Opening Bell 08.05.10


Barclays Profit Growth Held Back by Investment Banking Revenue (Bloomberg)
The bank said first-half profit rose 29 percent as a drop in provisions for bad loans mitigated a decline in investment banking revenue. Net income rose to 2.43 billion pounds ($3.9 billion) from 1.89 billion pounds in the year-earlier period, the London-based bank said in a statement today. Earnings beat the 2.26 billion- pound median estimate of 10 analysts surveyed by Bloomberg. “The second quarter was tough,” Diamond, 59, said on a conference call. “Clients were taking less risk in that period of May and June. We have clearly seen in the second half of July more activity in the market. I don’t want to predict how that all plays out for the second half, but it looks more positive.”

Goldman Sachs To Shift Principal Strategies Into A Fund (Bloomberg)
The team, which aims to complete the process by the end of the year, hasn’t set a target for the amount it wants to raise, the person said. Goldman Sachs Principal Strategies, the trading team led by Hong Kong-based Morgan Sze, 44, may be keen to raise money before competition emerges from proprietary- trading teams leaving other banks, analyst Brad Hintz said. “What you don’t want to be is the 50th prop desk being spun out,” Hintz, an analyst at Sanford C. Bernstein & Co. in New York, said in an interview. “I think what they’re saying is, ‘Get out while the getting’s good.’”

Buffett Gets In Bind Over Options
A new law requiring most derivatives users to post collateral on trades could diminish potential gains to the point where Buffett could lose interest in keeping his bet. Options prices have been rising amid concern that Buffett might buy back the options he sold, traders said.In the worst-case scenario, if markets tank and Buffett has to post collateral, he could face tens of billions of dollars if the underlying stock indexes went to zero.

New Law Fuels a Shake-Up at Morgan Stanley (WSJ)
In recent days, executives at the Wall Street firm and FrontPoint, which has $7 billion in assets, have been hashing out terms for a no-cash agreement that would bring Morgan Stanley's full ownership of FrontPoint—purchased at the height of the hedge-fund market—down to between 20% and 25%, said the people close to the matter. FrontPoint was profitable in 2007, but not in 2008, people familiar with the matter said. It went from $5.5 billion in assets when purchased in 2006 to $10 billion at its peak. FrontPoint executives offered about $150 million to buy back the firm from Morgan Stanley, said people familiar with the talks. That would have triggered a painful write-down, which Morgan Stanley wasn't willing to take. Morgan Stanley currently values FrontPoint at around $350 million, one person with knowledge of the matter said.

Brett Favre sent X-rated photos to Jenn Sterger (NYDN)
Deadspin editor-in-chief A.J. Daulerio reported Wednesday that model, actress and TV host Jenn Sterger told him that Favre had sent her inappropriate and explicit pictures of his himself. Daulerio said Sterger, 26, told him that she had received several friendly but strange voicemail messages early in the 2008 season. "But then, one night, Sterger received a picture on her phone which was so shocking that she just tossed it across the room. It was his d---. Brett Favre's d---."

Geithner Pushes Tax Boost For Wealthy (WSJ)
In a speech Wednesday in Washington, part of the administration's broader strategy to overcome Republican opposition on the issue, Mr. Geithner said that keeping current tax levels even on a short-term basis "would hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits." The government needs the revenue it would get from allowing tax rates for the wealthy to rise, he said.

Fortress Q2 Profit Rises 24% (Reuters)
FIG aid pretax distributable income rose 24 percent in the second quarter, helped by strong performance of its funds. The New York-based hedge fund and private equity firm said pretax distributable income, which excludes non-cash compensation charges and other costs, was $73 million, or 14 cents per share, up from $59 million, or 12 cents per share, a year earlier.


Opening Bell: 04.13.12

JPMorgan Profit Slips (WSJ) J.P. Morgan reported a profit of $5.38 billion, down from $5.56 billion a year earlier. On a per-share basis, earnings were $1.31, up from $1.28 as the share count outstanding declined. The latest quarter included a net 8-cent per-share loss tied to litigation expenses and changes in the value of the bank's debt. Analysts polled by Thomson Reuters expected a per-share profit of $1.18, excluding debt-related charges. Revenue rose 6.3% to $27.42 billion. Analysts were looking for $24.68 billion. Wells Fargo reports higher first-quarter profit (Reuters) Wells Fargo, the nation's fourth-biggest U.S. bank, said net income was $4.25 billion, or 75 cents a share, in the quarter, compared with $3.76 billion, or 67 cents, a share in the same period a year earlier. The average estimate from analysts was 73 cents per share. JPMorgan Said to Transform Treasury to Prop Trading (Bloomberg) Achilles Macris, hired in 2006 as the CIO’s top executive in London, led an expansion into corporate and mortgage-debt investments with a mandate to generate profits for the New York- based bank, three of the former employees said. Dimon, 56, closely supervised the shift from the CIO’s previous focus on protecting JPMorgan from risks inherent in its banking business, such as interest-rate and currency movements, they said. Some of Macris’s bets are now so large that JPMorgan probably can’t unwind them without losing money or roiling financial markets, the former executives said, based on knowledge gleaned from people inside the bank and dealers at other firms. Bank Bonus That Tops Salary May Be Banned by EU Lawmakers (Bloomberg) Governments and lawmakers in the 27-nation EU are considering rules for lenders that would go far beyond international agreements approved by the Basel Committee on Banking Supervision. Denmark, which holds the rotating presidency of the EU, has proposed empowering nations to set surcharges of up to 3 percent across their banking systems. Karas yesterday suggested adding language to the legislation that would ban banker bonuses that exceed fixed pay, following calls from other lawmakers to rein in excessive compensation. IMF Lifts Growth Forecast, Cautiously (WSJ) Christine Lagarde, managing director of the International Monetary Fund, said the world economy is marked by "a high degree of instability" even though prospects for global growth are better than they were a few months ago. In an interview with The Wall Street Journal, Ms. Lagarde said the IMF, which marked down its 2012 forecast for global growth in January to 3.3%, has now marked it up to reflect improving conditions in the world economy. But she said the new forecast, to be released next week, remains more pessimistic than the one it made last September, which predicted 4% growth. Europe remains the biggest single risk to the global economy, the former French finance minister said. Hedge Fund Driver Guns DownArmed Robber (NYP) A retired NYPD lieutenant blew away a drugstore bandit yesterday as the suspect tried to gun down three police officers during a foot pursuit, sources said. Thomas Barnes, Barnes — a driver for hedge fund manager Philippe Laffont, was filling his tank at the BP station on East 119th Street and First Avenue at around 11 a.m. when he saw gunman Rudolph Wyatt running from the store, and sprang into action. He crouched behind his hedge-fund boss’ Mercedes SUV and squeezed off three shots, killing Wyatt, 23. The trigger-happy thug — wanted on warrants for two other shootings — lay dead in a pool of blood on the sidewalk wearing a black stocking mask with a wad of stolen cash spilling out of his pocket, witnesses said. “Part of the back of his head was missing. He had a large head wound and there was tons of blood,” said witness John Brecevich, 59, owner of the Original Patsy’s restaurant nearby. “It was a scene straight out of NYPD Blue.” Trustees Aim For MF Execs (NYP) The trustee tasked with clawing back money for burned customers of MF Global is training his sights on the brokerage firm’s executives — a list that likely includes former CEO Jon Corzine. In a statement yesterday, trustee James Giddens said he is considering pursuing claims against “certain responsible individuals” who worked for MF at the time customers’ trading accounts were improperly tapped. Kent Jarrell, a spokesman for Giddens, declined to name names but said the trustee is considering civil suits against “officers, directors or other employees” of both the brokerage firm and the holding company. Fed Officials Differ on Need to Keep Rates Low to 2014 (Bloomberg) William C. Dudley, president of the New York Fed, and Vice Chairman Janet Yellen said the 2014 time-frame is needed to lower unemployment from 8.2 percent. Minneapolis Fed President Narayana Kocherlakota said rising inflation may prompt an interest-rate increase as early as this year, while Philadelphia’s Charles Plosser said policy should hinge on economic performance, not a calendar commitment. Newark Mayor Cory Booker: Race into home fire was a "come to Jesus moment" (CBS) Booker arrived home last night to discover his next-door neighbor's house on fire, and rescued a young woman trapped upstairs by carrying here through the flames, suffering second-degree burns in the process. The mayor's security team discovered the fire and pounded on the door to alert residents, when an elderly woman said that her daughter was trapped upstairs. At first, Newark Police Detective Alex Rodriguez would not let Booker into the burning house. "He basically told me, 'This woman is going to die if we don't help her,' and what can I say to that?," Rodriguez said. "I let him go and without thinking twice, he just ran into the flames and rescued this young lady." Booker said that as he jumped through the kitchen on the second floor, "I actually wasn't thinking. When I got there and couldn't find her in all the smoke, looked behind me and saw the kitchen really erupting with flames all over the ceiling, that's when I had very clear thoughts that I'm not going to get out of this place alive and got ... very religious. He admitted he was "not gentle" with her - "I just sort of threw her over my shoulder and dragged her through the kitchen."