Opening Bell: 04.12.11

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JPMorgan, BofA Earnings May Show Weaker Revenue (Bloomberg)
“While loan growth tends to be seasonally weak in the first quarter, this quarter is tracking worse than seasonality would suggest,” Barclays Capital Inc. analysts led by Jason Goldberg wrote in an April 8 report. “We fear companies have been disappointed.” Profits may have increased even with declining revenue as lenders set aside fewer funds to cover loan losses and in some cases released reserves they’ve already built up, said Matt Burnell, a banking analyst at Wells Fargo. Cost reductions may also help the bottom line in a smaller way, Burnell said.

Goldman Sachs Accused by Marvell Founders of Margin Call Fraud (BW)
Sehat Sutardja, Marvell’s chief executive officer, and Weili Dai, the company’s former chief operating officer, said they were duped into selling shares in 2008 that are now worth $141.5 million, according to a complaint filed yesterday in state court in San Francisco. Goldman Sachs pressured them by claiming a regulatory rule, which didn’t exist, required them to sell their stock, according to the complaint.

US Lawmakers Reach Agreement On $38 Billion In Cuts (Bloomberg)
The U.S. Environmental Protection Agency, high-speed rail and law enforcement are among the programs that would get reduced funding as part of a budget deal to avert a government shutdown, according to legislation unveiled this morning that identified specific cuts.

BofA Kept Executives In Dark On Dividends (WSJ)
The March 23 filing with the Securities and Exchange Commission was more explicit than an earlier news release. It showed that the Federal Reserve had "objected" to the proposed dividend increase following a "stress test" of all major U.S. financial institutions. Shares of Bank of America, the only bank to disclose the Fed's outright objection, dropped almost 4% in three days after the filing. But Chief Financial Officer Chuck Noski and Chief Accounting Officer Neil Cotty didn't see the filing before it went to the SEC, people familiar with the matter said. Head of investor relations, Kevin Stitt, found out late the night before, according to one of these people.

Gupta Says His SEC Suit Should Be Heard In Federal Court (Bloomberg)
...instead of dismissing the complaint as the agency has requested.

Sokol Knew Lubrizol’s Board Would Be Told of Berkshire Interest (Bloomberg)
Sokol knew Dec. 17 that Lubrizol Corp Chief Executive Officer James Hambrick planned to notify his board of directors about Berkshire Hathaway Inc.’s possible interest in acquiring the company. Sokol, who had inquired about Lubrizol through Citigroup Inc. bankers, was informed of Hambrick’s intention by the same bankers, according to a Lubrizol regulatory filing yesterday.

Hedge Funds Attract $35 Billion In February, Heaviest Inflow On Record (Barron's)
Hedge funds attracted net inflows of $34.9 billion in February, their heaviest monthly inflow total on record, according to BarclayHedge and TrimTabs Investment Research. That helped to raise industry assets to $1.73 trillion, the highest level since October 2008.

Japan Nuclear Disaster Put on Par With Chernobyl (NYT)
The decision to raise the alert level to 7 from 5 on the scale, overseen by the International Atomic Energy Agency, is based on new estimates by Japanese authorities that suggest the total amount of radioactive materials released so far from Fukushima Daiichi since the beginning of the crisis had reached that threshold.

Fed Plays Down Inflation (WSJ)
At the Economic Club of New York on Monday, Janet Yellen, the Fed's vice chairwoman, said U.S. monetary policy "continues to be appropriate."

Super Jumbo Jet Clips Another Plane At JFK (WSJ)
The wing of an Airbus A380—the world's largest passenger airliner—scraped against the tail of a much smaller regional jet at JFK Airport Monday night. The A380 was an Air France flight bound for Paris. It had left the terminal and was headed for the runway. Meanwhile, a Bombardier CRJ7 jet operated by Comair, which operates flights for Delta Air Lines, had just arrived from Boston and was taxiing toward its gate. As the two planes crossed on intersecting taxiways, the Airbus's wing hit the rear of the smaller jet.

Facebook Claimant Says He Has Email Proof He Owns Half (Bloomberg)
Paul Ceglia alleges that Zuckerberg defrauded him, lying about the early success of “The Face Book” at Harvard University, where Zuckerberg was a student at the time. Ceglia claims he is entitled to half of Facebook...Ceglia claims in his complaint that he contributed “his time, ideas, knowhow, and other ‘sweat equity’” to the start of Facebook.

Related

Opening Bell: 05.08.12

When Facebook Met Wall Street (WSJ) On Monday, investors piled into the hotel to hear what Mr. Zuckerberg and his lieutenants had to say about the offering. At one point, the line, leading to a second-floor ballroom where the meeting was scheduled to be held at 11:45 a.m., stretched down to the first floor and spilled out of the hotel for nearly half a city block. At least one investor waiting in line said he didn't expect anything to be revealed that wasn't already in Facebook's securities filings. Rather, he was there to take in the show, and lunch (which was Cobb salad and grilled chicken). A 30-minute video about Facebook, which had been widely distributed before Monday, led the lunch, according to attendees. The next part of the presentation was briefly delayed by Mr. Zuckerberg's absence. The CEO was in the bathroom, explained Chief Financial Officer David Ebersman to attendees. (Mr. Ebersman wore a navy suit.) Yahoo CEO Apologizes in Memo, Board Meets (Reuters, earlier) Yahoo Inc's board convened on Monday afternoon to discuss the mounting upset surrounding Chief Executive Scott Thompson, who has apologized to employees after being accused last week by activist investor Daniel Loeb of padding his resume, a source with knowledge of the matter said..."I want you to know how deeply I regret how this issue has affected the company and all of you," Thompson wrote in his first extended memo to employees since the disclosures emerged on May 3. "We have all been working very hard to move the company forward and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you." Billion-Dollar Traders Quit Wall Street For Hedge Funds (Bloomberg) Wall Street’s biggest banks have lost almost two dozen of their most-profitable credit traders in the past 13 months as regulators limit the kind of risk-taking that amplified the housing crisis four years ago. As banks slash or defer pay and reduce the amount they’re willing to wager, the traders are seeing better opportunities at hedge funds and investment firms that seek to profit in markets lenders are retreating from. Wall Street Banks Depressed In Secular Shift (Bloomberg) To Kevin Conn, who has been analyzing bank stocks for 15 years, the investment climate for Wall Street’s biggest firms has entered the realm of science fiction. “It’s like that Ray Bradbury short story where it rains for months in a row,” said Conn, who works for Massachusetts Financial Services Co., referring to “The Long Rain,” published in 1950. “It’s one of these terrifically depressing short stories where the weather just never changes.” Spain To Spend Billions On Bank Rescue (FT) Spain is planning a state bail-out of Bankia, the country’s third biggest bank by assets, in a move likely to involve the injection of billions of euros of public money into the troubled lender. In an abrupt reversal of policy, the Spanish government, which had previously insisted that no additional state money would be needed to clean up the country’s banking sector, confirmed that an intervention was being prepared. OWS Mom Snubs Plea (NYP) Occupy Wall Street protester Stacey Hessler, 39, arrested in November for resisting arrest and disorderly conduct, yesterday refused an offer to have her charges dismissed and will instead face a trial...Hessler had originally planned to accept the judge’s offer of an adjournment contemplating dismissal, which erases the charge if the defendant stays out of trouble for six months, but later changed her mind, her attorney said. SEC Orders Probe Of Watchdog Office (WSJ) The Securities and Exchange Commission has ordered an independent inquiry into allegations of sexual misconduct by current and former staff working for its office of the inspector general, according to a person familiar with the matter. The complaint includes allegations that the misconduct compromised certain investigations of the SEC, according to the person familiar with the situation. Apollo's Profit More Than Doubles (WSJ) For the first quarter, Apollo reported a profit of $98 million, or 66 cents a share, up from a year-earlier profit of $38.2 million, or 33 cents a share. Economic net income rose to $1.10 from 99 cents a year earlier. Analysts surveyed by Thomson Reuters expected 78 cents a share...Total revenue rose 12% to $776.7 million, far better than the $547 million expected by analysts. Bank of America Offers Principal Reductions to 200,000 Homeowners (CNBC) “If people get these things and toss them, they won’t be eligible,” says Ron Sturzenegger, the Bank of America executive charged with providing solutions to borrowers in need of mortgage assistance. But the offer is real, and eligible borrowers could get as much as $150,000 knocked off the balance of their mortgages. It is all part of the $25 billion settlement reached this year between federal and state agencies and the nation’s five largest mortgage servicers over fraudulent foreclosure document processing (so-called “robo-signing”). No Repeating Slowdown Seen by U.S. With Banks to Housing (Bloomberg) Rising auto sales, improving bank credit and stabilization of housing are among the signs the economy is more resilient now than it was around the same time in 2010 and 2011, according to Marisa Di Natale, an economist at Moody’s Analytics in West Chester, Pennsylvania. “From where we sit right now, we think the economy looks fundamentally stronger,” Di Natale said. “Surveys of business and consumer confidence are better, the labor market data looks a lot better than it did last year, even some of the housing data looks better.” Ex-Tyco CFO: Gimme the $ I didn’t steal! (Reuters) Former Tyco International Chief Financial Officer Mark Swartz, who is serving a prison sentence for looting the company, has sued for $60 million in retirement and other money he says he is owed. The lawsuit, which was made public yesterday, accuses Tyco of breach of contract and unjust enrichment for not paying him some $48 million from an executive retirement agreement, $9 million in reimbursement for New York taxes, and other money. Winner Of Mexican Presidential Debate? Julia Orayen (AP) Who won Mexico's presidential debate? According to the media and Twitter frenzy, at least, the victor wasn't any candidate but a curvaceous model in a tight gown who puzzled millions by appearing on stage for less than 30 seconds during the showdown. Julia Orayen has posed nude for Playboy and appeared barely dressed in other media, but she made her mark on Mexican minds Sunday night by carrying an urn filled with bits of paper determining the order that candidates would speak. She wore a tight, white dress with a wide, tear-drop cutout that revealed her ample decolletage. The image was splashed across newspaper front pages and websites by Monday. "The best was the girl in white with the cleavage at the beginning," tweeted former Mexican Foreign Minister Jorge Castaneda, who is also a New York University professor...Alfredo Figueroa, director of the Federal Electoral Institute responsible for organizing the debate, blamed the incident on a production associate hired by the institute to help with the debate. The institute later issued an apology to Mexican citizens and the candidates for the woman's dress.

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.