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Opening Bell: 7.10.08

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U.S. Mulls Future of Fannie, Freddie (WSJ)
Supposedly the talks have started in Washington DC about what to do about Fanny and Freddie if, you know, that thing happens, that's never going to happen, but there's always a chance it could happen, as likely as it is. Like, it's not going to happen, ever. But just in case something totally unexpected -- some once-in-lifetime-event -- were to happen, it might be good to have some contingency planning. Not that it's necessary. Fanny and Freddy should still be able to raise cash relatively easily. But just in case they can't. And the government isn't talking bailout. But if it came to that, where they needed a bailout, then the government needs to have a plan, even if it needs to bail them out, which is never going to happen, or at least it's unlikely. Gotcha... Meanwhile, ex-Fed Gov Bill Poole says that Fanny and Freddy should be considered insolvent right now. He always did tell it like it is.
Abu Dhabi Buys 90% Stake in Chrysler Building (NYT)
So that happened. Note that Abu Dhabi only bought a 90 percent stake. That 10 percent still held by Tishman Speyer Properties? It's the land that sits below the building. The NYT says that this means that they will still control the property as needed. Does it? What's stopping Abu Dhabi from lopping off the iconic top of the building and replacing it with something that plays more to garish, rich, MIddle Eastern sensibilities. Isn't, for example, there a way to replace the art deco top with some kind of representation of the globe of the entire world? Also, what's stopping Abu Dhabi from just picking up the building (piece by piece) and taking it home.
Reports: Iran test-fires more missiles (CNN)
More missile testing. Expect more "roiling".
A Grown-Up's Guide To Summer Rock Festivals (WSJ)
Guaranteed the WSJ wrote this article just to depress its audience and make fun of it. It's about outdoor rock concerts that are more geared to adults than to teenagers who want to mosh and listen to System Of A Down (that's what the kids are listening to these days, right?). So basically, these concerts are for people that need modern comforts, befitting their age and material status, but still like to rock out all day. Amenities include thai massages, wine-paired-meals and Tarot card readings. Also, some just ban kids. So depressing sounding. Still, what we wouldn't give to sit in a plush chair listen to a 35-minute Sebadoh set right now.


Defending World Series of Poker champion eliminated from competition (Las Vegas Review-Journal)
Jerry Yang, who may or may not be the CEO of Yahoo, is definitely the reigning World Series of Poker champ, but not for long. The social worker from California was bounced from the Main Event yesterday, ending the impossible dream of an impossible bid. It was a pretty quiet, unassuming reign for him. Though he's a pretty quiet, unassuming guy. He is into serving the lord, so at least for the year, it was nice that the champ wasn't a total degenerate. That will probably end this year.
Wachovia confirms Steel to lead bank (AP)
Wachovia got the Undersecretary of the Treasury Robert Steel to be its new CEO. The company also took the moment to announce that it was setting aside $4.2 billion in bad loans. How many of you could've guessed the Undersecretary of the Treasury's name before this announcement?
Passover, Coke, and Ethanol (Cafe Hayek)
This post takes a little bit of time getting to its point, but it's a good one for Coke purists, who pine for those tall bottles of Mexican Coke cause supposedly they contain real sugar, and not corn syrup. Russ Roberts surmises that with the cost of corn syrup soaring it will soon be economical for Coke to switch back to real sugar for its normal American Coke. As for the Mexican Coke using real cane sugar stuff, are we sure that isn't a myth? Maybe it's true. In a 3-second search, we didn't find anything debunking it.
A Girl Named Florida (Marginal Revolution)
Dealbreaker really needs to produce the definitive list of these books... Alex Tabarrok points us to the derivatively titled The Drunkard's Walk: How Randomness Rules Our Lives. Customers who bought this book also bought: Nudge, Sway, The Logic of Life, and Predictably Irrational, though apparently not Fooled by Randomness, Freakonomics or Blink, which is odd.
Taking Stock Of Tech Startups In Paris (AVC)
VC investor Fred Wilson's been on a European tour, checking out the startup scene across the Continent. Pretty sure he's in Germany at this point, as he recently concluded a stay in Paris, where he got to check out the local startup scene. The whole thing reminds us of Warren Buffett's recent trip to Europe. Buffett (and we're presuming Wilson, though we don't know his full track record) haven't been very active in Europe. But best to start laying the groundwork now, so when it's time, you're read. Anyway, a good post on what the Parisian startup scene looks like.

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Fiscal Cliff Talks At Stalemate (WSJ) Leading figures on both sides doubled down on their positions in interviews that aired Sunday, and they blamed each other for the current standoff, reflecting the talks that House Speaker John Boehner (R., Ohio) told "Fox News Sunday" have gone "nowhere." Treasury Secretary Timothy Geithner, speaking on the same program for the Obama administration, suggested Republicans needed to take a breather from negotiations but would ultimately agree to raise tax rates—a key White House demand that is part of its push to raise $1.6 trillion in taxes over 10 years. "It's obviously a little hard for them now, and they're trying to figure out where they go next, and we might need to give them a little time to figure out where they go next," Mr. Geithner said. Geithner Joins Boehner to Trade Blame on Fiscal Cliff Talks (Bloomberg) “There’s not going to be an agreement without rates going up,” Geithner said in a taped interview that aired Sunday on CNN’s “State of the Union.” Republicans will “own the responsibility for the damage” if they “force higher rates on virtually all Americans because they’re unwilling to let tax rates go up on 2 percent of Americans.” Clock Ticks For SAC Investors (WSJ) Seventy-five days remain until Feb. 15, the date by which investors must tell SAC whether they want to pull money from the firm during the next redemption period...Some investors already decided to pull out. French bank Société Générale SA, which has client money in SAC through its Lyxor asset-management arm, has put in a request to pull its money from the firm, according to people familiar with the matter. It is unclear how much money Lyxor has in SAC. Many, however, said they would reserve judgment, at least for now. Ironwood Capital Management, a San Francisco-based investment firm with client money in SAC, has been in touch with investors about the position and is monitoring the situation, said a person familiar with the firm. Last week, a unit within Morgan Stanley's MS +0.06% asset-management arm that has client money with SAC sent a note telling employees it would monitor the situation and be in touch frequently with SAC, according to a person familiar with the bank...Greycourt & Co., Inc., a Pittsburgh-based firm that manages about $9 billion for wealthy families, says it is sticking with SAC. Greycourt cited the stellar long-term returns of the firm, what it says is a robust compliance staff at SAC, Mr. Cohen's promise to cover any penalties himself and a belief that the firm's investment portfolio would be well-protected, even if it eventually faces charges. "The SAC portfolio is liquid enough that I'm not terribly concerned," says Gregory Curtis, Greycourt's chairman. "I very much hope that [Mr.] Cohen hasn't been behaving badly, but either way I'm not too concerned about our client positions." UK’s Euro Trade Supremacy Under Attack (FT) The City of London should be deposed as the euro's main financial center so the single currency club can "control" most financial business in the euro zone, France's central bank governor has said. Christian Noyer of the Banque de France said there was "no rationale" for allowing the euro area's financial hub to be "offshore", in a blunt assessment that will fan UK concerns over EU rules being rigged against it. "Most of the euro business should be done inside the euro area. It's linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency," Mr Noyer told the Financial Times while touring Asia to promote Paris as a renminbi trading center. "We're not against some business being done in London, but the bulk of the business should be under our control. That's the consequence of the choice by the UK to remain outside the euro area." Zoe Cruz trying to make a return to high finance, has reconciled with John Mack (NYP, earlier) Sources say Cruz has reconciled with her former boss Mack, who helped fuel her rise within their firm before their falling out. He has been helping his one-time protégée in her efforts to land at a buyout firm such as KKR. Mack also has been a shoulder for Cruz to lean on as she copes with the split from her husband Ernesto Cruz...[who] was once reprimanded by his superiors in the mid-2000s for frolicking in a hotel pool in Midtown after a company Christmas gala with a group of female assistants, according to sources familiar with the situation. SEC Chief Delayed Rule Over Legacy Concerns (WSJ) Internal SEC emails, released to a congressional panel and reviewed by The Wall Street Journal, appear to show how a last-minute intervention by a consumer lobbyist might have helped persuade Ms. Schapiro to change her mind and delay one of the centerpiece measures of the Jumpstart Our Business Startups, or JOBS, Act. In Panicky Russia, It’s Official: End of World Is Not Near (NYT) There are scattered reports of unusual behavior from across Russia's nine time zones. Inmates in a women's prison near the Chinese border are said to have experienced a "collective mass psychosis" so intense that their wardens summoned a priest to calm them. In a factory town east of Moscow, panicked citizens stripped shelves of matches, kerosene, sugar and candles. A huge Mayan-style archway is being built — out of ice — on Karl Marx Street in Chelyabinsk in the south. For those not schooled in New Age prophecy, there are rumors the world will end on Dec. 21, 2012, when a 5,125-year cycle known as the Long Count in the Mayan calendar supposedly comes to a close. Russia, a nation with a penchant for mystical thinking, has taken notice. Last week, Russia's government decided to put an end to the doomsday talk. Its minister of emergency situations said Friday that he had access to "methods of monitoring what is occurring on the planet Earth," and that he could say with confidence that the world was not going to end in December. He acknowledged, however, that Russians were still vulnerable to "blizzards, ice storms, tornadoes, floods, trouble with transportation and food supply, breakdowns in heat, electricity and water supply." Similar assurances have been issued in recent days by Russia's chief sanitary doctor, a top official of the Russian Orthodox Church, lawmakers from the State Duma and a former disc jockey from Siberia who recently placed first in the television show "Battle of the Psychics." One official proposed prosecuting Russians who spread the rumor — starting on Dec. 22. Old testimony may bite Cohen in SEC case (NYP) Steve Cohen’s sworn testimony in another legal skirmish could come back to haunt his $14 billion hedge-fund empire...In 2011, Cohen gave several days of deposition testimony in the civil fraud case, in which Fairfax sued SAC and other firms for allegedly conspiring to drive down its share price. The case was dismissed due to a lack of evidence, but the testimony offers a rare look into Cohen’s views on illegal trading. In his testimony, Cohen called SEC rules on insider trading “vague” and said he doesn’t expect his employees to follow the company’s internal compliance manual to the letter. When asked whether it was “legal or illegal to trade on material nonpublic information,” Cohen said: “It depends on the circumstance.” “So there are circumstances, in your view, in which it is legal . . . to trade on the basis of material, nonpublic information?” asked Fairfax ’s lawyer, Michael Bowe. “Yes,” Cohen said. Among them, he said, is when employees trade in the opposite direction of the nonpublic information they receive. He also said he didn’t expect employees to adhere to the company’s compliance manual in every situation. “See, we don’t operate our firm in absolutes,” he said. “When I look at this manual, I see guidelines.” Morgan Stanley trader probed over trades made while at Goldman (Reuters) Morgan Stanley trader Edward Glenn Hadden is under investigation by regulators at CME Group over trades in Treasury futures four years ago while he was employed by Goldman Sachs, according to a regulatory filing. Hadden is a managing director and head of global interest rates products at Morgan Stanley. Prior to joining Morgan Stanley, Hadden was a partner at Goldman Sachs, and head of government bond trading. Hedge Funds Increase Bullish Bets Most Since August (Bloomberg) Hedge funds increased bullish bets on commodities by the most since August as evidence that China is accelerating outweighed concern that U.S. lawmakers have yet to resolve an impasse over automatic spending cuts and tax rises. Krawcheck, possible SEC head, raises Washington (Reuters) ...many who have worked with her say Krawcheck was a smart, analytical and competent executive who not only knew the business, but was good at building consensus among different units of companies. She helped restore brokerage Smith Barney's reputation at Citigroup and was popular with many of the financial advisers at Merrill Lynch. Schumer and other lawmakers contacted by Reuters did not return calls or requests for comment about meetings with Krawcheck or their thoughts about her. In the end, of course, Krawcheck may not land in Washington at all, two people who know her said. She has had discussions about a variety of roles with several companies, one source said. "She has lots of balls in the air," said the source, who asked not to be named because the conversations were private. "Sallie always has a plan." Bret Easton Ellis mistakenly asks for cocaine on Twitter (DJ) Bret Easton Ellis, famed author of "American Psycho," tweeted a request for cocaine Sunday morning, leaving many to speculate that it was supposed to be a private message...“Come over at do bring coke now,” he tweeted at 3:44AM, stranding his 360,000 followers in a state of bewilderment regarding what the cryptic tweet could possibly mean.

Opening Bell

Opening Bell: 12.14.09