Opening Bell: 07.09.10

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Paulson's Flagship Funds Hit By Volatility (FT)
The $9bn flagship Paulson & Co Advantage fund lost 4.4 per cent in June, and is down 5.8 per cent in the year to date. Mr Paulson’s Credit Opportunities fund – which delivered 340 per cent returns in 2007 thanks to huge short positions against subprime mortgage instruments – was meanwhile down 0.9 per cent in June. Mr Paulson’s gold fund – set up barely a year ago – returned 7.3 per cent last month, however, and is up 13 per cent this year.

Deutsche Bank, Commerzbank, Postbank May Pass Stress Tests (Bloomberg)
The banks are expected to exceed the threshold of a 6 percent Tier 1 ratio under the stress scenario, which assumes an economic slowdown and sovereign-debt losses, said the people, who declined to be identified because the information isn’t official. The lenders are due to submit test results to regulators early next week, they said. “In principle, the stress tests are good news for the banking sector, but there’s been some criticism that the scenarios are too weak,” said Matthias Engelmayer, a Frankfurt- based analyst at Independent Research GmbH. “German political support for the stress tests signaled that the banks would be successful.”

Trichet Says It's too Early to Say the Crisis Is Over (Reuters)
"Just like consumers and countries, governments cannot live beyond their means forever. Fiscal authorities need to look beyond the current cyclical upturn. There is no alternative to that," Trichet said.

Hedge Fund Honcho's Thoughts on Hedge Fund Tax (Forbes)
Leon Cooperman suggests alternative solutions. These include New York State becoming more efficient in cutting back spending and “regrettably, the use of VAT tax to attack the underground economy”. He was also not averse to a raise in taxes on the wealthy as long as it was done in a fair and equitable manner. He opines that Mayor Michael Bloomberg “gets it” and says that it would take just one billionaire leaving to adversely impact tax revenues in the city.

BP Stages a Comeback in Credit Markets (Bloomberg)
“People can make much more of an investable story out of it right now,” said Matthew Eagan, a money manager at Loomis Sayles in Boston, which oversees $145 billion in equity and fixed-income assets. “There is a bit of hope built into the prices here. But people are saying we can see the light at the end of the tunnel, and we’re willing to make that leap of faith.”

Biggest Defaulters on Mortgages Are Now the Very Rich (NYT)
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Open Letter to Fans from Cavaliers Majority Owner Dan Gilbert (NBA)
Dear Cleveland, All Of Northeast Ohio and Cleveland Cavaliers Supporters Wherever You May Be Tonight;

As you now know, our former hero, who grew up in the very region that he deserted this evening, is no longer a Cleveland Cavalier. This was announced with a several day, narcissistic, self-promotional build-up culminating with a national TV special of his "decision" unlike anything ever "witnessed" in the history of sports and probably the history of entertainment. The good news is that the ownership team and the rest of the hard-working, loyal, and driven staff over here at your hometown Cavaliers have not betrayed you nor NEVER will betray you. There is so much more to tell you about the events of the recent past and our more than exciting future. Over the next several days and weeks, we will be communicating much of that to you. You simply don't deserve this kind of cowardly betrayal. You have given so much and deserve so much more. In the meantime, I want to make one statement to you tonight:

"I PERSONALLY GUARANTEE THAT THE CLEVELAND CAVALIERS WILL WIN AN NBA CHAMPIONSHIP BEFORE THE SELF-TITLED FORMER ‘KING’ WINS ONE".

You can take it to the bank.

If you thought we were motivated before tonight to bring the hardware to Cleveland, I can tell you that this shameful display of selfishness and betrayal by one of our very own has shifted our "motivation" to previously unknown and previously never experienced levels.

Some people think they should go to heaven but NOT have to die to get there.

Sorry, but that's simply not how it works.

This shocking act of disloyalty from our home grown "chosen one" sends the exact opposite lesson of what we would want our children to learn. And "who" we would want them to grow-up to become.

But the good news is that this heartless and callous action can only serve as the antidote to the so-called "curse" on Cleveland, Ohio.

The self-declared former "King" will be taking the "curse" with him down south. And until he does "right" by Cleveland and Ohio, James (and the town where he plays) will unfortunately own this dreaded spell and bad karma.

Just watch.

Sleep well, Cleveland.

Tomorrow is a new and much brighter day....

I PROMISE you that our energy, focus, capital, knowledge and experience will be directed at one thing and one thing only:

DELIVERING YOU the championship you have long deserved and is long overdue....

Dan Gilbert
Majority Owner
Cleveland Cavaliers

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