Opening Bell: 04.08.11

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Obama Demands Budget Deal To Avert Government Shutdown (Bloomberg)
fter meeting with House Speaker John Boehner and Senate Majority Leader Harry Reid, Obama said issues remained unresolved and he hoped for a breakthrough that would prevent a shutdown, set to begin at midnight tonight. “I’m not yet prepared to express wild optimism but I think we are further along,” he told reporters. “My hope is, is that I’ll be able to announce to the American people sometime relatively early in the day that a shutdown has been averted.”

SEC May Relax Limits On Shares In Private Firms (WSJ)
According to the letter and people familiar with the matter, the likely changes would include raising from 499 the number of shareholders private companies can have without being required to open their books, and also making it easier for such companies to publicize share offerings.

Portugal To Face Strict EU Aid Terms Amid Political Storm (Bloomberg)
In an unprecedented intervention in national politics, euro-area finance ministers said Portugal can win relief by mid- May as long as it makes cuts that go beyond measures that failed to pass parliament in March and led to the government’s downfall.

EU Stress Tests To Examine 90 Banks, 5% Capital Pass Rate (Bloomberg)
“Make no mistake, 5 percent of Core Tier 1 is harder in comparison with last year,” James Babicz, head of risk at SAS, a business analytics company, said in telephone interview in London today. “But I think you have to look at how risky a bank is rather than look at a static capital threshold.”

Marc Faber: Gold Is Still Cheap Despite Record Surge (CNBC)
Faber rejected the notion that gold is in a bubble even as it begins to approach $1,500 an ounce. "If it were a bubble a lot of people would have gold. The whole world would be trading gold 24 hours a day," he said. "But I don't think it's really a bubble. I think gold is maybe cheaper today than it was in 1999, when it was $252.

Why London Can Live Without Its Big Banks (Reuters)
"One or two of them might change their corporate headquarters for tax purposes but if they do go we probably won't even notice. There won't be a great outflow of workers and Canary Wharf won't turn into a ghost town."

Corporate Jets Often First Thing To Go After Leveraged Buyouts (Bloomberg)
Companies bought by private-equity firms are 32 percent less likely to have a jet in the three years after the deal closes than in the year before, according to a paper written by the Federal Reserve Board’s Jesse Edgerton. The study, published Jan. 21, found that jet fleets at LBO-backed companies are at least 40 percent smaller than at similar publicly traded firms.

Jefferies Expands (Breakingviews)
Jefferies' lineup now includes municipal bonds and an enlarged investment bank. Staffing has increased by more than a third since the financial crisis struck. Now it’s adding commodities and futures, by buying Prudential Bache for $430 million. Jefferies is still far from joining the big boys. Net profit last year was just $280 million, far less than what Goldman harvested. There’s still scope to grow, however. New hires arguably have not yet settled in enough to crank out their full earnings potential. Shareholders appear to have baked in a better relative performance at Jefferies: the stock trades at about 1.7 times book value, double Morgan Stanley’s multiple and a third better than Goldman’s.

An Aggressive Fed? More Of Street Betting On It (Reuters)
The survey found that about a third of the economists, fund managers and strategists who responded to the survey see the Fed hiking interest rates this year, double the percentage from the March survey. About 27 percent believe the Fed will begin selling assets in the second half of 2011, to reduce the size of its portfolio, up from around 16 percent in the prior survey.

How To Pay No Taxes (BusinessWeek)
Some tips.

Asian Central Banks Intervene As Currencies Rise (WSJ)
Asian currencies rose against the dollar Friday, prompting a number of regional central banks to intervene, as the U.S. currency fell over that nation's budget woes and a rise in the euro spurred the region's currencies higher. The move follows Thursday's rate increase by the European Central Bank, its first tightening since 2008. While the move was widely expected, it suggests world economic growth will continue to improve.

Speed Trading May Be Heading Out To Sea, Literally (CNBC)
In many cases, the best places to maximize chances of buying low in one place and selling high in another (for example between New York and London) were located in the world's oceans. So could this be the end of traditional fixed stock exchanges in the world's biggest cities and the rise of floating exchanges in the mid-Atlantic ocean? Wissner-Gross believes that floating trade centers could be a reality of the future.

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.