Opening Bell: 06.15.10
One Crowd Is Still Loyal To Goldman Sachs (NYT)
Despite all the bad headlines — the accusations of fraud, the talk of a big settlement, the risk, however remote, of criminal charges — there’s an inconvenient truth that’s been largely ignored: Most of Goldman’s big customers are not bolting. “We trust them,” Jeffrey R. Immelt, the chief executive of General Electric, told an audience at the 92nd Street Y in New York last month. “People need to tone down the rhetoric around financial services and stop the populism and be adults.” “I’m a big boy,” Mr. Pritzker told me. “I understand that they are in many businesses. I go into it with my eyes wide open.” He added, “I don’t feel any outrage, just the opposite.”
Blackstone's Wien Says Hedge Fund Returns May Halve (BW)
“I’m worried that by trying to protect capital on the downside they give up too much on the upside,” he said. “The concept of hedge funds was to produce equity-like returns with bond-like volatility. The danger is we get bond-like returns with equity-like volatility.”
Giving In on Trading, Bankers Turn to Other Losses (NYT)
Bankers have all but given up on defeating one of the most contentious provisions in the financial regulation bill — one that would effectively bar federally insured banks from trading for their own accounts — and are now focusing on battles like heading off a prohibition on derivatives trading.
BP Faces Grilling In Congress (Reuters)
McKay, the head of BP America, will be surrounded at the congressional hearings by executives from Exxon Mobil, Chevron, ConocoPhillips and Royal Dutch Shell seeking to stave off repercussions for the industry. McKay's rivals are likely to hang him out to dry in a rush to prove their companies would never take such risks or face such failures as the spill that has poured millions of gallons of oil into the Gulf of Mexico. "This incident represents a dramatic departure from the industry norm in deepwater drilling," Exxon Mobil Chairman and Chief Executive Rex Tillerson said in prepared testimony.
US Targets $20 Billion BP Pay-Out (FT)
In a letter to Mr Hayward, Harry Reid said the creation of a $20bn account would serve as an “act of good faith” and would be an important first step in ensuring that BP would not delay or evade responsibility for damages.
Pickens: Investigation can wait, let BP work (AP)
"I don't know (if BP was negligent in the blowout), but I don't like the investigation going on when we're trying to fix the problem," Pickens told reporters Monday. "Because nobody's going to run off. We've got plenty of time to investigate it."
El-Elarian: Markets Pricing In Global 'Paradigm Change' (CNBC)
El-Erian said markets have shown four distinct characteristics lately: Volatility, interconnectedness, political sensitivity, and improbable movements. That behavior is a reaction to tenuous European economies and the realization that policy makers have few stimulative tools left should conditions worsen. As such, households have cut back on spending and decreased their debt even as governments have dramatically increased their own leverage. "We're starting to get people to realize that we're not in a 'V' anymore, (it's) more like a square root," he continued. "We're going to come back off (the bottom) and then we're going to level off at about 2 percent growth."
Bullfighter Christian Hernandez runs out of ring in Mexico, arrested for breach of contract (NYDN)
Christian Hernandez, the 22-year-old terrified toreador, didn’t make excuses. "There are some things you must be aware of about yourself," he said. "I didn't have the ability, I didn't have the balls, this is not my thing."
Spain, Portugal Debt May `Snowball,' EU Draft Says (Bloomberg)
“While the newly announced measures are significant and the targets imply impressive budgetary consolidation, more measures are needed to meet those targets, in particular for 2011,” according to the draft report, which is dated May 26. The document, titled “Consolidation Requirement in Spain and Portugal,” was prepared by the European Commission for EU finance ministers.
Feds Weigh Options In Case Growth Ebbs (WSJ)
"If events in Europe evolve so that they have a more severe and broad impact on financial markets, then the scope of the problems for the U.S. could be magnified," Charles Evans, president of the Federal Reserve Bank of Chicago, said in a speech last week. Brian Sack, the head of the New York Fed's powerful markets group, has talked about "two-sided" risks to the economy—in other words, the risk that growth and inflation could turn out to be lower than expected, as well as higher. Some so-called hawks at the Fed—those officials who worry most about an increase in inflation—also have acknowledged risks on the economic horizon.
In Brazil, One Name Is Better Than Two (WSJ)
"It's madness that Dopey left Duck and Goose off the team," Mr. Silva, a shop worker in downtown São Paulo, says in Portuguese.
