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Opening Bell: 12.20.11

FBI Runs ‘Perfect Hedge’ to Nab Inside Traders (Bloomberg)
Almost five years ago...FBI agents David Chaves and Patrick Carroll surveyed the midtown skyline to the north, home to much of the world’s financial industry. They had received some disturbing intelligence: a surge in profits at hedge funds might be the result of an epidemic of insider trading. The two men, head of securities and commodities fraud units at the New York office, faced a dilemma. Informants had told them the hedge fund industry was similar to organized crime: insular and distrusting of outsiders. Without people on the inside, the government would have a tough time gathering enough evidence to prosecute. They needed more tools to gather more information on traders who move faster, and more secretly, than your typical Mafia soldier. “It was reminiscent of that scene in ‘Jaws’ where they get their first look at the shark,” Chaves said. He told Carroll, “We’re going to need a bigger boat.”

Jefferies Profit Tops Estimates (WSJ)
Jefferies Group Inc.'s fiscal fourth-quarter earnings fell 23% as the midsize investment bank reported lower revenue amid a volatile period for the global financial sector. However, shares were up 5.1% at $12.40 in premarket trading as the profit exceeded expectations and the company said it reduced its balance sheet by nearly one-fourth and reduced its leverage. Through Monday's close, the stock was down 56% this year.

Inside Capitol, Investor Access Yields Rich Tips (WSJ)
When Senate Democrats finally brokered a compromise over the proposed health-care law, a group of hedge funds were let in on the deal, learning details hours before a public announcement on Dec. 8, 2009. The news was potentially worth millions of dollars to the investors, though none would publicly divulge how they used the information. They belong to a select group who pay for early, firsthand reports on Capitol Hill...New York-based brokerage firm JNK Securities has emerged as one of the most aggressive of the dozens of companies that escort clients around Capitol Hill. JNK Securities arranged the Dec. 8, 2009 health-care briefing and more than 200 similar sessions over the past three years.

Japan Considers Buying Chinese Bonds (WSJ)
Finance Minister Jun Azumi made the comments just days ahead of a planned visit to China by Prime Minister Yoshihiko Noda. It was the first time Japan clearly indicated an intention to shift part of its foreign reserves into yuan-denominated Chinese debt. "It is true that we've been having discussions that could bring huge advantages to (both Japan and China) if we make it possible for both sides to buy each other's government bonds," Mr. Azumi said at a news conference. "Our country currently has no Chinese bonds. My assessment is that our holding those products would be beneficial to building relationships between us," he said.

Bankers Seek to Debunk ‘Imbecile’ Attack on Top 1% (Bloomberg)
Tom Golisano, billionaire founder of payroll processer Paychex Inc. (PAYX) and a former New York gubernatorial candidate, said in an interview this month that while there are examples of excess, it’s “ridiculous” to blame everyone who is rich. “If I hear a politician use the term ‘paying your fair share’ one more time, I’m going to vomit,” said Golisano, who turned 70 last month, celebrating the birthday with girlfriend Monica Seles, the former tennis star who won nine Grand Slam singles titles. Ken Langone, 76, another Home Depot co-founder and chairman of the NYU Langone Medical Center, said he isn’t embarrassed by his success. “I am a fat cat, I’m not ashamed,” he said last week in a telephone interview from a dressing room in his Upper East Side home. “If you mean by fat cat that I’ve succeeded, yeah, then I’m a fat cat. I stand guilty of being a fat cat.”

Swallowed pen removed from woman's stomach 25 years later, still usable (NYDN)
The 76 year-old British woman was diagnosed with severe diverticulosis, but it wasn’t until after her diagnosis that her doctor noticed “a linear foreign body” in an X-ray of her stomach. Upon questioning, the patient remembered she had once accidentally swallowed a black felt-tip pen. She was using the pen to poke her tonsils, examining them with a handheld mirror as she stood on stairs, a report from gastroenterologist Dr. Oliver Walters explained. While doing this, she lost her balance and stumbled down a couple steps, swallowing the pen in the process. At the time, X-rays didn’t show any evidence of the object in her stomach, and the issue was forgotten. The lost pen wasn’t to blame for the woman’s digestive problems, but doctors decided to remove it anyway, citing a case of a child who also accidentally swallowed a pen, which then tore through his bowel. Remarkably, the pen had caused no damage to the woman’s gastrointestinal tract, and still had ink and could write when it was removed.

Goldman's Conundrum For 2012 (WSJ)
With its stock down 48% this year through late Monday morning, compared with a drop of just 3.6% for the broader market, investors, analysts and competitors wonder whether Goldman will react with a new strategy, a change in leadership or even a takeover of a rival. Because of its "pure" business model, (it doesn't have large retail or asset-management operations) and market leadership, Goldman is a test case for the future of Wall Street. The financial industry is struggling to determine whether the changes in market conditions, regulations and investor behavior are part of a normal boom-and-bust cycle or the harbinger of a structural shift. So far, Goldman has voted for the former.

Roubini: Euro Zone 'In Denial' (FT)
"The euro zone has been in denial of the fact that some of its member states are insolvent, as well as unable to survive and grow in a monetary union," Roubini wrote.

U.S. Housing Starts Jump 9.3%, to Highest in Year (Bloomberg)
Builders broke ground in November on the most houses in over a year, led by a three-year high on work in multifamily units, a sign the market is stabilizing heading into 2012. Starts increased 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News and the highest level since April 2010, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, also climbed to a more than one- year high.

Butter Smugglers Busted In Norway (NYDN)
The two men, who snuck into the country from Sweden, were arrested with about 550 lbs of butter divided into 18-ounce packets, the Norwegian daily newspaper Adresseavisen reported. They were nabbed Saturday, and both admitted to churning up the scheme, authorities said. They have confessed that they have bought butter in Sweden to sell at a profit in Norway,” legal counsel Amund Sand told the Adresseavisen. A massive butter shortage has spread throughout Scandanavia in recent months, and is expected to last into next year. This has led to the blackmarket trafficking of butter in Sweden and Norway. The two men arrested were looking to score more than $40 for each packet of butter, police said.

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