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Opening Bell: 03.30.11

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Dimon Kicks Off Wall Street Pressure On Global Competitiveness (Bloomberg)
Dimon is the keynote speaker today at a conference on global capital markets competitiveness hosted by the U.S. Chamber of Commerce in Washington. “If America adopts a lot of things very different than the rest of the world,” U.S. competitiveness will be damaged, Dimon told investors at a Feb. 15 meeting at JPMorgan’s New York headquarters. JPMorgan’s chairman and CEO said forcing banks to spin off some derivatives business is “absurd” and other changes in last year’s Dodd-Frank Act are a “terrible shame.”

Microsoft Cofounder Hits Out At Gates (WSJ, excerpt)
Bill Gates schemed to take shares in Microsoft Corp. from his co-founder during the early days of the software company following his partner's treatment for cancer, according to a new memoir by the billionaire co-founder, Paul Allen...In the book, Mr. Allen reveals that his decision to leave Microsoft was prompted largely by his growing disenchantment with the behavior of Mr. Gates, whom he portrays as a confrontational taskmaster who clashed with Mr. Allen's low-key style. Past histories of Microsoft have said Mr. Allen's departure from the company was sparked by his first brush with cancer in 1982, when he was diagnosed with Hodgkin's disease. In that year, Mr. Allen says he eavesdropped on a discussion in the Microsoft offices in Bellevue, Wash., between Mr. Gates and Steve Ballmer, now the company's CEO, in which he heard the two men talking about Mr. Allen's recent lack of productivity and how they might dilute his equity in the company by issuing options to themselves and other shareholders. Mr. Allen said he burst into the room and confronted Messrs. Gates and Ballmer, both of whom later apologized to him and backed down from their plan.

Trader Outlines Two Faces Of Galleon (NYP)
Former employee Adam Smith testified that the culture at Galleon was such that Rajaratnam encouraged employees to communicate openly about their trading ideas and stock tips -- unless it came to "sensitive" inside information. In those cases, Rajaratnam "admonished" workers who were too specific and told them never to put anything in writing unless they could keep it "vague," Smith testified.

Merrill Lynch To Pay $1.2M To Former Co-President (WSJ)
Ahmass L. Fakahany, Merrill's former co-president and chief operating officer, filed the arbitration claim in December 2008, alleging the firm benefited financially at his expense, among other things, according to a ruling by a Financial Industry Regulatory Authority arbitration panel. The ruling, entered on March 24, didn't explain the basis for Fakahany's arguments, or the panel's decision, as is customary in arbitration cases. Fakahany, who left the firm in February 2008, sought $70 million in damages from Merrill Lynch & Co., in addition to John Thain, its former chairman and chief executive, members of its board of directors, and Banc of America Securities.

Deal Rush Pushes Takeovers To Most Expensive Since Lehman (Bloomberg)
Acquirers paid a median 9.2 times earnings before interest, taxes, depreciation and amortization for companies in thefirst quarter, the most since the second quarter of 2008, according to data compiled by Bloomberg. Valuations are still lower than during the last M&A boom, when they peaked at 11.4 times Ebitda.

Jim Rogers: Oil To Rise; Nuclear Energy Will Come Back (CNBC)
Uranium and nuclear power stocks are likely to be good buys only in two or three years, when things calm down, Rogers, who together with George Soros co-funded the Quantum Fund, said in an interview. "Unless we find something to replace oil and coal, we have to have nuclear… whether we like it or not," he said. Rogers, whose portfolio is mainly in commodities and currencies, said oil prices will rise.

Where The Bailout Went Wrong, By Neil Barofsky (NYT)
"Worse, Treasury apparently has chosen to ignore rather than support real efforts at reform, such as those advocated by Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, to simplify or shrink the most complex financial institutions. In the final analysis, it has been Treasury’s broken promises that have turned TARP — which was instrumental in saving the financial system at a relatively modest cost to taxpayers — into a program commonly viewed as little more than a giveaway to Wall Street executives."

G-20 Criticism of Fed Easing May Be Muted at China Meeting (Bloomberg)
Chinese criticism of the Federal Reserve for flooding the world with money may get little traction among Group of 20 finance chiefs meeting in China as Europe’s debt crisis and Japan’s disaster take precedence. Timothy Geithner, French President Nicolas Sarkozy, Chinese Vice Premier Wang Qishan and European Central Bank President Jean-Claude Trichet will gather in Nanjing for a one-day seminar on the international monetary system tomorrow. A Chinese state economist called for an end to the dollar’s dominance in a paper posted on a website yesterday, blaming the U.S. for fueling inflation. A 9.0-magnitude earthquake in Japan, armed NATO intervention in Libya, and the heightened prospect of a bailout of Portugal are among developments since Sarkozy proposed the meeting seven months ago.

State Tax Revenue Snaps Back (WSJ)
Total tax receipts for state and local governments hit $1.29 trillion in 2010, just 2.3% shy of the $1.32 trillion taken in during 2008, not adjusted for inflation, according to Census Bureau data.

Apollo Global Raises $565.4 Million in Expanded Share Offering (Bloomberg)
Apollo Global Management LLC raised $565.4 million, 13 percent more than it sought, pricing its share sale at the top end of the marketed range and increasing the number of shares sold. The private equity firm founded by Leon Black sold 29.8 million shares at $19 each, the company said yesterday in a statement. Apollo had offered 26.3 million shares at $17 to $19 apiece, according to a filing with the U.S. Securities and Exchange Commission. Proceeds will be used for general corporate purposes and “to fund growth initiatives,” the prospectus showed.

Private-Sector Job Growth Continues; Layoffs on Decline (CNBC)
The private sector added 201,000 jobs from February to March, according to a report from ADP that sets the stage for what is expected to be a similarly solid nonfarm employment report from the government later this week...The report signals "across-the-board strength by industry and by size," Joel Prakken, chairman of Macroeconomic Advisors, said on CNBC. In particular, he said the surge in service jobs helps balance the recovery and indicates that critical areas are catching up.

Real Estate Adds To Mets Owners' Headache (WSJ)
Last year, a loan servicer filed to foreclose on two office buildings in Fairfield, N.J., where the $609 million Sterling American Property V fund defaulted on a $35 million mortgage, according to loan research service Trepp LLC.

Five charged with using children's coloring books to smuggle drugs (PAC)
Disney-character coloring books arriving at the Cape May County Correctional Center and addressed “To Daddy” in a child’s handwriting were saturated with a narcotic drug as part of a smuggling operation, authorities said Monday. Two inmates at the correctional center, a state prison inmate and two others were charged with distribution of a controlled substance after they allegedly turned Suboxone, a prescription drug designed to treat opioid addiction, into a paste. The paste was then painted onto children’s pictures and sent through inmate mail, Cape May County Sheriff Gary Schaffer said Monday.


Opening Bell: 05.04.12

BofA Sees $5 Billion Collateral Need in Credit Downgrade (Bloomberg) A two-level downgrade of long-term senior debt ratings would have prompted the bank to post about $5.1 billion of collateral tied to derivatives contracts and other trading agreements as of March 31, the Charlotte, North Carolina-based firm said yesterday in a regulatory filing. It would have had to post an additional $1.1 billion of collateral if trading partners opted to tear up contracts in a two-level cut. RBS claims 'pleasing progress' though loss triples (AP) RBS, 82-percent owned by the British government after a massive bailout in the global the financial crisis, posted a 2011 first quarter net loss of £528 million. The lender said losses soared owing to an increase in the value of its outstanding debt to £2.46 billion. "As RBS's credit spreads tightened during the quarter, a charge of £2,456 million was booked for (our) own credit adjustments," RBS said in a statement. But the bank's underlying performance was brighter, with RBS posting a first quarter operating profit of £1.18 billion. RBS also confirmed that it would repay the last of emergency state loans totalling £163 billion but the British government will still own almost all of the bank after a £45.5 billion bailout following the 2008 financial crisis. "The start of 2012 has shown pleasing progress at RBS within the context of a flat economic environment," chief executive Stephen Hester said in the statement. Employers in U.S. Added Fewer Jobs Than Forecast in April (Bloomberg) Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent, and earnings stagnated. Facebook Targets $96 Billion Value (WSJ) With the pricing, Facebook is anticipated to raise as much as $13.6 billion, above earlier expectations of $10 billion. In a regulatory filing, Facebook said the company would seek to sell 337.4 million shares, with about half of those being sold by founders, employees and investors. The only U.S. issuers that have raised more money in an IPO were Visa Inc. at $19.7 billion in 2008 and General Motors Co. at $18.1 billion in 2010. Zuckerberg Facebook IPO to Make Him Richer Than Ballmer (Bloomberg) So that's exciting. Warren Buffett Has 'No Plans To Invest In Facebook IPO' (CNBC) When asked whether the current attention surrounding Internet IPOs reminded him of the tech stock bubble of the late 1990s, the Oracle of Omaha said, “It is not a bubble ... this is not what we were seeing in late 1999 all the way into 2001. We aren’t in any bubble phase of anything.” Inmates Dance, Deputy Fired (OBJ) Some inmates did the worm, others chose the old school robot. Each dance was performed to the beat of hip-hop artist Usher on command from a now-fired Summit County deputy. The inmate prize: use of a jail microwave. The charges are revealed in an internal affairs report released Wednesday. Deputy Dominic Martucci, 35, was fired for violating the department’s policies, including a mandate that inmates be treated humanely. Martucci is accused of ordering five inmates dance to Usher’s Yeah! song and then inviting other deputies to watch during an early evening shift on April 11. The inmates danced their way to regaining use of a microwave that they had lost earlier that day. Fitch CEO: US Downgrade Not Likely Before Election (CNBC) "We currently have the U.S. on a negative outlook, which actually suggests we think there is the potential for a downgrade," Taylor said in an interview. "It's too early to tell whether that will turn into an actual downgrade or not,” he said. “We think we still need to see what's going to happen through the elections and what actions are put in place subsequent to the elections. I think it's very clear that the U.S. does need to do something to deal with the debt problems built up since the financial crisis," he added. New Ripples For Gupta Case (WSJ) Mr. Gupta's criminal trial for securities fraud and conspiracy is scheduled to begin May 21 and expected to last about three weeks. Mr. Gupta has pleaded not guilty. His lawyer, Gary Naftalis, declined to comment for this article but previously has called the accusations "totally baseless." The Manhattan U.S. attorney's office also declined to comment. Federal prosecutors in Manhattan have taken note of the spike in trading in Goldman, which began as the firm's board concluded a special meeting to approve the deal that afternoon, according to people familiar with the matter. Galleon traders also noticed the climbing stock, conversations recorded on government wiretaps show. "Someone had this before us, someone, whatever went on, something happened," Galleon trader Ian Horowitz told Mr. Rajaratnam in a phone call the next morning, caught on tape by the Federal Bureau of Investigation. Goldman Readies Low-Cost Bond PLatform (WSJ) Goldman is preparing to roll out a bond-trading platform on which it will charge lower fees than on typical bond trades, according to people familiar with the matter, a move that could help retain customers tempted by rival trading venues being set up by BlackRock Inc. and others. AIG Invests $7.4 Billion at 5.3% to Boost Returns, Adds RMBS (Bloomberg) “We continue to be opportunistic with our investments in structured securities in order to improve yields, increase net investment income and offset the impact of a lower interest rate environment,” Wintrob said. BofA Talks Deal On Ex-Broker Pay (WSJ) The former Merrill brokers left the firm after the 2009 takeover by Bank of America and claim they are owed deferred compensation as a result of the deal. They were emboldened last month by an arbitration ruling ordering the Charlotte, N.C., company to pay more than $11 million to two former brokers with related complaints.