Opening Bell: 12.15.10

Author:

Wilbur Ross: Ireland Will Overcome Problems In Two Years (CNBC)
Ireland passed a very tough budget, cutting the minimum wage, and it now has in place a bailout by the European Union and the International Monetary Fund, showing the government’s determination to solve the problem the country faces, Ross said. “Ireland has a very specific problem, we think they’ll overcome it in a couple of years,” he added.

Dress To Impress, UBS Tells Staff (WSJ, Dealbreaker)
Yes, they did.

Fed Signals Stronger Economy Won't Slow $600 Billion Stimulus (Bloomberg)
The Federal Open Market Committee said yesterday after its final meeting of 2010 that growth is “insufficient to bring down unemployment” and inflation has “continued to trend lower.” U.S. central bankers affirmed a plan to buy $600 billion of bonds through June and renewed their pledge for an “extended period” of low interest rates.

Spain Rating Put On Review By Moody's (Bloomberg)
Spain’s credit rating may be cut from Aa1, Moody’s Investors Service said, as the government prepares its final bond sale of the year tomorrow amid concern it may follow Greece and Ireland in seeking a bailout. Spain has to raise 170 billion euros ($226 billion) next year, while refinancing needs for its regions total 30 billion euros and for banks around 90 billion euros, Moody’s estimates. “Spain’s substantial funding requirements, not only for the sovereign but also for the regional governments and the banks, make the country susceptible to further episodes of funding stress,” Kathrin Muehlbronner, an analyst at Moody’s, said in a report today.

Senate Sets Wednesday Vote On Tax Cuts (Reuters)
While the Senate neared a rare bipartisan vote on the bill to renew all Bush-era income tax breaks and add provisions to stimulate the economy, House Democrats mulled ways to pull back on some of the measure's tax breaks for the wealthy.

Tax Deal Shaping 2012 GOP Campaign (WSJ)
Former Alaska Gov. Sarah Palin and former Massachusetts Gov. Mitt Romney have both come out sharply against the measure, which President Barack Obama hammered out last week with Senate Republican leaders. Both cite the deal's price tag, with Mr. Romney saying it will heap billions more onto the nation's debt load. Supporting the package are former Arkansas Gov. Mike Huckabee, Minnesota Gov. Tim Pawlenty and former House Speaker Newt Gingrich, all of whom praise the deal as good for the economy and the only way to spare Americans the jolt of a sudden tax increase that otherwise would take effect on Jan. 1.

No Funeral, Just Cremation For Mark Madoff (NYP)
"He is going to be cremated at the family's wishes," the source said, hours after Mark's body was released by the Medical Examiner's Office to a Manhattan funeral home. "No services, no viewing. The family doesn't want a viewing."

Goldman Seeks New Top Asia Manager (FT)
GS is seeking an executive to run its day-to-day operations in Asia even as the bank struggles to find a new role in its New York headquarters for the region’s chairman, Michael Evans.

Icahn To Buy Dynegy For $665 Million (WSJ)
Dynegy Inc. said its board has agreed to be acquired by Icahn Enterprises LP for about $665 million and billions in assumed debt. Shares of the power producer climbed 2.2% to $5.57 premarket, above the $5.50-a-share offer price. The per-share bid from Icahn is 10% higher than an earlier bid by Blackstone Group LP that failed to win shareholder support amid intense opposition from investor Carl Icahn and hedge-fund operator Seneca Capital, another major holder.

Companies Assail Whistleblower Bounties (WSJ)
In a letter to the SEC, top legal officials at companies such as Delta Air Lines Inc., FedEx Corp., Gap Inc. and Pfizer Inc. told the agency that proposed rules for an enhanced whistleblower system required under the Dodd-Frank Act will undermine internal compliance programs already in place at companies. The proposed rules "disincent employees from looking for ways to improve or correct corporate behaviors, and incent them to find ways to profit from corporate wrongdoing," according to the letter, which is set to be released Wednesday. "Fraudulent misconduct, the bane of good compliance systems, then becomes the gold mine."

Jeffrey Gundlach: The US Can't Handle Rising Interest Rates (PC via BI)
“I don’t think the economy can take much of a rate rise above 3.5 percent….The economy, society and government are fueled by debt.”

News

Paulson props up his own firm; AIG plans to slim down; Dimon and Blankfein go from billionaires to millionaires; Puerto Rican man 'plays poker' at his own wake; and more.

News

Two Firms, One Trail, In Probe Of Ratings (WSJ) The Justice Department last week went after Standard & Poor's Ratings Services—not rival Moody's Investors Service —with a $5 billion fraud lawsuit. Some former Moody's employees think they know why. The Moody's Corp. unit took careful steps to avoid creating a trove of potentially embarrassing employee messages like those that came back to haunt S&P in the U.S.'s lawsuit, the former employees say. Moody's analysts in recent years had limited access to instant-message programs and were directed by executives to discuss sensitive matters face to face, according to former employees. The crackdown on communications came after a 2005 investigation by then New York Attorney General Eliot Spitzer into Moody's ratings on some mortgage-backed deals, the former employees say. Former employees also point to an April 2001 settlement between Moody's and the Justice Department's antitrust division over the destruction of documents amid a civil inquiry by the agency. Moody's pleaded to one count of obstruction of justice and paid a fine of $195,000. Moody's called that situation "an isolated incident" and said it cooperated with the Justice Department's investigation. That settlement helped lay the groundwork for heightened concerns about sensitive documents, former Moody's employees say. Credit Rating Victims Didn’t Know S&P’s Toxic AAA Born of Greed (Bloomberg) When Charles O. Prince III was chief executive officer of Citigroup Inc. from 2003 to 2007, he didn’t know about a surge in mortgage risk that his own investment bankers loaded on to its bank’s books. Because such debt carried top credit ratings from firms such as Standard & Poor’s, few financial executives paid attention to the potential dangers. When Charles O. Prince III was chief executive officer of Citigroup Inc. from 2003 to 2007, he didn’t know about a surge in mortgage risk that his own investment bankers loaded on to its bank’s books. Because such debt carried top credit ratings from firms such as Standard & Poor’s, few financial executives paid attention to the potential dangers. Makeover At Barclays Won't Be Extreme (WSJ) Mr. Jenkins's cuts are likely to be focused on areas where Barclays lags far behind competitors, executives say. That could include parts of the equities sales-and-trading businesses in Asia and continental Europe, according to analysts and people at other banks. Those are businesses in which Mr. Diamond spearheaded an ambitious expansion but where Barclays remains a second-tier player. But other changes are driven more by polishing the bank's tarnished image than they are by the need to boost profits. A few business lines that don't seem "socially useful" are likely to end up on the chopping block, executives say. For example, Barclays plans to retreat at least in part from the lucrative trading of "soft commodities" such as coffee, executives say. That is a concession to mounting criticism that speculative trading in those commodities contributes to food-price inflation. "We're a big player, but does it pass the smell test of what society would think of this?" a senior executive said. Mr. Jenkins is also expected to trumpet plans to dramaticallyscale back Barclays's tax-planning business, in which it advises clients on how to minimize their tax burdens. The bank will no longer help clients put together transactions that have no businesspurpose other than reducing taxes. "Such activity is incompatible with our purpose," Mr. Jenkins will say on Tuesday, according to the extract of his speech. But the bank isn't expected to exit the business altogether. It will continue to offer tax-minimizing advice. People familiar with the matter say the business has been hiring employees recently. Putin Turns Black Gold Into Bullion as Russia Out-Buys World (Bloomberg) Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty. White House Warns Coming Austerity Will Hit Economy Hard (Reuters) Automatic government spending cuts due to go into effect March 1 unless Congress acts to prevent them would bite deeply into programs affecting many Americans, such as law enforcement, small business assistance, food safety and tax collection, the White House said on Friday. The administration urged Congress to blunt the effect of the reductions, which the White House said would slash non-defense programs by 9 percent across the board and defense programs by 13 percent, the White House said. "These large and arbitrary cuts will have severe impacts across the government," the administration said in a statement. World's most prolific stripper calls it a day (DM) For two decades, the Liverpudlian father-of-three has been the Usain Bolt of the naked dash. In 1995, he leapt naked on to Fred Talbot’s weather map on daytime TV show This Morning, and a year later he appeared nude on the green during the Open at Royal Lytham. Then, in 2004, he was fined £550 for trespassing after streaking across the pitch at the Super Bowl in Texas – a match watched by 130 million people in 87 countries. For good measure, Mark has also stripped off at Wembley, Wimbledon and Ascot. ‘There’s no major venue or event I haven’t done,’ he says proudly. ‘But I’m nearly 49 now and my children have begged me to stop. It’s time. I’m not ready for my slippers just yet, but gravity’s against me.’ Treasury Pick Lew Faces Grilling on Citi Bonus, Cayman Account (Reuters) Jack Lew, President Barack Obama's pick to be U.S. treasury secretary, is expected to come under fire for the administration's budget policies and a nearly $1 million bonus he received from bailed-out bank Citigroup when he testifies on Wednesday before a Senate panel vetting him for the job. The hearing will briefly become ground zero in the pitched political battle over the federal budget, with Republicans set to attack over what they contend is Lew's devil-may-care attitude to reducing the U.S. budget deficit. "He'll be used as a political ping-pong ball," said Ted Truman, a senior fellow at the Peterson Institute for InternationalEconomics who served briefly as an adviser to Obama's former treasury secretary, Timothy Geithner. Treasury Eases Off On Bank Rules (WSJ) The proposal, which will be subject to comment before becoming a final rule, is likely to insist that financial institutions gather beneficial ownership information—who is in charge and who profits—on new corporate accounts, officials said. But in a move that could assuage some industry concerns, financial institutions wouldn't have to vet that ownership data for accuracy. Instead, they would rely on the customer to vouch for the information. With a Focus on Its Future, Financial Times Turns 125 (NYT) On Wednesday, The F.T. is celebrating its 125th birthday. The newspaper’s London headquarters along the south bank of the Thames will be lit up in pink, the color of the paper on which it has been printed since shortly after it was founded. There will be a few parties — understated, of course, for these are straitened times in the City of London, and challenging ones for the newspaper industry. Waxing Our Way To The ER (Salon) A new study from the University of California-San Diego reveals that “Emergency room visits due to pubic hair grooming mishaps,” including “lacerations,” increased fivefold between 2002 and 2010, sending an impressive 11,704 pube-scapers to the E.R. The culprits? Scissors and hot wax did some of the damage, but plain-old non-electric-razors accounted for the lion’s share, at 83 percent...The study also revealed that below-the-belt grooming isn’t just for adult ladies anymore – men accounted for 43.3 percent of the injuries, and almost 30 percent of them were girls under the age of 18. To avoid becoming yet another harrowing grooming gone bad statistic, the researchers advise hair removal aficionados to “Pay attention to where you’re placing that razor. Invest in a non-slip bath mat. And don’t shave while under the influence of drugs or alcohol.”

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