Opening Bell: 05.11.11

Commodity hedge funds upbeat after mauling (FT)
Last week saw the largest daily trading volume in Brent crude’s history as investors – a large proportion of them hedge funds – began to liquidate positions in a stampede to reduce risk. It was a rush to the exits that was seemingly without cause, however. Many fund managers are at a loss to explain what triggered the panic, dismissing the explanations that have been proffered – weak US economic data, a hike in commodities trading costs or even hedging upcoming equity exposure to the giant Glencore listing...But crucially such losses – unattractive though they are – have done little, if anything, to dent managers’ confidence in the long commodities play.

AIG Offering Near Low End of Range (WSJ)
American International Group Inc. and the Treasury decided to move ahead with a stock offering this month for about $9 billion, far less than what officials had once hoped to fetch, people familiar with the decision said…[AIG's board] decided to proceed with plans for an offering near the low end of a range envisioned by people familiar with the plan of $7 billion to $25 billion, depending on investor demand and market conditions.

Banks Float $5 Billion Deal to End Foreclosure Probe (WSJ)
Such an offer is considerably less than the amounts sought by state and federal officials, some of whom are asking for more than $20 billion in penalties. The banks' figure comes as mortgage companies and state and federal officials continue their efforts to strike a settlement of investigations sparked by allegations of "robo-signing" and other questionable foreclosure practices that came to light last fall.

Preemptive strike against high prices may be needed, Fed official says (WaPo)
The Federal Reserve needs to be prepared to take preemptive action against even the possibility of a surge of higher prices, a senior official of the central bank said Tuesday. Jeffrey M. Lacker, president of the Federal Reserve Bank of Richmond, added in an interview that he doesn’t think the recent rises in the price of fuel and other commodities will spiral into a broader inflation, but he cautioned that the central bank needs to remain vigilant.

Dodd-Frank Dissenters Sound Off (Dealbook)
And Ken Griffin, founder of the $15 billion hedge fund Citadel Investment Group, went the furthest by proclaiming that not only would the legislation not work as proposed, but it is “going to deeply entrench crony capitalism into the very fabric of our financial system, which I am terrified about.”

Ex-Galleon Trader Kimelman Wants Jury Told He Rejected Plea Deal With U.S. (Bloomberg)
Former Galleon Group LLC trader Michael Kimelman said he wants jurors at his upcoming insider- trading trial to be told that he could have avoided jail by admitting guilt and rejected a plea deal because he’s innocent. Kimelman is scheduled for trial on May 16… The government’s offer would have had Kimelman plead guilty to conspiracy to commit securities fraud and “was still available last week,” according to the filing.

FDIC warns on moral hazard for money market funds (Reuters)
[Sheila] Bair, outgoing chairman of the Federal Deposit Insurance Corp, said regulators needed to be mindful of so-called moral hazard in creating a backstop for the $2.7 trillion industry. During the financial crisis, the federal government was forced to backstop the market after the collapse of Lehman Brothers pushed the value of the Reserve Fund money market fund below $1 a share, wreaking havoc on the industry.

China Inflation Signals More Tightening to Come (Bloomberg)
China’s inflation held above 5 percent in April and lending exceeded analysts’ estimates, signaling that further monetary tightening may be needed to cool the fastest-growing major economy…Today’s data showed that inflation has exceeded Premier Wen Jiabao’s 4 percent target each month this year.

German Inflation Accelerated More Than Estimated (Bloomberg)
The inflation rate, calculated using a harmonized European Union method, jumped to 2.7 percent from 2.3 percent in March, the Federal Statistics Office in Wiesbaden said today. That’s an upward revision from the first estimate of 2.6 percent on April 27. From March, consumer prices rose 0.3 percent, more than the 0.2 percent initially reported.

Bank of England cuts growth forecasts (FT)
The Bank’s central forecast now predicts growth of about 2.7 per cent in the four quarters to the end of this year, down from its February forecast of growth of 2.9 per cent, assuming no change in monetary policy. Growth in the year to the end of 2012 is expected to be about 2.8 per cent rather than 3.2 per cent. Inflation is forecast to peak this year at about 5 per cent in the fourth quarter, rather than at about 4.5 per cent. By the end of next year, inflation is expected to reach 2.4 per cent, compared with an earlier forecast of 1.7 per cent.

Greek unions hold new general strike, plan demonstrations, to protest harsh austerity (WaPo)
A 24-hour general strike in Greece Wednesday brought most public services to a halt, while thousands marched through Athens to protest the government’s introduction of harsh austerity measures intended to keep the debt-ridden country solvent. This month, the Socialist government is planning to pass further cutbacks aimed at saving an estimated €23 billion ($33 billion) through 2015.

Google Sets Aside $500 Million for Probe (Bloomberg)
Google set aside $500 million related to the possible resolution of a U.S. Justice Department investigation of its advertising business, resulting in lower first-quarter profit. The expense trimmed net income to $1.8 billion, or $5.51 a share, in the period, Google said yesterday in a regulatory filing.

Stanford Trial Set for September (WSJ)
Jailed money manager R. Allen Stanford will go to trial on wire-fraud and other charges in September, a federal judge in Houston has ruled. Jury selection will begin Sept. 12 in the trial of Mr. Stanford, who has been accused of running a $7 billion fraud, according to an order issued by U.S. District Judge David Hittner in Houston on Tuesday.

'Mack' the life (NYP)
Mark Madoff's widow, Stephanie, filed two name change petitions to distance herself and her children from her husband's notorious last name. After the couple received numerous threats, Mark gave Stephanie his blessing to change her last name to "Morgan" in February 2010, and since then she's been called Stephanie Morgan. When the name change request was reported, sources say Morgan filed a second petition to change her family name to "Mack."

Female peacock escapes from Bronx Zoo, still on the loose on NYC streets (NYDN)
The Bronx Zoo cobra may be back in captivity, but a female peacock is on the loose. Three zoo workers wielding nets made a failed attempt to recapture the green peahen about noon on Tuesday…Zoo workers crawling stealthily through the grass got within a few feet of the feisty fowl before she flew off again. She hasn't been seen since…"We'll get her eventually," vowed Nancy Clum, the zoo's curator of ornithology.