Opening Bell: 05.09.11

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Commodity hedge fund loses $400m in oil slide (FT)
Clive Capital, the world’s largest commodity hedge fund, has been left nursing losses of more than $400m as a result of the collapse in the price of oil last week…Others, including Astenbeck Capital, the Phibro-owned fund run by Andrew Hall, are thought to have taken double-digit percentage point losses to their portfolios, according to investors…In a letter sent to investors on Friday and seen by the Financial Times, Clive said it was down 8.9 per cent on the week after what it called “extraordinary” price movements on Thursday. Clive’s management said it was at a loss to explain what had caused crude oil markets to be “annihilated”.

Silver-Mad Small Investors Fueled an Epic Rise and Fall (WSJ)
Behind silver's historic collapse is a market that came loose of its moorings, fueled by speculative traders, many of them small investors who may have jumped in at just the wrong moment. "If gold is a Monte Carlo casino, silver is a slot machine in Las Vegas," says Andy Smith, a senior metals strategist at Bache Commodities.

Euro Nations Divided Over Greek Debt (WSJ)
Finance chiefs from the most important euro nations discussed Greece's problems—and other issues, including Portugal's imminent aid package—at informal talks in Luxembourg on Friday. The gathering, one of many informal meetings of select European officials since the financial crisis began, turned into a media circus after Germany's Spiegel Online reported its existence Friday—and claimed it had been called because Greece was thinking of leaving the euro zone. The report sent the euro tumbling…"We are not discussing the exit of Greece from the euro area. This is a stupid idea and an avenue we would never take," said the host of Friday's meeting, Luxembourg Premier Jean-Claude Juncker.

EU eyes lower rates for Greece, Ireland amid chaos (Reuters)
The European Union is looking to lower interest rates on bailout loans to Greece and Ireland and is working on a second rescue for Athens in a chaotic effort to prevent a disorderly debt restructuring. The executive European Commission said on Monday it hoped to see a decision within weeks on reducing the rate charged to Ireland to make Dublin's debt more sustainable.

Irish to Avoid ‘Doomsday,’ Honohan Says as Rescheduling Mooted (Bloomberg)
Irish central bank Governor Patrick Honohan said the country will avoid economic “doomsday,” as a government minister and prominent professor suggested the nation should reschedule debts from its as much as 85 billion-euro ($121 billion) bailout. Honohan was responding to Morgan Kelly, an economics professor dubbed Ireland’s Doctor Doom, who wrote in the Irish Times newspaper that Ireland faces a “prolonged and chaotic national bankruptcy.”

U.S. Will Urge China to Boost Interest Rates in Washington Talks (Bloomberg)
Treasury Secretary Timothy F. Geithner will urge China to allow higher interest rates when he meets with Chinese leaders this week, as the U.S. extends its push for a stronger yuan.

Private Equity Has A Horse In This Race (Dealbook)
Carl Pascarella, an executive at TPG, the private equity firm, owns a piece of the the colt that shocked the horse racing world on Saturday with a come-from-behind victory. Animal Kingdom, who had never run on dirt and only had four races under his belt, covered the mile and a quarter in 2:02.04.

AIG Fall Blunts Talk Of Taxpayer Gain (WSJ)
What Treasury chooses to do with its AIG shares "is essentially a political decision," says Jay Ritter, a finance professor at the University of Florida. "Government officials and politicians would like to say we broke even and didn't lose any taxpayer money" in the AIG bailout, he says. "But as a taxpayer, I would be happy if we got out close to whole, and losing a little would ultimately be a good outcome" given the amount that was committed to the AIG bailout, Mr. Ritter says.

Fee Pitched for Fast Firms (WSJ)
Sen. Charles Schumer told regulators that sophisticated electronic traders should bear the cost of monitoring their dealings, with special fees assessed to firms that issue and then rapidly cancel securities orders.

UBS fears missing ambitious targets (FT)
Oswald Grübel, chief executive, surprised analysts last month by maintaining his medium-term goals of SFr20bn (€16bn) in annual revenues and SFr6bn in pre-tax profits for the group’s recovering investment bank. UBS’s performance targets were set in late 2009, before the new Basel III framework was finalised and before regulators in Switzerland proposed their own additional capital requirements for the group…However, according to senior UBS bankers, there is a growing acceptance that the targets are aspirational and will be extremely difficult to achieve over the next two years.

Moody's: Expiring of US muni backstops going well (Reuters)
An expected flood of expirations of liquidity facilities on U.S. municipal debt this year is so far going well, Moody's Investors Service reported on Monday.

SEC reform proposal threatens ‘dark pools’ (FT)
The US Securities and Exchange Commission is considering a proposal to move more trading back on to exchanges from alternative venues such as “dark pools”, which has drawn sharp criticism from banks and many trading firms. David Shillman, associate director of the SEC’s division of trading and markets, told the Financial Times that a so-called “trade at” rule is “very much in play. There’s interest in it”. The “trade at” rule, which would require non-exchange venues to improve on the displayed market price, is a response to concerns among some academics and market participants that a rising share of trading happening outside of exchanges is making trading more expensive and difficult.

US Q1 home values see biggest drop since 2008–Zillow (Reuters)
Zillow said its home value index fell 3 percent in the first three months of the year from the previous quarter, and was down 8.2 percent year-over-year.

Seeking Business, States Loosen Insurance Rules (NYT)
Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.

Berkshire Hathaway profit falls on Japan (Reuters)
Berkshire reported a net profit of $1.51 billion, or $917 per Class A share, compared with a profit of $3.63 billion, or $2,272 per Class A share, a year earlier. The company took a provision of $1.7 billion in the first quarter for catastrophe losses, primarily for the Japan earthquake but also from a quake in New Zealand and flooding in Australia…Berkshire also recorded losses of $506 million in the first quarter for stocks where the company's investment was in a loss position and that loss was not considered temporary. The biggest share of the loss was an impairment on part of Berkshire's stake in Wells Fargo, and the rest came from an impairment on the stake in Kraft Foods.

HSBC Costs Rise on New Hires and Customer Compensation (Bloomberg)
Costs as a proportion of income rose to 60.9 percent from 49.6 percent, the London-based bank said today in a statement. Net income rose 58 percent to $4.15 billion compared with $2.63 billion in the year-earlier period, the bank said in its first detailed quarterly earnings report. The shares fell.

U.S. gas prices hit $4 a gallon, but may retreat (Reuters)
The national average for self-serve, regular unleaded gas was $4 per gallon on May 6, up 11.98 cents from April 22, according to the nationwide Lundberg Survey. This was still below the all-time high of $4.11 on July, 11, 2008, and last week's fall in crude oil prices may lead to a 8- to 12-cent drop in prices at the pump over the next few weeks, according to Trilby Lundberg, the survey's editor.

Sweep is an ugly ending for Lakers and a bittersweet one for Phil Jackson (LA Times)
The Mavericks' 122-86 blowout victory in Game 4, which completed their 4-0 sweep of the Western Conference semifinal series, perhaps came at the right time for the Lakers. They appeared to be teetering, perhaps because this was the 77th postseason game they had played since 2008, nearly an extra 82-game regular season in a four-year span. "I was talking to Kobe [after the game] and we both agreed it was better to lose now than to get to the [NBA] Finals and lose," Jackson said. "Going all the way and losing in the Finals, now that's really tough."

What was in medicine chests at bin Laden compound? (MSNBC)
Either Osama bin Laden or those who lived with him at the Pakistan compound where he was killed apparently suffered from stomach ulcers, high blood pressure and nerve pain — plus the normal ailments that affect a family with children, according to a pharmacist’s analysis of medications reportedly found at the site. In addition, the medicine cache was said to contain Avena syrup, a botanical product that has at least two uses: as an artificial sweetener often used for a sour stomach and as “natural Viagra” that could be used to increase sexual desire and potency.

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Opening Bell: 09.14.12

Trial to Begin for Former UBS Trader Accused of Hiding Huge Loss (Dealbook) UBS will face the harsh glare of the spotlight again on Friday, as opening arguments begin in the trial of a former trader accused of hiding a multibillion-dollar loss at the investment bank. Kweku M. Adoboli, 32, the former trader, faces charges of false accounting and fraud in connection with a $2.3 billion loss at the bank. He has pleaded not guilty. “As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously,” the bank’s chief executive, Sergio P. Ermotti, said in an internal memo made public by the firm. JPMorgan Erases Stock Drop Fueled by London Trading Loss (Bloomberg) JPMorgan, the lender that plunged as much as 24 percent in the month after disclosing a multibillion-dollar trading loss, has erased that decline. The bank’s stock climbed 3.7 percent to $41.40 yesterday in New York, eclipsing the $40.74 closing price of May 10, when Chief Executive Officer Jamie Dimon announced what was then a trading loss of about $2 billion at the chief investment office in London. The loss this year now stands at $5.8 billion. Dutch and Germans Give European Union Reasons to Cheer (NYT) On Wednesday, the German Constitutional Court found a way to declare that the permanent bailout fund, the European Stability Mechanism, is legal, clearing the way to use it in time to recapitalize troubled banks as well as governments. And the Dutch voted for mainstream parties in a parliamentary election, choosing not to be enticed by parties wanting to leave the euro. Combined with the European Central Bank’s decision to restart its bond-buying program in return for more budget discipline, immediately lowering interest rates on Italian and Spanish bonds, European leaders could begin to feel that perhaps the worst is over in the euro crisis, at least for now. “With the Dutch shying away from anti-European parties the same day the German Constitutional Court rules in favor of the E.S.M., Sept. 12 seems to have been a good day for the euro,” Dimitry Fleming of ING Groep NV said in an analysis via e-mail. Not all is well, of course. Greece remains a mess, and will probably need even more money. A decision keeps being postponed about when, and whether, to grant Athens another big portion of loan money it needs to stay afloat. Deutsche Bank urges rivals to share IT (FT) Deutsche Bank is seeking to convince rival investment banks to share markets and trading software in an effort collectively to lower costs for the financial industry. Sharing software would be an unusual step for investment banks, which have historically closely guarded their technology, much of which is still built in-house at great expense. But Deutsche Bank’s efforts underscore the intense pressure banks are under to cut costs as lower markets activity and new rules eat into their profit margins...Sharing market software, Deutsche says, will save it and other big global banks some of the billions of dollars and euros that they would otherwise have spent building or improving on individual technology systems. Woman Tells Police She 'Accidentally' Stabbed Boyfriend (AZC) Margarita H. Zaragoza told police she and her boyfriend were arguing over alcohol that he poured down the sink when she "accidentally" stabbed him with a steak knife, according to the document. Zaragoza said her boyfriend came up behind her to talk to her while she was washing a knife in the sink, according to police, and that she accidentally stabbed him in the arm when she turned to talked to him. The victim told police his girlfriend became angry after he poured her alcohol down the sink because she is pregnant and isn't supposed to be drinking, the document said. The victim said Zaragoza grabbed a knife while he was getting rid of the alcohol and stabbed him twice in the arm, according to the document. Roger Altman: The US Economy May Surprise (CNBC) Looking out a few years, the Evercore founder said, “We’re going to have a bigger snap-back in housing than people think. The U.S. has undergone a breathtaking revolution in oil and gas production and the growth impact of that is underrated.” Altman also pointed to a bounce-back in lending and strong industrial competitiveness as reasons to be optimistic about the economy longer term. Fed Acts To Fix Job Market (WSJ) "If the outlook for the labor market does not improve substantially, the [Fed] will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed said in its postmeeting statement. Berkshire Climbs To Four-Year High On Fed's Action (Bloomberg) So that's nice. Mets fan who rushed Citi Field after Johan Santana's no-hitter slapped with $5,000 fine and 100 hours of community service (NYDN) Rafael Diaz, 32, was hit with the penalties after he pleaded guilty Thursday to interfering with a sporting event. “The defendant’s antics have resulted in a criminal record, the paying of thousands of dollars in fines and civil penalties, and – perhaps the worse punishment for any true Mets fan – precludes him from ever again visiting Citi Field,” Queens District Attorney Richard Brown said. Diaz, of Massapequa, L.I., who joined the celebration on the pitcher's mound June 1, was ordered to hand over $4,000 in civil penalties to the Mets and $1,000 to the city.

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.