Opening Bell: 10.28.11

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Calling Bankers’ Bluff, Merkel Won Europe a Debt Plan (NYT)
For hours, negotiators had been trying to persuade the banks to accede to a “voluntary” 50 percent loss in the face value of their Greek bond holdings. The banks, which had already agreed to a 21 percent write-down, had dug in their heels. They knew how badly the European leaders needed a deal, and how much financial experts feared a disorderly, involuntary default. That could set off a “credit event,” throwing world financial markets into turmoil, much as the collapse of Lehman Brothers did in the fall of 2008. But Mrs. Merkel called the bankers’ bluff, said officials present at the discussions. Accept the 50 percent write-down, she told the bankers, or bear the consequences of default. In effect, she was willing to risk a credit event, and to place the blame for any fallout on them.

Big Banks Blink on New Card Fees (WSJ)
Following eight months of consumer testing, J.P. Morgan Chase & Co. has decided that it won't charge customers who use their debit cards to make purchases, according to a person familiar with the bank's plans. The New York bank's Chase retail unit is one of the largest U.S. consumer banks, with 26.5 million checking accounts and 5,300 branches. J.P. Morgan joins U.S. Bancorp, Citigroup Inc., PNC Financial Services Group Inc., KeyCorp and other large banks that have said in recent days that they won't impose monthly fees on debit cards. None of those banks said they made their decisions because of the outcry over Bank of America's fees.

EFSF head optimistic of China’s support (FT)
The chief of the eurozone rescue fund said he was confident China would continue to support the European financial stability facility ahead of meetings with the finance ministry and central bank in Beijing on Friday. But both Klaus Regling, the head of the EFSF, and Zhu Guangyao, a Chinese vice-finance minister, said that nothing concrete had been agreed yet, although the door was open to deeper financial co-operation between the two.

Italy 10-Year Auction Yields Hit New Euro Lifetime High (CNBC)
Italy paid the most since joining the single currency to sell new 10-year debt on Friday in the first euro zone bond auction after European leaders agreed new steps to tackle the debt crisis. The auction yield on Italy's March 2022 BTP bond rose to 6.06 percent from 5.86 percent a month ago. The Treasury managed to sell 7.94 bln euros of medium and long term paper, versus a target range of between 5.25 billion and 8.5 billion euros.

Wachtell Switched Sides in United Technologies-Goodrich Deal (Deal Journal)
Wachtell, Lipton, Rosen & Katz was a longtime legal adviser to Goodrich Corp., and its work included helping Goodrich as it weighed a possible sale to United Technologies starting last year. But after working with Goodrich on the deal for months, the law firm — one of the most prominent firms in corporate M&A — switched sides and began working with United Technologies, according to a regulatory filing released today.

Raj and Rajat Go Hollywood (CNBC)
A New York production company says it is in pre-production for "Billion Dollar Raja," billed as "an investigative financial mafia drama," to be written and directed by New York filmmaker Nayan Padrai, who says he hopes to begin filming next fall. No word yet on the cast.

Lazard and Evercore Log Gains Despite a Slowdown in Deals (DealBook)
Lazard reported Thursday that revenue from its mergers and acquisitions advisory business rose 24 percent in the third quarter, to $199.1 million. And Evercore reported that its investment banking revenue rose 38 percent in the quarter, to $138.4 million. ... Known for putting together mergers and acquisitions, Lazard is often seen as an indicator of the health of the deal economy, and the firm sounded a note of caution. Its third-quarter results show that deal activity persisted despite market volatility, even as stock offerings had slowed. “This is certainly a challenging environment,” Matthieu Bucaille, Lazard’s chief financial officer, said in an interview. “We have to remain cautious, but our business model is well positioned.”

Chanos Says China Property Is Slowing, Still Shorting Banks (Bloomberg)
China is on “a bigger and faster treadmill” than ever as property sales slow, said Jim Chanos, the hedge-fund manager who’s shorting banking stocks on a bet the market will crash. “The Chinese are beginning to realize that property prices can go down as well as up and this is going to be a very, very troubling development for the Chinese property market,” Chanos, president and founder of $6 billion hedge fund Kynikos Associates Ltd., said in a Bloomberg Television interview from Singapore with Susan Li today.

Erste Bank Sharply Cuts CDS Portfolio; To Close It (CNBC)
Austrian bank Erste announced on Friday that it had drastically reduced its credit default swaps (CDS) portfolio and that it would close it by the end of the year, after valuing it based on what it would be worth in the market - known as marking to market - earlier in the month. ... "Following our pre-announcement for the third quarter on 10 October, concerns were raised in relation to our CDS exposure," Erste Group CEO Andreas Treichl said in a statement. "We have reacted to this and reduced our portfolio from 5.2 billion euros at the end of September to 0.3 billion yesterday, with no additional negative [profit and loss] effect," Treichl added.

Centuries-old rule of primogeniture in Royal Family scrapped (Telegraph)
Female members of the Royal Family are to be given equality with men in the rules of succession to the throne, meaning if the Duke and Duchess of Cambridge's first child is a girl, she can become Queen even if subsequent children are sons. ... Speaking before the meeting in Perth, the Prime Minister said the rules are “outdated and need to change”. He said: “The idea that a younger son should become Monarch instead of an elder daughter, simply because he is a man just isn’t acceptable any more. Nor does it make any sense that a potential Monarch can marry someone of any faith other than Catholic. “The thinking behind these rules is wrong. That’s why people have been talking about changing them for some time. We need to get on and do it.

Experiencing Las Vegas, in Queens (NYT)
The [new Resorts World casino opening at Aqueduct today] imitates the glitz and frenzy of Caesars Palace or Bally’s without running afoul of state laws and regulations that allow electronic gambling, but not human dealers, at the tracks. The baccarat tables feature real cards shuffled and dealt by robotlike mechanical arms. “We have a situation in which elected state officials are breaching the Constitution,” said the Rev. Jason McGuire, executive director of New Yorkers for Constitutional Freedoms, a conservative Christian political group. “A robotic arm dealing cards is just as insidious as a human being.”

Related

Opening Bell: 06.21.13

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They attached a carefully worded card to the parcel which read: 'Enjoy . . . Life is delicious.' However, the European newlyweds were less than impressed with the gesture and contacted the couple the next day via text message to ask if they had the receipt so they could get the money back instead. ... 'You ate steak, chicken, booze, and a beautiful venue . . . If anything you should be embarrassed for being so cheap and embarrassing,' the brides said in one message. Creeping mistrust stops euro zone banks lending to peers across bloc (Reuters) In a trend that could reignite fears about the euro and its banks, European Central Bank data shows the share of interbank funding that crosses borders within the euro zone dropped by a third, to just 22.5 percent in April from 34.5 percent at the beginning of 2008. Banks are now lending to other banks across euro zone borders at only about the same rate as when the single currency was first launched, 15 years ago. Greek markets rattled by political disarray (FT) The benchmark 10-year bond yield of Greece rose 75 basis points to 11.6 per cent by late morning in London, while the Athens stock exchange index fell 2.9 per cent to its lowest level since early April. ... Investor sentiment towards Greece is not helped by uncertainty over how to plug a funding gap in the country’s bailout programme. The FT reported on Thursday that the International Monetary Fund might suspend aid to Greece next month unless the eurozone stepped in. Losses loom for investors enmeshed in U.S. mortgage chaos (Reuters) A review of loan documents, property records and the monthly reports made available to investors show that mortgage servicers are reporting individual houses are still in foreclosure long after they have been sold to new buyers or the underlying mortgages have been paid off. ... In one case, Reuters found that Bank of America Corp had been collecting a monthlyservicing fee of $50.73 from investors on a loan that had been paid off nearly two years ago, investor reports show. Bank of America filed a document at a local county office on July 22, 2011 showing that the $162,400 loan on a cream-colored duplex in Greenacres, Florida, owned by a drywall hanger named Roman Pino, had been satisfied and "cancelled." But investors in Pino's loan and more than 6,700 other similar mortgages that are bundled together in a subprime mortgage bond still have not been informed that the loan no longer exists, according to the last investor report in May. Good and Evil Battle Volatility on Summer Solstice (CNBC) "Summer Solstice is upon us: the longest day of the year in the northern hemisphere where some religions in the western world believe the sun defeats the forces of evil." Also it's triple witching. 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