Opening Bell: 05.12.11

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Next Up: A Crackdown on Outside-Expert Firms (DealBook)
With the government securing a conviction against Raj Rajaratnam of the Galleon Group on Wednesday, federal prosecutors will shift their focus to expert networks — the intricate web of money managers, corporate executives and consultants at the center of another wave of insider trading cases.

Goldman Sachs Viewed Unfavorably by 54% (Bloomberg)
The company was viewed less favorably than other banks by the 1,263 poll respondents. While 54 percent said they had an unfavorable view of Goldman Sachs, 25 percent felt the same about JPMorgan, 49 percent for Citigroup Inc. (C) and 48 percent for Bank of America Corp. (BAC) Thirty-five percent had an unfavorable view of Frankfurt-based Deutsche Bank AG (DBK), which was also singled out in the U.S. Senate subcommittee report.

AIG Share Sale Starts But Could Be Pulled (WSJ)
The stock offering commenced Wednesday following lengthy discussions between Treasury and AIG's management and directors about what they want to achieve from the share sales…Following the discussions, the Treasury and AIG are now in alignment about how to proceed with the offering, and they won't sell shares if taxpayers don't earn a profit now and in the future on the sales, according to people familiar with the matter. In other words, if they don't get the price they want, Treasury will "pull the deal," said one of the people.

Glencore Said to Gain Double Orders for IPO (Bloomberg)
Glencore International Plc received enough demand from investors for its $11 billion initial public offering to sell the shares more than twice over, according to three people with knowledge of the matter. Highbridge Capital Management LLC, a hedge fund owned by JPMorgan Chase & Co., proposed a $500 million investment, said one of the people, who declined to be identified because the information isn’t yet public. The last orders for the offer are due on May 18, with final pricing to be disclosed the following day, according to a term sheet for the sale.

Exit interview: Kobe Bryant says Lakers' failed title run was a 'wasted year of my life' (LA Times)
Kobe Bryant is never much for sentimentality, and he's not going to change any time soon. So when he reflected Wednesday on the Lakers' underachieving 2010-2011 season, which included being swept in a Western Conference semifinal series, Bryant didn't mince words on his disappointment.

China hikes reserve requirement ratio for banks (MarketWatch)
The People's Bank of China lifted the ratio of funds domestic banks must set aside as reserves on Thursday, the fifth such hike this year amid persistent inflation concerns. From Monday the reserve requirement ratio will be increased 0.5-percentage point, bringing the rate to 21% for most big banks and 19% for smaller banks.

Copper tumbles to 5-month low on growth blues (Reuters)
Copper tumbled to a five-month through on Thursday as investors headed for the exit, fearing slower economic growth and demand from top consumers China and the United States. Also weighing on sentiment was the stronger dollar .DXY across a basket of currencies, which makes commodities priced in dollars more expensive for holders of other currencies.

SEC Investigating State Street Foreign Exchange (WSJ)
The Securities and Exchange Commission is investigating State Street Corp.'s foreign-exchange trading on behalf of pension funds in a sign that law-enforcement probes into how custody banks process tens of thousands of foreign-exchange trades are widening.

Draghi to Take Helm at ECB in November (Bloomberg)
[Italy’s Mario] Draghi, 63, will on Nov. 1 inherit an ECB that’s almost unrecognizable from the one Jean-Claude Trichet took charge of eight years ago. The bank’s balance sheet has more than doubled to 1.9 trillion euros ($2.7 trillion), mostly as a result of the extraordinary measures it used to battle the global financial crisis and now Europe’s sovereign debt woes…[German Chancellor Angela] Merkel made clear she’s backing the Bank of Italy governor in the expectation he will subscribe to the tight-money tradition of the Bundesbank, which provided the blueprint for the ECB when it was created 1998.

Bill Proposes Mortgage Shake-Up (WSJ)
Two lawmakers, a California Republican and a Michigan Democrat, are set to unveil legislation Thursday to replace mortgage giants Fannie Mae and Freddie Mac with at least five private companies that would issue mortgage-backed securities with explicit federal guarantees… Like Fannie and Freddie, the new entities would be restricted to buying loans that meet certain standards, including size caps. But the firms would have to hold much more capital than Fannie and Freddie.

Goldman, Beijing Launch Yuan Private-Equity Fund (WSJ)
Goldman Sachs Group Inc. has signed a deal with the Beijing government to launch a yuan-denominated private-equity fund that aims to raise 5 billion yuan ($769 million), according to a person familiar with the situation.

Morgan Stanley to Announce Private-Equity Yuan Fund (WSJ)
Morgan Stanley is expected to announce details of a yuan-denominated private equity fund in Hangzhou next week, according to a person familiar with the matter. The Wall Street firm will be running the fund in a partnership with Hangzhou Industrial & Commercial Trust Co., the person said. It wasn't immediately clear how much the fund expected to raise.

China growth could slow to 8 percent: Goldman's O'Neill says (Reuters)
"It is my judgment that the Chinese economy is probably slowing down more than people realize," [O'Neill, Chairman of Goldman Sachs Asset Management] said, adding that as a result, he was not surprised that commodity prices are coming under pressure. As evidence, he cited the Goldman Sachs China Activity Index, the firm's propriperary indicator of GDP, which shows that the momentum of Chinese growth has slowed, and that slowdown was supported by economic data reported this week. "And I suspect that China is going to slow down to around 8 pct GDP growth. If I'm right, that means sometime in the 2nd half this year, Chinese inflation will not be a problem, and will come back down to around 4 percent," he said. "And the PBOC will be able to stop tightening monetary policy and we can all live happily ever after."

UBS: Basel Rules Leave Banks Overcapitalized (WSJ)
Banks will likely have too much cash by 2019 as a result of the Basel III global banking rules, UBS AG Chief Executive Oswald Grübel said Thursday. "In the next 10 years, at the end of 2019, we will have overly liquid, overcapitalized banks," said Mr. Grübel, who was addressing a business audience at a conference here. "However this also means we won't have a lot of growth," he said.

MIT sells $750m of century bonds (FT)
The Massachusetts Institute of Technology is planning to sell 100-year bonds as the recent drop in interest rates draws a flood of bond issuance this week.

In Exquisite Detail, Donald Trump Describes How He Styles His Hair (Rolling Stone via Vanity Fair Daily)
“O.K., what I do is, wash it with Head and Shoulders. I don’t dry it, though. I let it dry by itself. It takes about an hour. O.K., so I’ve done all that. I then comb my hair. Yes, I do use a comb. Do I comb it forward? No, I don’t comb it forward. I actually don’t have a bad hairline. When you think about it, it’s not bad. I mean, I get a lot of credit for comb-overs. But it’s not really a comb-over. It’s sort of a little bit forward and back. I’ve combed it the same way for years. Same thing, every time.”

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