Opening Bell: 07.08.11

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Jobs Picture Gets Even Worse as Rate Swells to 9.2% (CNBC)
U.S. employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months. Nonfarm payrolls rose only 18,000, the weakest reading since September, the Labor Department said on Friday, well below economists' expectations for a 90,000 rise. Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000. The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.

Taboo eases on talk of Greek euro zone exit (Reuters)
Dismissed as foolish fantasy a year ago, the prospect of Greece leaving the euro zone has become a topic worthy of serious discussion among experts handling the crisis in recent weeks.

Fitch Cuts Minnesota From Triple-A (WSJ)
Fitch downgraded Minnesota's bond rating one notch Thursday, taking away its triple-A rating, as the state finishes its first week of government shutdown over how to balance its budget. Until now, the shutdown has had little effect on Minnesota's reputation in the municipal-bond market. The state's 10-year debt trades in secondary markets at a yield around 2.8%, 0.04 percentage point above a scale of triple-A-rated states' debt, said Dan Berger, senior market strategist at Thomson Reuters Municipal Market Data.

Phil's farmville (NYP)
In a desperate move to save his $2.9 billion telecom investment, the urbane and very urban hedge-fund tycoon Phil Falcone is seeking to befriend rural America. Falcone's high-speed telecom venture, LightSquared, yesterday announced a new outreach project called the Empower Rural America Initiative, made up of a group of former federal lawmakers to "work with small cities and rural communities to ensure the deployment of this new satellite and broadband service."

Carlyle Is Said to Be in Talks With Energy Buyout Shop (DealBook)
The private equity giant Carlyle Group is in talks to acquire Energy Capital Partners, a buyout shop focused on investments in power plants and gas pipelines, according to two people briefed on the talks. Carlyle’s potential acquisition of Energy Capital underscores the relentless drive by the firm to gather more assets and broaden its product line as it gears up for an initial public offering.

Countrywide Wages Tranche Warfare on Investors (Bloomberg)
Investors who sued over $351 billion in downgraded Countrywide Financial Corp. mortgage-backed securities after the 2007 subprime market collapse may have to settle for less than 1 percent of what they initially sought.

A Smoking June for Hedge Funds (WSJ)
In an otherwise bleak month for many investments, tobacco bonds were star performers, rising an average of 10%. Some jumped more than 60%. But many municipal-bond funds missed out on the gains. They had been forced to sell the bonds months earlier, often at a big loss, after a credit-rating downgrade made them noninvestment grade. Instead, the big beneficiaries were hedge funds that scooped up the bonds at pennies on the dollar.

Hedge-Fund Consultant Who Refused FBI Wire Says He Expects His Own Arrest (Bloomberg)
“Am I a target? Yeah, absolutely,” John Kinnucan said in a telephone interview. “There’s a saying that the government indicts who they investigate, so I have always assumed that I was a target.”

Chasing Fraud, Then Chasing Cash (WSJ)
Since late 2005, the Securities and Exchange Commission and Commodity Futures Trading Commission have ordered $12.3 billion in penalties for alleged wrongdoing. The total includes fines, the return of ill-gotten profits and repayment of restitution to investors. But more than $4.5 billion hasn't been paid yet, according to the two agencies. The SEC is owed $3.78 billion, while the CFTC hasn't collected $752 million in fines alone.

Central banks pull most gold in a decade from BIS (FT)
Central banks have pulled 635 tonnes of gold from the Bank for International Settlements in the past year, the largest withdrawal in more than a decade…Central banks and other official institutions collectively hold about 30,000 tonnes of bullion in their reserves, and many seek to earn an income on their gold by lending it out, just as any other currency.

Bill Gross Wants You to Pay $26.5 Million for His Empty Lot (MarketBeat)
Bond guru Bill Gross, perhaps in preparation for his move into Jennifer Aniston’s mansion, has put his Newport Beach empty lot for sale for $26.5 million, according to the Orange County Register.

Behind the Gentler Approach to Banks by U.S. (NYT)
The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September. The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.

Strauss-Kahn Faces Preliminary Paris Inquiry on Banon Attempted Rape Claim (Bloomberg)
The Paris prosecutor opened a preliminary investigation today into an attempted rape complaint by a French writer against Dominique Strauss-Kahn. The prosecutor will seek to determine whether there are grounds for a full criminal probe into Tristane Banon’s claims the former International Monetary Fund chief assaulted her in 2003 when she went to interview him, according to spokeswoman Agnes Labregere-Delorme.

High-frequency trading adding risk, Haldane says (FT)
High-frequency trading is creating systemic risk and markets may need a “redesign”, a top official at the Bank of England said in prepared remarks. In a policy speech to be given in Beijing, Andrew Haldane, executive director for financial stability at the Bank of England, said the “race to zero” in the amount of time it takes to make a trade is increasing volatility and “tail risk” in global markets.

JPMorgan close to becoming the top U.S. lender (Reuters)
JPMorgan Chase & Co is close to vaulting past Bank of America Corp to become the biggest bank in the United States, but it will likely get there in an odd way -- by shrinking less than its rival.

Ex-Goldman Sachs Proprietary Trader Sze Said to Boost Fund to $1.9 Billion (Bloomberg)
Azentus Capital Management Ltd., a Hong Kong-based hedge fund led by former Goldman Sachs Group Inc. (GS) proprietary trader Morgan Sze, increased assets to more than $1.9 billion, said three people with knowledge of the matter. Azentus plans to stop accepting new money when the fund hits $2 billion, said two of the people, who declined to be identified because the information is private.

Money market funds losing safe-haven allure (Reuters)
Shocks this year including Arab world unrest and Japan's earthquake, and simmering fears of a Greek default and ebbing economic momentum, have not halted the exodus from money funds, which have seen outflows of some $130 billion (81 billion pounds) so far in 2011. According to data monitor EPFR, total outflows from money funds are a whopping $1.1 trillion since the credit crisis peaked in early 2009, far outweighing the inflows into these funds seen as the banking crisis unfolded in 2007-2008.

Citigroup Bank Error in Executive’s Favor: Collect $900,000 (DealBook)
Citigroup claimed in arbitration that Mr. Oredice “in essence received a $900,000 payment in error.” Not so fast, say regulators. A Finra arbitration panel found that Citigroup entered “into two separate and enforceable” agreements. “While Claimant may not have wished to twice pay Respondent $900,000.00, Claimant drafted two separate contracts calling for such payments, and made payments pursuant to those contracts,” the panel wrote in its finding against Citigroup.

A Walk In The Woods With Mark Zuckerberg (NYT)
Several people who have been courted by Mr. Zuckerberg told the same story. The 27-year-old chief executive surprises them with the idea of a walk through the woods. A little startled by the invite, people often agree, and are then led across the Facebook parking lot where they eventually end up hiking along a trail that reaches a Silicon Valley lookout. This is where Mr. Zuckerberg delivers his pitch.

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