Opening Bell: 09.01.11 - Dealbreaker

Opening Bell: 09.01.11

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Goldman Takes A Dark View (WSJ)
In a 54-page report sent to hundreds of Goldman's institutional clients dated Aug. 16, Alan Brazil—a Goldman strategist who sits on the firm's trading desk—argued that as much as $1 trillion in capital may be needed to shore up European banks; that small businesses in the U.S., a past driver of job production, are still languishing; and that China's growth may not be sustainable. Among Mr. Brazil's ideas for trading on that downbeat analysis: a fancy option play that offers a way to take a bearish position on the euro, and a bearish bet through an index of insurance contracts on the credit of European financial stocks. The report also includes detailed information about European financial institutions and pointed language about the depth of the problems in Europe, the U.S. and China.

ECB Official: US Has An 'Enormous' Debt Problem (CNBC)
"The crisis is not over. Not just in Europe is it not over, it is also not over in other regions of the world," European Central Bank policymaker Juergen Stark said, adding the United States had an "enormous" debt problem and lacked the structures to get the problem under control.

Jobless Claims Fall 12,000 Last Week (Reuters)
Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 409,000, the Labor Department said, still pointing to a jobs market struggling to find strength, but well short of a recession signal.

AT&T’s Stephenson Plans Court Fight to Salvage T-Mobile Deal (Bloomberg)
Stephenson, 51, agreed to a deal that will pay T-Mobile a package of $7 billion, including $3 billion in cash plus wireless airwaves and call discounts, if regulators reject the acquisition. Dallas-based AT&T expressed surprise yesterday that the U.S. Justice Department moved to block the deal...“He went and did a deal with a very large breakup fee,” said Christopher King, an analyst at Stifel Nicolaus & Co. in Baltimore. “To come out of it with observers knowing they weren’t even close to getting it approved, that is a black eye for AT&T management.”

BNY Mellon Ousts Chief In Shake-Up (WSJ)
Mr. Kelly couldn't be reached to comment on his departure. In a statement released by the bank, Mr. Kelly said, "It has been an honor to serve BNY Mellon, its management team and its employees during the past four years." Mr. Kelly is being succeeded by President Gerald L. Hassell, a long-time veteran of Bank of New York, which became BNY Mellon in a merger with Mellon Financial Corp. in 2007. Mr. Kelly could collect more than $30 million in cash compensation, retirement benefits and stock awards, according to a regulatory filing from earlier this year outlining severence pay.

Sources: BNY Chief Fired For 'Abrasive' Style (CNBC)
People familiar with the deliberations say BNY's board of directors felt his management technique was hurting morale, and feared that staff may leave the company as a result.

German Man Caught With Cocaine In Digestive System In Las Vegas Airport (KTNV)
A German man was caught with more than a kilogram of cocaine inside his digestive system at McCarran Airport in Las Vegas. Authorities said Christopher Adiegwu, 43, was trying to catch a plane from Las Vegas to London on August 17, when U.S. Customs officers inspected him after becoming suspicious that he was carrying narcotics. Officers took Adiegwu to a nearby hospital for X-rays, where they found several dozen pellets in his upper digestive system. He was given laxatives, and eliminated 81 plastic pellets containing cocaine, about 1.2 kilograms.

Banks, State Reach A Deal On Mortgages (WSJ)
Under the agreement with the state's financial-services superintendent, Benjamin M. Lawsky, the three firms—Goldman, its Litton Loan Servicing business and Ocwen Financial Corp.—promised to end so-called robo-signing, in which bank employees signed foreclosure documents without reviewing case files as required by law. They also agreed to comb through loan files for evidence they mishandled borrowers' paperwork and to cut mortgage payments for some New York homeowners.

German Resilience Buoys Europe (WSJ)
A pair of bullish reports, on German employment and manufacturing, were reassuring on Wednesday: Unemployment remained at its lowest level in nearly two decades last month, while July machine orders jumped 9% from a year earlier.

Brazil Surprises With Key Cut Rate (WSJ)
Brazil's central bank cut the overnight rate by half a percentage point to 12%, still among the highest rates in the world. In a statement, the central bank said weakening economies in the U.S. and Europe would take pressure off Brazilian inflation, reducing the need for its high rates.

London Loses As Banks Book Trades Overseas (Bloomberg)
Banks in Europe are exploring ways to cut costs by routing more of their trades and other business through overseas subsidiaries, a plan that may shift tax revenue away from London and loosen European regulators’ influence over the lenders.

Actor Steven Seagal Sued for Driving Tank into Arizona Home, Killing Puppy (Forbes)
The story of Steven Seagal accompanying Sheriff Joe Arpaio’s raid on an Arizona man suspected of cock-fighting seems almost humorous. Almost, that is, until you think about police driving into your own home with a tank and killing your dog, which is what happened when Seagal drove a tank into Jesus Llovera’s house.

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