Opening Bell: 11.21.11

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U.S. Debt Supercommittee Ready to Announce Failure (Bloomberg)
A debt-reduction committee with special powers that was supposed to dissolve congressional gridlock in Washington is instead on the brink of failure, setting the stage for $1.2 trillion in automatic spending cuts. The 12-member bipartisan supercommittee likely will announce today that it can’t reach agreement on deficit savings, according to a Democratic aide...U.S. Senator Jon Kyl of Arizona, the chamber’s No. 2 Republican who sits on the panel, said Democrats turned down a final offer that included $250 billion in new revenue by eliminating some tax breaks even as it lowered income tax rates. “There’s a group of folks that will not cut a dollar unless we also raise taxes,” Kyl said on NBC’s “Meet the Press.” Senator John Kerry, a Massachusetts Democrat who serves on the committee, called Kyl’s statement “patently not true” and said Democrats agreed to $917 billion in spending cuts with no new revenue as part of the August agreement to raise the debt ceiling. The latest Republican plan, said Kerry, “still results in the biggest tax cut since the Great Depression.”

Buffett Doubts Euro Survival (CNBC)
“The system as presently designed has revealed a major flaw. And that flaw won’t be corrected just by words. Europe will either have to come closer together or there will have to be some other rearrangement because this system is not working,” Buffett said in an interview. Asked whether the union would survive this crisis, Buffett said: “That’s in doubt now.”

Moody's Warns France On Rating (WSJ)
Moody's Investors Service warned Monday that its stable outlook on France's triple-A rating is under pressure, in another sign the euro zone's sovereign-debt crisis is spreading from the bloc's smaller and weaker states toward core economies.

Buffett Invites Analysts To Berkshire Meeting (WSJ)
After decades of largely shunning Wall Street analysts, Warren Buffett is preparing to give them a prominent voice at his company's biggest event. Three research analysts will join Berkshire Hathaway Inc. shareholders in questioning the billionaire and his business partner, Charlie Munger, at the conglomerate's annual meeting next year. The event started with 12 attendees 30 years ago and now draws tens of thousands of people to Mr. Buffett's hometown of Omaha, Neb., each spring to pay homage to the world's most famous investor and hear him speak.

Buffett Could Spend $10 Billion On Next Investment (Bloomberg)
“We like the A part better,” Buffett said in an interview with Bloomberg News in Fukushima prefecture in northern Japan, referring to a preference for acquisitions over mergers. “On the Lubrizol transaction I think we spent about $8.7 billion. We’d love another one like that -- we can handle that. We can manage somewhat larger. We can handle a $10 billion deal very comfortably.”

Theodore Forstmann, Private Equity Pioneer, Is Dead at 71 (Dealbook)
Theodore J. Forstmann, a colorful financier and philanthropist who helped pioneer leveraged buyouts, died on Sunday at the age of 71. The cause was brain cancer, his spokesman said. Mr. Forstmann, who lived in Manhattan had been diagnosed with a malignant glioma earlier this year.

Picking Carcass Of MF Global (WSJ)
Centerbridge Partners, a $10 billion private-equity and hedge-fund firm, purchased as much as $15 million of MF Global's bank debt on the heels of the firm's collapse in late October, according to people familiar with the matter. David Tepper, who manages about $14 billion at hedge fund Appaloosa Management LP, bought nearly $50 million worth of MF Global investments, including shares, bonds and bank debt...Big hedge fund Elliott Management Corp. is on MF Global's creditor's committee, and traders say the firm owns a significant amount of MF Global's debt, though it isn't clear when it was accumulated. Other hedge funds say they also bought MF Global's shares, which traded at about 13 cents on Friday, down from nearly $8 six months ago.

As Bears Multiply, Human Clashes (WSJ)
Bear populations have surged so much that several states, including Nevada, Oklahoma and New Jersey, have started or expanded bear hunting seasons. Texas is circulating a brochure that tells hunters what to do if a bear wanders into camp. ("Talk in a calm manner...Do not run!...Do not play dead!")..."There are now bears in areas of the country where there haven't been bears since the colonial days," said Rick Winslow, a carnivore biologist with the New Mexico Department of Game and Fish...Black bears aren't as menacing as grizzlies, which can top 800 pounds. In recent months, grizzlies have attacked and injured hikers in and around Glacier, Yellowstone and Grand Teton national parks. Two hikers were killed by grizzlies in Yellowstone this summer.

Occupy Wall Street takes drum circle to Bloomberg's doorstep (AMNY)
Hundreds of demonstrators marched to Bloomberg's Upper East Side home Saturday for what they hoped would be a 24-hour drum circle outside his building. Some danced, a few played on wind and brass instruments, and others banged on snare drums, pots and pans. Police blocked off the sidewalks on Bloomberg's street and corralled the demonstrators on Fifth Avenue between 78th and 79th streets, kettling them into a pen where they were drumming and dancing. As of press time, the scene was generally peaceful and without incident. A police spokesman said they had no plans to make the protesters leave.

Outrage Over Police Spraying Students (CBS)
As video spread of an officer in riot gear blasting pepper spray into the faces of seated protesters at a northern California university, outrage came quickly — followed almost as quickly by defense from police and calls for the chancellor's resignation. University of California Davis Chancellor Linda Katehi said in a statement Saturday she was forming a task force to investigate the police action and the video images she said were "chilling." However, a law enforcement official who watched the clip called the use of force "fairly standard police procedure." In the video, an officer dispassionately pepper-sprays a line of several sitting protesters who flinch and cover their faces but remain passive with their arms interlocked as onlookers shriek and scream out for the officer to stop...At a news conference, Katehi said what the video shows is, "sad and really very inappropriate" but defended her leadership and said she had no plans to resign...In the video of the UC Davis protest, the officer, a member of the university police force, displays a bottle before spraying its contents on the seated protesters in a sweeping motion while walking back and forth. Most of the protesters have their heads down, but several were hit directly in the face.

Lobbying Firm's Memo Spells Out Plan to Undermine Occupy Wall Street (MSNBC)
A well-known Washington lobbying firm with links to the financial industry has proposed an $850,000 plan to take on Occupy Wall Street and politicians who might express sympathy for the protests, according to a memo...The proposal was written on the letterhead of the lobbying firm Clark Lytle Geduldig & Cranford and addressed to one of CLGC’s clients, the American Bankers Association. CLGC’s memo proposes that the ABA pay CLGC $850,000 to conduct “opposition research” on Occupy Wall Street in order to construct “negative narratives” about the protests and allied politicians.

Housing Market May Be Nearing Bottom (WSJ)
But don't get too excited: "Construction is picking up but remains at historically depressed levels, and broader sales activity is still anemic. Indeed, the National Association of Realtors' existing-home sales report, out Monday, is likely to show a second straight monthly decline in October to a seasonally adjusted annualized pace of about 4.8 million units. That would mean the sales rate has dropped by more than 10% so far this year. Meanwhile, the foreclosure supply is ticking back up."

US Billionaires Avoid Reporting Gains To IRS (Bloomberg)
“The 800-pound gorilla is unrealized appreciation,” said Edward J. McCaffery, a professor of law, economics and political science at the University of Southern California in Los Angeles.

Fatal Egypt Clashes Fuel Investor Concern (Bloomberg)
“One of the main concerns for investors after the protests and the exit of Mubarak from the scene has been how long and protracted the transition period is,” said Raza Agha, senior economist for the Middle East and North Africa at Royal Bank of Scotland Plc in London. “For an economy with as pressing considerations as Egypt, with high financing requirements, these day-to-day protests and strikes have a huge impact on risk perceptions,” he said. “The parliamentary elections are important but they’re certainly not the end of the uncertainty.”

Man who used counterfit cash to buy movie theater snacks sentenced to 80 years in prison (DN)
A career thief who tried to pay for a movie theater hotdog with a fake $20 bill was sentenced on Friday to 80 years in prison. On Wednesday, jurors in state district Judge Everett Young's court deliberated about three hours in convicting Charles Cleveland Nowden, 48, of forgery for passing the counterfeit money. During the trial, prosecutors Dawn Ferguson and Lisa Callaghan presented evidence that on Nov. 6, 2009, Nowden tried to pay for two hot dogs, two cokes and a tub of popcorn with a $20 counterfeit bill at a Mansfield movie theater.

Related

Opening Bell: 02.20.13

Regulator set to weigh lifetime futures-trading ban for Corzine (NYP) Two directors of the National Futures Association will move tomorrow to ban Corzine from the multibillion-dollar futures trading industry in light of the scandalous collapse of MF Global — the commodity futures brokerage firm Corzine once headed. If the motion is approved, NFA would hold hearings to determine whether Corzine, MF’s former CEO, deserves a “lifetime ban” from the industry...Corzine, who declined to comment on the proposed ban, is reportedly looking to set up a hedge fund. An NFA ban would limit his ability to trade futures in any fund with outside investors, experts said. It could also hinder his ability to raise money from pension funds and other large investors, experts said. Corzine could also be asked to fork over as much as $250,000 for each violation, according to NFA rules. The proposed ban cites nine rule violations, which could ding the disgraced Corzine for as much as $2.5 million. Rhetoric Turns Harsh As Budget Cuts Loom (WSJ) With less than two weeks to go before the latest fiscal face-off, rhetoric heated up Tuesday as the political parties exchanged fire over whom to blame if looming spending cuts take effect. With Congress in recess this week, Republican and Democratic leaders sent lawmakers home armed with fact sheets about the $85 billion in across-the-board federal spending cuts due to start March 1, and talking points on how to blame the other side. Meantime, the White House and lawmakers are making no progress toward forging a compromise to avoid the reductions, which are known in Washington as the sequester. Thousands of Greeks Rally in Anti-Austerity Strike (Reuters) Tens of thousands of Greeks took to the streets of Athens on Wednesday during a nationwide strike against wage cuts and high taxes that kept ferries stuck in ports, schools shut and hospitals with only emergency staff. Beating drums and chanting "Robbers, robbers!" more than 60,000 people marched to parliament in the biggest anti-austerity protest so far this year. The two biggest labour unions brought much of crisis-hit Greece to a standstill during the 24-hour protest against policies which they say deepen the hardship of people struggling through the country's worst peacetime downturn. Judge Says Einhorn Hedge Fund May Succeed in Apple Case (Reuters) David Einhorn's hedge fund has shown a "likelihood of success" if his legal attack against Apple goes forward, a U.S. judge said, though he made no immediate ruling on fund's request to block a shareholder vote on a proxy proposal next week. U.S. District Judge Richard Sullivan on Tuesday reserved decision on a lawsuit by the fund, Greenlight Capital, to stop a Feb. 27 shareholder vote on an Apple proposal to end the issuance of preferred stock without investor approval. "Candidly I do think the likelihood of success is in favor for Greenlight," Sullivan said at a court hearing in New York. Big Anglo-French Buyout Planned (FT) A British-based private equity consortium is preparing a bid of 3.5 billion euros for French catering company Elior in what would be the biggest buyout in continental Europe since Lehman Brothers collapsed in 2008. CVC Capital Partners and BC Partners have teamed up to launch a buyout of Elior, underlining how confidence is returning to Europe's private equity sector. New York mom charged with child endangerment after hiring strippers to perform lap dances at her 16-year-old son's birthday party (NYDN) Judy Viger, 33, hired the women from a company called Tops in Bottoms and arranged for them to perform in a private room at the Spare Time Bowling Center in South Glens Falls on Nov. 3. At the party, the women performed what police describe as “personal and intimate” dances with the party guests, some of whom were as young as 13. Approximately 80 people attended the party, including a 13-year-old and many adults who later said they were outraged at the sexually charged performances. Police were alerted to the party activities after raunchy photos of the lap dances were posted online. The mother of a 15-year-old boy who attended the party saw some of the photos on her son’s Facebook page and alerted South Glens Falls authorities...The company providing the strippers said that the dancers were unaware that the kids at the party were underage, local CBS affiliate WRGB reported, and that the incident was being “blown out of proportion.” Heinz Deal Feeds Chatter About Food-Industry Consolidation (WSJ) The deal sparked speculation of what Heinz may want to buy and what other food company has the wherewithal to become a consolidator. With the potential for more tie-ups, that may also jar loose some brands or businesses—possibly Heinz's underperforming frozen-foods business—that could make a nice fit in another company's pantry. The speculation makes just about everyone a buyer or a seller. "Most of what food companies discuss at the conference will now be taken in the context of what it may mean for further industry consolidation or portfolio change," Barclays packaged-food analyst Andrew Lazar said. Brink’s Says Brussels Diamond Robbery Will Hurt Quarter’s Profit (Bloomberg) Brink’s Co., a provider of armored cars to transport valuables, said a diamond robbery at Brussels airport will have a “significant impact” on first-quarter earnings. A portion of the gems stolen two days ago was being shipped by Brink’s, the Richmond, Virgina-based company said today in a statement. The Antwerp World Diamond Centre has said about $50 million of rough and polished diamonds were stolen as the gems were being loaded onto a plane bound for Switzerland. Revel Into Chapter 11 (AP) Revel, the casino many people had hoped would turn around Atlantic City’s sagging fortunes, said yesterday that it will file for Chapter 11 bankruptcy protection in March, less than a year after it opened. The voluntary, prepackaged bankruptcy envisioned for late March will wipe away about two-thirds of its $1.5 billion in debt by converting more than $1 billion of it into equity for lenders. JPMorgan Leads U.S. Banks Lending Least Deposits in 5 Years (Bloomberg) The biggest U.S. banks including JPMorgan Chase & Co. and Citigroup Inc. are lending the smallest portion of their deposits in five years as cash floods in from savers and a slow economy damps demand from borrowers. The average loan-to-deposit ratio for the top eight commercial banks fell to 84 percent in the fourth quarter from 87 percent a year earlier and 101 percent in 2007, according to data compiled by Credit Suisse Group AG. Lending as a proportion of deposits dropped at five of the banks and was unchanged at two, the data show. New Grey Poupon 'Pardon Me' ad to air during Oscars (AP) After a 16-year hiatus, the mustard that mocked its own stuffy image in one of TV’s most famous commercials will once again take to the airwaves during the Feb. 24 Academy Awards show. The spot comes as Kraft Foods looks to boost sagging sales of the Dijon mustard, which is facing competition from a growing variety of high-end condiments on supermarket shelves. The new ad begins in the same way as the original — an aristocratic English gentleman is being chauffeured in the countryside, when another car pulls up alongside them at a stop. The back window rolls down and a second man asks in an over-the-top snooty accent, “Pardon me, would you have any Grey Poupon?”