Opening Bell: 08.30.11

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BofA Cashes In Its China Chips (WSJ)
But Bank of America faces additional worries because of its 2008 acquisition of Countrywide Financial Corp., the troubled California lender that is the source of many bad mortgages now plaguing the bank. "No one really knows the capital hole that sits there," said Mr. Miller, the bank analyst for FBR Capital Markets.

Citi CIO: There's A Long Term Problem In Stocks (CNBC)
"The corporate sector continues to simply slash costs rather than focus on top-line growth," he said. "If you carry on just cutting costs and cutting people, at some stage the growth will stop."

Merkel To Voters: Germany Will Emerge Stronger (Bloomberg)
“Many are worried, but they don’t need to be because the currency is stable,” Merkel told a rally of her Christian Democratic Union yesterday in Schwerin, the state capital. “It’s our aim to come out of this stronger than we went into it, as we did during the banking crisis. I said that in 2009, and look at where the economy is in 2011. This can be achieved again.”

EU Seeks Action On Greek Deal (WSJ)
The European Commission said Tuesday negotiations have made progress this week in finding a resolution to Finland's requirement for collateral from Greece in exchange for contributing to a second bailout for the Mediterranean country, but comments from other leaders signaled that there is no quick fix. "There was progress at the expert level just yesterday [Monday]," Commission President José Manuel Barroso said Tuesday at a press conference, adding that he hopes the final details will find consensus "very soon."...Meanwhile, Richard Sulik, head of Slovakian Freedom and Solidarity Party, also known as SaS, told German newspaper Die Welt that Greece should default rather than receive additional financial support. Mr. Sulik is quoted as saying in an interview with the paper he "will do everything" to stop parliament approving the euro zone's second rescue package for Greece, along with a proposed increase in the lending capacity of the euro zone's chief bailout vehicle.

Hedge Funds Burned By August Market Heat (FT)
According to provisional estimates from consultancy Hedge Fund Research, the average hedge fund has lost 4.1 percent during August – making the month the industry’s fourth worst ever. Among the biggest losses are those at the $36 billion Paulson & Co. As of August 19, the firm’s flagship Advantage Plus fund was down 14 percent in the month, one investor revealed – taking the funds losses to just under 39 percent – around $4 billion – so far this year.

Italian Town Mints Own Money To Fight Austerity (Reuters)
Filettino, set in rugged hill country around 100 km (65 miles) east of Rome, is rebelling against a proposal to merge the governments of towns with fewer than 1,000 inhabitants to save money. Filettino has only around 550 people, but instead of merging with neighboring Trevi, mayor Luca Sellari is trying to go it alone and set up a "principality" along the lines of the famous republic of San Marino to the north. He has started minting Filettino's own bank currency, the "Fiorito," with his photo on the back, which he says is already being used by the townsfolk. "We aim to achieve real autonomy from Italy and we have the financial resources to do it," Sellari said in an interview

S&P: Risk Of Double Dip In Europe Increases (CNBC)
High unemployment and the recent decline in stock markets pose a risk to spending, rating agency Standard & Poor's wrote on Tuesday in a report headlined 'Slowing Growth in Europe Increases the Risk of a Double Dip.' Downside risks "are significant" and the rating agency will "closely monitor" trends in consumer demand in the coming quarters, Jean-Michel Six, Standard & Poor's chief economist for Europe, said in the report.

Bailout Fatigue Fuels Finland Collateral Demand (Bloomberg)
Finland’s demand for collateral on new Greek loans leaves European leaders with two choices: accept the AAA rated nation’s terms and risk the rescue plan, or reject collateral and help bring Finnish euro-skeptics to power.

Appreciation In Home Prices To Be Fleeting (WSJ)
The June Case-Shiller indexes should show "their largest month-over-month increases in a year, perhaps longer," Quinn Eddins, director of research at Radar Logic, writes, "but they will remain well below their June 2010 levels. We expect them to begin to decline again in two or three months."

UBS Senior Economic Adviser: Give Karl Marx a Chance to Save the World Economy (Bloomberg)
"The spirit of Marx, who is buried in a cemetery close to where I live in north London, has risen from the grave amid the financial crisis and subsequent economic slump. The wily philosopher’s analysis of capitalism had a lot of flaws, but today’s global economy bears some uncanny resemblances to the conditions he foresaw...So how do we address this crisis? To put Marx’s spirit back in the box, policy makers have to place jobs at the top of the economic agenda, and consider other unorthodox measures. The crisis isn’t temporary, and it certainly won’t be cured by the ideological passion for government austerity."

TSA: No Snakes On This Plane (CBS)
The incident happened on August 25th when security were screening passengers with a millimeter wave advanced imaging technology machine. It was there when the TSA officials noticed a little big extra in the passenger’s pants. When taken for further screening, TSA officials discovered seven exotic snakes and three tortoises held in nylon bags that were concealed inside the man’s pants. The man was arrested and charged with violating the Lacey Act, which deals with imports of exotic animals. He faces a maximum of five years in jail.

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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.