Opening Bell: 08.24.11

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Moody's Cuts Japan's Credit Rating (WSJ)
Moody's said it was cutting Japan's government bond rating to Aa3 from Aa2, citing "large budget deficits and the build-up in Japanese government debt since the 2009 global recession." It kept the outlook on the new rating as stable.

Japan Rolls Out Yen-Stopping Measures (WSJ)
Announced by Finance Minister Yoshihiko Noda, the package has two main elements: a $100 billion fund to encourage Japanese businesses to ramp up their overseas mergers and acquisitions, and a rule requiring major financial institutions to report currency-trading positions twice daily.

Markets Remain Unkind To BofA (WSJ)
FYI: "As a bond-fund manager, I do watch Bank of America's stock price, and under $7 is a bad sign," said Chris Vincent, a portfolio manager at William Blair & Co.

Paul Tudor Jones Up For The Month, Lowering/Raising Fees (WSJ)
Tudor Investment Corp executives have told clients that early next year the firm will offer a new share class for the firm's flagship $7.6 billion Tudor BVI Global Fund Ltd., one that charges management fees of 2.75%, down from the current 4% fees. But clients will have to give something to get something. They will choose between paying the new management fee of 2.75% as well as 27% of any gains for the new share class of the fund; or they can stick with the current fees, which include a 4% management fee and 23% of any gains. Either way, the fees will remain higher than the 2% management fee and 20% slice of gains claimed by most hedge funds. One reason the high fees may not deter investors: Mr. Jones has managed to make money amid the market's recent tumble, scoring gains of more than 3% so far this month, according to investors. The reason: Mr. Jones has held a large slug of gold-related investments as well as bearish positions on stocks.

Ben Bernanke unlikely to announce big new plans at Jackson Hole (WaPo)
“He will explain what the Fed has done and the costs and benefits of its remaining policy options,” Michael Feroli, chief U.S. economist at J.P. Morgan Chase, said in a research note. “But we would expect him to leave it at that, and not forcefully signal that a given course of action has already been decided upon.”

A Defiant Gadhafi Vows To Fight (WSJ)
Earlier Wednesday, Col. Gadhafi used a radio address on local Al-Ouraba TV to urge Libyans to fight against the rebels. The pro-Gadhafi TV channel earlier quoted the Libyan leader as saying he had left the compound in a "tactical move" after 64 North Atlantic Treaty Organization airstrikes turned it to ruble, according to news reports. He vowed martyrdom or victory in his fight against NATO aggression.

German President Questions Legality of ECB Bond Buys (Reuters)
"I regard the massive acquisition of the bonds of individual states via the European Central Bank as legally questionable," he said in the opening speech at an economists' conference in Lindau, Germany.

Some Gold Bulls Say Time To Cash In, Rally Overdone (Reuters)
Dennis Gartman, who has long been bullish on gold priced in non-U.S. currencies, said he was reducing his long positions on gold priced in euro and sterling terms. "Perhaps things have become a bit too frothy and reduced rather than increased exposure seems reasonable and wise," Gartman said.

Irene Now 'Major' Hurricane, Heads For Northeast (Bloomberg)
The storm, bearing winds of 115 miles per hour (185 kilometers per hour), may cause “devastating damage,” the NHC said in an advisory at 8 a.m. Miami time. Irene, 335 miles southeast of Nassau in the Bahamas, is forecast to hit the North Carolina coastline on Aug. 27 and make landfall again near Rhode Island late on Aug. 28, according to NHC projections.

Cocaine's Newest Risks: Dying Skin and Compromised Immunity (SA)
To the list of cocaine’s many dangers, health officials have added at least one more: purpura, a rash caused by internal bleeding from small blood vessels. Two recent papers in major medical journals have documented cases of cocaine users showing up in emergency rooms with patches of blackened, dying skin on the ears, face, trunk or extremities. The condition causes scarring and sometimes requires reconstructive surgery. Noah Craft, a dermatologist at the Harbor-UCLA Medical Center who co-authored a paper on the condition published online by the Journal of the American Academy of Dermatology in June, says he now sees about one case per month: “It’s become almost routine.”

Related

Opening Bell: 04.09.12

JPMorgan Trader Iksil Fuels Prop-Trading Debate With Bets (Bloomberg) Iksil’s influence in the market has spurred some counterparts to dub him Voldemort, after the Harry Potter villain. He works in London in the bank’s chief investment office, which has assembled traders from across Wall Street to its staff of 400 who help oversee $350 billion in investments. While the firm describes the unit’s main task as hedging risks and investing excess cash, four hedge-fund managers and dealers say the trades are big enough to move indexes and resemble proprietary bets...The trades, first reported by Bloomberg News April 5, stirred debate among U.S. policy makers over the Easter-holiday weekend as they wrangle over this year’s implementation of the so-called Volcker rule, the portion of the Dodd-Frank Act that sets limits on risk-taking by banks with government backing. Taking Measure Of Citigroup And Bank Of America (NYT) Bank of America shares are up 66 percent this year, while Citigroup has risen 33 percent, amid the broader rebound in financial stocks. After staying out of the spotlight and earning $21 billion over the last two years, Citigroup’s potential problems are gaining attention again...At Barclays, the analyst Jason Goldberg said he was shocked when Citigroup did not get the go-ahead from the Fed, adding, “We had run mock stress tests with Citi passing by a fair amount.” Just as surprising, he added, has been Bank of America’s surge this year. Its performance has been a far cry from last year, when Bank of America’s stock, which closed at $9.23 on Thursday, was flirting with $5, and questions about whether it had enough capital were mounting. “If you asked me in January whether this thing would be up 66 percent, I’d have said you’re crazy,” Mr. Goldberg said, referring to Bank of America’s stock performance this year. A 'Fat Cat' With The President's Ear (WSJ) When President Barack Obama attacked "fat-cat bankers on Wall Street" in 2009, Robert Wolf had a ready response. "I said 'Mr. President, I know you think I'm overweight, but I can think of better names to call me,'" Mr. Wolf recalls. "He laughed." Humor and self-deprecation have served Mr. Wolf well in his often conflicting roles as presidential pal and Wall Street power broker. The 50-year-old president of UBS's UBS investment bank has remained a leading voice in the industry while also serving as Mr. Obama's chief Wall Street fundraiser and his current BFF (best friend in finance)...Mr. Wolf plays golf and basketball with the president and he is a frequent visitor to the White House. On vacation in Martha's Vineyard or at fundraising events, the two often bond over sports and their families, since they each have two school-age kids. As if to prove the president wrong about "fat cats," Mr. Wolf says he has lost 20 pounds in the past three months. Willing Banks Find Profits in Legal Trade With Iran (WSJ) As Western sanctions on Iran have grown tighter, some small banks have found a lucrative niche financing what remains of the legal trade with the Islamic Republic. Top-tier financial institutions including Société Générale SA GLE.FR -0.74% and Rabobank Group have stepped back from business with Iran in recent months, citing increased political risk and logistical hassles that attend even legal trade with the country. As a result, the remaining players are commanding higher fees and offering increasingly complicated services. Like Russia's First Czech-Russian Bank LLC and China's Bank of Kunlun Co. Ltd, they are typically small, obscure financial institutions often based in countries historically friendly to Iran. The firms and other intermediaries still brokering these trades are charging more than 6% per transaction for legitimate trade deals with Iran, on top of traditional banking fees, according to traders and bankers knowledgeable with the process. That is as much as triple the fees typically charged by Arab Gulf banks two years ago, before the United States and European Union significantly stiffened sanctions, according to Iranian businessmen. Easter Bunny Arrested (KTLA) An Easter Bunny was arrested this week after police found he was carrying around more than Easter eggs and candy. Joshua Lee Bolling, 24, was arrested and charged on Thursday with illegally possessing prescription narcotics. Police arrested Bolling after businesses at the Piedmont Mall in Danville, Virginia complained that the Easter Bunny was acting suspicious. "His suspicious behavior took place while he was on breaks and not during his contact with children," a police release said. UBS Faces Billionaire Olenicoff in Lawsuit Over His Tax Felony (Bloomberg) and billionaire Igor Olenicoff are scheduled to clash in court today over his claim that the bank bears blame for his failure to declare $200 million in offshore accounts on U.S. tax returns. Olenicoff, 69, a real-estate developer, pleaded guilty in 2007 to filing a false tax return, admitting he didn’t tell the Internal Revenue Service about his offshore accounts for seven years. He was sentenced to two years’ probation and ordered to pay $52 million in back taxes, fines and penalties. In 2008, he sued Zurich-based UBS, the largest Swiss bank, claiming it traded excessively in his accounts, engaged in racketeering and committed fraud by not telling him he owed U.S. taxes. He seeks as much as $1.7 billion in damages. Arguments on the bank’s motion to dismiss the case are set for today before U.S. District Judge Andrew Guilford in Santa Ana, California. Markets at the Start of a More Significant Downturn Says Marc Faber (CNBC) “The technical underpinnings of the market have been a disaster in the last couple of weeks,” Faber said on the sidelines of the Maybank Invest Asia conference. “The number of new highs have declined, the volume has been poor, insider sales just hit a record.” Faber said the weakness in economically sensitive stocks such as mining and industrial goods was particularly “disturbing.” Agencies At Odds Over New Ratings (FT) The latest example came this month when a near-$800 million bond deal backed by U.S. prime mortgages was sold to investors with triple-A ratings — provided by Standard & Poor’s and DBRS, a smaller competitor based in Canada — on some tranches. Fitch Ratings issued a statement saying it would not have rated the bonds triple A. It said it provided “feedback” on the transaction to the arranger, Credit Suisse, and “was ultimately not asked to rate the deal due to the agency’s more conservative credit stance”. Steven Vames, a Credit Suisse spokesman, said it was common for an issuer to engage multiple rating agencies to look at a deal and ultimately choose a subset of those agencies to rate it. In March, Moody’s said: “Some recent cases have come to market for which we believe increased risk has not been adequately mitigated for the level of ratings assigned by another agency.” In particular, Moody’s faulted ratings issued by S&P, Fitch and DBRS on asset-backed deals. For Big Companies, Life Is Good (WSJ) An analysis by The Wall Street Journal of corporate financial reports finds that cumulative sales, profits and employment last year among members of the Standard & Poor's 500-stock index exceeded the totals of 2007, before the recession and financial crisis. UK Cruise Retraces Titanic's Ill-Fated Voyage (Reuters) Descendants of some of the 1,500 people killed when the Titanic sank a century ago were among the passengers on a cruise ship that set off from Britain on Sunday to retrace the route of the liner's ill-fated voyage. Some donned period costume, including furs and feathered hats for women and suits and bowler hats for men, to board the MS Balmoral at Southampton on the southern English coast. The world's most famous maritime disaster has fascinated people ever since, explaining why passengers from 28 countries were prepared to pay up to 8,000 pounds ($13,000) each to be a passenger on the memorial cruise organized by a British travel firm. The Balmoral will follow in the wake of the Titanic, sailing near Cherbourg in France and then calling at Cobh inIreland before arriving at the spot where the Titanic went down...Passenger Jane Allen, whose great-uncle died on his honeymoon trip on the Titanic while her great-aunt survived, said she did not think it was "ghoulish or macabre" to go on the voyage.