Opening Bell: 10.20.08 - Dealbreaker

Opening Bell: 10.20.08

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U.S. stock index futures rise; eyes on earnings (Reuters)
It's looking like today's going to be another big, big rebound day if things hold up. S&P futures are up 2.9%, Dow futures are rising 2.4%, and Nasdaq futures are gaining 2.8%, as of the early morning. If earnings come in broadly much better than expectations this week, this may mark the beginning of the end of the bear market. Haliburton reports this morning; AMEX and Texas Instruments after the bell. San Disk also reports; separately Toshiba is planning to buy 30% of production capacity.
Asia Stocks To Twist With U.S. Earnings (Forbes.com)
Here's my weekly Asia markets outlook column at Forbes. Looks like it's going to be a volatile week in Asia, with some hope of markets outperforming if earnings fare well (and plunging if worse than expected). Alibaba -- which has lost a big % in recent weeks -- may jump this week if majority shareholder Yahoo! comes up with positive earnings; investors in Hong Kong real estate developers will be looking to earnings of Caterpillar. Economic growth in the region is contracting as quickly as it came.
OPEC Plans Supply Cut as Crude Oil Heads Toward $50 (Bloomberg)
Emerging markets are starting to feel the pain of the credit crunch. It was just a matter of time - many derive a disproportionate share of revenue from oil sales. OPEC now looks set to cut production quotas after a surge in volume of December puts at $50. Venezuela and Iran need $80 oil to remain profitable; Saudi Arabia can get by on $65. Inadvertently, this could be the greatest (and cheapest) counter-terrorism measure in the whole eight years of the current administration.

China's Economic Growth Is Slowest in 5 Years (New York Times)
China's growth slowed to just 9% in the third quarter, according to the latest data. Economists expected growth as high as 9.7%. The upside is that inflation is down, to 4.6% last month from 4.9% previously.
ING shares surge after 10 billion euro capital deal (Marketwatch)
It was only a matter of time before stocks began surging again on bailout packages. ING got 10 billion euros from the Dutch government, and separately, sold its Taiwanese life insurance business to Taiwan-based Fubon Financial Holding for $600 million. ING's share price rebounded more than 20% on the news.


South Korea's Won, Stocks Gain on $130 Billion Financial Rescue (Bloomberg)
More bailouts to start the week off. South Korea's government will provide $30 billion to banks, while guaranteeing $100 billion of lenders' foreign currency debt. Friday, the won plunged 11% in value after Standard & Poor's said banks wouldn't be able to meet short term debt requirements. The government guarantees new foreign debt taken on from today to June 30, 2009, for a 2-year period.
Merrill Chief Thain Expects `Thousands' of Job Cuts (Bloomberg)
It's going to be ugly ... at Merrill. Most of the cuts, says Thain, will take place in IT, operations and finance - which is a nice way of saying they're cutting everywhere. Thain made his remarks on Bloomberg TV from Dubai today. "We haven't mapped it out in terms of actual number of people, but we are committed to saving $7 billion across the combined platforms, and that will be a challenge," he said.

Joint U.S.-New York Inquiry into CDS trading: report (Reuters)
No financial crisis is ever complete without some populist investigation into dealing or sales malpractice, which everyone all to happily overlooks in the up times. One such investigation is underway in the unregulated credit-default swap market.
Bush Adviser Says Parts Of U.S. Are in Recession (Washington Post)
This is a non-story: Edward Lazier, chairman of the White House Economic council, only said "We are seeing what I think anyone would characterize as a recession in certain parts of the country." For something that hasn't even happened yet, recession is a word you've seen used far too often this year.

Exelon makes $6.2 billion all-stock bid for NRG (Marketwatch)
The deal would create the largest power company in the U.S., supplying 45 million homes with 47,000 megawatts of electricity. As a side note, Berkshire Hathaway bought 3.2 million shares in NRG in the second quarter this year. Seems "buying American" worked out well this time for Buffett.
Ericsson 3Q Net -28%, No Hit From Financial Turmoil (DJ)
Net profit fell to $383.50 million for the third quarter, but that was due to restructuring charges. Sales actually rose at the telco giant, and the company reports no hits by the financial crisis. That's very, very good news. It's exactly these kinds of companies which, if they can out-deliver to the market this week and show that recession fears are premature, could give sentiment a big boost.

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The third-biggest U.S. bank by assets later this month will begin issuing digital-identity badges to the employees of Defense Department contractors, ranging from makers of high-tech engineering parts to the janitors who clean the bathrooms. Citigroup is the only financial institution that has clearance to sell the identity cards and grab a piece of a market whose annual sales could reach into the billions of dollars. But the badge business is just the beginning. Citigroup's hope is that the contractors will eventually use the plastic on which the badges are issued for more than just identity verification. If companies adopt the technology, their employees will be able to collect paychecks and pay business expenses using the cards—enabling Citigroup to collect fees on all of those transactions. John Paulson Buys Saudi Prince’s $49 Million Aspen Palace (CNBC) The lavish ranch, sold by Saudi Prince Bandar bin Sultan, was once the most expensive estate ever listed in the U.S., with a price tag in 2006 of $135 million. The property includes a main house with 15-bedrooms, 16-baths, and 56,000-square-feet. It also includes several side buildings, as well as a water treatment plant, gas pumps and other high-tech features. Mr. Paulson’s $49 million purchase included two properties — the 90-acre main property as well as a 38-acre property nearby called Bear Ranch. Bear Ranch and Hala Ranch together might have once fetched more than $150 million in 2006 or 2007, according to Aspen real-estate experts. Blankfein: Nyet to Petersburg leaks (NYP) Goldman Sachs CEO Lloyd Blankfein yesterday squarely disputed his former director Rajat Gupta’s claim that Gupta was permitted to speak about details of a 2008 board meeting with his alleged co-conspirator, hedge-fund titan Raj Rajaratnam. “Did you authorize Mr. Gupta to reveal any of the confidential information discussed at the board meeting in St. Petersburg, Russia?” prosecutor Reed Brodsky asked the CEO. “No,” Blankfein said. The details included directors discussing the possibility of Goldman buying a commercial bank or insurance company, including AIG, in the early days of the mortgage crisis. MF Global Trustee Sees $3 Billion in Potential Claims (Reuters) MF Global Holdings could have more than $3 billion in claims against its former affiliates, Louis Freeh, the trustee overseeing the wind-down of the parent company of the collapsed broker-dealer, said in his first status report. The potential recoveries for the parent company's creditors will come primarily from such claims, Freeh said in his 119-page report that was submitted to the bankruptcy court. Former bath-salts addict: 'It felt so evil' (CNN) The man is strapped onto a gurney and restrained, yet he is singing, making faces and twitching. "You know where you're at?" a paramedic asks him, but Freddy Sharp can't answer. He was, he explained later, off in his own world after overdosing on the synthetic drug known as "bath salts." "I'd never experienced anything like that," Sharp told CNN's Don Lemon. "It really actually scared me pretty bad." He said he was hallucinating about being in a mental hospital and being possessed by Jason Voorhees, the character from the "Friday the 13th" movies. "I just felt all kinds of crazy," said Sharp, now 27, of Tennessee, who says he hasn't used bath salts in months. "It felt so evil. It felt like the darkest, evilest thing imaginable." The drug made national headlines recently after a horrific crime in Miami, where a naked man chewed the face off a homeless man in what has been called a zombie-like attack. Australia Central Bank Cuts Rates to Fight Global Gloom (Reuters) Australia's central bank cut interest rates for a second month running on Tuesday in a bid to shore up confidence at home, just as finance chiefs of advanced economies around the world prepare to hold emergency talks on the euro zone debt crisis. Citing a weaker outlook abroad and only modest domestic growth, the Reserve Bank of Australia cut its cash rate by 25 basis points to 3.5 percent. Burbank Bets On Global Recession With Subprime Conviction (Bloomberg) In the dozen years that John Burbank has run his $3.4 billion Passport Capital hedge fund, he’s never been as negative on global stocks as he is now. Burbank, 48, expects that the U.S. and much of the rest of the world will slide into a recession, and he’s setting up for that event with a big wager that global stocks will fall. Most of his peers are still betting that stocks, especially those in the U.S., are more likely to rise than decline. “You have a great contrarian outcome here that will be obvious in hindsight, just like subprime was,” Burbank said in an interview last month. “I have a lot of conviction about something that others don’t seem to see clearly.” In Facebook, Options Traders Shift to Post-Earnings Bets (WSJ) While June and July bets have been most active since Facebook options began trading last Tuesday—accounting for more than half of the total options outstanding—contracts expiring in August and September have been picking up steam. Downside options that expire after the company's first public earnings report—expected at the end of July, though no date has been set—were the most actively traded Monday. The most popular positions included bets Facebook would fall below $25 a share over the next two to three months. Real life Garfield eats his way to 40-pound frame (NYDN) A tubby tabby named Garfield was dropped off at the North Shore Animal League last week tipping the scales at nearly 40 pounds, and now the no-kill shelter is hoping to turn him into the biggest loser. “He needs to lose at least 20 pounds,” shelter spokeswoman Devera Lynn said. “He’s so big, he’s like a dog. He actually has his own room.” Garfield meanders slowly in smaller spaces. He’s being moved to a foster home Tuesday in hopes that a next of kin claims the orange-and-white kitty. But if that doesn’t happen, the North Shore Animal League has received several applications from folks willing to give him a permanent home. Lynn said they’ll work with an owner to put the cat on a healthier track. “He’s actually outgoing for a cat,” Lynn said. “Once he loses that weight, he’s going to be a rock star.”

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Forthcoming Facebook Motion Said to Discuss Nasdaq’s Role in I.P.O. (NYT) Facebook is preparing for battle. One month after its botched initial public offering, the social network is set to file a motion to consolidate all the shareholder lawsuits against the company, according to a person with knowledge of the matter. The lead underwriters, Morgan Stanley, Goldman Sachs, and JPMorgan Chase, are expected to join the motion, which could be filed in the Federal District Court for the Southern District of New York as early as Friday. The motion will represent the first time Facebook has publicly addressed the lawsuits and the performance of its highly anticipated, but ultimately lackluster, IPO on May 18. Facebook Is Not The Worst IPO (Deal Journal) Thursday marked the 4-week anniversary of the pricing of the IPO at $38 and today marks the anniversary of the innocuous opening and subsequent turmoil. Through Thursday’s close the stock was down about 26%, losing some $27 billion in market capitalization. That is ugly, but not as bad as the Halloween 2007 debut of Giant Interactive Group. The Chinese online-gaming company raised just over $1 billion in an IPO that started out well, rising about 18% on day one, but then promptly tumbled 30% through its first month, according to Dealogic. Draghi Hints ECB Is Ready To Act (WSJ) Providing liquidity "is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term, and this is what we will continue to do," Mr. Draghi said. The Eurosystem, the ECB and the 17 national central banks that use the single currency "will continue to supply liquidity to solvent banks where needed," he added. Greeks Return To Ballot Box As Crisis Nears Decisive Moment (Bloomberg) The June 17 vote will turn on whether Greeks, in a fifth year of recession, accept open-ended austerity to stay in the euro or reject the conditions of a bailout and risk the turmoil of becoming the first to exit the 17-member currency. World leaders have said they’d prefer a pro-euro result, underscoring concern over global repercussions. Moody's Downgrades Dutch Banks (WSJ) In a statement, Moody's said it had cut the ratings by two notches each of ABN Amro Bank NV and ING Bank NV to A2, LeasePlan Corp. NV to Baa2 and Rabobank Nederland to Aa2. It also cut the rating of SNS Bank NV by one notch to Baa2. Giselle Is World's Highest Paid Model (Forbes) Just like last year, the Brazilian bombshell Bündchen leads the pack with a stunning $45 million in earnings (all estimates from May 1st, 2011 to May 1st, 2012). Even in her early thirties, Bündchen remains an unparalleled force within the fashion world. As the world’s most powerful supermodel, she racks up modeling gigs, spokesperson deals, and independent licensing ventures at every turn...Bündchen’s success combining business with modeling is influencing young, ascendant models. “The ones that are coming up, their model for excellence is Gisele. They’re looking at her and saying ‘that’s what I want to shoot for,’” Razek said. Fed Loans Backing AIG, Bear Repaid (WSJ) On Thursday, the regional Federal Reserve bank said it has been repaid, with interest, on $53.1 billion in loans it made to two crisis-era vehicles that held complex subprime mortgage bonds, home loans, commercial-property loans and other unwanted assets from Bear and AIG. The New York Fed earlier recouped a separate $19.5 billion loan that financed the purchase of mortgage-backed securities from AIG. Warren Buffett fired Benjamin Moore CEO after Bermuda cruise (NYP) “[Abrams] kept asking what he’d done wrong,” according to an insider briefed on the ouster. “[Berkshire officials] told him to clear his stuff out while they stood and watched every move he made.” Gupta Hopes Family Guy Image Will Help (NYP) The 63-year-old former Goldman Sachs director — facing 25 years in prison on charges of leaking inside information to his hedge fund pal Raj Rajaratnam — has surrounded himself with family and friends throughout the four-week trial. Gupta’s four Ivy League-educated daughters, his wife, Anita, and sister, Kumkum, in-laws and colleagues — roughly a dozen daily attendees — were in the courtroom each day, taking up the first two rows of the gallery. As the jury today starts its second day of deliberations, the fallen Wall Street star hopes the family vibe helps push the panel toward an acquittal. 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