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Opening Bell: 11.08.10

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Goldman Says Bernanke Engineers `Substantial Pickup' (Bloomberg)
Goldman Sachs Bernanke’s decision to pump money into the U.S. economy after officials in Germany, China and Brazil criticized the plan. The move will spur gross domestic product growth and reduce the risk of deflation, Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients. Because the Fed’s target for overnight loans between banks is near zero, the central bank is doing “the next best thing,” according to Goldman, one of the 18 primary dealers that are authorized to trade directly with the central bank. “The widespread hostility to the Fed’s actions is misplaced,” Hatzius wrote. “Downside risks to the economic outlook have declined significantly. U.S. inflation is unlikely to become a problem for years.”

BofA May Pay Bonuses In Stock As Deadline Looms On Capital Gap (Bloomberg)
The gap of about $1.1 billion at Bank of America, the largest U.S. lender by assets, stems from its accord last December to repay $45 billion of federal bailout funds and escape TARP. As part of the deal, the bank agreed to sign contracts by June 30 for asset sales that would raise capital. The sum, originally $4 billion, was later reset at $3 billion and the deadline extended to Dec. 31. With two months left, the Charlotte, North Carolina-based company said in a Nov. 5 quarterly report the bank “must raise a commensurate amount of common equity” if asset sales don’t bring in the necessary funds. Bank of America raised $1.9 billion so far to meet the commitment, and the gap may be closed by issuing stock to some of its approximately 284,000 employees, according to the filing. “They are going to meet their commitment and if they have to, they’ll do it through their employees,” said Mark Borges...Any new shares issued to employees would immediately vest and could be traded right away, according to the filing.

Green Shoots Are Piercing Through The Gloom (FT)
Steve Rattner: "The US economy might be struggling but it is not quite the basket case that dominates the public consciousness. And neither are its prospects – at least in the medium term – quite as gloomy as the daily drumbeat of apocalyptic forecasts would suggest."

Buffett's Buyout Search Aided by Biggest Cash Hoard Since 2008 (Bloomberg)
“The fact that he’s got $34 billion means that he can go hunting again,” said Jeff Matthews. “Burlington Northern was the first really big elephant that came along. And he’s got the cash to do it again.”

Taking on a Second Mortgage to Pay the Foreclosure Lawyer (NYT)
The new mortgage, which takes effect only if the foreclosure is dismissed and the homeowner’s debt to the bank is reduced, is controversial among defense lawyers, some of whom call it “creepy” and “crass.” Yet even they acknowledge it offers a solution to a vexing question: How do they get paid? After recent revelations that banks were sloppy in processing many foreclosures and in some cases lack standing to seize a house, potential clients seeking to challenge their lenders are flocking to lawyers. But while these distressed homeowners might have a case, they generally lack the resources to pay legal fees. Being in foreclosure usually means being broke. “We thought, ‘Why don’t we use a bit of ingenuity to find an affordable way to represent them?’ ” said Peter Ticktin of the Ticktin Law Group in Deerfield Beach, Fla. “It’s a new model, a new paradigm.”

Failed Al Qaeda plot involved sewing bombs inside dogs (NYP)
The diabolical plot failed because the bombs were so badly stitched inside the poor pooches that they died, said the Paris daily Le Figaro.

CEOs Most Optimistic on U.S. Profits in Bull Signal for S&P 500 (Bloomberg)
The last time executives were this optimistic, stocks climbed 39 percent over the next 3 1/2 years, data compiled by Bloomberg show.

Weddings: Tali Farhadian and Boaz Weinstein (NYT)
The bride, 35, is a lawyer with the United States Department of Justice. The bridegroom, 37, is the founder of Saba Capital Management, an investment firm in Manhattan.

Fortress Investment Profit Rises 37% (Bloomberg)
Pretax distributable earnings were $78 million, or 15 cents a share, compared with $57 million, or 11 cents, a year earlier, the New York-based firm said today in a statement. The results beat the 11-cent average estimate of seven analysts surveyed by Bloomberg. Earnings were boosted by $75 million in performance fees, mostly from the credit funds and liquid hedge funds, which rose above their previous peak asset values.

World Bank Chief Sparks Gold Standard Debate (FT)
Robert Zoellick, the bank’s president since 2007, says a successor is needed to what he calls the “Bretton Woods II” system of floating currencies that has held since the Bretton Woods fixed exchange rate regime broke down in 1971.

Geithner, Mukherjee Discuss Economic Agenda (WSJ)
Mr. Geithner and Mr. Mukherjee talked about technical cooperation on capital markets, infrastructure investments, and about joint efforts to combat money-laundering and terrorism financing, the spokeswoman said...The U.S. Treasury Department has been advising India on its plans to expand its small capital and debt markets.


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