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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.

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