Opening Bell: 08.31.11

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Merkel’s Cabinet Approves Larger Euro-Rescue Fund as Dissent Ebbs (Bloomberg)
“We’re in a now-familiar phase of ifs and buts from lawmakers but the bill will pass,” Peter Grottian, a politics professor at Berlin’s Free University, said by phone yesterday. “What’s more painful: risking the collapse of the government and a devastating economic backlash, or gritting your teeth and waving through a bill that may be effective even if you don’t understand it?”

Germany Deputy Finance Minister: Euro Bailout Fund Big Enough (CNBC)
The size of the new fund earmarked for bailing out struggling euro zone economies is "enough" at 440 billion euros ($635 billion), a key German policymaker told CNBC Wednesday...He also claimed that European banks do not need immediate recapitalization, despite increasing concerns about the health of banks with exposure to struggling peripheral economies such as Greece and Portugal, and even about the survival of the euro.

Citadel alleges employee took data, lied (CB)
Citadel alleges that a company engineer put “massive amounts of highly confidential” information on external computer devices and “has repeatedly lied to Citadel about his activities.” The employee, Yihao Ben Pu, 23, who is being fired today, has been in recent contact with a competitor whose principal formerly worked for the hedge fund, Citadel alleges in a complaint filed Monday in Cook County Circuit Court. Mr. Pu told Crain's this morning that he has cooperated with Citadel and that the contact with the competitor came because he was asking about hiring a lawyer, which Citadel advised him he might need. He said information being used against him comes from devices he gave to Citadel without being asked and that some of what he did was “more or less” for work. He said he thinks Citadel has “overreacted” in the case and that he hopes the parties can put it behind them soon.

S&P Rates Subprime Mortgages Higher Than U.S. (Bloomberg)
S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties.

Fitch Reiterates Warning On China Banking System (WSJ)
"Clearly the government has done a lot to cool down the market and to some extent it has been successful... (But) the jury is still out," said Charlene Chu, head of China financial institutions at Fitch.

'Sleeping gas' thieves target super-rich at Italian billionaires' resort (Guardian)
Police in the billionaires' retreat of Porto Cervo on Sardinia's Costa Smeralda believe thieves who made off with €315,000 (£280,000) in cash and jewels used sleeping gas on their victims to ensure they were not disturbed during the break-in. Similar robberies have been reported this summer in France and Spain. The burglaries in Porto Cervo, which took place last week, were only disclosed by police on Tuesday. The thieves sneaked into the rented holiday villa of a Milanese pharmaceuticals tycoon and left with a haul worth around €300,000. The businessman's 42-year-old wife, her mother and their daughter were all in the house, along with a servant, but no one heard the burglars, even though they took the windows off their hinges to get in. At the villa next door, two holidaymakers found a watch and €15,000 in cash missing. They told police they had woken up feeling weak and dazed. In July, "gassing gangs" were reported to be targeting caravans and camper vans in France. Thieves sprayed sleeping gas in through air vents before breaking in.

Economy Deeply Divides Fed (WSJ)
Minutes of the Fed's Aug. 9 meeting, released Tuesday after the normal three-week lag, offered new evidence that some officials wanted to immediately restart a controversial bond-buying program aimed at spurring the economy. Others felt that even the smaller steps the central bank instead chose were too aggressive.

Some Companies Pay Their CEO's More Than Uncle Sam (WaPo)
Of last year’s 100 highest-paid corporate executives in the United States, 25 earned more in pay than their company recorded as a tax expense in 2010. Those 25 firms reported average global profits of $1.9 billion. Among the 25 were Verizon, Bank of New York Mellon, General Electric, Boeing and eBay. “These individual CEOs are being rewarded for presiding over companies that dodge taxes,” said Chuck Collins, one of the study’s co-authors and a senior scholar at the Institute of Policy Studies. Eighteen of the 25 firms last year operated subsidiaries in countries that the U.S. Government Accountability Office and other groups have identified as tax havens, one of the report’s authors said. For example, Bank of New York Mellon paid its chief executive Robert Kelly $19.4 million last year, while the company got $670 million in what amounted to a tax refund, according to the report. The company has 10 subsidiaries in foreign countries, the report said.

SEC Lawyer Blew Whistle Before (WSJ)
Darcy Flynn, who started in the SEC's enforcement division in 1995, earned the large payout after reporting alleged Medicare fraud in 1993 as an insurance-claims auditor in Michigan, according to public records and people familiar with the case. Nearly two decades later, Mr. Flynn is again accusing his employer of misbehavior. This time, Mr. Flynn is targeting the Wall Street regulator, which hired him to ferret out wrongdoing. He was initially asked to probe accounting scams, insider trading and other financial frauds. Since early 2010, Mr. Flynn has been supervising record-keeping related to enforcement cases that have been closed.

Hurricane Costs Seen As Ranking Among Top Ten (NYT)
Industry estimates put the cost of the storm at $7 billion to $10 billion, largely because the hurricane pummeled an unusually wide area of the East Coast...While insurers have typically covered about half of the total losses in past storms, they might end up covering less than 40 percent of the costs associated with Hurricane Irene, according to an analysis by the Kinetic Analysis Corporation. That is partly because so much damage was caused by flooding, and it is unclear how many damaged homes have flood insurance, and partly because deductibles have risen steeply in coastal areas in recent years, requiring some homeowners to cover $4,000 worth of damages or more before insurers pick up the loss.

Irene Fuels Hamptons Labor Pain (NYP)
Ex-President Bill Clinton, his wife, Secretary of State Hillary Clinton, Madonna and a few other lucky folks will have a ritzy Hamptons beach all to themselves after Hurricane Irene crippled public access to the oh-so-chic stretch of sand -- just in time for Labor Day. The megastorm washed away massive amounts of sand at East Hampton's Georgica Beach, leaving behind a five-foot drop from the public access point on the road, next to where the Clintons are renting a house on exclusive Lily Pond Lane.

Russian cannibal made meatballs and sausage out of victim (NYDN)
A young Russian man who was curious about the taste of human flesh stabbed a man to death and then made meatballs and sausage out of his corpse, the Ria Novosti news agency reported. "The accused stabbed the man a few times, and after having assured himself that the man was dead, he cut up his body and ate him," an official told Ria Novosti...the 21-year-old cannibal is a chef in the Arctic city of Murmansk.

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Opening Bell: 01.10.13

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Mr. Ackman's Pershing Square Capital Management LP has bet more than $1 billion against the company by shorting its stock…The face-off between two high-profile, media-savvy hedge-fund managers highlights the arrival of a new wave of postcrisis financial stars. They tout their positions during television interviews and at conferences, in letters or securities filings and on customized Web pages, often convincing other investors to follow their lead. Their pronouncements move stocks, at times dramatically, and leave companies scrambling to respond. And when they take the opposite sides of the same trade the ensuing battle can captivate the financial world. "One of them is going to be very wrong," said Gregg Hymowitz, founder of the $8.2 billion EnTrust Capital, a longtime investor with both Mr. Ackman and Mr. Loeb's firms. "Ackman thinks it's a complete and utter fraud, and Dan thinks it's a completely legitimate business." Hedgie's Herbalife Bet Counters Ackman (NYP) [In addition to Loeb], Carl Icahn is also believed to have taken a long position in Herbalife, sources said. The possibility of Loeb and Icahn going up against Ackman’s Herbalife short sent investors into a tizzy. “It’s going to be an Ackman sandwich,” one hedge fund manager wailed. Lew Taking Over at Treasury Puts Perennial Aide at Head (Bloomberg) With his penchant for thinking several steps ahead, his organizational drive and his budget expertise, Lew, 57, has been Obama’s consummate aide. Now, he’s Obama’s choice for Treasury secretary, according to a person familiar with the process. Lew faces the prospect of becoming a leader at a critical juncture for the nation’s economic and fiscal future. “As chief of staff you are staff and as Treasury secretary, you are principal -- Jack has to make that transition,” said Ken Duberstein, a chief of staff to former President Ronald Reagan who first met Lew in the 1980s. “It’s not the invisible hand, it is the visible hand.” If confirmed, Lew may need to play that hand as soon as next month, when the administration squares off with Congress over the U.S. debt ceiling. Lew’s job will be all the more difficult because his relations with House Republicans soured during the 2011 battle over the government’s borrowing limit. Government's worst signature will be on America's dollar bills (NYP) Lew’s signature — which looks like a strand of hair gone though a curler treatment — might even be too peculiar to grace our greenbacks, political insiders said. “Whoa! That’s completely unintelligible,” said a Senate finance aide. “This doesn’t look like anyone’s name at all.” She concluded, “Oh my gosh — I’ve never seen a signature like that.” ome social-media users were also quick to poke fun, saying Lew should clean up his squiggle. “HE GOT A CRIZZAZY SIGNATURE!!!!” one Twitter user wrote. Another tweeter quipped, “Looooooo!” But just because his autograph looks it’s penned by a drunken 3-year-old doesn’t mean it isn’t lovable, others said. Some fans created a petition on the White House’s Web site called “Save the Lewpty-Lew!” “We demand Lew’s doodle on every dollar bill in circulation,” the petition read. 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Police said Wednesday that they actually got three 911 calls about the “lion.” The first came at 10:19 a.m. The animal was running on Granby Street, a male voice said. Then a woman took the phone. She sounded anxious as she described the proximity to the zoo. “There was a lion that ran across the street. A baby lion. It was about the size of a Labrador retriever.” It was near Granby and 38th, she said. “It’s roaming loose in the neighborhood.” A second call came five minutes later. “I just saw an animal that looked like a small lion.” It had “the mange and everything,” a man said. He had seen it on Delaware Avenue near Llewellyn Avenue. “I don’t know if it got away from the zoo, or what,” he said. The dispatcher said they already had received a report. “I’m not sure if it actually is a lion or not, but I’ll update the information.” A third call came at 1:19 p.m. “I just saw a baby lion at Colley Avenue and 50th Street,” a man reported. “What kind of animal?” the dispatcher later asked him. “A lion. A baby lion, maybe.” The lion was going to nearby houses. “I don’t think it has caused any problem so far,” said the caller. “OK. You think it’s looking for food?” the dispatcher asked. “I don’t know.” By now, most folks know that the “baby lion” was actually Charles the Monarch, a Labrador-poodle mix owned by Daniel Painter, who lives in Riveriew and has a garden center on Colley Avenue. He has the dog groomed to look like the Old Dominion University mascot. Many people say they see Charles out a lot, especially on Colley. But to someone who hasn’t seen him, he sure doesn’t look like a dog at first. PE King Black Is Hungry For Hostess (NYP) Black’s Apollo Global Management has teamed with veteran food executive C. Dean Metropoulos on a potential bid for bankrupt Hostess Brands’ snacks business, which includes Twinkies, Ding Dongs and Ho Hos…Hostess is in the process of selling off its iconic brands and liquidating the company after a crippling strike by its bakers union forced it to shut down in November. The Irving, Texas-based company plans to hold separate auctions for its bread and snack businesses. Hostess is just a few days away from choosing a so-called stalking horse bidder for its bread brands, including Wonder Bread, Nature’s Pride and Butternut. The snack business will follow suit later. 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He said the company would strengthen its management and oversight of suppliers. "We feel regretful for all the problems," Mr. Su said in the statement. "I sincerely apologize to the public on behalf of the company." Swiss Banks Welcome Rejection of Germany Tax Accord, Study Shows (Bloomberg) Swiss banks welcome the collapse of an accord with Germany that would have imposed new taxes on German clients in a bid to end a dispute over tax evasion, Ernst & Young said. About 72 percent of 120 Swiss banks surveyed see the demise of the agreement as positive, Ernst & Young said in a report today. How Jawboning Works (WSJ) The clearest example comes from Europe. In July, Mario Draghi, president of the European Central Bank, defused an intensifying crisis of confidence in the euro with two sentences scribbled in the margins of an otherwise routine speech. "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro," he said. "And believe me, it will be enough." That may prove to be the most successful central-bank verbal intervention in history. A few weeks later, the ECB pledged to buy bonds of governments shunned by markets if those governments made belt-tightening commitments accepted by fellow euro-zone countries. No government has sought that help so the ECB hasn't spent a single euro. Yet global anxiety about an imminent euro crisis has abated. Beautiful Existence, Seattle Woman, Plans To Eat Only Starbucks For One Year (HP) A Seattle woman, legally named Beautiful Existence, will eat only food from Starbucks this year. She'll also be only drinking beverages from Starbucks as well, but will include drinks from Tazo Tea and Evolution Fresh since both fall under the Starbucks brand. Beautiful Existence cites several reasons for this endeavor. She explains them on her blog: "So how can eating only one company’s products impact me, anybody? Well Mr. McDonald’s already proved that question years ago with his documentary and Mr. Subway did his take on the loosing weight portion of the food challenges too. But when I watched those guys doing their thing I asked myself “where are the WOMEN challenging themselves in the world?” “Where are the effects being shown on a woman’s culture? A woman’s family & children? A woman’s diet, weight, fashion, checkbook, community and world through challenges?” “Where is HER VOICE on how an international company is directly or indirectly impacting everything from her waistline to her bottom line and every other woman’s, man’s, child’s, societies and planets world with their presence?” So far, Existence has really liked the Turkey Rustico Panini and is trying hard not to eat any of the baked items.