Opening Bell: 07.26.10

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Deutsche Bank Second-Quarter Net May Fall on Trading Slowdown (Bloomberg)
Net income probably slipped to 1.05 billion euros ($1.35 billion) from 1.09 billion euros a year earlier and 1.76 billion euros in the previous quarter, according to the average estimate of 16 analysts surveyed by Bloomberg.

Citigroup's Risk Chief Learned The Hard Way (WSJ)
As an options trader for Morgan Stanley in 1992, Brian Leach bet wrongly that European government bonds would track British government debt. He lost a half-year's worth of his trading profit after the surprise election of British Prime Minister John Major's Conservative party. Now, he is trying to apply at Citigroup one lesson he learned from the incident: quickly cutting losses. "It really helped define for me what downsides could look like," he says—particularly from extreme events that disrupt historical pricing models.At Brown University, Mr. Leach excelled at wrestling in the 134-pound weight class, showing "good quickness," says his coach, Joe Wirth. "In wrestling, there are multiple OK moves and one wrong move," Mr. Leach says. In risk management, "there are a fair amount of things that are actually OK but there is usually one thing that you can't do. And you've got to be able to understand what that is."

Embattled BP Chief To Exit (WSJ)
The BP board is scheduled to meet Monday to discuss and approve Mr. Hayward's departure, these people said, one describing the decision as "mutual."

Stress Tests Show Banks' Strength, Weren't Too Soft, EU Policy Makers Say (Bloomberg)
“The French banking system once again shows its capacity to resist crises,” Bank of France Governor Christian Noyer said yesterday after the four largest French banks were ruled to have enough capital to outlast an economic slump and sovereign debt crisis. In Germany, where Hypo Real Estate Holding AG was the only one of 14 banks to fail the test, the Bundesbank and financial regulator BaFin said the “banking system has shown itself to be robust and proved its resilience.”

Jim Rogers: Stress Test Is a PR Exercise (CNBC)
"Just as was America's," Rogers said. (He went there.)

In Trader's Cocoa Binge, Fear For Chocolate Lovers (NYT)
Anthony Ward, 50, is not some rabid chocoholic, former employees say. He simply has a head for cocoa. And, through his private investment firm, Armajaro, he now controls a cache equal to 7 percent of annual cocoa production worldwide, a big enough chunk to sway prices. His play has some people up in arms. While some see it as a simple bet that cocoa prices will rise on falling supply, others say Mr. Ward has created a shortage of cocoa simply to drive up the price himself. The German Cocoa Trade Association and others wrote an angry letter to the London exchange on which cocoa is traded, demanding that it take action against what the association characterized as a “manipulation.” The British news media has christened Mr. Ward “Chocolate Finger,” a nod to the Bond villain Auric Goldfinger. And on Facebook, someone has created a “Choc Finger” page featuring Mr. Ward’s face superimposed on a pig that is bellying up to the trough.

Goldman Threatened With Audit (FT)
“We have a deep level of questioning about whether we’re getting the straight scoop here and whether Goldman is working with us on information that they surely have,” said Phil Angelides.

Russian spy ring meets with Prime Minister Vladimir Putin for singalong (NYDN)
"I met them," Putin told a group of journalists asking questions about the 10 Russian spies deported from the U.S. earlier this month. Putin said they sang songs accompanied by live music, including the famous Russian ditty "What Motherland Starts From," the Russian news agency RIA Novosti reported. The Prime Minister was pleased with the crew of busted snoops and said he thinks they'll readjust to life in Russia just fine. "They will work," he said. "I have no doubts they will have interesting, bright lives."

Geithner: US Economy Seeing Gradual Recovery (MarketWatch)
Monday morning shocker: In an interview broadcast Sunday, Geithner said that Americans had been borrowing too much and the country had been living beyond its means. "But again, you are seeing a recovery," Geithner added. "You're seeing private investment expand again, job growth starting to come back. And that's very encouraging."

Apollo exploits loophole to create new bank (FT)
The company has hired a team from Countrywide Financial to run the bank, and is awaiting regulatory approval. Apollo plans to get round ownership restrictions which can force a private equity group to be considered a bank holding company by asking its investors to put money alongside it in the new bank, to be called Ares. The bank will have a separate board and operate independently of Apollo.

Government Won't Target Additional Swiss Banks Over Taxes (AP)
Great news: the U.S. is not planning to carry out new tax investigations against Swiss banks, the U.S. ambassador to Switzerland said. Asked whether he envisaged new probes after the Swiss parliament ratified a Swiss-U.S. deal in June that put an end to the UBS tax saga, Donald Beyer told Swiss newspaper Le Temps on Saturday he was not aware of any new probe. "To my knowledge no such thing is planned," Beyer, who became the top U.S. diplomat in Berne last year, was quoted as saying by the Swiss paper.

Feinberg: BP Is Stalling Payments To Oil Victims (CNBC)
"I have a concern that BP is stalling claims. Yes, BP is stalling. I doubt they are stalling for money. It's not that. I just don't think they know the answers to the questions (by claimants)," Feinberg told reporters.

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Opening Bell: 04.09.12

JPMorgan Trader Iksil Fuels Prop-Trading Debate With Bets (Bloomberg) Iksil’s influence in the market has spurred some counterparts to dub him Voldemort, after the Harry Potter villain. He works in London in the bank’s chief investment office, which has assembled traders from across Wall Street to its staff of 400 who help oversee $350 billion in investments. While the firm describes the unit’s main task as hedging risks and investing excess cash, four hedge-fund managers and dealers say the trades are big enough to move indexes and resemble proprietary bets...The trades, first reported by Bloomberg News April 5, stirred debate among U.S. policy makers over the Easter-holiday weekend as they wrangle over this year’s implementation of the so-called Volcker rule, the portion of the Dodd-Frank Act that sets limits on risk-taking by banks with government backing. Taking Measure Of Citigroup And Bank Of America (NYT) Bank of America shares are up 66 percent this year, while Citigroup has risen 33 percent, amid the broader rebound in financial stocks. After staying out of the spotlight and earning $21 billion over the last two years, Citigroup’s potential problems are gaining attention again...At Barclays, the analyst Jason Goldberg said he was shocked when Citigroup did not get the go-ahead from the Fed, adding, “We had run mock stress tests with Citi passing by a fair amount.” Just as surprising, he added, has been Bank of America’s surge this year. Its performance has been a far cry from last year, when Bank of America’s stock, which closed at $9.23 on Thursday, was flirting with $5, and questions about whether it had enough capital were mounting. “If you asked me in January whether this thing would be up 66 percent, I’d have said you’re crazy,” Mr. Goldberg said, referring to Bank of America’s stock performance this year. A 'Fat Cat' With The President's Ear (WSJ) When President Barack Obama attacked "fat-cat bankers on Wall Street" in 2009, Robert Wolf had a ready response. "I said 'Mr. President, I know you think I'm overweight, but I can think of better names to call me,'" Mr. Wolf recalls. "He laughed." Humor and self-deprecation have served Mr. Wolf well in his often conflicting roles as presidential pal and Wall Street power broker. The 50-year-old president of UBS's UBS investment bank has remained a leading voice in the industry while also serving as Mr. Obama's chief Wall Street fundraiser and his current BFF (best friend in finance)...Mr. Wolf plays golf and basketball with the president and he is a frequent visitor to the White House. On vacation in Martha's Vineyard or at fundraising events, the two often bond over sports and their families, since they each have two school-age kids. As if to prove the president wrong about "fat cats," Mr. Wolf says he has lost 20 pounds in the past three months. Willing Banks Find Profits in Legal Trade With Iran (WSJ) As Western sanctions on Iran have grown tighter, some small banks have found a lucrative niche financing what remains of the legal trade with the Islamic Republic. Top-tier financial institutions including Société Générale SA GLE.FR -0.74% and Rabobank Group have stepped back from business with Iran in recent months, citing increased political risk and logistical hassles that attend even legal trade with the country. As a result, the remaining players are commanding higher fees and offering increasingly complicated services. Like Russia's First Czech-Russian Bank LLC and China's Bank of Kunlun Co. Ltd, they are typically small, obscure financial institutions often based in countries historically friendly to Iran. The firms and other intermediaries still brokering these trades are charging more than 6% per transaction for legitimate trade deals with Iran, on top of traditional banking fees, according to traders and bankers knowledgeable with the process. That is as much as triple the fees typically charged by Arab Gulf banks two years ago, before the United States and European Union significantly stiffened sanctions, according to Iranian businessmen. Easter Bunny Arrested (KTLA) An Easter Bunny was arrested this week after police found he was carrying around more than Easter eggs and candy. Joshua Lee Bolling, 24, was arrested and charged on Thursday with illegally possessing prescription narcotics. Police arrested Bolling after businesses at the Piedmont Mall in Danville, Virginia complained that the Easter Bunny was acting suspicious. "His suspicious behavior took place while he was on breaks and not during his contact with children," a police release said. UBS Faces Billionaire Olenicoff in Lawsuit Over His Tax Felony (Bloomberg) and billionaire Igor Olenicoff are scheduled to clash in court today over his claim that the bank bears blame for his failure to declare $200 million in offshore accounts on U.S. tax returns. Olenicoff, 69, a real-estate developer, pleaded guilty in 2007 to filing a false tax return, admitting he didn’t tell the Internal Revenue Service about his offshore accounts for seven years. He was sentenced to two years’ probation and ordered to pay $52 million in back taxes, fines and penalties. In 2008, he sued Zurich-based UBS, the largest Swiss bank, claiming it traded excessively in his accounts, engaged in racketeering and committed fraud by not telling him he owed U.S. taxes. He seeks as much as $1.7 billion in damages. Arguments on the bank’s motion to dismiss the case are set for today before U.S. District Judge Andrew Guilford in Santa Ana, California. Markets at the Start of a More Significant Downturn Says Marc Faber (CNBC) “The technical underpinnings of the market have been a disaster in the last couple of weeks,” Faber said on the sidelines of the Maybank Invest Asia conference. “The number of new highs have declined, the volume has been poor, insider sales just hit a record.” Faber said the weakness in economically sensitive stocks such as mining and industrial goods was particularly “disturbing.” Agencies At Odds Over New Ratings (FT) The latest example came this month when a near-$800 million bond deal backed by U.S. prime mortgages was sold to investors with triple-A ratings — provided by Standard & Poor’s and DBRS, a smaller competitor based in Canada — on some tranches. Fitch Ratings issued a statement saying it would not have rated the bonds triple A. It said it provided “feedback” on the transaction to the arranger, Credit Suisse, and “was ultimately not asked to rate the deal due to the agency’s more conservative credit stance”. Steven Vames, a Credit Suisse spokesman, said it was common for an issuer to engage multiple rating agencies to look at a deal and ultimately choose a subset of those agencies to rate it. In March, Moody’s said: “Some recent cases have come to market for which we believe increased risk has not been adequately mitigated for the level of ratings assigned by another agency.” In particular, Moody’s faulted ratings issued by S&P, Fitch and DBRS on asset-backed deals. For Big Companies, Life Is Good (WSJ) An analysis by The Wall Street Journal of corporate financial reports finds that cumulative sales, profits and employment last year among members of the Standard & Poor's 500-stock index exceeded the totals of 2007, before the recession and financial crisis. UK Cruise Retraces Titanic's Ill-Fated Voyage (Reuters) Descendants of some of the 1,500 people killed when the Titanic sank a century ago were among the passengers on a cruise ship that set off from Britain on Sunday to retrace the route of the liner's ill-fated voyage. Some donned period costume, including furs and feathered hats for women and suits and bowler hats for men, to board the MS Balmoral at Southampton on the southern English coast. The world's most famous maritime disaster has fascinated people ever since, explaining why passengers from 28 countries were prepared to pay up to 8,000 pounds ($13,000) each to be a passenger on the memorial cruise organized by a British travel firm. The Balmoral will follow in the wake of the Titanic, sailing near Cherbourg in France and then calling at Cobh inIreland before arriving at the spot where the Titanic went down...Passenger Jane Allen, whose great-uncle died on his honeymoon trip on the Titanic while her great-aunt survived, said she did not think it was "ghoulish or macabre" to go on the voyage.