Opening Bell: 08.01.11

Author:
Updated:
Original:

Obama, Congress Reach Debt Deal (WSJ)
The Senate and House are expected to vote on the deal Monday, so the agreement still needs the support of many House Republicans, who have proven a restless, independent group in recent days. But if it passes both chambers, it culminates an extraordinary display of political and economic brinksmanship, coming just days before the government could have been unable to fully pay its bills. The deal would raise the debt ceiling by $2.4 trillion in two stages, and provide initially for $917 billion in spending cuts over 10 years. A special committee of lawmakers would be charged with finding another $1.5 trillion in deficit reduction, which could come through a tax overhaul and changes to safety-net programs. If the committee doesn't find at least $1.2 trillion in savings, or Congress doesn't adopt its proposals, a pre-set array of spending cuts would kick in, including cuts in military spending and Medicare payments to health-care providers.

'Band Aid’ Deal May Pressure S&P to Slash US Rating (Reuters)
The deal “is certainly not a game-changing breakthrough, and will keep the possibility of a near-term rating downgrade alive; it represents, in our view, just a band-aid approach on the way to more sustainable public finances,” said Julian Callow, the chief European economist at Barclays Capital in a research note on Monday.

HSBC Posts Surprise Profit Rise; Cuts 30,000 Jobs (Reuters)
"There will be further job cuts," Chief Executive Stuart Gulliver told reporters on a conference call. "There will be something like 25,000 roles eliminated between now and the end of 2013." The cuts equate to roughly 10 percent of HSBC's total workforce. They come on top of any reductions in overall headcount that will result from a program of disposals that also forms part of a plan to focus on HSBC's Asian operations.

Hedge Fund Cashes In $850 Million Goldman Stake (NYP)
Lansdowne Partners, a London-based hedge fund that is said to be the largest in Europe, has cashed in its entire $850 million stake in the New York bank giant. Lansdowne sold its shares in Goldman -- whose results lately have hit a rough patch under wisecracking CEO Lloyd Blankfein -- because of rising concerns about stiffening US regulations that are putting a crimp in its profits, according to the Sunday Telegraph, citing unnamed sources close to the situation.

Ex-SAC Manager Sentenced In Expert Network Probe (WSJ)
A former hedge-fund manager at SAC Capital Advisors was sentenced to 2½ years in prison Friday after he pleaded guilty in April to insider-trading charges. Donald Longueuil, 35 years old, was charged as part of an investigation into the ties between so-called expert-network firms, which match company insiders with hedge-fund managers and other investors for a fee. "I continue to accept full responsibility and will forever be remorseful for those actions," Mr. Longueuil said before sentencing. "I have one life to live and forever tainted it. "I made mistakes, I crossed the line, I broke the law," he told the court. After the judge left the bench, Mr. Longueuil visibly sobbed in the courtroom.

Report: Man Finds Brick Of Unknown Substance, Snorts It, Dies (WPBF)
Thomas Swindal, 53, was offshore on Marathon when he and his brother Kenneth discovered a brick of an unknown substance, possibly cocaine, floating in the water. They ended up tossing the package into a bait well until a short time later, when Kenneth said he turned around and saw his brother snorting some of the substance. Kenneth told investigators that about 90 minutes later, Thomas began running around the boat, throwing things into the water, including a cell phone and a VHF radio. Thomas also picked up knives, pliers and a gaff and removed the cowling from the engine, which fell overboard and sank, leaving the brothers stranded. To avoid further dangers, Kenneth said he tossed all remaining sharp objects into the water, as well as the package of the mysterious substance.

CIO: Selective Default Only Solution To US Debt (CNBC)
"It's incredibly frustrating to watch this slow train wreck taking place. All we have are incremental solutions to the problem and that's no good anymore. You need some very drastic solutions to shift America out of its paradigm because it's being chased by a hugely powerful China," Murrin said in an interview. "The only solution is the unthinkable and that is selective default. They will default whatever happens why not choose your default?" he added.

China's Fake Ikea Stores Try to Recreate Experience (Reuters)
Nestled in a sleepy southern district of Kunming city in southwest China, is a 10,000 square metre, four-storey building that could make Swedish furniture giant Ikea uneasy. 11 Furniture, as the store is known, copies Ikea's blue and yellow colour scheme, mock-up rooms, miniature pencils, signage and even its rocking chair designs. Its cafeteria-style restaurant, complete with minimalist wooden tables, has a familiar look, although the menu features Chinese-style braised minced pork and eggs instead of Ikea's Swedish meatballs and salmon. This knock-off Ikea store is emblematic of a new wave of piracy sweeping through China. Increasingly sophisticated counterfeiters no longer just pump out fake luxury handbags, DVDs and sports shoes but replicate the look, feel and service of successful Western retail concepts — in essence, pirating the entire brand experience. "This is a new phenomenon," said Adam Xu, retail analyst with Booz&Co. "Typically there are a lot of fake products, now we see more fakes in the service aspect in terms of (faking) the retail formats."

Porsche Profit Driven By World Wide Demand (WSJ)
Porsche Automobil Holding SE's sportscar division said Monday its first-half operating profit surged on rising demand for luxury vehicles in major markets across the globe, and confirmed that it's targeting a new sales record of more than 100,000 cars this year...It benefited from booming demand in China, where sales rose 47% to 11,712 cars. In Europe, sales increased by 10.5% to 18,853 vehicles. Porsche's domestic German market accounted for 6,734 cars, up 0.9% year-to-year. North American sales rose 25% to 15,466 cars.

Buffett’s Berkadia Venture Weighs Acquisitions (Bloomberg)
Buffett said in May that the commercial property market was showing signs of strength. “The country’s expanding, the activity is expanding, households are expanding,” Buffett, 80, said in the May 1 interview. “Prices have been pretty strong if you start looking at particularly apartment buildings, but even shopping malls.”

Xbox addict 'dies from blood clot' (AP)
The family of a budding computer programmer have on Saturday launched a campaign to raise awareness about the health risks of playing online computer games after their son died following a marathon session on his Xbox.
A post-mortem revealed that 20-year-old Chris Staniforth -- who was offered a place to study Game Design at Leicester University -- was killed by a pulmonary embolism, which can occur if someone sits in the same position for several hours. Deep vein thrombosis normally affects passengers on long-haul flights, but medical experts fear youngsters who spend hours glued to their consoles might also be at risk and have urged them to take regular breaks. Professor Brian Colvin -- an expert on blood-related conditions -- said it was "unhealthy" for youngsters to spend long periods in front of their consoles.

Related

News

Opening Bell: 11.21.12

Germany Hints At More Financing (WSJ) Germany on Wednesday signaled its willingness to provide additional financing for the euro zone's bailout fund and accept lower interest on loans to Athens, in order to get the Greek rescue back on track and free the next tranche of about €44 billion ($56.40 billion) in loans for the euro zone's weakest member. Merkel Sees Chance For Greek Deal Monday (Reuters) "I believe there are chances, one doesn't know for sure, but there are chances to get a solution on Monday," Merkel told the Bundestag lower house of parliament in a debate on the German budget. But the longing for one act, one miracle solution, one truth that means all our problems are gone tomorrow...this will not be fulfilled. What was neglected over years, over decades, cannot be taken care of overnight and therefore we will need to continue to move step by step." H-P Says It Was Duped (WSJ) The technology giant said that an internal investigation had revealed "serious accounting improprieties" and "outright misrepresentations" in connection with U.K. software maker Autonomy, which H-P acquired for $11.1 billion in October 2011. "There appears to have been a willful sustained effort" to inflate Autonomy's revenue and profitability, said Chief Executive Meg Whitman. "This was designed to be hidden." Michael Lynch, Autonomy's founder and former CEO, fired back hours later, denying improper accounting and accusing H-P of trying to hide its mismanagement. "We completely reject the allegations," said Mr. Lynch, who left H-P earlier this year. "As soon as there is some flesh put on the bones we will show they are not true." Analysts Had Questioned Autonomy’s Accounting Years Ago (CNBC) Paul Morland, technology research analyst at broking and advisory house Peel Hunt, told CNBC that he had noticed three red flags in Autonomy’s accounts in the years leading up to the HP acquisition: poor cash conversion, an inflated organic growth rate, and the categorizing of hardware sales as software. London Bankers Become Landlords as Rents Hit Record (Bloomberg) Vivek Jeswani became a landlord by accident when Deutsche Bank AG (DBK) transferred him to New York two weeks after he moved into a new home in central London. Now back in the U.K., Jeswani views the apartment in Baker Street, the fictional home of Sherlock Holmes, as one of his best assets and is about to buy another home to expand his rental business. “There are no other investments as attractive and you’ve got some security if you’ve got an asset you can use yourself,” the 36-year-old risk officer at China Construction Bank Corp.’s U.K. unit said. “There’s a good yield over 5 percent and being in central London, you’ve got demand domestically and internationally.” Trading Charges Reach SAC (WSJ) The hedge funds reaped $276 million in profits and losses avoided based on that information, criminal and civil authorities said—far dwarfing that of any previous insider-trading case. The bulk of the trading profits generated by Mr. Martoma was paid to Mr. Cohen, a person close to the hedge fund said. Fed Still Trying To Push Down Rates (WSJ) Fed Chairman Ben Bernanke suggested that the central bank will keep trying to push down long-term interest rates in 2013, as federal tax and spending policies become a more substantial headwind to the U.S. economy. "We will continue to do our best to add monetary-policy support to the recovery," Mr. Bernanke said at the New York Economic Club, answering a question about how the Federal Reserve would respond to impending spending cuts or tax increases that might restrain economic growth. 'Stiletto Surgery' alters pinky toe for better fit (Fox) These days, some women will do just about anything to fit into their favorite pair of high heels – including surgery. A growing number of women are paying thousands of dollars to surgically alter their feet just to make wearing heels a more comfortable experience. Surgical procedures such as shortening toes, receiving foot injections and even completely cutting off pinky toes are on the rise. “Unless you’ve been there, and you can’t find shoes, and you’re in pain, don’t judge,” said Susan Deming, a patient who recently underwent a toe-shortening procedure. Adoboli’s Fate Decided at Wine Bar as UBS Market Bets Unraveled (Bloomberg) On a cool late summer evening last year in London’s financial district, with the euro-zone crisis worsening and Greece tottering on the edge of default, Kweku Adoboli says he asked the three traders who worked with him at UBS AG’s exchange-traded funds desk to join him for a drink. Adoboli said in a post on his Facebook page that he needed “a miracle” as his bets on the market imploded. That night at a wine bar across the street from their office, Adoboli asked John Hughes, the senior trader on the ETF desk, and two junior traders, what to do. The others decided he should take the blame for billions of dollars in losses and an elaborate web of secret trades in what he called an umbrella account that once held $40 million in hidden profits. “I knew I was going to lose my job anyway, I had already resigned myself to that, so fair enough,” the 32-year-old Adoboli testified last month about the meeting, which the other traders deny took place. Jobless Claims in U.S. Decrease (Bloomberg) Fewer Americans filed applications for unemployment benefits last week as damage to the labor market caused by superstorm Sandy began to subside. Jobless claims decreased by 41,000 to 410,000 in the week ended Nov. 17, the Labor Department reported today in Washington. The number of applications matched the median forecast of 48 economists surveyed by Bloomberg. Soros Buying Gold as Record Prices Seen on Stimulus (Bloomberg) The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 11 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.66 billion bet through the SPDR Gold Trust, the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show. 'Cannibal Cop' Gilberto Valle planned to to cook up 'some girl meat' on Thanksgiving (NYDN) The "Cannibal Cop" had his own twist for a Thanksgiving dinner this year — cooking up “some girl meat,” prosecutors revealed Tuesday. Gilberto Valle, 28 — who allegedly kept a database of at least 100 women he plotted to rape, cook and eat — planned the freakish feast with one of his online conspirators earlier this year, prosecutors said. “I’m planning on getting me some girl meat,” he wrote to his pal on Feb. 9. “Really tell me more,” responded the friend. “It’s this November, for Thanksgiving. It’s a long way off but I’m getting the plan in motion now,” Valle wrote.