted tight new rules for foreign banks to shield the U.S. taxpayer from costly bailouts, ceding only minor concessions despite pressure from abroad to weaken the rule. Foreign banks with sizable operations on Wall Street such as Deutsche Bank and Barclays had pushed back hard against the plan because it means they will need to transfer costly capital from Europe. The Fed, which oversees foreign banks, gave them a year longer to meet the standards, and applied it to fewer banks than in a first draft, but the rule was largely unchanged from when it was first proposed in December 2012.

New Push to Throw Assets Overboard (WSJ)
Companies ranging from chemical giants to restaurant chains have come under fire from shareholders wanting to break them apart, arguing that businesses perform better when they aren’t part of a sprawling conglomerate. The year isn’t even two months old, and already five companies have been targeted by investors pushing them to sell or spin off pieces, according to FactSet SharkWatch, which tracks such campaigns. That puts the year on pace to catch up with 2008, which marked the high-water mark for activism campaigns.

When the Boss Works Long Hours, Must We All? (WSJ)
In some cases, shifting your work hours can help. At companies where managers focus on face time, employees who work 10 a.m. to 8 p.m.—when more people are present—are more likely to get noticed than those who work 7 a.m. to 5 p.m. Executive coach Michael Melcher was told in a previous job at an investment bank that “I wasn’t working long enough hours,” he says. “I started coming in later and staying later,” he says. “A couple of months later, my boss said, ‘It hasn’t gone unnoticed that you’re putting in additional hours.’”

How the Feds Can Take Even Legally Earned Bitcoins (BusinessWeek)
If you are paid in cash for mowing the lawn of a notorious drug dealer, the money is yours to keep even if the dealer obtained it illegally. But if the dealer pays you in Bitcoins, the government may seize them from you someday when you least expect it. This is Bitcoin’s nemo dat quod non habet problem, that being Latin for an old principle of English common law: “No one gives what he does not have.” If the drug lord didn’t legitimately own the Bitcoins in question because he got them via crime, then he can’t legitimately give them to you. You must give them up even if you’re not at fault. The same principle is at play when certain unwitting art buyers are forced to surrender works that were seized by the Nazis in World War II.

Tinder Makes Its First Match in Antarctica (The Cut)
On a lonely December night at Antarctica’s McMurdo Station, an American scientist conducting research there decided to log on to Tinder — “just for fun.” He’d been using the mobile dating app in the States for a few months, and wanted to see if there were any available women out on the loveless tundra. At first, no profiles showed up. But when he expanded the app’s location radius, he found someone: another researcher, working at a deep field camp a 45-minute helicopter ride away from the base station. He swiped right, indicating his interest, and a few minutes later, they matched. “She was actually in her tent in the Dry Valleys when we matched,” said the scientist, who asked not to be named out of concern that the government would revoke his internet privileges if anyone found out he was using precious broadband to look for hookups. Read more »

Opening Bell: 02.18.14

FX Traders Facing Extinction as Computers Replace Humans (Bloomberg)
Electronic dealing, which accounted for 66 percent of all currency transactions in 2013 and 20 percent in 2001, will increase to 76 percent within five years, according to Aite Group LLC, a Boston-based consulting firm that reviewed Bank for International Settlements data. About 81 percent of spot trading — the buying and selling of currency for immediate delivery — will be electronic by 2018, Aite said. “Foreign-exchange traders are much like stock floor traders: a rapidly dying breed,” said Charles Geisst, author of “Wall Street: A History” and a finance professor at Manhattan College in Riverdale, New York. “Once the banks realize they are costing them money, the positions will dwindle quickly.”

Bankers Reap Benefits of 2013 Rally (WSJ)
All benefited from a steep rise in bank stocks over the past year—shares of the top six U.S. banks on average rose 41% last year, compared with a 30% gain for the Standard & Poor’s 500 stock index.

Former Barclays Employees Charged by U.K. Over Libor Rigging (Bloomberg)
Three former Barclays Plc employees were charged by U.K. prosecutors with conspiring to manipulate Libor, bringing the number of people accused in global probes to more than a dozen. Peter Charles Johnson, 59, Jonathan James Mathew, 32, and Stylianos Contogoulas, 42, were charged with conspiring to defraud between June 2005 and August 2007, the Serious Fraud Office said in an e-mailed statement today. The charges are the first related to manipulation of U.S. dollar Libor, the agency said, while previous cases were linked to interest-rate benchmarks tied to the Japanese yen.

Summers: US faces a ‘Downton Abbey’ economy (CNBC)
The U.S. is at risk of becoming a “Downton Abbey” economy, as the gap between the top 1 percent and the poor widens, former US treasury secretary Larry Summers has warned. In a comment piece for the Financial Times, Summers highlighted that the share of income going to the top earners in the U.S. has increased sharply, while real wages and family incomes remain stagnant. These conditions will last beyond the normalisation of the economic cycle and budget deficits, Summers added. “The cumulative effect of all these developments is that the U.S. may well be on the way to becoming a Downton Abbey economy. President Barack Obama is right to be concerned. Those who condemn him for ‘tearing down the wealthy’ and engaging in un-American populism are, to put it politely, lacking in historical perspective,” Summers wrote.

How a Big Bet on Racing Suits Left U.S. Skaters in the Cold at Sochi (WSJ)
To be sure, no one knows what role, if any, the Mach 39 played in the team’s performance. Some insiders say that once doubts about the suit were planted in the team’s psyche, the skaters’ collective mental focus was broken. Team U.S.A. itself has pored over a multitude of other factors that could have contributed to their poor showing: race tactics, skate blades and the decision to hold their pre-Olympic camp at high altitude…The dramatic turnabout, meanwhile, has created a crisis for Under Armour. With revenues of $2.3 billion, the Baltimore-based company has skyrocketed to prominence in recent years with sleek skin-gripping sports apparel that made it a darling of athletes and investors alike. Long term effects are yet to be known, but on Friday, the stock fell 2.38%. In an interview, Matt Mirchin, the company’s director of marketing, said Monday the company still believes the skinsuit gave the skaters “the strongest chance of winning.” But the controversy hit the company where it hurt most—its credibility in high quality athletic apparel—exactly when it needed to shine on the world stage. With more than 90% of its revenues coming from North America, its partnership with the U.S. speedskating squad was supposed to help the company vault into new international markets.

Nike is actually making Marty McFly’s self-lacing shoes (NYP)
When Marty and Doc set a course for 2015 to blend in they needed to dress like futurites. Marty slipped on a self-adjusting jacket and put on a pair of awesome runners that automatically laced themselves up. Before our very eyes they fastened to his feet. “Power laces!” Marty cried. Now you could be doing the same next year after Nike designer Tinker Hatfield confirmed at an event in New Orleans that power laces were coming for 2015. “Are we gonna see power laces in 2015? To that, I say YES!” Hatfield said. Further information such as what models will get the special lacing system was not disclosed. Read more »

Opening Bell: 02.14.14

Banks in London Devise Way Around Europe’s Bonus Rules (Dealbook)
…the bank giants operating in London — including Goldman Sachs, Bank of America Merrill Lynch and Barclays — are seeking to outflank the new restrictions. Responding to the law, they are structuring new pay packages that try to satisfy both their emboldened regulators and their very expensive employees. So goodbye, big bonus. Hello, role-based pay. Other banks have called their new payments “allowances.” At least one labeled it “reviewable salary.” One of the European lawmakers who led the push for bonus caps is not buying the semantic somersaults. “These are bonuses in disguise,” said Philippe Lamberts, a Belgian member of the Green Party in the European Parliament. “I wonder how they will hold up in a court of law.”

AIG Ramps Up Reward To Investors (WSJ)
The insurer, which nearly collapsed during the financial crisis, boosted its common-stock dividend and share-repurchase target in the latest sign of the insurer’s improved health since it nearly collapsed in 2008. Not everyone will cheer Thursday’s news. The company, already roughly half its precrisis size, said it will eliminate about 3% of its workforce. The cuts, totaling about 1,600 jobs, will be made by year-end, according to a person familiar with AIG’s plans.

New Mexico County’s Bond Buys Set Off Alarm, Probes (WSJ)
New Mexico’s most populous county is facing a budget crunch amid allegations that its treasurer’s office mismanaged more than $250 million in its investment portfolio, a situation that has triggered state investigations and a recall drive. Bernalillo County, which includes about a third of the state’s two million residents, has responded by implementing cost-cutting measures and is exploring selling a jail and other real estate in Albuquerque to raise funds. Treasurer Manny Ortiz also sold some bonds early, at a loss of about $750,000, to address cash-flow concerns. Through his lawyer, Mr. Ortiz has denied wrongdoing.

Ackman talks Herbalife, P&G, Target, Air Products (NetNet)
On Target, Ackman warned that the company had lost the buzz that once surrounded it and is likely to lose additional sales to online retailers like Amazon. “It’s a well-run retailer but it has lost some of its magic,” Ackman said. “It seems to have lost some of its brand appeal. It’s become more of a commodity retailer. It’s selling food. It seems more like a slightly higher-end Wal-Mart. That’s a bit of a risky place to be in the world.”

Al Roker & de Blasio in Twitter feud over snow (NYP)
Roker, at the Olympics in Sochi with the “Today” crew, was incensed that de Blasio allowed public schools to open during this snow storm. “I knew this am @NYCMayorsOffice @NYCSchools would close schools. Talk about a bad prediction,” Roker tweeted from Russia. “Long range DiBlasio forecast: 1 term.” Roker misspelled the mayor’s name. The mayor fired back, telling Roker to stick to weather. “I respect Al Roker a lot, watched him on TV for many years,” de Blasio said. “It’s a different thing to run a city than give the weather on TV.” The mayor added: “It’s weather, none of us controls this.” But Roker stuck to his guns. “Gov Cuomo declaring state of emergency for the Mid-Hudson, New York City, and L.I. as a Nor’Easter storm continues to affect NY,” Roker tweeted. The normally jovial weatherman accused de Blasio of wrongly blaming the National Weather Service. “How dare @NYCMayorsOffice @NYCSchools throw NWS under the school bus,” Roker wrote. Read more »

Opening Bell: 02.13.14

Comcast Said to Agree to $44 Billion Time Warner Cable Deal (Bloomberg)
Comcast Corp. agreed to acquire Time Warner Cable Inc. for about $44 billion, combining the largest two U.S. cable companies in an all-stock deal, according to four people familiar with matter. Philadelphia-based Comcast is paying about $159 a share in the transaction set to be announced this morning, said the people, who asked not to be named because the negotiations were private.

Third Point blasts Dow Chemical’s ‘lack of transparency’ (Reuters)
Dow Chemical’s lack of transparency makes it difficult to determine whether the petrochemical giant should be split up or kept together, billionaire hedge fund investor Daniel Loeb’s Third Point Capital said Wednesday. Last month, Third Point announced a major stake in Dow Chemical, the largest U.S. chemical maker, saying that the company should spin off its lucrative but slow-growing petrochemical unit and focus on specialty materials. In a filing with the Securities and Exchange Commission on Tuesday night, Dow Chemical said it had conducted an internal review and concluded that breaking up the company would not help shareholders. Third Point said Wednesday that it was prepared to sign a nondisclosure agreement with Dow Chemical in order to review the company’s records and arrive at its own conclusion.

Bullard Says Fed Is ‘Cautious’ About Altering Tapering Pace (Bloomberg)
Federal Reserve Bank of St. Louis President James Bullard said Fed officials will probably be careful about altering the pace of their reductions to bond buying because of a potentially significant impact on markets. “If we move off our baseline, it’s going to have pretty big repercussions,” Bullard said today in an interview at Bloomberg’s headquarters in New York. “We’d be cautious in using that — it’s going to have to be a situation where you’re pretty sure things are moving off track.”

Britain warns Scotland: Forget the pound if you break away (Reuters)
Britain will warn Scotland on Thursday it can’t keep the pound if it votes for independence, its boldest attempt yet to scuttle a nationalist bid to break the 307-year-old union with England. In the latest salvo of a choreographed campaign to keep Scotland in the UK, George Osborne will seek to play on Scottish fears of losing the pound to argue that secession would put Scots’ prosperity at risk, pushing them into a tempest of volatility.

Krawcheck Says Women on Wall Street Have ‘Gone Backwards’ (Dealbook)
It has long been a feature of Wall Street that women are underrepresented in the executive ranks. But since the financial crisis, the situation has gotten worse, according to one former big bank executive. “It’s not that we’ve even gone sideways, as we have in corporate America,” Sallie L. Krawcheck, a former executive at Bank of America and Citigroup, said in an interview on Bloomberg TV on Wednesday. “We’ve gone backwards.” Ms. Krawcheck, a prominent voice on the subject of women in finance, who owns the women’s network 85 Broads, said that the crisis tended to make banks more homogenous, reiterating an argument that she has made in the past. “What I saw when I was on Wall Street is it’s not, ‘Well, let’s get rid of people who are different from us because they’ve got cooties,’” she said on Bloomberg TV. “It’s more, ‘Yeah, I know the numbers around diversity, and the diversity adds to business results in theory, but we are in a crisis mode and I need that person who I can trust today.’”

Sky dines in style at Sardi’s after winning Best in Show at Westminster (NYDN)
America’s top dog celebrated her Westminster win Wednesday by wolfing down a platter of gourmet chicken at legendary Midtown eatery Sardi’s. Sky, the 5-year-old ginger-and-white fox terrier who won Best in Show on Tuesday night at the fabled Westminster Kennel Club, took her accolades in stride. Licking her silver platter to a sparkling sheen, the Sky hopped into her spacious silver Best in Show trophy to entertain the gaggle of media. Her handler Gabriel Rangel said the wiry terrier regularly eats chicken — which is why he chose that for her celebration luncheon…The terrier beat out an impressive 138 dogs to take her title, a feat one of her owners likened to “winning an Oscar.” Read more »