Opening Bell: 10.19.11

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Morgan Stanley profit boosted by accounting gain (Reuters, press release)
Morgan Stanley (MS.N) reported a third-quarter profit, reversing a year-earlier loss, helped by a large accounting gain that stemmed from declines in the value of its debt. The second-largest U.S. investment bank earned $2.15 billion, or $1.15 per share, compared with a loss of 7 cents per share a year earlier. Revenue climbed 46 percent to $9.89 billion. Excluding a gain of $3.4 billion from debt valuation adjustment, Morgan Stanley earned 2 cents per share.

Banks' Files Are Seized (WSJ)
European officials are scrutinizing an interest rate called the Euro Interbank Offered Rate, or Euribor, people familiar with the situation said. Euribor, set by more than 40 banks, is a benchmark used to determine interest rates on trillions of euros worth of euro-denominated loans and debt instruments. ... The Euribor rate-setting panel includes some of Europe's biggest banks. A list of financial firms raided Tuesday by the European Commission, which is the executive branch of the European Union, wasn't available. But among the targets were a large French bank and a large German bank, people familiar with the situation said. The coordinated raids occurred in London and other European cities, these people said.

Groupon set to launch roadshow (FT)
The US IPO market has been virtually shut since August. But the first exchange-traded IPO in two months, Ubiquiti Networks, came off last week. Another deal priced on Tuesday. Zeltiq Aesthetics, which develops weight loss tools, successfully sold $91m worth of shares after the market closed, although again they priced below the expected range, at $13 a share, versus a target of $15 to $17. JPMorgan and Goldman Sachs were the lead managers on the deal. However, the market remains challenging. On Tuesday, insurer Liberty Mutual withdrew a $1.3bn IPO of a subsidiary unit, and oil and gas group Williams withdrew a $750m offering of its exploration unit. The volume of US IPOs this year is still set to double last year’s total, at $34.5bn so far versus $17.8bn at the same time last year, according to Dealogic, following a boom in offerings in the first half of the year, including LinkedIn’s $352m offering in May.

Occupy Wall St. pepper-spray cop Anthony Bologna loses 10 vacation days for violating NYPD rules (NYDN)
The NYPD found that Bologna violated departmental guidelines and docked him 10 vacation days, or the equivalent amount of pay, police sources said. ... Shortly after midnight, actor Alec Baldwin showed up at Zuccotti Park. "You slept here for two days?" he asked Nina Montgomery, 18. "I slept like a baby," she answered. "I woke up with cameras in my face. Maybe you're used to that, but I'm not."

Town under siege: Lions, tigers, bears escape Ohio preserve and run amok (NYP)
Officers armed with assault rifles patrolled Zanesville Wednesday morning, a day after police killed dozens of animals that escaped from a wild-animal preserve, and where the owner's body later was found. Warning that more animals still were on the loose, officials expected up to four school districts to cancel classes as the remaining bears, big cats and other beasts from the Muskingum County Animal Farm were hunted down. "These are wild animals that you would see on TV in Africa," Sheriff Matt Lutz said at a press conference. He told residents to stay indoors and sent updates to them via Twitter.

Italy Punching Below Political Weight Revealed in Draghi Succession Fight (Bloomberg)
Prime Minister Silvio Berlusconi’s inability to nominate Mario Draghi’s successor to head the Bank of Italy illustrates the political paralysis that’s left Italy marginalized in Europe and under threat from the region’s debt crisis. ... "Failure to act on this matter unnecessarily exposes the country to market speculation by further highlighting that Italy is the weakest link among the large sovereigns in the euro area,” said Domenico Lombardi, a former board official at the International Monetary Fund and a senior scholar at the Brookings Institution in Washington.

Start of 2-day general strike to protest austerity measures shuts down Greece (AP)
A two-day general strike that unions vow will be the largest in years grounded flights, disrupted public transport and shut down everything from shops to schools in Greece on Wednesday, as at least 70,000 protesters converged in central Athens. All sectors, from dentists, state hospital doctors and lawyers to shop owners, tax office workers, pharmacists, teachers and dock workers walked off the job ahead of a Parliamentary vote Thursday on new austerity measures which include new taxes and the suspension of tens of thousands of civil servants. ... Protesters converged on the square in front of Parliament, banging drums, chanting slogans against the government and Greece’s international creditors who have pressured the country to push through rounds of tax hikes and spending cuts.

BNY Mellon Profit Rises on Higher Fee Revenue (WSJ)
Bank of New York Mellon Corp.'s third-quarter profit improved 8.7% as the trust bank recorded higher fee revenue and net long-term asset inflows from a year earlier. Already pinched by low interest rates, trust banks were faced with steep stock-market declines in the third quarter, which analysts largely expected to weigh down assets under management and cut into fee revenue. ... Bank of New York Mellon reported a profit of $664 million, or 53 cents a share, up from $611 million, or 51 cents a share, a year earlier. Revenue rose 7.9% to $3.7 billion. Analysts polled by Thomson Reuters expected earnings of 52 cents a share on $3.7 billion in revenue.

Paulson, Falcone No Longer Joined at Hip (II)
John Paulson and Philip Falcone will forever be linked by their respective fortunes—and sudden fame—stemming from huge bets they made against the housing market in 2007. But the association may begin and end there. ... In the ensuing three years Paulson personally made more than $7 billion betting on the rebounding stock market, especially banks and the surge in the price of gold, among other investment plays. Paulson became perhaps the most watched hedge fund managers. And judging from the impression he gave us during a meeting not too long ago, Paulson seemed to revel in the attention. Falcone, on the other hand, has ridden a dizzying roller-coaster ride that has no doubt left the Minnesota-native queasy. He lost more than 29 percent in 2008 before rebounding with a better than 46 percent gain in 2009, before losing 12 percent in 2012. ... But 2011 is another story. Most of Paulson’s funds are down between 20 percent and 47 percent, thanks to his bets on bank stocks and a recovering economy. Now his future is being debated, and the debate will continue if he widens his losses this year and is unable to reverse the trend in 2012. Falcone, on the other hand, is faring pretty well. His Master Fund is up 4 percent through September while his smaller Blue Line fund, which specializes in the credit markets, was up more than 16 percent, according to knowledgeable sources.

CFTC approves new caps on speculators (FT)
The US commodity regulator approved sweeping new constraints on speculation in food, energy and metals, in a decision riven along party lines. The limits on the size of positions in futures and swaps markets will curb banks’ and investment funds’ ability to trade commodities, though the rules were watered down after lobbying by Wall Street.

Favored pizzeria making big dough (NYP)
As with many businesses, Libertos’s pizzeria suffered after the financial markets imploded in 2008, and his best customers -- the targeted banker crowd -- had evaporated. “Our whole business model [upon opening in 2006] was to cater to AIG, which was right across the street,” he said. The protest movement’s pizza orders have allowed him to “catch up on my bills, catch up with my vendors,” Libertos said.

Related

Opening Bell: 07.18.12

BofA Swings To Profit, Topping Analysts' Estimates (WSJ) Bank of America reported a profit of $2.46 billion, compared with a year-earlier loss of $8.83 billion. On a per-share basis, which reflect the payment of preferred dividends, earnings came in at 19 cents from a loss of 90 cents a year earlier. The year-ago quarter's results included a charge of $1.23 a share in mortgage-related and other adjustments. Total revenue surged 66% to $21.97 billion. Analysts polled by Thomson Reuters expected earnings of 14 cents a share on $22.87 billion in revenue. The bank's profit was helped by reduced provisions for loan losses as credit quality continued to improve. Credit-loss provisions totaled $1.77 billion compared with $3.26 billion a year ago and $2.42 billion in the first quarter. HSBC Probe Brings Promises Regulator, Bank Will Clean Up Act (Bloomberg) HSBC executives apologized for opening their U.S. affiliate to a river of Mexican drug lords’ cash, and the U.S. regulator that failed to stem the flow vowed to prevent a repeat. “I deeply regret we did not act sooner and more decisively,” Comptroller of the Currency Thomas Curry said at a day-long hearing yesterday of the Senate Permanent Subcommittee on Investigations. He said his agency, which regulates HSBC’s U.S. arm, is partially responsible for letting Europe’s largest bank give terrorists, drug cartels and criminals access to the U.S. financial system and will take “a much more aggressive posture.” Opinion: Investing In America Produces The Best Returns, By Lloyd Blankfein (Politico) The question I’m most often asked these days is, “Where should I invest?” In recent years, we all know, there has been an unusually high degree of uncertainty. It falls into two broad categories: cyclical concerns that focus on the outlook for near-term economic growth and structural concerns that center on the viability of existing political or economic systems — for example, the European Union. The cyclical and structural challenges are considerable, and in some cases, even daunting. But when I meet with chief executive officers and institutional investors and they ask me where to invest, my response is that the United States remains as attractive as ever. And it would be even more attractive if it can make some short-term progress in a few key areas. Hugh Hendry: ‘Bad Things are Going to Happen’ (FT) Hendry believes that financial markets are single-digit years away from a crash that will present investors with opportunities of a lifetime. “Bad things are going to happen and I still think the closest analogy is the 1930s.” For Yahoo CEO, Two New Roles (WSJ) Just hours after Yahoo named Marissa Mayer as its new chief, the real conversation kicked in: how she will juggle pregnancy and being the CEO charged with saving a foundering Internet giant. The 37 year-old former Google executive is expecting her first child, a son, in early October. On Tuesday, she started her new job at Yahoo, which reported another quarter of lackluster sales growth...No Yahoo directors expressed concern about her pregnancy, according to Ms. Mayer, who told the board in late June, about a week after Yahoo's recruiter contacted her. She says she plans to work during her maternity leave, which will last several weeks...Ms. Mayer's husband, Zachary Bogue, a former attorney, is co-managing partner at Data Collective, an early-stage venture capital fund specializing in tech start-ups. JFK jet in laser scare (NYP) A lunatic aimed a powerful laser beam at an airliner flying over Long Island on its way into JFK — sending the pilot to the hospital and endangering the lives of the 84 people aboard. The first officer on JetBlue Flight 657 from Syracuse was treated for injuries to both eyes after the blinding flash of light lit up the cockpit Sunday night — as the FBI and Suffolk cops hunted for the person responsible, who could face federal prison time. The Embraer E190 jet landed safely, and the injured pilot — identified by sources as First Officer Robert Pemberton, 52 — was met at the gate and taken to Jamaica Hospital. Authorities believe the beam came from around West Islip, Babylon or Lindenhurst. “You wouldn’t think a pen laser would go that far of a distance,” said shocked West Babylon resident Cindy Konik, 50...A startled co-pilot, who was not identified, immediately took over the controls from his temporarily blinded colleague. “We just got lasered up here — two green flashes into the cockpit,” the captain radioed controllers at Ronkonkoma. Credit Suisse Sets Capital Plan (WSJ) moved Wednesday to stanch recent concerns about its financial strength, saying it is raising capital through the sale of convertible bonds, more divestments and the launch of another cost-savings program. It is a surprise twist in a spat with the country's central bank, which recently warned that Switzerland's number two bank wasn't strong enough to withstand a major crisis. Credit Suisse initially rejected the central bank's criticism, saying it was among the world's best-capitalized banks. This didn't impress investors, who offloaded their shares, wiping out 2 billion Swiss francs ($2.05 billion) in market value. At one point last month the bank even felt compelled to reassure investors that it was profitable in the second quarter, even though profitability over the period was never in doubt. Strong Possibility Of Further Fed Easing By September: Goldman (CNBC) In a testimony before the Senate Banking Committee on Tuesday, Federal Reserve Chairman Ben Bernanke offered no new hints that the central bank is planning more easing, but repeated a pledge that the Fed “is prepared to take further action as appropriate to promote stronger economic recovery.” “While we think that a modest easing step is a strong possibility at the August or September meeting, we suspect that a large move is more likely to come after the election or in early 2013, barring rapid further deterioration in the already-cautious near term Fed economic outlook,” Goldman Sachs conomist Andrew Tilton said in a report. BlackRock's Net Slips 11% (WSJ) BlackRock reported a profit of $554 million, or $3.08 a share, compared with a year-earlier profit of $619 million, or $3.21 a share. Stripping out one-time items, per-share earnings rose to $3.10 from $3. Revenue slipped 5% to $2.23 billion. Analysts expected earnings of $3.01 a share on $2.26 billion in revenue, according to a poll conducted by Thomson Reuters. BNY Mellon profit falls 37 percent on litigation charge (Reuters) Bank of New York Mellon Corp said on Wednesday that second-quarter net income had fallen 37 percent on lower foreign exchange revenue and after it paid $212 million to settle an investor lawsuit. The world's largest custody bank reported net income of $466 million, or 39 cents a share, compared with $735 million, or 59 cents a share, a year earlier. As announced earlier this month, the results included an after-tax charge of $212 million to settle an investor lawsuit accusing the bank of imprudently investing their cash in a risky debt vehicle that collapsed in 2008. Quarterly revenue fell to $3.62 billion from $3.85 billion. Residents warned: 6-foot lizard loose in Colorado (AP) A sheriff has warned residents in a tourist town northwest of Colorado Springs that a strong, aggressive 6-foot lizard that eats small animals — including dogs and cats — is on the loose in the area. Teller County Sheriff Mike Ensinger said Tuesday that a 25-pound pet Nile monitor lizard has gone missing after breaking a mesh leash and crawling away. Ensinger said about 400 homes in the Woodland Park area were warned. He added that the animal, which escaped Monday and is known as Dino, has not bitten any humans — yet. "We have a 6-foot reptile out and about," Ensinger said. "If it gets hungry enough, we don't know what it will do." Ensinger said officers may use a tracking dog if Dino isn't located by Tuesday afternoon. "I'm not going after it," Ensinger said. "I don't do reptiles."

Opening Bell: 04.17.13

BofA Misses Estimates as Mortgage Banking Weighs on Results (Bloomberg) Net income advanced to $2.62 billion, or 20 cents a share, from $653 million, or 3 cents, a year earlier, according to a statement today from the Charlotte, North Carolina-based company. The consensus of 25 analysts surveyed by Bloomberg had predicted 23 cents a share. Chief Executive Officer Brian T. Moynihan, 53, has sold more than $60 billion in assets, settled more than $40 billion in mortgage claims and repaired the bank’s balance sheet since taking over in 2010. He’s now focused on trimming $8 billion in annual expenses and adding revenue, which dropped 8.4 percent on an adjusted basis to $23.9 billion. BNY Mellon Has Net Loss of $266 Million on Tax Expense (Bloomberg) BNY Mellon had a net loss of $266 million, or 23 cents a share, compared with a profit of $619 million, or 52 cents, a year earlier, the New York-based bank said today in a statement. Earnings were cut by $854 million, or 73 cents, because it wasn’t allowed to take foreign tax credits. Excluding the item, BNY Mellon earned $588 million, or 50 cents a share. Analysts had expected BNY Mellon to report an adjusted profit of 52 cents a share, the average of 22 estimates in a Bloomberg survey. IMF Renews Call To Ease Austerity (WSJ) Seeking to keep a fragile global recovery on track, the International Monetary Fund on Tuesday called on countries that can afford it—including the U.S. and Britain—to slow the pace of their austerity measures. The fund warned that "overly strong" belt-tightening in the U.S. will slow growth this year. Across-the-board government spending cuts, known as the sequester, were the "wrong way" to shrink the budgetdeficit, it said in its semiannual report on economic growth. Bitcoin Investors Hang On For The Ride (WSJ) Norman Vialle, a 53-year-old car dealer in Kansas, invested in his share of winners and losers during the Internet bubble of the 1990s. Now he is clinging to a stash of Bitcoin, even though the fledgling virtual currency has lost about 70% of its value in the past week. "It's volatile because it's new, but it's still a lot higher than it was a month ago," Mr. Vialle says. In addition to investing in the currency, Mr. Vialle recently began accepting bitcoins for payment at Overland Park Jeep Dodge Ram Chrysler. One of his customers is planning to pay for a $40,000 Jeep with the currency next month. Grantham man explains why he has Margaret Thatcher tattooed on his leg (ITV) The unusual design features Baroness Thatcher's head sitting on an ice cream cone. Louis Maier, aged 32, wanted to have the six-inch work of art on his right calf to honour her. Cyprus Finance Minister Sees Gold Sale Within Next Months (Bloomberg) The Cypriot government plans to sell part of its gold reserves within the next months, a decision that needs to be approved by the country’s central bank, Finance Minister Haris Georgiades said. “The exact details of it will be formulated in due course primarily by the board of the central bank,” Georgiades, 41, told Bloomberg TV’s Ryan Chilcote in an interview in Nicosia. “Obviously it’s a big decision.” Gold's Fall Costs Paulson $1.5 Billion This Year (FT) The estimated losses for Mr. Paulson, who has made and lost more money on gold than almost any other hedge fund manager, reflect a bold all-in bet on the precious metal While many investors hold some gold in case of financial calamity or a return of the rampant inflation of the 1970s, since 2009 Mr. Paulson has allowed clients of Paulson & Co to denominate their holdings in gold, rather than US dollars. Mr. Paulson enthusiastically embraced the option, according to people familiar with the situation, and has about 85 percent of his personal capital in the firm linked to the gold price. Gold's Great Unraveling Had a Few Harbingers (WSJ) The gold-price rout began taking shape in the early morning hours Monday, after a sharp Friday selloff in a market that had risen steadily for a decade left traders girding for a downdraft. Some in London began arriving at work Sunday night ahead of the market's Asia opening to prepare for the onslaught, while others arrived as early as 4 a.m. Monday, even though a paucity of traders at this time limits most trading options until about 8 a.m. Forget Gold, the Gourmet-Cupcake Market Is Crashing (WSJ) The craze hit a high mark in June 2011, when Crumbs Bake Shop, a New York-based chain, debuted on the Nasdaq Stock Market under the ticker symbol CRMB. Its creations—4" tall, with fillings such as vanilla custard, caps of butter cream cheese, and decorative flourishes like a whole cookie—can cost $4.50 each. After trading at more than $13 a share in mid-2011, Crumbs has sunk to $1.70. It dropped 34% last Friday, in the wake of Crumbs saying that sales for the full year would be down by 22% from earlier projections, and the stock slipped further this week. Crumbs in part blamed store closures from Hurricane Sandy, but others say the chain is suffering from a larger problem: gourmet-cupcake burnout. "The novelty has worn off," says Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm that often works in the restaurant industry. Crumbs now has 67 locations, nearly double the number it had less than two years ago. "These are singularly focused concepts," says Darren Tristano, executive vice president at Technomic Inc., a Chicago research and consulting firm that specializes in the food industry. "You're not going to Crumbs every day." "It's a short-term trend and we're starting to see a real saturation," he adds. "Demand is flat. And quite frankly, people can bake cupcakes."