September 18, 2021

Opening Bell: 11.01.11

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MF Global Collapses As Books Questioned (WSJ)
U.S. regulators are investigating the discrepancy, which relates to money from customers that couldn't be accounted for as MF Global raced to sell itself, according to people with knowledge of the probe. The probe is at an early stage, and it isn't clear if the money is missing or if the inconsistencies relate to sloppy bookkeeping...Because of the company's dire condition when trading opened Monday, CME Group Inc., the owner of the Nymex and the Chicago Mercantile Exchange, blocked traders working for MF Global or backed by the securities firm from buying and selling. Some of their security cards were deactivated as they left the trading pits in Chicago. At the Nymex in lower Manhattan, three marooned traders wearing MF Global's light-blue jackets sat off to the side of the oil-options pit with sullen expressions.

Credit Suisse Plans 1,500 More Job Cuts After Loss at Securities Division (Bloomberg)
Credit Suisse fell the most in almost three years in Zurich trading as third-quarter net income of 683 million Swiss francs ($767 million) missed the 979 million-franc mean estimate of 12 analysts surveyed by Bloomberg. Chief Executive Officer Brady Dougan, who said current volatility in the markets is “similar” to the 2008 crisis, is adding to the 2,000 staff cuts announced in July. That may make it more difficult for the Zurich-based bank to compete with larger rivals amid the European sovereign debt crisis and as the global economic slowdown crimps investment-banking revenue.

Greek Vote Threatens Bailout (WSJ)
Greek Prime Minister George Papandreou stunned Europe by announcing a referendum on his country's latest bailout—a high-stakes gamble that could undermine the international effort to preserve the euro. A "yes" vote in the referendum could deflate the massive street protests and strikes that threaten to paralyze Greece as it tries to enact a brutal austerity program to earn rescue loans from the euro zone and the International Monetary Fund. A "no" vote, however, could bring down the government and cut off international funding for Greece, leaving the country facing a financial meltdown. The government expects to hold the referendum in January.

Paulson Received $1.5 Billion in Redemptions (II)
John Paulson has so far received $1.5 billion in redemption requests as of Friday, according to a knowledgeable source. This works out to 5 percent of the firm’s total assets of $30 billion, which are up from $27 billion thanks to strong performance in the October market rally. If Paulson does not get a sudden surge of redemptions by the Monday deadline, the total will wind up much less than many experts had anticipated. In addition, Paulson is allowing existing investors to put additional money into any of the firm’s funds, and won’t charge a performance fee until that particular fund hits its high water mark.

Occupy Wall Street Applies For Trademark (Fortune)
In an application dated October 24, the unincorporated association "Occupy Wall Street" applied for the trademark to "Occupy Wall Street." The trademark application says the group would like to use the phrase on merchandise such as clothing and bags, in periodicals and newsletters, and on a website featuring "photographic, audio, video and prose presentations" about the Occupy movement.

Citigroup Number One At Picking Financial Stocks (Bloomberg)
The No. 1 financial stock-picking firm was Citigroup Inc. (C), whose London-based team of capital markets analysts made 26 accurate calls on the 43 financial stocks they follow that met the Bloomberg Markets ranking’s criteria. Citigroup was No. 5 in 2010. “It is not, and it hasn’t been for a while, a stock picker’s environment,” says Andrew Pitt, Citigroup’s global head of investment research and a former financial company analyst. “So doing well picking financial stocks over the last 12 months has required judgment and probably also a degree of luck.”

One Analyst Is Detailing His "Fight" (WSJ)
A forthcoming book, written in near-total secrecy over the past decade by longtime banking analyst Mike Mayo, promises to reopen old wounds and shine a light on how banks behave toward their investor clients. Mr. Mayo is a controversial figure with a reputation as a bruiser with a passion for the limelight, and the title of the book underscores those traits. "Exile on Wall Street: One Analyst's Fight to Save the Big Banks From Themselves" chronicles Mr. Mayo's 20-plus years working for, and writing about, some of the world's biggest financial firms. In the ensuing 200 pages, Mr. Mayo argues that, when it comes to research, big banks look after themselves first and their clients much later...In the executives' view, Mr. Mayo's perspective is also undermined by his temperament: combative, stubborn and unyielding. In short, not conducive to the kind of subtle business that is the stuff of Wall Street. "He is a royal pain," growled an executive who knows him well. Mr. Mayo retorts that his job isn't to please executives. "I work for shareholders," he said. "I am one of the thousand eyes of the market."

Fannie, Freddie dole out big bonuses (Politico)
The Federal Housing Finance Agency, the government regulator for Fannie and Freddie, approved $12.79 million in bonus pay after 10 executives from the two government-sponsored corporations last year met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.

Obama Pivots To Call For Patience On Economy (Bloomberg)
Obama is promoting themes similar to those he used four years ago even as he tempers expectations. “It is going to take time to rebuild an America where we can restore security for the middle class and opportunity for folks trying to get in the middle class,” he said last month. And he has tried to maintain a post-partisan tone, even if conciliatory words are sometimes followed by fighting ones. “I’m not the Democratic president, I’m not the Republican president -- I’m the president,” Obama said to applause last month in Emporia. “This is not the Republican jobs act, this is not called the Democratic jobs act -- this is the American Jobs Act.” Then he added: “One poll found that 63 percent of Americans support the ideas in this jobs bill. And yet 100 percent of Republicans in the Senate voted against it. Does that make any sense?” Obama asked at Greensville County High School.

Groupon IPO Holds Price At $16 To $18 A Share (WSJ)
Groupon is expected to price its IPO shares after the market close on Thursday, and to begin trading as a public company on Friday.

Camping sorry for failed apocalypse predictions (AP)
Religious broadcaster Harold Camping says he and his Family Radio network are embarrassed that the world didn't end on Oct. 21 as he predicted. In a message posted on his network's website, the 90-year-old Camping says, "When it comes to trying to recognize the truth of prophecy, we're finding that it is very, very difficult." Camping also apologizes for saying last May that people who didn't believe his prophecy that Christians would be taken up to heaven in the rapture on May 21 probably were not saved.

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Global Finance Chiefs At Odds (WSJ) At the annual meetings here of the International Monetary Fund and World Bank, European officials bickered about the damage caused by austerity; this week they head into a major euro-zone summit with no clear rescue plan for Greece. A territorial row between China and Japan, the world's second- and third-largest economies, bled into the conference with no sign of resolution, highlighting a new risk to growth. And many top finance officials pointed fingers at the U.S. for casting a new cloud over global markets by failing to make progress on the budget mess in the world's largest economy. Thousands March In Spain To Protest Austerity (Reuters) Several thousand anti-austerity protesters in Spain marched down a major street in the capital banging pots and pans Saturday. Many protesters also blew whistles as they blocked part of the Castellana boulevard Saturday carrying placards saying "We don't owe, we won't pay." "None of us pushed the banks to lend huge sums of money to greedy property speculators, yet we are being asked to pay for other's mistakes," 34-year-old civil servant Maria Costa, who was banging an old pot along with her two children, said. Bernanke Defends Fed From Claims It Is Being Selfish (NYT) Critics say the Fed’s unorthodox policies weaken the dollar and bolster the currencies of developing countries, hurting their ability to export. “It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies,” Mr. Bernanke said at an event sponsored by the Bank of Japan and the International Monetary Fund. The Fed last month announced a program of open-ended bond purchases that will be continued until there is substantial improvement in labor market conditions, barring a sustained and unexpected spike in inflation. To start off, the central bank will buy $40 billion in mortgage-backed securities each month. “This policy not only helps strengthen the U.S. economic recovery, but by boosting U.S. spending and growth, it has the effect of helping support the global economy as well,” Mr. Bernanke said. Fischer Backs Fed QE3 as World ‘Awfully Close’ to Recession (Bloomberg) While there has been “a lot of progress made” to improve the global economy, its impact hasn’t materialized, Fischer said in an interview in Tokyo with Bloomberg Television airing Sunday. He signaled that by deciding not to set an end date or total amount to its third program of bond buying, the Fed is easing worries it will run out of ammunition before achieving its goals. Can Morgan Stanley's Gorman Save Wall Street? (BV) Gorman’s strategic moves are enough to convince one natural born skeptic, Mike Mayo, a financial-industry research analyst at Credit Agricole SA (ACA), to recommend Morgan Stanley’s stock for the first time in years. “The stock is valued as if it is a Greek or Spanish bank but its risk is far less,” he wrote in an e-mail to me. For Morgan Stanley to return to its glory days, he said, margins need to be improved in asset management, fixed-income trading needs to be further slimmed down and the core investment-banking franchise needs to be maintained and reinvigorated. Good advice. A firm built around lower risk-taking and lower overall pay while still providing clients with the advice and capital they need to innovate and expand is what we need on Wall Street. It’s the vision of one man taking seriously his responsibility to make the capital markets safe and productive for economies all over the world, instead of just some casino gone haywire where the house absorbs the losses and the profits go to the gamblers. The question is whether other leaders on Wall Street will follow Gorman’s example. Sex Life Was ‘Out of Step,’ Strauss-Kahn Says, but Not Illegal (NYT) More than a year after resigning in disgrace as the managing director of the International Monetary Fund, Dominique Strauss-Kahn is seeking redemption with a new consulting company, the lecture circuit and a uniquely French legal defense to settle a criminal inquiry that exposed his hidden life as a libertine...In France, “Libertinage” has a long history in the culture, dating from a 16th-century religious sect of libertines. But the most perplexing question in the Strauss-Kahn affair is how a career politician with ambition to lead one of Europe’s most powerful nations was blinded to the possibility that his zest for sex parties could present a liability, or risk blackmail. The exclusive orgies called “parties fines” — lavish Champagne affairs costing around $13,000 each — were organized as a roving international circuit from Paris to Washington by businessmen seeking to ingratiate themselves with Mr. Strauss-Kahn. Some of that money, according to a lawyer for the main host, ultimately paid for prostitutes because of a shortage of women at the mixed soirees orchestrated largely for the benefit of Mr. Strauss-Kahn, who sometimes sought sex with three or four women. German finance chief Wolfgang Schaeuble says Greece won't default or exit (Telegraph) "Greece has to take a lot of very serious reforms" and "everyone is trusting that the Greek government is doing what is necessary", he said at a meeting with business leaders in Singapore on Sunday. Mr Schaeuble said an increasing majority of Greeks understand that being in the euro "is in the best interest of Greece" and said did not think there would be a ‘staatsbankrott’ - or state bankruptcy. He said he did not see “any sense to speculate on Greece leaving the euro” because it would be very damaging for both the country and the region. High-Speed Trading No Longer Hurtling Forward (NYT) Profits from high-speed trading in American stocks are on track to be, at most, $1.25 billion this year, down 35 percent from last year and 74 percent lower than the peak of about $4.9 billion in 2009, according to estimates from the brokerage firm Rosenblatt Securities. By comparison, Wells Fargo and JPMorgan Chase each earned more in the last quarter than the high-speed trading industry will earn this year. Titanic Tycoon Plans Stake Sale Talks for $8 Billion Gas Project (Bloomberg) Australian mining magnate Clive Palmer, who’s planning to build a modern replica of the Titanic, aims to start talks next year to sell stakes in a potential $8 billion natural gas project in Papua New Guinea. “We’ve had interest from major petrochemical companies who want to joint venture” including Exxon Mobil Corp. and Chinese companies, Palmer said in an interview. “We will talk to them at the appropriate time,” likely mid-2013 when field work is scheduled to be completed, he said. Occupy Supporters Stage Protest in London (AP) Several supporters of the anti-corporate Occupy movement chained themselves to the pulpit of St. Paul’s Cathedral during a service on Sunday in an action for the anniversary of its now-dismantled protest camp outside the London landmark. The dean of St. Paul’s, David Ison, said he was conducting an evening prayer service when “four young women dressed in white” chained themselves to the structure. Dutch make massive cocaine bust in fruit shipment headed for zoo, arrest five (AP) A major cocaine seizure in Europe turned out to be good news for the animals at Rotterdam’s zoo. The drugs were hidden among boxes of bananas, and the fruit went to the monkeys and other creatures at the Blijdorp zoo. Dutch prosecutors said Friday more than eight tons of cocaine was hidden among the bananas on a ship from Ecuador. The drugs were seized Monday in the Belgian port of Antwerp, while the bananas were allowed to continue on to Rotterdam – the shipment’s final destination. Dutch police arrested a Belgian truck driver and four Dutch men on Tuesday.

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