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Opening Bell: 09.13.11

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The Trouble With French Banks (WSJ)
'We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore," a bank executive for BNP Paribas, who declines to be named, told me last week. "Since we don't have access to dollars anymore, we're creating a market in euros. This is a first. . . . We hope it will work, otherwise the downward spiral will be hell. We will no longer be trusted at all and no one will lend to us anymore."

Market turmoil lands hedge funds with big losses (FT)
According to the latest provisional figures from Hedge Fund Research, the average hedge fund manager has lost 4.1 per cent in the past four weeks. Equity-focused managers have fared even worse, losing an estimated 6.9 per cent – a staggering drop for an industry that prides itself on risk management, and charges accordingly.

Merkel Rejects Greek Default, Defends Euro-Area Integrity (Bloomberg)
“The top priority is to avoid an uncontrolled insolvency, because that wouldn’t just hit Greece and the danger that it hits everyone, or at least a number of other countries, is very big,” Merkel told Berlin-based broadcaster Inforadio. “I have made my position very clear: that everything must be done to keep the euro area together politically, because we would very quickly face a domino effect.”

Nomura Said to Prepare Cuts of About 5% of Jobs in Europe (Bloomberg)
The reductions may be announced as early as tomorrow, the people said, declining to be identified because the information is confidential. Fewer than 400 positions will be eliminated globally, with the majority in Europe, one of the people said.

Candidates Perry, Romney differ in tone on Fed and Bernanke (Reuters)
Former Massachusetts governor Mitt Romney, who has said he would not re-appoint Bernanke, has been less critical of the Fed and defended the central bank's role to preserve the value of currency and ensure investor confidence. "Of course we should see what the Fed is doing - there should be some oversight to make sure that it is acting properly - but at the same time we need to recognize we need to have a Fed," Romney said.

‘Killer’ rep for S&M’er (NYP)
Leather-loving Edythe Maa, whose lawyer boyfriend was shot and killed three years ago by a crazed client, just found her newest beau dead in the attic. The 29-year-old former-Ph.D.-student-turned- S&M-model, better known as Jade Vixen, made the horrific discovery Aug. 18 in their home in Drexel Hill, Pa., police said. Peter Stelzenmuller, 49, an engineer -- who, based on online photos, seemed to share her kinky interests -- was testing new scuba equipment when he died, according to a police report.

Doubts Cast on Whether China will Help Out Italy (CNBC)
"Don't forget this is Italy telling us, not China. We're not hearing anything from China," Simon Derrick, chief currency strategist at BNY Mellon, told CNBC Tuesday.

Dark Side of Brazil's Rise (WSJ)
"We have to defend ourselves from this immense, fantastic, extraordinary sea of liquidity that finds its way to our economies in search of returns that it can't find in its own," Ms. Rousseff told Latin American leaders on July 28 in Lima.

Detroit Sets Its Future on a Foundation of Two-Tier Wages (NYT)
What was once seen as a desperate move to prop up the struggling auto industry is now considered an integral part of its future. The demand for $14-an-hour manufacturing jobs is providing Detroit’s Big Three automakers with a ready pool of eager new employees. Last year, Chrysler was flooded with inquiries about the jobs here. It froze the list after receiving 10,000 applications.

GOP Balks at Taxes to Finance Jobs Plan (WSJ)
"It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past,'' said Michael Steel, a spokesman for House Speaker John Boehner (R., Ohio). "We remain eager to work together on ways to support job growth, but this proposal doesn't appear to have been offered in that bipartisan spirit.''

Saving Europe with sovereign equity (interfluidity)
European governments would define a new class of security: European Sovereign Equity Shares. Governments would issue and sell these securities at par. Dividends would accrue at the Eurozone inflation rate (and negative accruals could occur in the event of outright deflation). However, these would be true equity securities. The timing of any redemptions, whether of principal or accrued dividends, in part or in full, would be at the discretion of the issuing sovereign.

Cybersex examined by UNB Fredericton student (CBC)
Shaughnessy won the 2010 International Academy of Sex Research's best student manuscript for her research. ... "A key piece in the research that I'm conducting right now is, who do you have cybersex with? One thing that is across the board — whether I'm talking to researchers, students, anybody — is this notion that cybersex is two strangers hiding from their offline partners engaging in sex online, and I don't think that's reality," she said.

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Opening Bell: 11.02.12

Economy Adds 171,000 Jobs (WSJ) U.S. payrolls increased by a seasonally adjusted 171,000 jobs last month, the Labor Department said Friday. The politically important unemployment rate, obtained by a separate survey of U.S. households, rose one-tenth of a percentage point to 7.9%. Economists surveyed by Dow Jones Newswires expected a gain of 125,000 in payrolls and a 7.9% jobless rate. Hedge Fund Cashes In On Greek Bonds (Reuters) London-based hedge fund Adelante Asset Management has made a 70 percent gain on a sale of Greek bonds, showing the potential for big profits from betting on a recovery in the fortunes of a country effectively off-limits to investors a few months ago...Since the restructuring, Greek government bond prices have strengthened, allowing Adelante to sell them for around 24 cents on the euro, having bought them for around 14 cents in June, the company said. A Greek government bond maturing in 2042, for example, is currently trading at around 20.8 cents on the euro, Thomson Reuters data shows. Other hedge funds have made similar bets. Third Point, a high profile New York hedge fund, for example, has been a significant buying of cut-price Greek bonds. RBS Eyes Libor Settlement Soon (WSJ) RBS wants to seal a settlement with regulators over its alleged rigging of key interest rates in the coming months, as the partstate-owned bank looks to draw a line under the scandal. Speaking to reporters at the bank's third-quarter results presentation, Chief Executive Stephen Hester said he would be "disappointed" if he couldn't provide details on a settlement by February. "We are up for settling with all and everyone as soon as they are ready. But each regulator has to satisfy itself that it has all the facts," he said. Deutsche Bank Faces Top Surcharge as FSB Shuffles Tiers (Bloomberg) Deutsche Bank would be required to hold more capital and Bank of America Corp.’s burden stands to be reduced as global regulators shuffled the competitive balance among the world’s biggest banks. Citigroup, HSBC and JPMorgan join Deutsche Bank as firms that will be targeted for a capital surcharge of 2.5 percent, according to an updated list published yesterday by the Financial Stability Board. The change means Bank of America already exceeds requirements, while Deutsche Bank would be more than 2 percentage points below the new minimum of 9.5 percent. “That limits earnings potential for Citigroup, JPMorgan and Deutsche Bank compared to Bank of America, all other things being equal, so it’s certainly a competitive advantage for them,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. Short-Sellers of Europe Set to Be Unmasked (CNBC) The European Securities and Markets Authority (ESMA), the EU regulator, has issued new rules on the short-selling of securities indicating that anyone with short positions of greater than 0.2 percent in an EU company’s shares must report it to regulators. Positions of more than 0.5 percent will be publicly released, naming both the company and the short-seller. Public disclosure is triggered any time that level is hit with each 0.1 percent increase or decrease after that. NYSE Open For Business Shows Wall Street Still Vulnerable (Bloomberg) The Securities and Exchange Commission may consider whether exchanges’ emergency regimens need to be bolstered, according to a person familiar with the regulator’s thinking who asked not to be named because the matter is private. The industry’s decision to halt equities and bond trading shows the challenge of maintaining markets when a catastrophe threatens New York City, home to 168,700 securities industry workers. “One of the purposes of having electronic exchanges and basing them away from New York City is for the market to be more robust and stay open,” Charles Jones, a finance professor at Columbia Business School in New York, said in a phone interview. “This is what the back-up plans were designed for. But the markets didn’t open.” David Blaine Entertains New Yorkers After Hurricane Sandy (NYP) When a backup generator at Old Homestead Steakhouse sputtered, the restaurant started serving hundreds of pounds of steaks, burgers, lobster tails and shrimp on the street outside for downtown denizens. David Blaine, the modern-day Harry Houdini who spent days recently being shocked in a steel suit, pitched in to provide spontaneous street entertainment. “David was rumbling by on his motorcycle, and he stopped to see why there was a line on 14th Street,” said a spy, adding 800 chowed down. Blaine then asked restaurant co-owner Greg Sherry if there was a deck of cards in the house. Blaine used the full deck and some spare silverware to perform magic tricks outside for an hour and a half. The magic man, an Old Homestead regular, was offered a doggie bag but said he’s on a special diet in preparation for his next stunt. Romney Faces Sale With A Win (WSJ) Mr. Romney's assets, valued at between $190 million and $250 million, include investments in hedge funds, private-equity funds and partnerships at Bain Capital, which he ran for 15 years. These entities have ownership stakes in dozens of companies that could be affected by government action, such as radio firm Clear Channel Communications Inc. and a video-surveillance firm based in China. Many businessmen and wealthy individuals have entered government service and sold off holdings. But a Romney sale would be especially complicated. Investments in private-equity funds can be difficult to value and seldom change hands. Any sale would have to be handled carefully to avoid any appearance that the incoming president was getting favorable treatment from a buyer. What Do Asia Markets Fear? Romney As President (CNBC) At a time of heightened uncertainty, with the ongoing European debt crisis and the upcoming leadership transition in China, a new president in the world’s largest economy will cause additional nervousness among Asian investors, experts told CNBC. “Asian traders don’t like change in leadership. You would see weakness in the markets if Romney won, because people would question how well he would deal with the impending doom of the ‘fiscal cliff.’ Obama would be a safer bet, as investors would enjoy continuity at a time of a lot of uncertainty,” said Justin Harper, market strategist, at IG Markets...Besides, Romney’s stance on China is particularly worrying feels Harper. The presidential hopeful has said he will name China a “currency manipulator,” which could lead to more tensions with the mainland, including on the trade front. “You would expect trade between the two nations to suffer, this would have a knee-jerk reaction on trade in the region,” he added. Fed Up With Fees (NYP) The manager of a large public pension’s private-equity program said for the last 24 months he has not committed money to any new private-equity fund that doesn’t give all fees it charges its companies back to investors. He is doing this because he wants an alignment of interest where he and the private-equity firm only make money by reselling a business. PE firms, he believes, will stop charging their companies fees if there is little in it for them. So, KKR, for example — responding to pressure — has agreed to give all fees it charges its companies in its new fund back to investors, the pension manager said. KKR is not the only firm making this change. Apax Partners, Blackstone Group, Centerbridge Partners, Providence Equity and TPG Capital are among those making the same concessions, the pension manager said. Local shelter mistakenly euthanizes family pet (WRCB) After waiting 10 days to be reunited with his dog, a local college student learned the family's pet had been euthanized by mistake. The Lab mix was being held at McKamey Animal Center, where administrators say a paperwork mix up led to the dog's death. Matt Sadler adopted the three-year-old Lab mix when he was just a puppy. "That was my best friend," Sadler says. "He was there for me through my parents' divorce and a lot of really hard tough times in my life." It was hard for Matt when Zion was quarantined last week, after jumping on a pizza delivery driver. "The lady didn't want to press charges, it wasn't anything serious, but the law has a 10-day quarantine period," he says. Because Zion was a month past due on his yearly rabies vaccine, he was held for the full 10 days at McKamey Animal Center. Thursday, Matt eagerly returned to the facility to take Zion home. "She says, ‘I'm sorry, Matt, we accidentally euthanized your dog'," Sadler says...McKamey has offered to cremate Zion, and allow Matt to adopt any dog he chooses.