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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."

Related

Opening Bell: 11.21.12

Germany Hints At More Financing (WSJ) Germany on Wednesday signaled its willingness to provide additional financing for the euro zone's bailout fund and accept lower interest on loans to Athens, in order to get the Greek rescue back on track and free the next tranche of about €44 billion ($56.40 billion) in loans for the euro zone's weakest member. Merkel Sees Chance For Greek Deal Monday (Reuters) "I believe there are chances, one doesn't know for sure, but there are chances to get a solution on Monday," Merkel told the Bundestag lower house of parliament in a debate on the German budget. But the longing for one act, one miracle solution, one truth that means all our problems are gone tomorrow...this will not be fulfilled. What was neglected over years, over decades, cannot be taken care of overnight and therefore we will need to continue to move step by step." H-P Says It Was Duped (WSJ) The technology giant said that an internal investigation had revealed "serious accounting improprieties" and "outright misrepresentations" in connection with U.K. software maker Autonomy, which H-P acquired for $11.1 billion in October 2011. "There appears to have been a willful sustained effort" to inflate Autonomy's revenue and profitability, said Chief Executive Meg Whitman. "This was designed to be hidden." Michael Lynch, Autonomy's founder and former CEO, fired back hours later, denying improper accounting and accusing H-P of trying to hide its mismanagement. "We completely reject the allegations," said Mr. Lynch, who left H-P earlier this year. "As soon as there is some flesh put on the bones we will show they are not true." Analysts Had Questioned Autonomy’s Accounting Years Ago (CNBC) Paul Morland, technology research analyst at broking and advisory house Peel Hunt, told CNBC that he had noticed three red flags in Autonomy’s accounts in the years leading up to the HP acquisition: poor cash conversion, an inflated organic growth rate, and the categorizing of hardware sales as software. London Bankers Become Landlords as Rents Hit Record (Bloomberg) Vivek Jeswani became a landlord by accident when Deutsche Bank AG (DBK) transferred him to New York two weeks after he moved into a new home in central London. Now back in the U.K., Jeswani views the apartment in Baker Street, the fictional home of Sherlock Holmes, as one of his best assets and is about to buy another home to expand his rental business. “There are no other investments as attractive and you’ve got some security if you’ve got an asset you can use yourself,” the 36-year-old risk officer at China Construction Bank Corp.’s U.K. unit said. “There’s a good yield over 5 percent and being in central London, you’ve got demand domestically and internationally.” Trading Charges Reach SAC (WSJ) The hedge funds reaped $276 million in profits and losses avoided based on that information, criminal and civil authorities said—far dwarfing that of any previous insider-trading case. The bulk of the trading profits generated by Mr. Martoma was paid to Mr. Cohen, a person close to the hedge fund said. Fed Still Trying To Push Down Rates (WSJ) Fed Chairman Ben Bernanke suggested that the central bank will keep trying to push down long-term interest rates in 2013, as federal tax and spending policies become a more substantial headwind to the U.S. economy. "We will continue to do our best to add monetary-policy support to the recovery," Mr. Bernanke said at the New York Economic Club, answering a question about how the Federal Reserve would respond to impending spending cuts or tax increases that might restrain economic growth. 'Stiletto Surgery' alters pinky toe for better fit (Fox) These days, some women will do just about anything to fit into their favorite pair of high heels – including surgery. A growing number of women are paying thousands of dollars to surgically alter their feet just to make wearing heels a more comfortable experience. Surgical procedures such as shortening toes, receiving foot injections and even completely cutting off pinky toes are on the rise. “Unless you’ve been there, and you can’t find shoes, and you’re in pain, don’t judge,” said Susan Deming, a patient who recently underwent a toe-shortening procedure. Adoboli’s Fate Decided at Wine Bar as UBS Market Bets Unraveled (Bloomberg) On a cool late summer evening last year in London’s financial district, with the euro-zone crisis worsening and Greece tottering on the edge of default, Kweku Adoboli says he asked the three traders who worked with him at UBS AG’s exchange-traded funds desk to join him for a drink. Adoboli said in a post on his Facebook page that he needed “a miracle” as his bets on the market imploded. That night at a wine bar across the street from their office, Adoboli asked John Hughes, the senior trader on the ETF desk, and two junior traders, what to do. The others decided he should take the blame for billions of dollars in losses and an elaborate web of secret trades in what he called an umbrella account that once held $40 million in hidden profits. “I knew I was going to lose my job anyway, I had already resigned myself to that, so fair enough,” the 32-year-old Adoboli testified last month about the meeting, which the other traders deny took place. Jobless Claims in U.S. Decrease (Bloomberg) Fewer Americans filed applications for unemployment benefits last week as damage to the labor market caused by superstorm Sandy began to subside. Jobless claims decreased by 41,000 to 410,000 in the week ended Nov. 17, the Labor Department reported today in Washington. The number of applications matched the median forecast of 48 economists surveyed by Bloomberg. Soros Buying Gold as Record Prices Seen on Stimulus (Bloomberg) The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 11 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.66 billion bet through the SPDR Gold Trust, the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show. 'Cannibal Cop' Gilberto Valle planned to to cook up 'some girl meat' on Thanksgiving (NYDN) The "Cannibal Cop" had his own twist for a Thanksgiving dinner this year — cooking up “some girl meat,” prosecutors revealed Tuesday. Gilberto Valle, 28 — who allegedly kept a database of at least 100 women he plotted to rape, cook and eat — planned the freakish feast with one of his online conspirators earlier this year, prosecutors said. “I’m planning on getting me some girl meat,” he wrote to his pal on Feb. 9. “Really tell me more,” responded the friend. “It’s this November, for Thanksgiving. It’s a long way off but I’m getting the plan in motion now,” Valle wrote.