Opening Bell: 07.26.11 - Dealbreaker

Opening Bell: 07.26.11

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Deutsche Bank Q2 profits, revenues miss expectations, bank takes writedown on Greek bonds (WaPo)
The bank said Tuesday that its net income during the period rose by only 6 percent from a year ago to €1.23 billion ($1.79 billion). Over the previous quarter, net profit was down 42 percent from €2.13 billion. Diluted earnings per share of €1.24 cents per share were below the consensus prediction of €1.35 per share. Despite lower than expected earnings, the company’s shares rose after the earnings report as investors were relieved that the question of who will replace CEO Josef Ackermann has been resolved.

UBS Scraps Earnings Goal After Profit Falls 49% (Bloomberg)
Net income fell to 1.02 billion Swiss francs ($1.27 billion) from 2.01 billion francs in the year-earlier period, the Zurich-based bank said in a statement today. That missed the 1.29 billion-franc mean estimate of 14 analysts surveyed by Bloomberg. UBS shares declined…The investment bank, which already cut about 6 percent of jobs in the first quarter, may slash 700 more positions, mostly in the back office, a person familiar with the situation said.

Hedge-Fund Titan Englander Preps for Future in Sale Talks (WSJ)
Hedge-fund manager Israel Englander is in discussions to sell a minority stake in his closely held firm Millennium Management LLC, showing that hedge-fund success stories continue to draw interest from deep pockets. Known for his talent in handpicking money-making traders and for swiftly shedding those who disappoint, the 62-year-old billionaire aims to expand his business by increasing its more-than-$11 billion in assets, say people familiar with the matter.

President Obama, House Speaker Boehner present dueling debt-limit plans to nation (WaPo)
As Boehner tried to rally support for his two-step plan to cut $3 trillion in spending, Senate Majority Leader Harry M. Reid (D-Nev.) offered a strikingly similar proposal for increasing the debt limit before the Aug. 2 deadline. The two leaders, however, remained bitterly divided over Boehner’s demand to hold another vote next year to further expand the government’s borrowing authority. With financial markets warily watching the Capitol Hill drama, Obama used his 15-minute address from the White House to urge “shared sacrifice” in tackling the debt, calling for deep cuts in federal spending to be coupled with higher taxes on the wealthy and on large corporations. He slammed Boehner for calling for another vote on the issue next year, saying: “We know what we have to do to reduce our deficits; there’s no point in putting the economy at risk by kicking the can further down the road.”

Erin Burnett Tweets (EB)
Source who met w/S&P says SIZE of Boehner plan is the problem. MIGHT not be enough to avert downgrade, needs to be closer to $3TR all at once.

Weak UK growth puts AAA rating at risk, experts warn (Telegraph)
"I don't think there are immediate ramifications unless we get a negative or flat outturn. Without a strong bounce back in the third quarter, though, there is quite possibly a risk for the sovereign rating," Ross Walker, UK economist at Royal Bank of Scotland, who expects growth of 0.3pc, said…Moody's said in March: "We believe that slower growth combined with weaker-than-expected fiscal consolidation could cause the UK's debt metrics to deteriorate to a point that would be inconsistent with a triple-A rating."

India raises rates by unexpected 50bp (FT)
It comes as the economy continues to struggle with higher global commodity prices, supply-side bottlenecks that affect the prices of food, and loose fiscal policy. The Sensex, India’s main stock index, fell 1.6 per cent following the announcement…Consensus estimates ahead of the announcement had almost unanimously been for a 25 basis points increase in the repo, or short-term, lending rate.

Swiss Franc Gives Shelter in Storm (WSJ)
The Swiss franc has risen by 30% over the past year against the U.S. dollar and by more than 4% so far in July. On Monday the franc hit a record high of $1.2408, up 1.6% from Friday. It is also in record territory against the euro, which is down 15% over the last year against the Swiss currency and off nearly 5% this month.

Ex-Credit Suisse broker fraud case goes to Brooklyn (Reuters)
Former Credit Suisse Group AG (CSGN.VX) broker Eric Butler, convicted of cheating investors out of $1.12 billion, on Monday won the transfer of a separate wire fraud case in Manhattan to the same Brooklyn federal judge who presided over his 2009 trial.

Ex-Moore Trader Pays $1 Million Fine to Settle Market Manipulation Case (DealBook)
From late 2007 until mid-2008, Christopher Louis Pia tried to manipulate prices of palladium and platinum futures contracts on the New York Mercantile Exchange in a trading practice known as “banging the close,” the Commodity Futures Trading Commission said.

Bentley Explores SUV as Demand Drives Market (Bloomberg)
“The traditional perception of brands -- Bentley as the maker of large, luxurious sedans -- is open to expansion,” said Michael Tyndall, an analyst at Barclays Capital in London, adding that Bentley might be able to fetch a price of more than 120,000 euros for an SUV. “There appears to be customers out there who are willing to spend that much on a luxury SUV.”

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