Opening Bell: 11.19.10

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Meredith Whitney To Rival Moody's And S&P With Own Ratings Agency (FT)
Ms Whitney said in an interview with the Financial Times that her new agency would use the same business model as established agencies, in which issuers of debt pay for ratings. She maintainted that she would be able to manage potential conflicts of interest, saying: “If you run a good business and you have compliance in place, there should not be problems...We’re in the process of applying for an NRSRO licence with the intention of being a formal competitor to S&P and Moody’s,” Ms Whitney said. She plans to rate global structured products and corporate bonds and US municipal bonds.

Bernanke Fires Back, Takes Aim At China (WSJ)
By keeping their currencies artificially weak, Mr. Bernanke argued in Frankfurt Friday, China and other emerging markets are allowing their economies to overheat, preventing trade imbalances from adjusting and worsening what he called a "two-speed" global recovery. Their "strategy of currency undervaluation" is preventing more "balanced and sustainable" global growth, he warns, echoing a view expressed by Obama Administration officials.

China to Raise Reserve Ratio by 50 Basis Points From Nov. 29 (Bloomberg)
China ordered banks to set aside larger reserves for the fifth time this year, draining cash from the financial system to limit inflation and asset-bubble risks in the world’s fastest-growing major economy. The ratio will increase 50 basis points starting Nov. 29, the central bank said on its website today. The aim is to step up liquidity management and “appropriately control” credit and loans, it said.

PIMCO Said To Seek $1 Billion To Buy Troubled Assets From Banks (Bloomberg)
The Pimco Bravo fund, short for Bank Recapitalization and Value Opportunities, will acquire commercial and residential mortgage loans and other debt, according to a prospective investor.

Lippman, Who Bet Against Subprime At Deutsche Bank, Turns Buyer At Fund (Bloomberg)
LibreMax Capital LLC’s fund gained about 1.67 percent in October as it invested 44.4 percent of its portfolio in bonds backed by subprime home loans to borrowers with the worst credit, according to a letter to investors.

SEC To Step Up Supervision Of Hedge Funds (Reuters)
The SEC meets later Friday to vote on a proposal that would require the registration of advisers to hedge funds and private equity funds with more than $150 million in assets under management.

Irish Bailout May Unleash Market Vigilantes On Portugal (Bloomberg)
“Wait a few weeks and the markets will just go for someone else, with Portugal at the front of the queue,” London-based Diebel said. “The vigilantes pushed Ireland into the same situation Greece is in. Why would you conclude they won’t do the same to Portugal?”

Harrah's Cancels IPO (CNBC)
Harrah's said Friday it will not pursue an initial public offering due to market conditions. The company, which planned to return to the stock market rebranded as Caesar's Entertainment had planned to raise $470 million, selling shares between $15 and $19 each.

Wall Street Pay Day For A New GM (WSJ)
Sen. Bob Corker, a Tennessee Republican who was an outspoken critic of using Troubled Asset Relief Program funds for the bailout of GM and Chrysler Group LLC, said recently he feels "gratified" by the progress GM has made. Without the government's help, "there is absolutely no way GM would be in the position they are in to expand and grow," he said in the recent interview. "Much of the taxpayer money is going to come back."

Irish Grasp At EU, IMF Lifeline (WSJ)
"It will be a large loan because the purpose...is to show Ireland has sufficient firepower to deal with any concerns of the market," central-bank governor Patrick Honohan said.

AR Magazine Names Top Hedge Funds (AR)
Bridgewater took top honors for macro strategy and management firm of the year. Third Point, Renaissance, Paulson Advantage recognized for risk-adjusted returns.

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Opening Bell: 04.18.13

Morgan Stanley Sees Core Earnings Weaken (WSJ) Morgan Stanley saw core earnings weaken, although the investment bank swung to a first-quarter profit as it benefited from a comparison with a year-earlier period bogged down by a heavy charge. For the quarter, the bank reported a profit of $984 million, compared with a year-earlier loss of $94 million. The per-share profit, which reflects the payment of preferred dividends, was 49 cents compared with a loss of six cents a year earlier. The latest period featured a decline in fixed-income trading revenue, but strong stock trading and continued improvements in Morgan Stanley's wealth-management division, which was buoyed by strong markets. ... Revenue jumped 18% to $8.16 billion. Excluding debt valuation, revenue was $8.48 billion. Analysts polled by Thomson Reuters most recently expected earnings, excluding debt-valuation adjustments, of 57 cents, on revenue of $8.35 billion. Blackstone First-Quarter Profit Rises on Fund Performance (Bloomberg) Blackstone Group LP (BX), the world’s biggest buyout firm, said first-quarter profit rose 28 percent as market gains lifted the carrying value of its holdings. Economic net income, a measure of earnings excluding some costs tied to the firm’s 2007 initial public offering, increased to $628.3 million, or 55 cents a share, from $491.2 million, or 44 cents, a year earlier, New York-based Blackstone said today in a statement. Analysts had expected earnings of 53 cents a share, according to the average of 15 estimates in a Bloomberg survey. Barclays Head of Investment Banking Rich Ricci to Retire in June (Bloomberg) Barclays Plc’s Rich Ricci, the head of investment banking and one of the last members of former Chief Executive Officer Robert Diamond’s management team, will retire at the end of June. Ricci, 49, will be replaced by Eric Bommensath and Tom King, 52, as co-chief executive officers of corporate and investment banking in May, the London-based bank said in a statement today. “The market will see this as an inevitable and appropriate piece of transitioning,” said Ian Gordon, an analyst at Investec Plc (INVP) in London. “Few tears will be shed and the reshuffle will be broadly welcomed.” Special Report: The battle for the Swiss soul (Reuters) A sign on display in UBS's museum, from a bank founded in 1747 in the Italian-speaking part of Switzerland, could almost be Switzerland's mantra: "MASSIMA DISCREZIONE" it promises. Swiss bankers have long adhered to an unwritten code similar to that observed by doctors or priests. Bankers do not acknowledge clients in public for fear of exposing them as account holders; they often carry business cards with just a name, rather than bank or contact details; and, at least until the 1990s, they never advertised abroad. ... Even today, few Swiss like to discuss the fact that much of the country's prosperity was built on bankers helping foreigners evade taxes. Visitors should avoid personal questions, advises Communicaid, a consultancy which advises businesses on cross-cultural awareness. It would also be wise to steer clear of discussing "Swiss banks, money or Switzerland's military role in World War One or Two." Reinhart/Rogoff and Growth in a Time Before Debt (RortyBomb via Felix Salmon) Here is a simple question: does a high debt-to-GDP ratio better predict future growth rates, or past ones? If the former is true, it would be consistent with the argument that higher debt levels cause growth to fall. On the other hand, if higher debt "predicts" past growth, that is a signature of reverse causality. ... As is evident, current period debt-to-GDP is a pretty poor predictor of future GDP growth at debt-to-GDP ratios of 30 or greater—the range where one might expect to find a tipping point dynamic. But it does a great job predicting past growth. Ottawa sets up taxpayer-funded food truck in Mexico to promote Canadian cuisine (National Post) When author Anita Stewart first heard about the Canadian government’s new food truck parked in Mexico City, she laughed so hard she cried. The new Canada-branded, taxpayer-funded venture, which kicked off its three-week pilot project last week, is serving up a Mexican-ized version of poutine, using Oaxaca cheese instead of curds. Also on the menu are Alberta beef tourtière, and maple-glazed Albacore tuna. China Vows Wider Yuan Movement (WSJ) China's central bank plans to widen the yuan's trading band in the near future, People's Bank of China Vice Governor Yi Gang said Wednesday, suggesting that China's leaders will press ahead with change despite the surprise slowing of the economy. "The exchange rate is going to be more market-oriented," Mr. Yi said on a panel at the International Monetary Fund spring meetings in Washington. "I think in the near future we are going to increase the floating band even further." IMF warns on risks of excessive easing (FT) Extraordinarily loose monetary policy risks sparking credit bubbles that threaten to tip the world back into financial crisis, the International Monetary Fund warned on Wednesday. In its global financial stability report, the fund cautioned that policy reforms were needed urgently to restore long-term health to the financial system before the long-term dangers of monetary stimulus materialised. German Parliament Approves Bailout for Cyprus (WSJ) German Finance Minister Wolfgang Schäuble called the vote a "strong signal" by Germany in favor of the euro and the euro zone. The parliament also voted in favor of a seven-year extension of the maturity on European Financial Stability Facility loans for Ireland and Portugal with a large majority. SEC to Move Past Financial Crisis Cases Under New Chairman White (Bloomberg) Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a “bold and unrelenting” enforcement program at the agency charged with regulating Wall Street. With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge. White, who was sworn in last week, has already provided a few signals about what that might be. During her Senate confirmation hearing, she said she intends to focus on high- frequency and automated trading. She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years. Dispute in Hamptons Set Off by Effort to Hold Back Ocean (NYT) Soon after Hurricane Sandy hit last fall, Joshua Harris, a billionaire hedge fund founder and an owner of the Philadelphia 76ers, began to fear that his $25 million home on the water in Southampton might fall victim to the next major storm. So he installed a costly defense against incoming waves: a shield of large metal plates on the beach, camouflaged by sand. His neighbor, Mark Rachesky, another billionaire hedge fund founder, put up similar fortifications between his home and the surf. Chris Shumway, who closed his $8 billion hedge fund two years ago, trucked in boulders the size of Volkswagens. Across a section of this wealthy town, some residents, accustomed to having their way in the business world, are now trying to hold back the ocean. ‘Elvis’ is busted in ricin terror (NYP) The FBI last night busted a troubled Mississippi Elvis impersonator as the poison-wielding man who mailed ricin-laced letters to President Obama and two other officials. ... Despite his rock ’n’ roll hobby, Curtis shows his angry side on Facebook, where he lashes out in a conspiracy-filled rant. “I’m on the hidden front lines of a secret war,” he wrote. “They burned down my home, killed my dogs, my cat, my rabbit, blew up my 1966 Plymouth Valiant . . . and guess what? I am still a thorn in their corrupt anals! I will remain here until Jesus Christ decides it’s time for me to go.”