Opening Bell: 01.13.11


JPMorgan Reserve `Bleeds' Distort Record 2010 Earnings (Bloomberg)
JPMorgan will probably report record earnings of about $16.7 billion for last year boosted by a reduction in reserves for future losses. Fourth-quarter results, which the New York-based company plans to announce tomorrow, are likely to show a profit of $4.2 billion, or $1 per share, based on the average estimate of analysts surveyed by Bloomberg. About 40 percent of earnings for the first nine months came from money taken from loss reserves as U.S. banks dip into their funds, at least temporarily, and mask a revenue squeeze.

US Unlikely To Recoup GM Bailout, Panel Says (WSJ)
The U.S. government is unlikely to recover its entire $50 billion investment in General Motors Co., in part because the Obama administration unloaded a big block of shares in the company's initial public offering at $33 a share rather than wait for a higher price, a federal panel said Wednesday.

Geithner says China needs faster yuan rise (Reuters)
"China still closely manages the level of its exchange rate and restricts the ability of capital to move in and out of the country," Geithner said. "These policies have the effect of keeping the Chinese currency substantially undervalued." He described China as focused on taking greater advantage of U.S. investment opportunities, gaining easier terms of market access and being able to buy U.S.-made high tech goods. "We are willing to make progress on these issues, but our ability to move on these issues will depend of course on how much progress we see from China," Geithner said in an address delivered at Johns Hopkins' School of Advanced International Studies.

AIG Share Sale May Place Investor Focus on CEO Succession Plan (Bloomberg)
Who wants this gig when Bobby's done with it?

Moody's Urges U.S., U.K., Germany, France to Control Spending (Bloomberg)
“All four countries face dramatic increases under their existing policy commitments arising from aging-related pension and health-care subsidies,” the ratings company said today in an e-mailed report from New York. “Future costs must be brought under control if these countries are to maintain long-term stability in their debt-burden credit metrics.”

Home Foreclosures Top 1 Million for First Time in 2010 (Reuters)
Banks foreclosed on 69,847 properties in December, bringing the year's total to 1.05 million, topping the prior record of 918,000 homes seized in 2009.

Spanish Banks Not Reliant On ECB, Says Finance Minister (CNBC)
"If you are talking about financial assistance, for sure, not. But of course any of the countries of the euro area, we need all the others because we have to improve our economic governance so we have to work together. But if you are talking about a bailout, definitely not,” Salgado told CNBC.

'Con' Man Was Undie Suspicion (NYP)
A bumbling con man was caught with a big bulge in his pants -- $500 in fake bills, cops said yesterday. Michael Lewis, whose undies were stuffed with the wad, and his pal Orville Stacy, both 24, were busted after a four-store Midtown spending spree Thursday in which they allegedly spent the funny money on food, including chips, guacamole, a protein bar and a can of soda -- and got real money as change. The duo's small purchases from stores close in proximity drew suspicion from cops on patrol, who began tailing the pair. They watched the men buy snacks from four shops near West 56th Street and Sixth Avenue, with Lewis allegedly passed bogus $20 bills while Stacy acted as a lookout. After the last stop, a Subway sandwich shop, cops stopped the men and examined the bills in Lewis' pants -- and noticed they had missing watermarks and incorrect coloring, sources said.

Crumbs Cupcake IPO Offers Hope For A New Bubble (Bloomberg)
Before long, sophisticated investors may once again line up to throw money at sure-fire concepts like iron-on T-shirts and collectible plush toys. This must be good news, whether you’re a central banker or a maxed-out office worker buying a caramel apple on credit. It’s evidence that our global economic leaders’ master plan is working. That would be to spend our way out of the last bubble’s wreckage with money we don’t have, until we can create a new bubble to wealth-effect our troubles away.

Goldman's Pieties Go Too Far (FT)
"To Goldman’s credit, this week’s purification has brought fresh honesty about how lucrative these bets are. In the first nine months of last year, proprietary investing and lending accounted for a fifth of the bank’s pre-tax earnings: in one quarter they amounted to a remarkable 59 per cent. Since every investment or loan represents an opportunity that Goldman’s clients might have wanted, why even pretend that customers come first?"

Banks Pass Hurdles But Face More (WSJ)
For many bankers, who have been begging regulators to give them the go-ahead, they can't raise their dividends soon enough. "It's high time that we provide a return on your investment," Wells Fargo & Co. Chief Executive John Stumpf told investors recently. "I am in violent agreement that it is time we get back to a quote unquote more normal basis." But big banks may be swapping one set of problems for another. They are grappling with mounting demands to repurchase bad mortgage loans and new regulations expected to cost billions of dollars annually. Executives are scrambling to replace the lost proceeds with new fees that will test their relationship with customers. The other half of the industry—smaller institutions that haven't enjoyed the bounce that big banks have—suffers additional problems of low valuations and persistent difficulty in raising new capital.

Brett Favre's Sister Arrested At Meth Lab (WLBT)
Once Narcotics agents entered the condo, they were shocked at what they found. "When we arrived, there were a couple of people coming out of the house and the chemical smell was just overwhelming. It was pretty bad. And then we discovered the full lab in the bathroom; it was still cooking. I think we collected pretty close to ten grams of finished product, which, that's a lot of meth."