Opening Bell: 01.09.12

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Wall Street Is Bracing For Dismal 4th Quarter (NYT)
In recent days, analysts have been lowering their fourth-quarter earnings estimates for Goldman Sachs, Morgan Stanley, Citigroup and Bank of America. Analysts are also bracing for lower earnings from JPMorgan Chase, which on Friday will be the first of the Wall Street banks to report results. “It’s likely 2011 will be the worst year for revenue growth for the banks since 1938, and so far 2012 isn’t feeling much better,” said Michael Mayo, an analyst with Crédit Agricole Securities. “The industry simply grew too fast over the past two decades and now it’s downshifting. This process will take time, but the hit to revenue is happening now.”...For the fourth quarter, Goldman Sachs is projected to post a profit of $2.02 a share, according to a survey of analysts by Thomson Reuters. That consensus number is down from $2.81 a month ago. And it is likely to fall further in the coming days as more analysts weigh in with new estimates. Some analysts already have Goldman, which reports on Jan. 18, earning less than $1 a share in the fourth quarter.

Carl Icahn Bounces Back With Banner Year (NYP)
In a year when the average hedge fund fell between 4 percent and 7 percent — with some prominent funds down in the deep double-digits — the Far Rockaway native returned 35 percent in trading profits last year. “I didn’t think we’d do so great this year, but we did very well,” Icahn told The Post when asked about the returns. “I was pretty hedged this year too,” he said.

Merkel, Sarkozy Return to Work on Euro Rescue (Bloomberg)
German Chancellor Angela Merkel and French President Nicolas Sarkozy meet today for the first time in 2012 as they seek to craft a master plan for rescuing the euro over the next three months. The two leaders gather in Berlin to flesh out a new rulebook for fiscal discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17-member euro area. They meet at 11 a.m. local time at the Federal Chancellery and hold a joint press conference at about 1:30 p.m. The German and French leaders have sponsored a plan to install new guidelines by March. A crisis that began in Greece more than two years ago has moved to the euro area’s core, and leaders are struggling to persuade investors they can contain the risk and assure the euro’s survival.

Romney At Bain: Big Gains, Some Busts (WSJ)
...the full record has largely escaped a close look, because so many transactions are involved. The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain's involvement and shortly afterward. Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. An additional 8% ran into so much trouble that all of the money Bain invested was lost. Another finding was that Bain produced stellar returns for its investors—yet the bulk of these came from just a small number of its investments. Ten deals produced more than 70% of the dollar gains. Some of those companies, too, later ran into trouble. Of the 10 businesses on which Bain investors scored their biggest gains, four later landed in bankruptcy court.

Huntsman Says Romney Presidency Would Be Status Quo on Wall Street Issues (Bloomberg)
If the U.S. banks “get infected with the flu that’s making the rounds in Europe, they have to be bailed out, because if they fail, we all go down,” Huntsman said, adding that’s “right for the taxpayers.” He suggested that some of his Republican rivals -- particularly Romney, who has received the most campaign contributions from the financial community -- would be captives of Wall Street if elected.

The Ex-Lehman Banker Who Doesn’t Get Why People Hate Bankers (New York)
"It’s just a grind now. I don’t get the whole Occupy Wall Street thing. Nobody is making that much money, and no one is having that much fun, so what are you trying to do? It’s the same outrageous hours and outrageous negotiations; everyone is trying to make a buck. But the money’s not there. I have this problem with my mother: She doesn’t understand we make a product. She doesn’t see it. And Main Street says you’re still getting paid too much: Even getting cut from $1 million to $500,000, they still think you’re earning too much."

Bronx principal under fire for outrageous 'sex machine' comments about photocopier (NYDN)
Elected officials and school staffers are calling for the removal of a foulmouthed Bronx principal who taunted female workers about having sex with a photocopier and a computer. Principal John Chase Jr. of Bronxdale High School made a series of outrageous comments to female staffers last July when his school received a new photocopier and a new computer, according to a November report by the Education Department’s Office of Equal Opportunity. “Have you seen the new copy machine? It does everything. It even has a hole in it where you can stick your d--- in it and get a b--- job,” Chase told two female staffers, according to investigators.

Geithner's Asia Trip To Focus On Iran (WSJ)
U.S. Treasury Secretary Tim Geithner headed to Asia Sunday to seek support from China and Japan for boosting financial pressure on Iran in an effort to prevent it from developing nuclear weapons...The Obama administration is attempting to squeeze Iran's government by curtailing its oil revenue. Some European Union members are taking the same tack, agreeing in principle last week to enact an embargo on all purchases of Iranian oil. A Dec. 31 law imposes U.S. sanctions on Iran's central bank and could penalize foreign firms that trade with the bank, which handles Iran's oil revenue. Investors are watching nervously, because any retaliation by Iran could send oil prices skyrocketing and threaten a fragile global economic recovery.

New Hire Will Mine AIG's Data (WSJ)
Seeking to transform sheaves of claims data into risk-management gold, American International Group Inc. has hired a chief science officer for its largest insurance unit. AIG on Monday plans to name Murli Buluswar to the newly created position at Chartis, its global property- and casualty-insurance business. The 40-year-old will oversee a research team that will draw in part on the immense collection of information the company has amassed around the world in the course of doing business. The goal of the effort is to improve loss forecasts, reduce costs and devise more accurate pricing for insurance policies—even for big clients in the commercial-insurance field, where such analysis is relatively rare.

Goldman, Citigroup CDOs Were Tip of Iceberg (BusinessWeek via Heidi Moore)
The complex mortgage instruments at the center of the 2008 financial crisis went so spectacularly wrong that many observers have said they were designed to fail. A new paper by Oliver Faltin-Traeger of the investment firm Blackrock and Christopher Mayer of Columbia Business School lends a lot of credence to that assertion. Faltin-Traeger and Mayer -- who are scheduled to present their preliminary results Saturday at the annual meeting of the American Economic Association -- focus on collateralized debt obligations tied to asset-backed securities, or ABS CDOs. For the most part, these were mortgages that had been pooled into bonds, which in turn were repackaged into CDOs...Using a unique database published by the investment firm Pershing Square Capital Management, Faltin-Traeger and Mayer identified the underlying bonds in some 528 ABS CDOs issued between 2005 and 2007, and compared their performance to similar bonds that weren't included in CDOs. They found that the bonds in the CDOs performed a lot worse. Even if one holds observable characteristics such as initial ratings and yields constant, the bonds in the CDOs suffered ratings downgrades that were 50 percent to 90 percent more severe. As of June 2010, for example, bonds with initial triple-A ratings had been downgraded by an average 11.84 notches, compared to 5.99 for those not in CDOs. The bonds in the CDOs were also more likely to have been rated by all three major credit-rating firms. The research provides strong support for the idea that banks -- with the help of pliant ratings agencies -- put together the CDOs and sold them to investors in a premeditated effort to get rid of some of their most toxic assets, or to provide vehicles for clients who wanted to bet against the worst possible assets. As the authors put it: "It would have been very hard to randomly choose securities with such poor ex-post performance."

Taxi Supply and Demand, Priced by the Mile (NYT/Bits)
On New Year’s Eve, Dan Whaley, a tech entrepreneur in San Francisco, got into a black Town Car and was driven one mile to a holiday party. The ride cost him $27. At the end of the night out, Mr. Whaley took a Town Car home from the party. This time, the exact same ride cost $135. Mr. Whaley was using Uber, a service that allows people to order livery cabs through a smartphone application. On New Year’s Eve, Uber, a start-up in the city, adopted a feature it called “surge pricing,” which increases the price of rides as more people request them.

Former Soros Trader Said to Return Outside Money in Asia Hedge Fund Penta (Bloomberg)
Former Soros Fund Management LLC trader John Zwaanstra plans to return outside capital in Penta Investment Advisers Ltd., the Asia-focused hedge fund he set up in 1998, said two people with knowledge of the matter. The company plans to give investors more details this week, said the people, who asked not to be identified. Penta managed as much as $2.9 billion in mid-2011, about 40 percent of which came from Penta principals, said another person. Its assets have fallen below $2 billion, said one of the people familiar with the plan to return investors’ money.

Disgruntled bankers threaten to sue or walk (NYP)
“There are alternatives to money to help resolve bonus disappointment,” says Sklover. “You could get a promotion to managing director or more staff on your desk, which gives you a better chance of making money next year.” Feel better now?

Workplace Confidential: The Per Se Waiter on Diners Who Vomit Up Their $500 Meals (New York)
Per Se actually has a list of people who aren’t allowed to go back. There’s a range of behavior that’s appropriate. We can accommodate wacky people, and for the most part, 95 percent of the guests are well behaved. Then you have the couple that goes and has sex in the bathroom—that happens quite a lot. You have people who throw up—they throw up a lot. There was one woman—it was a VIP tasting menu, I remember this: She just threw up on the table, in the middle of an extended tasting menu. They cleaned it up, and she “boot-and-rallied.” She finished the meal. I had an old woman tell me about giving her husband head, which was just disturbing.

Workplace Confidential: The Bikini Waxer (New York)
Sometimes piercings get in the way, depending on the shape and size of the vagina. I had one client who brought in a stencil of a W because that was her boyfriend’s name, and that was a challenge—T’s are easy, L’s are easy, W’s are difficult. We don’t offer dyeing at the spa where I work, but we do the Vajewel, which is Swarovski crystals that stick on the skin in a design, and vagina airbrush tattoos—stars, hearts, whatever. The Vajewel is really popular, I do at least one a day. I just did one of a cherry design.

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Opening Bell: 10.24.17

Mark Johnson ruins it for the rest of the forex world; Klarman has Baupost at 40 percent cash; Ray Dalio is talking wealth transfers; Amazon but for weed; and more.

Opening Bell: 10.01.12

British Banks Face Heat From On High (WSJ) The Right Reverend Justin Welby, Bishop of Durham, is grilling top bankers as part of a new parliamentary inquiry into "banking standards" that represents the U.K. government's latest attempt to shake up the industry. The inquiry was established in July on the heels of news that several banks allegedly sought to rig interest rates such as the London interbank lending rate, known as Libor. Bishop Welby, a former oil executive who sits in Britain's House of Lords, has joined nine other lawmakers in assembling a report that will consider new rules on everything from corporate governance to conflicts of interest. The inquiry also involves a series of public hearings already under way. Sitting in a castle in his diocese in northern England, Bishop Welby said the inquiry isn't about digging into the details of banks' alleged failings in the Libor scandal and other matters. Rather, it is an attempt to determine more broadly the future role of the industry. "It's an existential question," he said. "It's about why the bankingindustry is here." Spain To Borrow $267 Billion Of Debt Amid Rescue Pressure (Bloomberg) Spain’s debt will widen to 90.5 percent of gross domestic product in 2013 as the state absorbs the cost of bailing out its banks, the power system and euro-region partners Greece, Ireland and Portugal. This year’s budget deficit will be 7.4 percent of economic output, Budget Minister Cristobal Montoro said at a press conference. Spain’s 6.3 percent target will be met because it can exclude the cost of the bank rescue, he said. Euro Leaders Face October of Unrest After ECB’s September Rally (Bloomberg) With the first of three summit meetings that European Union President Herman Van Rompuy has called “crucial” taking place in Brussels on Oct. 18-19, investor sentiment toward the euro area that surged in September is on the wane. “People are beginning to look at this in a more sober way” after the ECB bond-buying plan and a German high-court decision releasing bailout financing spurred optimism over the past month, Clemens Fuest, an economist at Oxford University’s Said Business School, said in an interview yesterday. October, which marks the third anniversary of the debt crisis, will showcase euro-area leaders fighting out their differences. The discord underscores the inadequacy so far of ECB President Mario Draghi’s bid to calm the crisis through a pledge on sovereign-debt purchases. Graduates Turn Away From Wall Street (FT) MBA statistics show a steady decline in the number of graduates taking jobs at investment banks. The Wharton school at the University of Pennsylvania, which bankers consider the “conveyor belt of Wall Street”, sent 16.6 percent of its class to investment banks in 2011 compared with more than one in four in 2008. The pattern is similar at other large business schools. “The number of students going into financial services has remained steady but what’s changed has been the types of roles,” said Maryellen Lamb, director of MBA career management at Wharton. “We’ve seen more opportunity for students in private equity and hedge fund roles.” Yield hunt pushes funds into CLOs, CDOs (Reuters) Fund managers are increasingly eyeing riskier exotic assets, some of which haven't been in fashion since the financial crisis, as yields on traditional investments get close to rock bottom. Returns from investments in "junk" bonds, government guaranteed mortgage securities and even some battered euro-zone debt are plunging in the wake of global central bank policies intended to suppress borrowing costs. In particular, the Federal Reserve's latest move to juice the U.S. economy by purchasing $40 billion of agency mortgage-backed securities every month is forcing some money managers who had previously been feasting on those securities to get more creative. The only problem is they may be getting out of their comfort zones and taking on too much risk. "I would not be surprised if some managers are reaching outside of their expertise for a few extra basis points," said Bonnie Baha, a portfolio manager for DoubleLine's Global Developed Credit strategy. Arnold Schwarzenegger 60 minutes interview video: admits habit of keeping secrets, affairs (CNN) While he did not specify how many affairs he'd had before Shriver filed for divorce in July 2011, Schwarzenegger admits two women he was involved with include "Red Sonja" co-star Brigitte Nielsen (while he and Shriver were dating, according to Schwarzenegger) and his family's longtime housekeeper, Mildred Patricia Baena. Nine months after Schwarzenegger and Baena had their affair, she gave birth to a son -- less than a week after he and Shriver's fourth child, Christopher, was born. Baena remained the family's housekeeper for years, with her son sometimes around the house as well. But Schwarzenegger said in the "60 Minutes" interview that he didn't have any suspicions he was the father until the boy was 7 or 8 years old and he began to notice "that he started looking like me." "It was never discussed, but I put things together," said Schwarzenegger, whose autobiography "Total Recall" hits bookshelves Monday. After that realization, he said he began sending Baena extra money for her and her son, without talking about his being the boy's father. Schwarzenegger also denied to Shriver that he'd had an affair and that Baena's child was his son -- until Shriver confronted him during a marriage counseling session a few months before their break-up. "She said, 'Am I off on this or am I not?' And I said, 'You are absolutely correct.'" More Wall Street Layoffs Coming (NYP) Nomura analyst Glenn Schorr said in a recent report warns that many banks, which are still overstaffed, need a more liberal wielding of the ax to squeeze out more profits in the coming years, amid a global market that continues to look sluggish. “While overcapacity is weighing on returns under the current environment, most bank managements have been in the camp that the industry is currently experiencing a cyclical rather than secular downturn,” Schorr writes. “So they’ve been slow to do too much on the head-count front,” the bank analyst said regarding layoffs. According to Schorr’s research, big banks like JPMorgan, Credit Suisse, UBS and Barclays have actually added jobs over the past three years. Goldman Sachs and Morgan Stanley have only slashed about 1 and 2 percent of their work forces, respectively. Orange Juice Gets Squeezed (WSJ) Since the start of the current hurricane season, futures prices have climbed as high as $1.4095 a pound. Traders and analysts said the possibility of storm damage fueled much of the rise. But since no such storm has materialized, investors are taking profits or cutting their losses, they added. Vikram's Housing Woes (NYP) Pandit is on track to lose money on the sale of his Greenwich, Conn. home, which he bought in June 2001 for $4.1 million. Pandit, 55, put the two-story Colonial on the market for $4.3 million in April. Now he has lowered the price to $3.9 million, according to Trulia.com. South Florida Man Inherits 13,000 Clown Items (SS) Richard Levine is now trying to wrap his head around the unusual pickle he inherited when his father-in-law and business partner died two years ago and left him essentially a warehouse full of curated items of buffoonery. There are clown dolls with faces of joy and sorrow. Clown paintings, some more colorful than others. Clown figurines and clown puppets, some tiny, some huge, some very disturbing. There are clown photographs, clown books and clown costumes...Levine, who runs the same Waterboy Sprinklers business his father-in-law started in the 1970s, said he barely has had the time to go through all of the items. He hopes to inventory all of it, sell most of it, keep some of it and donate the rest to a local charity group. "I am slowly starting to like them and getting enthusiastic about them. I can see how Jack was into them," Levine said. "I don't go for the sad clowns much though, but I really enjoy the happy ones."

Opening Bell: 08.20.12

Diamond Censured Over Evidence in Barclays Libor Probe (Bloomberg) Barclays ex-Chief Executive Officer Robert Diamond was criticized for giving “unforthcoming and highly selective” evidence by a U.K. parliamentary report that faulted the bank for letting traders rig interest rates. The “candor and frankness” of Diamond’s testimony to lawmakers on July 4 “fell well short of the standard that Parliament expects,” the House of Commons Treasury Committee said in a 122-page report today following its inquiry into the bank’s attempts to manipulate the London interbank offered rate. “The Barclays board has presided over a deeply flawed culture,” the panel of British lawmakers said. “Senior management should have known earlier and acted earlier.” Bob Diamond Hits Bank In Rate-Rigging Row (Telegraph) In a statement Mr Diamond hit back at the report. "I am disappointed by, and strongly disagree with, several statements by the Treasury Select Committee,” Diamond said. Deutsche Bank’s Business With Sanctioned Nations Under Scrutiny (NYT) Federal and state prosecutors are investigating Deutsche Bank and several other global banks over accusations that they funneled billions of dollars through their American branches for Iran, Sudan and other sanctioned nations, according to law enforcement officials with knowledge of the cases. JPMorgan Picks Leader For 'Whale' Probe (WSJ) JPMorgan directors have named Lee Raymond chairman of a board committee investigating the bank's multibillion-dollar trading blunder, said people close to the probe. Some Groupon Investors Give Up (WSJ) Some of the early backers of Groupon, including Silicon Valley veteran Marc Andreessen, are heading for the exits, joining investors who have lost faith in companies that had been expected to drive a new Internet boom. At least four Groupon investors who held stock in the daily-deals company before it went public have sold or significantly pared back their holdings in recent months. Since its initial public offering in November, Groupon has shed more than three-quarters of its stock-market value, or about $10 billion...Mr. Andreessen, who rode the 1990s dot-com frenzy to riches at Netscape Communications Corp., was among the investors who helped fuel Groupon's rapid ascent. His firm, Andreessen Horowitz, was responsible for $40 million of the $950 million investors put into Groupon just months before the company's IPO. Andreessen Horowitz sold its 5.1 million Groupon shares shortly after restrictions on selling the stock expired June 1, according to people with knowledge of the transaction. Facebook Investors Brace For More Shares Coming To Market (Bloomberg) While Facebook Chief Executive Officer Mark Zuckerberg operates the world’s largest social-networking service, he’s facing investor concerns about how it can generate more revenue from its growing user base. That, plus the end of the first lock-up, drove the shares to half the offering price of $38, wiping out almost $46 billion in market value. Queen's corgis 'attack' Princess Beatrice's terrier Max (Telegraph) They may be among the Queen's favourite subjects but her corgis are in the doghouse after getting into a fight with one of Princess Beatrice's pets. Max, an 11–year–old Norfolk terrier, is said to have been badly injured after a "nasty" encounter at Balmoral castle last week. The Princess's pet nearly lost an ear and suffered several bloody bite injuries that had to be treated by a vet, in the latest in a series of scraps between royal dogs..."The Queen's dog boy was taking the corgis for a walk and they were joined by the Norfolk terriers, which came with Prince Andrew," one insider told a Sunday newspaper. "They were being taken along the long corridor leading to the Tower Door before being let into the grounds for a walk, and they all became overexcited. They began fighting among themselves and unfortunately the dog boy lost control. "The next thing we knew there were horrific yelps and screams...there was blood everywhere." EU Leaders Plan Shuttle Talks To Bolster Greece, Sovereign Bonds (Bloomberg) The sovereign-debt crisis mustn’t become a “bottomless pit” for Germany, even though Europe’s biggest economy would pay the highest price in a breakup of the euro region, German Finance Minister Wolfgang Schaeuble said on Aug. 18 during his ministry’s open day in Berlin. “There are limits,” he said, as he ruled out another aid program for Greece. Hedge 'A-Listers' Include Ackman, Loeb, Chanos (NYP) Influential adviser Cliffwater LLC — which monitors some 1,500 hedge funds and ranks them with an A, B or C grade — keeps a closely guarded list of 90 or so top-rated funds...Cliffwater advises large pension funds in New Jersey, Wisconsin and Massachusetts, among others, and has become one of the industry’s hottest gatekeepers as more big institutions invest directly in hedge funds rather than through funds of funds...An August copy of Cliffwater’s “500 top-rated A or B” funds shows that the company gives high marks to activist funds such as Ackman’s Pershing Square and also to tail risk funds, which aim to protect against disasters. Tucked inside the protected internal document, which compares five-year historical returns to risk, is Cliffwater’s “Select List,” which appears to be the 95 funds deemed worthy of A ratings. Along with Ackman, Dan Loeb of Third Point, the hedgie who recently rattled Yahoo!, famed short-seller Jim Chanos of Kynikos Associates and gold hound James Melcher of Balestra Capital, made the short list as well. Spitzer Defends Wall Street Legacy (FT) Last week it emerged that Goldman Sachs had brought the curtains down on its Hudson Street platform, one of the most high-profile independent research projects started by an investment bank involved in the settlement. Other settlement banks, such as UBS and Bank of America Merrill Lynch, are said to have closed or scaled down their own independent analysis projects. Mr. Spitzer was quick to defend the legacy of the global settlement in an interview with the Financial Times. “I think we accomplished something,” Mr. Spitzer said. “There are a lot of independent research firms out there, some doing well and others not. Goldman has other business models and other priorities.” Shia LaBeouf To Have Sex "For Real" While Filming Scenes For Lars Von Trier's "Nymphomaniac" (Complex) "It is what you think it is. There's a disclaimer at the top of the script that basically says, we're doing [the sex] for real. And anything that is 'illegal' will be shot in blurred images. But other than that, everything is happening," LaBeouf said during an interview.

Opening Bell: 11.2.15

Berkshire No. 2 Charlie Munger bashes Valeant (again); Fed rate rise odds at 50%; Hedge funds suck wind; "Rap video recorded inside Georgia jail prompts investigation"; and more.