Opening Bell: 05.23.11

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Options Trading in SAC Probe (WSJ, earlier)
Congressional investigators are broadening an early-stage stock-trading probe into SAC Capital Advisors, with plans to examine any suspicious trading by the hedge-fund giant in the options market, another arena where investors wager on the prospects of companies and deals, according to people familiar with the matter. The Wall Street Journal reported Friday night that Iowa Sen. Charles Grassley, the top Republican on the Senate Judiciary Committee, is investigating roughly 20 instances over the past decade when the Financial Industry Regulatory Authority, a Wall Street regulator, suspected SAC could have bought and sold stocks based on inside information.

Fitch cuts Greek rating, warns over restructuring (Reuters)
"An extension of the maturity of existing bonds would be considered by Fitch to be a default event and Greece and its obligations would be rated accordingly," the rating agency said. If private sector 'burden sharing' is coercive, the credibility of EU/IMF policy commitments not just for Greece but also Ireland and Portugal would be severely diminished and affect financial stability across the euro area, it said.

Lagarde Is Front-Runner To Head IMF (Bloomberg)
“Lagarde might be front-runner,” New Zealand Prime Minister John Key said in an interview with TVNZ television today. “She’s super impressive I’ve got to say,” he said, while echoing officials outside of Europe in calling for a selection “on merit.”

Singapore to Create Most Bank Jobs in the Next Year, London Recruiter Says (Bloomberg)
Singapore will create more jobs in financial services during the next 12 months than any other city, beating London and New York, said recruiter Astbury Marsden, which advises companies in Europe and Asia.

Biggs Buying as S&P 500 Profit Estimates Climb (Bloomberg)
“Investors are overreacting,” said Biggs, citing concerns about the European debt crisis, housing and reduced stimulus from the U.S. Federal Reserve. “All those worries are true, but I can see a number of them will be resolved in the next two months, and I do not think the global economy will slow down significantly. Stocks are very reasonably priced on earnings for next year.”

Zapatero’s Socialists Routed in Backlash Over Austerity (Bloomberg)
Spanish Prime Minister Jose Luis Rodriguez Zapatero’s Socialist party had its worst electoral setback in more than 30 years, prompting a shift in regional governments that risks reviving concern over public finances…The transfer of power in the regions may spark doubts over Spain’s ability to contain its budget deficit, and Spanish bonds declined today.

S&P warning heralds tough times ahead for Italy (Reuters)
Standard & Poor's surprising decision to revise downward its outlook for Italy could mark the start of increased market scrutiny on the euro zone's third-largest economy, which faces tough challenges that it is probably unable to meet.

Times Columnist, Wife, Charged In Domestic Argument (Hartford Courant)
New York Times technology columnist David Pogue and his wife were charged with disorderly conduct earlier this week following a domestic argument at a Woody Lane house, part of which she recorded on her iPhone, police said…He told police his wife had bitten his left arm and that she had been filming the altercation with her iPhone camera. Arciola said David Pogue followed Jennifer Pogue into a bedroom and allegedly jumped on top of her and hit her in the head with a phone…In addition to his column, Pogue writes a monthly column in Scientific American. He also appears weekly on CNBC's "Power Lunch" and on "CBS News Sunday Morning."

JP Morgan and Morgan Stanley keep barbarians at the gate (eF)
Companies seeking to fight off a hostile takeover approach should consider hiring JP Morgan to defend them, according to new rankings compiled by Financial News.

Emerging market bond fund flows signal shift (FT)
Eight consecutive weeks of net inflows have taken the total invested in these funds this year to $7.9bn, according to EPFR, the fund data provider…Robust inflows into emerging market bonds stand in contrast to nervousness over potentially overheating equity markets in developing countries, and the debt crisis in western Europe’s periphery. Investors have pulled $12.9bn out of European bond funds this year, and more than $7bn was withdrawn from global equity funds last week, of which $1.6bn came from emerging market equity funds, according to EPFR.

Buyers Battle for Europe's Bad Loans (WSJ)
As banks across Europe clean up their balance sheets, it is causing a feeding frenzy among hedge funds and private-equity firms hungry for their troubled assets…Among the buyers is Marathon Asset Management LP… Other buyers include Fortress Investment Group LLC, OakTree Capital Management, York Capital Management, and Och-Ziff Capital Management, according to industry officials.

Utah making gold and silver coins legal currency, pushing debate about national gold standard (AP via WaPo)
Utah became the first state in the country this month to legalize gold and silver coins as currency. The law also will exempt the sale of the coins from state capital gains taxes.

NY senators bat with banks on rule change (NYP)
The Senate agricultural committee is set to host hearings as early as mid-June to discuss new derivatives rules, which have become a hot-button issue on Wall Street, The Post has learned. US legislators, including Sens. Chuck Schumer and Kirsten Gillibrand, have been fighting on behalf of firms like JPMorgan Chase, Goldman Sachs and Morgan Stanley, arguing that new rules on complex derivatives securities being hammered out under the Dodd-Frank regulatory reforms put domestic banks at a "competitive disadvantage."

Inside a Battle Over Forex (WSJ)
Bank of New York Mellon Corp. has been fighting accusations that it took advantage of clients while trading currencies…BNY Mellon priced 58% of the currency trades within the 10% of each day's trading range that was least favorable to the fund, the analysis shows. As a result, the trades cost the pension fund, the Los Angeles County Employees Retirement Association, $4.5 million more than if the average trade occurred at the middle of the trading range for each day, the analysis showed.

Yuan Funds May Be More Illusion Than Oasis (WSJ)
But already, firms that manage dollar funds and are setting up yuan funds, too, are grappling with a conundrum: How do you convince your foreign investors—referred to as limited partners, or "LPs," in the private-equity world—that you are keeping their best interests at heart while you scour China for deals to invest in with renminbi? Foreign LPs already had reason to worry that things weren't going in their favor. When it involves foreigners, approval for an investment in China can take 18 months or longer. Also, more and more companies in China are reluctant to take foreign money because doing so complicates their ability to go public in Shanghai or Shenzhen, thanks to arcane Chinese listing regulations.

CDB seeks to join TPG stake purchase (FT)
China Development Bank, one of the country’s largest state-owned banks, has applied to regulators for permission to join a group of sovereign wealth funds buying a minority stake in buy-out firm TPG, according to people familiar with the matter. CDB’s request is the latest indication of the private equity fever sweeping China as local dealmakers leave the major buy-out firms and banks to set up their own investment firms.

KKR to Buy Ipreo, a Capital-Markets Data Firm (WSJ)
KKR is acquiring Ipreo from another buyout firm, Veronis Suhler Stevenson LLC. Ipreo, based in New York, provides a range of financial data, deal-related information and investor-communication tools to investment banks and companies. It also has software that assists banks and companies in marketing new stock to potential buyers. One of its databases, called Bigdough, contains contact information for thousands of institutional investors that Ipreo clients can use to pitch hedge funds and other types of investors.

Cassette tapes make a comeback (WaPo)
Four years ago, cassette tapes were headed toward their funeral. In 2007, British tabloid The Sun declared the death of the cassette, after the announcement that a major electronics retailer in the United Kingdom would cease selling cassette tapes…Then, last year, cassettes began to rise from the dead. In the fall, NPR reported that cassettes were having a “kind of” revival, with at least 25 labels in the United States putting out new music exclusively on tape. In a lengthy essay in Pitchfork, contributor Marc Hogan detailed examples of the “broader underground resurgence” of cassettes.

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