Opening Bell: 08.26.11

Author:
Updated:
Original:

World Facing 50% Danger of Another Recession, Nobel Laureate Spence Says (Bloomberg)
“I’m quite worried,” Spence said in a Bloomberg Television interview in Hong Kong yesterday. “A combined downward dip in Europe and America, which is a good chunk of the industrialized economies, I’m quite sure will take down growth in China particularly, and that will then immediately spread to the rest of the emerging economies.” He put the likelihood of such a scenario “at about 50 percent.”

Greece Sets Out Conditions For Bond Swap (WSJ)
In a letter sent to foreign governments on Thursday and posted in part on the Athens Stock Exchange websites Friday, Greek Finance Minister Evangelos Venizelos laid out two conditions for Greece to proceed with the deal. Specifically, that investors holding 90% of all Greek government bonds eligible for the program participate, and including 90% of those bonds maturing between June 30, 2011 and between Aug. 31, 2014. "If these thresholds (or either of them) are not met, Greece shall not proceed with any portion of the transaction described in this letter if it determines, in consultation with the official sector, that the total contribution of private sector creditors towards the financing needs of Greece and Greece's debt sustainability is insufficient to permit the official sector to support the new multi-year adjustment program for Greece announced on July 21, 2011," the letter said.

Hurricane Irene Weakens on Course to North Carolina (Bloomberg)
Irene is packing slightly slower sustained winds of 110 mph, the U.S. National Hurricane Center said in an advisory at 5 a.m. Miami time. The storm may strengthen later today to a Category 3 hurricane on the five-step Saffir-Simpson scale as it churns toward the North Carolina coast, the center said.

S&P Pushes Back at Blame for Rating Turmoil (Bloomberg)
“It’s at the very least an oversimplification to say that all this is happening because of S&P’s change of opinion,” Beers said. Amid evidence of a slowing world economy, “markets digesting all these news have concluded that the near-, perhaps medium-term, outlook for global growth has become less certain. This was all happening before the downgrade and has continued after some of the noise around the downgrade,” Beers said.

AIG Gets Tough On Analyst Views (WSJ)
Chief Executive Robert Benmosche has complained to senior executives at investment banks about the unfavorable stock research, suggesting that some analysts don't fully understand the company and its value, according to people familiar with the matter.

ABN Amro To Cut 2,350 Jobs (WSJ)
ABN Amro Chief Executive Gerrit Zalm said the move is not so much driven by economic uncertainties, but rather by the goal to reduce costs. "The main consideration is that we want to be a very efficient bank," he said.

Sushi and whisky: hard time in Russia's VIP prisons (Independent)
Andrei, a former assistant to a Russian member of parliament who was sentenced to nine years in jail in 2006 for embezzlement said: "We had whatever we wanted. I even ate sushi every day," he told the paper, to which he showed photographs that backed up his claims. "We had a great table laid on for us in the camp – sushi, champagne, whisky." His allegations come just a month after photos were published of prisoners partying in a prison just outside Moscow. The photos showed inmates dressed up in togas, sitting down to a lavish meal and having McDonald's delivered to their cell. The governor of the prison was sacked after the photos appeared on the internet. Both incidents show how corruption, endemic in Russia, has also engrained itself in the Russian prison system. Andrei claimed he was allowed, for a fee, to live in the hotel used for conjugal visits, which is on the camp's grounds, and leave whenever he wanted so long as he returned at night. "I put up a bar, home cinema and brought back whoever I wanted," he said

In Buffett's Bet, Gone Is 'Panic' Premium (WSJ)
Sandler O'Neill analysts said Mr. Buffett was sounding the "all clear" by stepping in, adding "we expect the move to also diminish fears that financials in general are on the verge of another 2008-like crisis." Still, not all were heralding the news. Peter Schiff, head of brokerage EuroPacific Capital Inc., said Mr. Buffett's 2008 investments came right before the shares tumbled and would have failed if not for extraordinary government bailouts. "If history repeats, it's more likely the banking stocks are about to get hammered," said Mr. Schiff, a noted gold investor. "People that buy Bank of America shares could lose all their money and Warren can still be fine."

NYSE To Open Monday But Has Contingency Plan In Place (NYP)
"We have contingency plans in place for such events with the goal of having the market up and running while ensuring the safety of our people," Richard Adamonis, a spokesman for the exchange, said in an email. Contingency measures include proactive personal and information outreach to employees and the trading community as well back-up power generation facilities.

Groupon Has 'Never Been Stronger' Mason Says (Bloomberg)
“When I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble,” Mason wrote in a memo sent to employees yesterday and obtained by Bloomberg News. “The irony is hopefully clear: We’ve never been stronger.”

Apple Without Jobs Gives Cook $28 Billion To Deal (Bloomberg)
Jobs, who transformed the near-bankrupt personal-computer also-ran into the world’s largest technology company, used less than a billion dollars for takeovers in the past decade as he unveiled the iPod, iPhone and iPad. Apple’s largest U.S. rivals have shelled out more than $15 billion on average to buy companies over the same span, according to data compiled by Bloomberg...Boosting acquisitions in entertainment, patents and security with its $28 billion cash hoard may help Apple fend off Google and Samsung Electronics Co. without Jobs, the University of North Carolina and Stewart Capital said.

Guy: Fully Fledged Credit Crisis May Be Ahead (CNBC)
“The global economy may muddle through, but a second credit crash is now distinctly possible. But the trigger and timing is unknown,” he added.

Related

Opening Bell: 6.24.15

UBS rogue trader freed; Greece on a deadline; SoulCyle to IPO; The Canadian Hamptons; Hedge fund gains; "...the groom reportedly challenged police to fight before being subdued and charged with disorderly conduct"; and more.

Opening Bell: 05.04.12

BofA Sees $5 Billion Collateral Need in Credit Downgrade (Bloomberg) A two-level downgrade of long-term senior debt ratings would have prompted the bank to post about $5.1 billion of collateral tied to derivatives contracts and other trading agreements as of March 31, the Charlotte, North Carolina-based firm said yesterday in a regulatory filing. It would have had to post an additional $1.1 billion of collateral if trading partners opted to tear up contracts in a two-level cut. RBS claims 'pleasing progress' though loss triples (AP) RBS, 82-percent owned by the British government after a massive bailout in the global the financial crisis, posted a 2011 first quarter net loss of £528 million. The lender said losses soared owing to an increase in the value of its outstanding debt to £2.46 billion. "As RBS's credit spreads tightened during the quarter, a charge of £2,456 million was booked for (our) own credit adjustments," RBS said in a statement. But the bank's underlying performance was brighter, with RBS posting a first quarter operating profit of £1.18 billion. RBS also confirmed that it would repay the last of emergency state loans totalling £163 billion but the British government will still own almost all of the bank after a £45.5 billion bailout following the 2008 financial crisis. "The start of 2012 has shown pleasing progress at RBS within the context of a flat economic environment," chief executive Stephen Hester said in the statement. Employers in U.S. Added Fewer Jobs Than Forecast in April (Bloomberg) Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent, and earnings stagnated. Facebook Targets $96 Billion Value (WSJ) With the pricing, Facebook is anticipated to raise as much as $13.6 billion, above earlier expectations of $10 billion. In a regulatory filing, Facebook said the company would seek to sell 337.4 million shares, with about half of those being sold by founders, employees and investors. The only U.S. issuers that have raised more money in an IPO were Visa Inc. at $19.7 billion in 2008 and General Motors Co. at $18.1 billion in 2010. Zuckerberg Facebook IPO to Make Him Richer Than Ballmer (Bloomberg) So that's exciting. Warren Buffett Has 'No Plans To Invest In Facebook IPO' (CNBC) When asked whether the current attention surrounding Internet IPOs reminded him of the tech stock bubble of the late 1990s, the Oracle of Omaha said, “It is not a bubble ... this is not what we were seeing in late 1999 all the way into 2001. We aren’t in any bubble phase of anything.” Inmates Dance, Deputy Fired (OBJ) Some inmates did the worm, others chose the old school robot. Each dance was performed to the beat of hip-hop artist Usher on command from a now-fired Summit County deputy. The inmate prize: use of a jail microwave. The charges are revealed in an internal affairs report released Wednesday. Deputy Dominic Martucci, 35, was fired for violating the department’s policies, including a mandate that inmates be treated humanely. Martucci is accused of ordering five inmates dance to Usher’s Yeah! song and then inviting other deputies to watch during an early evening shift on April 11. The inmates danced their way to regaining use of a microwave that they had lost earlier that day. Fitch CEO: US Downgrade Not Likely Before Election (CNBC) "We currently have the U.S. on a negative outlook, which actually suggests we think there is the potential for a downgrade," Taylor said in an interview. "It's too early to tell whether that will turn into an actual downgrade or not,” he said. “We think we still need to see what's going to happen through the elections and what actions are put in place subsequent to the elections. I think it's very clear that the U.S. does need to do something to deal with the debt problems built up since the financial crisis," he added. New Ripples For Gupta Case (WSJ) Mr. Gupta's criminal trial for securities fraud and conspiracy is scheduled to begin May 21 and expected to last about three weeks. Mr. Gupta has pleaded not guilty. His lawyer, Gary Naftalis, declined to comment for this article but previously has called the accusations "totally baseless." The Manhattan U.S. attorney's office also declined to comment. Federal prosecutors in Manhattan have taken note of the spike in trading in Goldman, which began as the firm's board concluded a special meeting to approve the deal that afternoon, according to people familiar with the matter. Galleon traders also noticed the climbing stock, conversations recorded on government wiretaps show. "Someone had this before us, someone, whatever went on, something happened," Galleon trader Ian Horowitz told Mr. Rajaratnam in a phone call the next morning, caught on tape by the Federal Bureau of Investigation. Goldman Readies Low-Cost Bond PLatform (WSJ) Goldman is preparing to roll out a bond-trading platform on which it will charge lower fees than on typical bond trades, according to people familiar with the matter, a move that could help retain customers tempted by rival trading venues being set up by BlackRock Inc. and others. AIG Invests $7.4 Billion at 5.3% to Boost Returns, Adds RMBS (Bloomberg) “We continue to be opportunistic with our investments in structured securities in order to improve yields, increase net investment income and offset the impact of a lower interest rate environment,” Wintrob said. BofA Talks Deal On Ex-Broker Pay (WSJ) The former Merrill brokers left the firm after the 2009 takeover by Bank of America and claim they are owed deferred compensation as a result of the deal. They were emboldened last month by an arbitration ruling ordering the Charlotte, N.C., company to pay more than $11 million to two former brokers with related complaints.