Opening Bell: 02.22.12

Fitch Downgrades Greece (WSJ) Fitch Ratings downgraded Greece's credit rating to C from triple-C Wednesday after confirmation of the country's second bailout package, which includes a debt exchange that will force bondholders to take a loss on their holdings of Greek debt. "The rating action is in line with Fitch's statement on 6 June 2011, which outlined its rating approach to a sovereign-debt exchange," the ratings company said. Fitch said it will lower its rating on the country's sovereign bonds to "restricted default" upon the completion of the debt exchange aimed at reducing the country's debt burden.

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Dealbreaker

Fitch Downgrades Greece (WSJ)
Fitch Ratings downgraded Greece's credit rating to C from triple-C Wednesday after confirmation of the country's second bailout package, which includes a debt exchange that will force bondholders to take a loss on their holdings of Greek debt. "The rating action is in line with Fitch's statement on 6 June 2011, which outlined its rating approach to a sovereign-debt exchange," the ratings company said. Fitch said it will lower its rating on the country's sovereign bonds to "restricted default" upon the completion of the debt exchange aimed at reducing the country's debt burden.

Greek Bailout Wins Two Cheers From Wary Investors (Bloomberg)
“The deal may have removed near-term uncertainty, it won’t immediately change our investment view,” said Helen Roberts, who oversees 27 billion pounds ($43 billion) as head of government bonds at F&C Asset Management in London. “People said the right thing, now they need to do the right thing. It’s a hard environment to implement austerity measures. It’s a worry that the Greek government might not be able to do much even though they are fully committed to the agreement.”

Obama Proposes Tax Revamp (WSJ)
The Obama administration will propose lowering the top income-tax rate for corporations to 28% from 35% but would raise overall tax revenue by eliminating dozens of popular deductions in an effort to restructure the corporate tax code. The proposal, which will be announced Wednesday, would lower the "effective" tax rate on manufacturers to "no more than 25%," according to a senior administration official, down from the current average rate of about 32%. It raises taxes on oil and gas companies that would lose many large deductions and subsidies. The plan would require U.S. companies operating overseas to pay—for the first time—a minimum tax rate on their foreign earnings.

Citigroup ‘Defrauded’ Fannie, Freddie: Whistle-Blower (Bloomberg)
Citigroup, which last week admitted breaking Federal Housing Administration rules and paid a fine, also violated regulations for home loans sold to Fannie Mae and Freddie Mac, according to a whistle-blower’s complaint. The bank “defrauded, falsified information or misled federal government entities” by selling or securing insurance for mortgages with defects such as improper appraisals and paperwork errors and not reporting them as required, Sherry Hunt, a Citigroup quality-assurance vice president, said in her complaint, which was unsealed yesterday. It was filed under the False Claims Act in federal court in Manhattan in August.

Aimed at banks, Volcker Rule hits unlikely targets (Reuters)
The Volcker Rule was designed to curb the risks that banks take with depositor dollars, a practice known as proprietary trading. But the rule risks ensnaring public agencies ranging from housing agencies to hospital authorities because the way muni bonds are sold and traded results in banks risking their own capital -- the very practice banned under the Volcker Rule. And although the rule, a key component of the Dodd-Frank reform law passed in the wake of the 2008 financial crisis, did include an exemption to ensure that state and local governments would still be able to raise money in the municipal bond market, it left a gaping hole. As a result, state and local authorities are worried that the rule will inhibit banks from underwriting bonds and trading, inadvertently driving up water and sewer bills, delaying public transportation projects and making affordable housing scarcer unless changes are made.

How Waiters Read Your Table (WSJ)
What looks like a convivial scene is a waiter's nightmare: people at a table, chatting away, menus closed with drinks in their hands. Yet when Alex Martin, a 26-year-old waiter at Blue Smoke restaurant in New York, tried to take their order "they didn't even look up," he says. "If you are standing there for more than three seconds it's like an eternity." At such times, Mr. Martin employs his go-to strategy of "the hand on the table." Placing down his palm draws the group's eyes up and out of the conversation, interrupting but without being pushy, he says. A few minutes later the men had ordered and quickly returned to chatting...Even chain restaurants like Denny's, T.G.I. Friday's, and Romano's Macaroni Grill are focusing more on personalized service by training staff to note body language, eye contact and offhand remarks, hoping to make service feel less mechanical. Traditionally, eateries taught waiters to follow a script and push add-ons like desserts and drinks...As part of a recent, two-week training course at the Cheesecake Factory in Burlington, Mass., Lauren McDonagh, 23 years old, sat with four other new employees before the lunch rush. They heard tips on how to interact with tables with children (if a kid says he doesn't like green things, don't use lettuce, even as a garnish), first-time guests (walk them to the restroom, don't point), and celebrations (get at least five employees to sing "Happy Birthday").

Chunks Of Queensboro Bridge Land On Driver (NYP)
Andrew Campbell, 40, of Bergenfield, was heading to an indoor soccer game in Jackson Heights when he said a large screw and a piece of metal shattered the windshield of his white luxury car about 7 p.m. on the bridge's lower level. "I was stunned, it sounded like a gunshot when it hit the windshield," Campbell said. "It was totally unexpected. I was very shocked. I'm grateful I'm okay." Campbell said he was not injured by the glass, and kept driving until he reached Long Island City, where he parked near a nearby footbridge.

HSBC Said to Fund Bankers’ Cash Bonuses by Issuing New Shares (Bloomberg)
The bank will fund cash bonuses exceeding 50,000 pounds ($78,600) by issuing stock rather than eroding capital, said the person, who declined to be identified because the matter is private. The plan doesn’t limit cash bonuses, the person said.

The world's most expensive meal? City high-flyer in court battle over a '£1.7m lunch' (DM)
Fahim Imam-Sadeque was head of sales for the UK, Middle East and Australia for BlueBay, one of Europe’s largest specialist managers of fixed-income credit and alternative products, managing assets of more than £24billion. He left the firm last December after agreeing a deal in July 2011 and was entitled to keep fund units worth £1.7million, according to the writ. His gardening leave started on August 23 last year just after he accepted an offer to join Goldbridge Capital Partners as head of sales and marketing from January 3 this year, the court will hear. BlueBay wrote to him on December 22, claiming he was in breach of their agreement by trying to poach his colleague Damian Nixon. Imam-Sadeque says his email exchange with Nixon was innocuous and that he emailed him on August 4 last year saying, ‘Coffee today?’. Nixon replied that he was free between 11am and 4pm and Imam-Sadeque replied, ‘OK, you can take me for lunch’, the writ says.

UBS To Issue More Loss-Obsorbing Capital (CNBC)
"Today's deal marks the beginning of an issuance program as we build our loss-absorbing capital base to meet FINMA and the Basel Committee requirements for systemically important banks well in advance of the regulatory deadlines," UBS's financial head Tom Naratil said.

French police question DSK for second day over prostitution ring (NYP)
Strauss-Kahn presented himself at the Lille police station at 9:00am local time Tuesday. He is being questioned with regard to an investigation for "complicity in a prostitution network" and "aiding and abetting in the misappropriation of company assets," a spokeswoman at the Lille prosecutor's office said.

Man Who Paid Teens to Spit on Him Acquitted of Sex Charges (KTLA)
A Los Angeles man has been found not guilty of paying high school students to spit in his face and yell profanities at him for sexual gratification. Charles Hersel was arrested in 2009 during a sting operation at a Thousand Oaks mall. Westlake High School students said Hersel paid them to yell profanities, spit and slap his face, according to officials. Several students also said he offered them cash to urinate and defecate on him, Ventura County sheriff's detectives said. Hersel was charged with four counts of annoying and molesting a child. During the trial Hersel's lawyer, Ron Bamieh, admitted the 41-year old paid more than a dozen teenagers to do those acts, but said the acts were not for sexual gratification.

Opening Bell

Morgan Stanley Posts Loss (WSJ) "The rebound in fixed income and commodities sales and trading indicates that clients have re-engaged after the uncertainty of the rating review in the previous quarter," Chief Executive James Gorman said, referring to Moody's Investors Service's move over the summer to downgrade the credit rating on more than a dozen banks. "We are beginning to unlock the full potential of the Global Wealth Management franchise, having increased our ownership of, and agreed on a purchase price for the rest of, Morgan Stanley Wealth Management." For the quarter, Morgan Stanley reported a loss of $1.02 billion, compared with a year-earlier profit of $2.2 billion. The per-share loss, which reflects the payment of preferred dividends, was 55 cents compared with a profit of $1.15 a year earlier. Stripping out the impact of debt-valuation changes, the per-share profit was 28 cents versus two cents a share a year ago. Revenue fell 46% to $5.29 billion, including a negative impact of $2.3 billion from the tightening of credit spreads related to debt. Stripping out debt-valuation changes revenue was up 18% to $7.55 billion. Analysts polled by Thomson Reuters expected earnings of 24 cents, excluding gains related to debt, on revenue of $6.36 billion. Morgan Stanley Reduces Investment-Bank Pay to $5.2 Billion (Bloomberg) The ratio of compensation to revenue in the unit fell to 44.9 percent, compared with 48.4 percent in the same period a year earlier, when excluding accounting gains and losses related to the firm’s credit spreads. That’s still higher than Goldman Sachs and JPMorgan’s investment bank. Compensation and benefits for all of Morgan Stanley totaled $12 billion in the first nine months, down 4 percent. Goldman Ex-Employee Says Firm Pushed Europe Bank Options (Bloomberg) Goldman Sachs sought to profit last year by persuading clients to buy and sell stock options on European banks such as BNP Paribas SA and UniCredit SpA, according to former employee Greg Smith’s new book. “We must have changed our view on each of these institutions from positive to negative back to positive ten times,” Smith writes in “Why I Left Goldman Sachs: A Wall Street Story,” scheduled for release on Oct. 22. “I remember thinking, ‘How can we be doing this with a straight face? No thinking client could believe that conditions on the ground could change that frequently.”’ [...] Smith also describes being disappointed with his $500,000 bonus at the end of 2006. “By any measure, I should have felt exceptionally lucky and grateful,” he writes. “But by the warped logic of Goldman Sachs and Wall Street, I was being screwed.” U.S. to Get Downgraded Amid Fiscal ‘Theater,’ Pimco Says (Bloomberg) “The U.S. will get downgraded, it’s a question of when,” Scott Mather, Pimco’s head of global portfolio management, said today in Wellington. “It depends on what the end of the year looks like, but it could be fairly soon after that.” Asian Scion's Trades Draw Scrutiny (WSJ) A federal probe into an alleged multimillion-dollar insider trading scheme is focusing on the son of a deposed Central Asian autocrat once courted by the U.S. as a key ally in the war on terror, according to people involved in the investigation. The globe-spanning criminal case marks a turnabout by the U.S. against a ruling family it once relied on to keep open military supply lines to Afghanistan. For years, the U.S. maintained good relations with then-Kyrgyzstan President Kurmanbek Bakiyev. Now, the U.S. has prepared charges against the former strongman's son, Maksim Bakiyev, who officials say spent some of his exile in London profiting from illegal tips on stocks trading on the New York Stock Exchange and Nasdaq. On Friday, the younger Mr. Bakiyev, 35, was arrested in England on an extradition request from the U.S. Mr. Bakiyev's U.K. attorney, Michael O'Kane, declined to comment. Computer programmer 'quadruples productivity' after hiring a woman to slap him in the face every time she catches him looking at Facebook (DM) Maneesh Sethi placed an advert on Craigslist to recruit someone willing to monitor what he was looking at on his laptop. The computer expert and writer, from San Francisco, now pays a female employee £5 ($8) an hour to strike him in the face if she spots him wasting time on social media. Mr Seethi claims the unusual motivational system has helped him boost his productivity from just 35 percent to around 98 percent during the working day...Mr Seethi published details on his blog of his Craigslist advert, which was entitled '(Domestic gigs) Slap me if I get off task'. In it he wrote: 'I'm looking for someone who can work next to me at a defined location (my house or a cafe) and will make sure to watch what is happening on my screen. 'When I am wasting time, you'll have to yell at me or if need be, slap me. 'You can do your own work at the same time. Looking for help asap. Mr Seethi said he was inundated with offers from potential slappers and quickly hired a volunteer he names only as Kara. He wrote: 'Within minutes, my inbox began blowing up. Up to 50% of Greek Workforce Strikes; Tipping Point Nears (CNBC) As European Union leaders prepare to meet in Brussels on Thursday, Greece’s workers aim to make their voices heard by holding a 24-hour strike bringing the country to a halt. With the economy in the fifth year of a recession, the lost production could prove counterproductive and cost the economy 100 million euros ($131 million), according to one expert. Most business and public sector activity is expected to grind to a halt during the strike called by the ADEDY and GSEE unions that represent around 2 million people — half of Greece’s workforce. A protracted news blackout is also expected as television and radio broadcasters and newspapers shut for the day, according to Reuters. Spain Banks Face More Pain as Worst-Case Scenario Turns Real (Bloomberg) Spain’s request for 100 billion euros of European Union financial aid to shore up its banks is increasing concern about the nation’s growing liabilities. Standard & Poor’s downgraded the country’s debt rating by two levels to BBB-, one step above junk, from BBB+ on Oct. 10, saying it wasn’t clear who will bear the cost of recapitalizing banks. It cut the ratings of 11 lenders including Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s largest, two days ago, citing the sovereign downgrade. Brothels Rescue Cash-Strapped Greek Soccer Team (AP) Players on a cash-strapped Greek soccer team now wear pink practice jerseys with the logos "Villa Erotica" and "Soula's House of History," two bordellos it recruited as sponsors after drastic government spending cuts left the country's sports clubs facing ruin. Other teams have also turned to unconventional financing. One has a deal with a local funeral home and others have wooed kebab shops, a jam factory and producers of Greece's trademark feta cheese. But the amateur Voukefalas club — whose players include pizza delivery guys, students, waiters and a bartender — has raised eyebrows with its flamboyant sponsorship choice. Prostitution is legal in Greece, where brothels operate under strict guidelines. Though garish neon signs advertising their services are tolerated, the soccer sponsorship has ruffled some feathers in the sports-mad city of Larissa. League organizers have banned the pink jerseys during games, saying the deal violates "the sporting ideal" and is inappropriate for underage fans...Brothel owner Soula Alevridou, the team's new benefactor, has already paid more than 1,000 euros ($1,312) for players to wear her jerseys. The team is appealing the game ban, but that doesn't worry the 67-year-old Alevridou, who says she's only in it because she loves soccer. "It's not the kind of business that needs promotion," she said, dressed all in white and flanked by two young women in dark leggings at a recent game. "It's a word-of-mouth kind of thing."

Opening Bell

Obama Wins Re-Election With Romney Defeated In Key States (Bloomberg) Obama defeated Republican Mitt Romney, winning at least 303 electoral votes in yesterday’s election with 270 needed for the victory. With one state -- Florida -- yet to be decided, Romney had 206 electoral votes...Obama won the battleground states of Ohio, Virginia, Iowa, New Hampshire, Wisconsin, Nevada and Colorado. He also carried Pennsylvania, where Romney made an 11th-hour bid for support to try to derail the president’s drive for re-election. North Carolina was the only battleground Romney won. Romney Campaigns To The End (WSJ) Hours before Mitt Romney lost his six-year quest to win the presidency, he said he had prepared only one speech—a victory speech...Until the final hour, Mr. Romney and his aides expressed confidence that he would win. The candidate, who prefers data and metrics to chitchat, appeared to be caught off guard by the loss even though he trailed in polls in crucial battlegrounds such as Ohio. Triumph Of The Nerds: Nate Silver Wins In 50 States (Mashable) The Fivethirtyeight.com analyst, despite being pilloried by the pundits, outdid even his 2008 prediction. In that year, his mathematical model correctly called 49 out of 50 states, missing only Indiana (which went to Obama by 0.1%.) This year, according to all projections, Silver’s model has correctly predicted 50 out of 50 states. A last-minute flip for Florida, which finally went blue in Silver’s prediction on Monday night, helped him to a perfect game. Loser Ryan Also A Winner (NYP) The Republican vice-presidential hopeful hedged his bet by running for re-election to his congressional seat in Wisconsin — where last night, he was declared the winner for an eighth straight time. Goldman Partners Pocket $22 Million (WSJ) More than 30 executives, including Chief Executive Officer Lloyd C. Blankfein, recently cashed in stock options awarded in the afterglow of the company's initial public offering in 1999. According to a securities filing, the executives, all Goldman partners, pocketed a total of $21.8 million by exercising options and selling the underlying shares in the three days after the firm reported third-quarter results in mid-October. The options expire at the end of November, and cashing in produced instant profits because Goldman's share price is more than 50% higher than when the options were awarded in 2002. "By exercising 10-year-old options before they expired later this year, executives captured some of the value we have built for shareholders over that period," said a spokesman for the securities firm. In contrast, many of the executives' remaining options are worthless, at least for now, because they were granted from 2005 to 2008. The stock peaked in October 2007 at about $239, or 89% higher than Tuesday's closing price of $126.25 in New York Stock Exchange composite trading at 4 p.m. The biggest gain went to Michael S. Sherwood, a Goldman vice chairman and the firm's top executive in Europe, who received $5.2 million from exercising options on 115,211 shares. Mr. Blankfein collected $3.1 million, while departing Chief Financial Officer David A. Viniar got $2.3 million, the filing shows. JPMorgan Nears SEC Settlement (WSJ) JPMorgan is close to a settlement with the Securities and Exchange Commission that would end one probe into how the company's Bear Stearns Cos. unit packaged and sold home loans to investors, according to people familiar with the case. A pact with the nation's largest bank by assets would be the first tangible victory in a wide-ranging SEC investigation into Wall Street's sale of mortgage-backed securities before the onset of the financial crisis. Since 2010, the SEC has issued more than 300 subpoenas or document requests related to the probe and collected more than 30 million pages of documents, enforcement chief Robert Khuzami said earlier this year. BNP Paribas Third Quarter Net Doubles On Trading Gains (Bloomberg) Pretax profit at BNP Paribas’s corporate- and investment- banking unit, or CIB, rose 7.3 percent to 732 million euros, beating analysts’ estimate of 686 million euros. Revenue from equity and advisory operations climbed 51 percent to 444 million euros, while fixed-income sales more than doubled to 1.13 billion euros. After Obama Victory, Donald Trump Rants On Twitter (ABC) “We can’t let this happen. We should march on Washington and stop this travesty,” Trump Tweeted. “Our nation is totally divided! Lets fight like hell and stop this great and disgusting injustice! The world is laughing at us. This election is a total sham and a travesty. We are not a democracy! And then: “Our country is now in serious and unprecedented trouble…like never before. Our nation is a once great nation divided! The electoral college is a disaster for a democracy. Hopefully the House of Representatives can hold our country together for four more years…stay strong and never give up! House of Representatives shouldn’t give anything to Obama unless he terminates Obamacare.” And finally: “This election is a total sham and a travesty. We are not a democracy!” Fitch: No Fiscal Honeymoon For President Obama (CNBC) President Barack Obama will need to quickly secure agreement on avoiding the "fiscal cliff" and raising the debt ceiling following Tuesday's elections, Fitch Ratings said. The economic policy challenge facing the president is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the U.S., according to Fitch. Resolution of these fiscal policy choices would likely result in the U.S. retaining its triple-A status from Fitch, the firm said. Failure to avoid the so-called fiscal cliff and raise the debt ceiling in a timely manner, as well as securing agreement on credible deficit reduction, would likely result in a rating downgrade in 2013, Fitch said. The New Haven For Investors (WSJ) Treasurys have a new rival for safe-haven status: U.S. companies. Bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasurys, a sign that investors perceive them as a safer bet. It is a rare phenomenon that some market observers said could be the beginning of a new era for debt markets. It could ultimately mean some companies will borrow at lower rates than the U.S. government. Swiss, Greeks Begin Talks On Tax Deal (WSJ) Switzerland has begun formal talks on a deal to tax assets stashed in secret Swiss bank accounts by Greek citizens, in line with similar agreements struck with other European countries, the Swiss government said Wednesday. Woman Wearing MIT Shirt Nearly Banned From Voting In Boca Raton (BNN) A woman attempting to vote in West Boca Raton yesterday was initially prohibited from entering the polling place because she was wearing a t-shirt with the letters MIT. BocaNewsNow.com heard from multiple sources that an election supervisor at the polling place ultimately realized that MIT stands for “Massachusetts Institute of Technology” — a school where students tend to know how to spell — and was not a campaign shirt for the Republican candidate, who spells his name MITT. Campaigning is not permitted within several yards of a polling place. The woman was ultimately allowed to vote.

Opening Bell

Greece's Conservatives Start Coalition Talks (WSJ) Greece's conservative leader Antonis Samaras, whose New Democracy party came first in a crucial election Sunday, is set to meet the main opposition leader, radical left Syriza's Alexis Tsipras, to start the formal process of coalition-building talks. Mr. Samaras saw the Greek president of the republic earlier Monday and received the formal mandate to start coalition-building talks, as his party is 21 seats shy of an absolute majority in the 300-seat parliament. The talks with Mr. Tsipras are purely a formality, as the radical left leader made it plain Sunday night that he wouldn't join a coalition with New Democracy. "Don't expect any surprises, this is a formal procedure. Mr. Samaras has to see the leader of the second party first, that's the protocol," Syriza's spokesman said. Greek Election Defuses One Crisis, but More Lurk (NYT) “Unless they make a radical change, we will be back with another Greek cliffhanger in three or four months’ time,” said Darren Williams, a European economist at AllianceBernstein in London. Wilbur Ross: Real Question For Greece Is What Now (CNBC) Ross also said the government has to improve tax collection for a more permanent solution to the country’s debt problems and said higher revenues would allow the country to ease up on austerity measures. “The tax avoidance in Greece — including by government officials — is ridiculous. The black economy is a ridiculously high percentage,” he said. “Those are the problems they have to deal with and if they can deal with those than more limited austerity is what’s needed.” Europe Gets Emerging Market Crisis Ultimatum As G-20 Meet (Bloomberg) As elections in Greece reduced the immediate risk of the euro area’s breakup, China and Indonesia signaled growing exasperation with more than two years of European crisis- fighting that has failed to stem the threat of global contagion. World Bank President Robert Zoellick said that policy makers bungled their attempt to rescue Spain’s banks. CUNY biz school fixed Wall Streeters' GPAs to keep receiving tuition (NYP) An internal CUNY probe found the course grades of “approximately 15 students” were falsified to keep their GPAs high enough to stay in the programs, Baruch officials acknowledged. The trickery prevented enrollees, including many mid-level Wall Streeters whose firms picked up their tabs, from flunking out — and kept their tuition checks flowing in. The accelerated “executive programs” in business and finance allow students to earn a master’s degree in 10 to 22 months while working full-time. The tuition: $45,000 to $75,000. Baruch has referred the matter to law-enforcement agencies, the college said in a statement. Spokeswoman Christina Latouf would not say if students knew their grades were being changed or were complicit in the scheme. But Baruch has started calling some recent graduates with disturbing news: Their sheepskins are invalid. “What do you mean? My diploma’s on my wall. How can you tell me I don’t have a degree?” one grad said, according to a source...Zicklin officials gave a sales pitch for prospective students last week, but directors and professors made no mention of the problems. Instead, they promised “respected and well-recognized” degrees that would put grads on the path to become chief executives and financial officers. “This is a master’s program on steroids,” one said. Pressure Mounts On Credit Suisse Chief (FT) Investors and analysts have already grown impatient in the past 12 months over Mr Dougan’s efforts to improve the bank’s profitability and cost base, which are lagging behind rivals in Europe. Although they do not question Mr. Dougan’s credentials as a bank manager, they say that a capital raising now would make it difficult for him to stay in his job. Not only would shareholders resent the dilution, but the change of tack would undermine his strategy in recent years of making generous dividend payouts, in contrast to rivals, which have used a larger share of profits to boost capital. Dollar Shortage Seen In $2 Trillion Gap Says Morgan Stanley (Bloomberg) After falling to an all-time low of 60.5 percent in the second quarter of last year, the dollar’s share of global reserves rose 1.6 percentage points to 62.1 percent in December, the latest International Monetary Fund figures show. The buying has left the private sector with $2 trillion less than it needs, according to investment-flow data by Morgan Stanley, which sees the dollar gaining 8.2 percent in 2012, the most in seven years. App Developers Too Young To Drive (WSJ) Paul Dunahoo went on a business trip to San Francisco last week, where he attended technical sessions at Apple Inc.'s AAPL +0.45% developer conference, networked with other programmers and received feedback from Apple engineers on his six productivity apps. Then, Mr. Dunahoo, chief executive of Bread and Butter Software LLC, returned to Connecticut to get ready for the eighth grade. "It's a very rare opportunity" to be at Apple's conference, said Mr. Dunahoo, who is 13 years old and wears red braces. Mr. Dunahoo is one of a growing number of teens joining the app-making frenzy. Apple, the app industry's ringleader, is encouraging the trend. Fitch Cuts India Credit Rating To Outlook Negative (Reuters) "A significant loosening of fiscal policy, which leads to an increase in the gross general government debt /GDP ratio, would result in a downgrade of India's sovereign ratings," Fitch said in a statement on Monday. Woman claims Southwest wouldn't let her board plane because of her cleavage: report (NYDN) Southwest Airlines was forced to apologize to a woman who was told she couldn't board her flight because her cleavage was "inappropriate." Jezebel reports that the woman, Avital — she only gave her first name — was boarding a 6 a.m. flight from Las Vegas to New York on June 5 when a ticket agent remarked that she couldn't fly unless she covered her breasts. Clad in a comfy cotton dress, a baggy flannel shirt and bright scarf, Avital ignored the warning and marched aboard anyway. "I didn't want to let the representative's Big Feelings about my breasts change the way I intended to board my flight," she told Jezebel. "And lo and behold, the plane didn't fall out of the sky... my cleavage did not interfere with the plane's ability to function properly." Avital slammed the Southwest for "slut shaming," and said a man on her flight had on a provocative piece of clothing, but wasn't hassled. "The guy sitting in front of me on the plane was wearing a shirt with an actual Trojan condom embedded behind a clear plastic applique and had no trouble getting on his flight," she said.

Opening Bell

Bank Of America Reaches Settlement In Merrill Lynch Acquisition-Related Class Action Litigation (BW) Under terms of the proposed settlement, Bank of America would pay a total of $2.43 billion and institute certain corporate governance policies. Plaintiffs had alleged, among other claims, that Bank of America and certain of its officers made false or misleading statements about the financial health of Bank of America and Merrill Lynch. Bank of America denies the allegations and is entering into this settlement to eliminate the uncertainties, burden and expense of further protracted litigation. Greece Seeks Taxes From Wealthy With Cash Havens in London (NYT) At the request of the Athens government, the British financial authorities recently handed over a detailed list of about 400 Greek individuals who have bought and sold London properties since 2009. The list, closely guarded, has not been publicly disclosed. But Greek officials are examining it to determine whether the people named — who they say include prominent businessmen, bankers, shipping tycoons and professional athletes — have deceived the tax authorities by understating their wealth. Libor Riggers May Be Criminal, Even If Acts Not Illegal at Time (CNBC) Those who took part in the manipulation of the London interbank offered rate (Libor), the key benchmark rate, could face criminal prosecution even though Libor manipulation is not yet a criminal offense. Martin Wheatley, who is advising the U.K. government on what changes could be made to Libor to stop manipulation in the future, said that U.K. regulator the Financial Services Authority (FSA) is considering prosecuting those who took part under “broad principles of conduct.” He also recommended that the government should give the FSA power to prosecute future Libor manipulation. Libor Furor: Key Rate Gets New Scrutiny (WSJ) "There's a concern that if you're going to base financial decisions on a particular interest rate" it should be a measure that responds to changes in market conditions, "and that's not Libor," said Andrew Lo, a finance professor at the Massachusetts Institute of Technology. Macquarie Bonuses Whack Profit (WSJ) Macquarie Group may have lost its reputation as the Millionaire’s Factory as profits slumped since the onset of the global financial crisis, but according to Citigroup analysts the bank’s net profit could have been 60% higher last financial year if not for a dramatic rise in bonus payments to staff...Wes Nason estimates that while the bank’s return on equity fell to 6.8% last financial year-–hitting its lowest level since it listed in the first half of fiscal 2012 and compared with a 10-year average of 18.4%—-its average bonus payments almost tripled to A$73,000 a head, up from A$26,000 in 2009. Replacement referee Lance Easley stands by touchdown call (NYDN) Lance Easley has been vilified for awarding the Seattle Seahawks a touchdown on its Hail Mary pass in the closing seconds of Monday night’s game against the Green Bay Packers even though pretty much everyone in the country saw that the pass had been intercepted. “I processed everything properly,” Easley told the Daily News Thursday. “It was supported on video. But the bad thing is, people don’t understand the rules in that whole play. “But that play rarely ever happens, it rarely happens in the field of play and it never happens in an NFL game,” he added. “And here I got stuck in the middle of it.” The call was reviewed on instant replay — and, amazingly, upheld, despite the refs also missing a pass interference infraction by a Seattle player. Since then the 52-year-old Bank of America banker has been swept up in a whirlwind of national outrage — one that forced the NFL to end a seven-week lockout of its unionized refs early Thursday. But Easley said he and his replacements did a good job in their stint in zebra stripes. “I know where I stand,” he said. “Everything I did ... I got support from all the referees and everything, and replay and our league office and anybody else that understands the rules and how those plays function. Spanish Rescue May Throw Crisis Spotlight on Italy (Reuters) Italian government bonds risk being thrown back into the spotlight of the euro zone debt crisis once Spain decides to request aid and secures central bank support for its debt. A partial bailout for Madrid would probably trigger the European Central Bank's bond-buying plan, lowering Spain's borrowing costs and increasing investor appetite for riskier assets in general, including debt issued by Italy. But Italy could then return to the forefront of market concern as the next weak link. "The risks increase that you will get a contagion into Italy," said David Keeble, global head of fixed income strategy at Credit Agricole. Cyber Attacks On Banks Expose Computer Vulnerability (WSJ) Cyber attacks on the biggest U.S. banks, including JPMorgan Chase & Co. and Wells Fargo & Co., have breached some of the nation’s most advanced computer defenses and exposed the vulnerability of its infrastructure, said cybersecurity specialists tracking the assaults. The attack, which a U.S. official yesterday said was waged by a still-unidentified group outside the country, flooded bank websites with traffic, rendering them unavailable to consumers and disrupting transactions for hours at a time. Such a sustained network attack ranks among the worst-case scenarios envisioned by the National Security Agency, according to the U.S. official, who asked not to be identified because he isn’t authorized to speak publicly. The extent of the damage may not be known for weeks or months, said the official, who has access to classified information. Fitch Ratings Cuts China, India 2012 Growth Forecasts (CNBC) In its September Global Economic Outlook, the ratings agency said it now expected China’s economy, the world’s second largest, to grow 7.8 percent this year, down from a forecast of 8 percent made in June. It also lowered its forecast for economic growth in India to 6 percent in the financial year ending in March 2013 from a previous estimate of 6.5 percent. CIT Chief Tries To Rescue Reputation (NYP) John Thain yesterday said he brought up executive compensation at the time his firm was getting bailed out by taxpayers not for selfish reasons but to determine how much control Washington would have over his company. “One of the issues we were worried about at the time was, if you take government money how much say does the government have in how you run your business?” Thain said during an interview on CNBC. Days earlier, Thain was trashed by former bank regulator Sheila Bair, who, in her upcoming book, “Bull By the Horns,” accuses the Wall Street veteran of being fixated on pay during the height of the financial Armageddon. Bair, the former Federal Deposit Insurance Corp. boss, wrote that Thain “was desperate for capital but was worried about restrictions on executive compensation.” “I could not believe it. Where were this guy’s priorities?” she wrote, referring to Thain. The CEO, who was tapped to run the troubled lender in 2010, also addressed during the CNBC interview rumors that CIT was looking to sell itself to a large bank. “It’s absolutely not true,” Thain said yesterday. Canada Cheese-Smuggling Ring Busted (BBC) A Canadian police officer was among three people charged as the country's authorities announced they had busted a major cheese-smuggling ring. A joint US-Canadian investigation found C$200,000 (£125,600) of cheese and other products were illicitly brought over the border into southern Ontario. The smugglers sold large quantities of cheese, which is cheaper in the US, to restaurants, it is alleged. The other two men charged were civilians, one a former police officer. The charges come three days after CBC News first reported the force was conducting an internal investigation into cheese smuggling. A pizzeria owner west of Niagara Falls told CBC that he had been questioned by police over the issue, but assured them he had not bought any contraband dairy. "We get all our stuff legit," said the restaurateur. "We thought it was a joke at first. Who is going to go around trying to sell smuggled cheese?"

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Cyprus's Banks Open After Two Weeks (Bloomberg) Cyprus’s banks opened for the first time in almost two weeks, with new rules curbing access to cash preventing an initial panic to withdraw deposits. “We expected much more people,” said Argyros Eraclides, manager of a Bank of Cyprus branch in the Stavrou area of Nicosia. “Fortunately there are only some people who needed cash for the day, but customers reacted fantastically. We expected some people to be more aggravated.” Banks opened at midday local time today, with lines of about 15 to 20 people waiting to enter branches in the Cypriot capital. The Central Bank of Cyprus’s money controls include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country. Italy Minister Knows Nothing About Possible Downgrade (Reuters) Italian Economy Minister Vittorio Grilli said on Thursday he had no knowledge of any imminent decision by Moody's to cut Italy's sovereign debt rating. Fitch cut Italy's rating this month and market rumours have been swirling for days that fellow agency Moody's, which has a negative outlook on Italy, is poised to follow suit. "I have no news about that," Grilli told reporters in parliament. BofA Said to Ask Mortgage-Bond Buyers to Take Debt in Packages (Bloomberg) Investors seeking to buy higher yielding, riskier slices of home-loan bonds sold yesterday by EverBank Financial Corp. were told they’d have a better shot if they also purchased some of the AAA rated classes, showing weaker demand for the top-ranked debt. Bank of America Corp. and Barclays Plc, the underwriters of the deal, pushed investors to purchase the debt in a package as relative yields widen on AAA portions of securities tied to new mortgages without government backing, according to two people familiar with the discussions who asked not to be identified because the negotiations were private. Matthew 25 Fund Inspired By Scripture Returns 27% (Bloomberg) When the Matthew 25 Fund fell 40 percent in 2008, it kept Mark Mulholland awake at night. Mulholland, the founder and sole manager of the mutual fund -- named after a Bible passage -- says he would lie in bed thinking about the damage he had done to his investors, particularly the elderly whose nest eggs might not recover before they died. The assets he managed dwindled to $22 million from $115 million, Bloomberg Markets will report in its May issue. What Mulholland didn’t worry about were the stocks in his portfolio. “The companies we owned were so cheap that barring a total collapse of the economic system, I knew at some point we were going to make a lot of money,” he says. That time has come. Florida couple says they live next to 'neighbor from hell' (WTSP) A dispute over an alligator has ignited a feud between two neighbors that appears to be spiraling out of control. Drew and Nicole Carver say their neighbor, John McDonough, has consistently harassed them since last October. "We had a security system installed not because of the neighborhood that we live in, but because of the neighbor we live next to," said Nicole Carver. It started after the Carvers called out wildlife officials to remove an alligator from a retention pond they share with McDonough. The move apparently angered McDonough so much that he began to put up yard signs insulting Drew Carver, a trainer with the military at MacDill Air Force Base. One sign read, "In memory of Chris Kyle," an army sniper who was murdered by a fellow veteran back in February. "He removed Chris Kyle's name from the sign and he said, 'Your name will be in there next,'" said Nicole Carver. S&P Seeks to Merge State Suits Into One (WSJ) Seventeen lawsuits have piled up against Standard & Poor's Ratings Services by state attorneys general who claim the firm churned out shoddy ratings before or after the financial crisis. S&P wants to yank the cases into a federal court—and shrink the total to one. The moves are an important skirmish in a legal battle that could wind up costing S&P billions of dollars if the firm loses the cases or settles them to cut its losses. Funds Reshape Investment Mold (WSJ) Hedge funds that specialize in bonds are bulking up on stocks, in the latest sign of investor concern over the health of the long bull market in debt prices. Fund managers that have made winning bets in corporate loans, mortgage bonds and distressed debt are altering course after a flood of cash has pushed up the prices of all sorts of debt investments, raising risks and depressing expected returns. Ratings Relief For JPM (NYP) JPMorgan Chase had its credit outlook raised to stable from negative by Standard & Poor’s as doubts about last year’s record trading loss eased. Wells Fargo distances itself from 'Harlem Shake' video filmed in Atlanta bank (AP) Wells Fargo bank officials say a viral video filmed inside an Atlanta bank branch was not approved or produced by the company, and employees participated on their own time. The video, one of many depicting the "Harlem Shake," features characters dancing in the lobby of a Wells Fargo branch. One wears a diaper and has a pacifier, and another is dressed as a bottle of Colt 45.

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JPMorgan's Losses Are Rival's Boons (WSJ) A group of about a dozen banks, including Goldman Sachs Group and Bank of America have scored profits that collectively could total $500 million to $1 billion on trades that sometimes pit them directly against J.P. Morgan's Chief Investment Office, according to traders and people close to the matter. Facebook 11% Drop Means Morgan Stanley Gets Blame (Bloomberg) Some investors say they felt misled by the underwriters. According to one London-based fund manager who asked not to be named, bankers indicated demand was so strong that he placed a bigger order than he thought he would get, leaving him with 40 percent more Facebook shares than anticipated. He sold most of that stock on the first day of trading. Morgan Stanley Cut Facebook Estimates Just Before IPO (Reuters) In the run-up to Facebook's $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, unexpectedly delivered some negative news to major clients: The bank's consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company. The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast. They say it may have contributed to the weak performance of Facebook shares, which sank on Monday - their second day of trading - to end 10 percent below the IPO price. The $38 per share IPO price valued Facebook at $104 billion. Deutsche Bank: 'Geuro' an Alternative to Greek Euro Exit (CNBC) Greece’s best chance of survival may be to stay in the euro but opt for its own parallel currency or “Geuro,” according to Deutsche Bank’s head of research, Thomas Mayer. In a research piece, Mayer said the Geuro would help Greece balance its primary budget without financial support from the 'Troika' of international lenders (the International Monetary Fund, the European Union and the European Central Bank). This would allow the incoming Greek government to reject the strict austerity program on which aid is contingent. IMF Chief, OECD Call For More Euro Debt Sharing (WSJ) International Monetary Fund head Christine Lagarde Tuesday called on euro-zone governments to accept more common liability for each other's debts, saying that the region urgently needs to take further steps to contain the crisis. "We consider that more needs to be done, particularly by way of fiscal liability-sharing, and there are multiple ways to do that," Ms. Lagarde told a press conference in London to mark the completion of a regular review of U.K. finances. Greece Needs To Accept Bailout Terms, Says South Korea (CNBC) South Korea’s President Lee Myung-bak says Greece needs to accept the terms of a $130 billion international bailout agreed in March and there will be no disbursement of money from the International Monetary Fund (IMF), unless the country does so. Floating bales of marijuana a mystery (OCG) The floating bundles, weighing a total of 8,068 pounds, were first seen by a boater near the harbor around 12:01 p.m. Sunday, U.S. Coast Guard Petty Officer Seth Johnson said. The bales were reportedly floating at least 15 miles off shore. The Orange County Sheriff's Department sent three Harbor Patrol ships to aid in recovering the marijuana. A Coast Guard cutter was also sent to assist. Michael Jimenez, a Border Patrol spokesman, called Sunday's incident unusual. In most scenarios when marijuana bales are found dumped in the water it is because a vessel is trying to flee from authorities. "At other events, they've dumped the bales to get rid of weight if they're being chased," he said. "Generally in these cases we're aware they're being dumped. What's more unusual is that the bales were floating with no boat in sight." Fitch Downgrades Japan (WSJ) Fitch Ratings downgraded Japan's sovereign rating to A-plus and said it was maintaining a negative outlook due to the "leisurely" pace of the county's efforts to remedy its dire fiscal situation. The firm's long-term foreign-currency rating had been AA and its local currency issuer default rating had been AA-minus. JPMorgan Veered From Hedging Practices At Competing Banks (Bloomberg) JPMorgan's biggest U.S. competitors say their corporate investment offices avoid the use of derivatives that led to the bank’s $2 billion loss and buy fewer bonds exposed to credit risk. Bank of America, Citigroup, and Wells Fargo. say the offices don’t trade credit-default swaps on indexes linked to the health of companies. JPMorgan is said to have amassed positions in such indexes that were so large they drove price moves in the $10 trillion market. The loss has prompted shareholders to join regulators in scrutinizing how banks use their investment offices to hedge risks and manage deposits they aren’t using for loans. JPMorgan’s competitors confine corporate-level trading mostly to interest-rate and currency swaps -- the most common derivatives -- and put a greater percentage of funds into U.S. government- backed securities such as Treasury bonds. Blackstone Moves Into Motel 6 (WSJ) Blackstone Group LP is acquiring discount lodging chain Motel 6 in a deal valued at $1.9 billion, as the private-equity firm continues to invest aggressively through its $10 billion real estate war-chest. Jon Corzine Got $8.4 Million In Year Before MF Global Collapse (NYP) Corzine received a bonus of $1.25 million in addition to his salary of about $1.8 million last year. He also was awarded $5.35 million in now-worthless stock options. Other MF Global insiders, including Chief Operating Officer Bradley Abelow, also saw big pay days. Abelow, who is still working at the firm, was paid $2.7 million in cash, including a $1.25 million bonus, plus restricted stock valued at $1.5 million. Woman Claims She Was Fired For Being "Too Hot" (Reuters) A New Jersey woman said on Monday that she was dismissed from a temporary job at a New York lingerie warehouse because her male employers felt she was too busty and dressed too provocatively for the workplace. Wearing a form-fitting sequined black dress and black leather, sequin-studded boots, Lauren Odes, 29, said her Orthodox Jewish employers at Native Intimates told her that outfit and others like it were "too hot" for the warehouse. "We should not be judged by the size of our breasts or the shape of our body," Odes said. Odes's attorney, celebrity lawyer Gloria Allred, said she filed a gender and religious discrimination complaint with the U.S. Equal Employment Opportunity Commission in New York.

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Public Pension Funds Named To Lead ‘London Whale’ Lawsuit (Bloomberg) U.S. District Judge George Daniels in Manhattan ruled today that lawsuits against the New York-based bank should be consolidated into a class action. The pension funds allege they lost as much as $52 million because of fraudulent activities by JPMorgan’s London chief investment office. The lead plaintiffs named by Daniels are the Arkansas Teacher Retirement System, Ohio Public Employee Retirement System, School Employees Retirement System of Ohio, State Teachers Retirement System of Ohio, Oregon Public Employee Retirement Fund and the Swedish pension fund Sjunde AP-Fonden. Pressures Intensify On Merkel (WSJ) The Greek government, struggling with depression-like conditions that have pushed the economy to the brink, is likely to need many billions of euros of additional aid to avoid bankruptcy. If Athens doesn't get the money, it may be forced to leave the euro, an outcome that would undermine financial markets' tenuous confidence in other vulnerable southern euro members, including Spain and Italy. An expansion of Greece's €173 billion ($213.4 billion) bailout that was agreed to this spring faces adamant opposition in Ms. Merkel's center-right coalition in Germany's parliament, the Bundestag. Her junior coalition partners are especially against lending Greece more money, threatening to leave her either without a governing majority—or without a plausible way to cover Athens's funding gap. "It is one of the hardest dilemmas she has faced as chancellor," said an adviser to Ms. Merkel. The chancellor is set to meet with French President François Hollande on Thursday and Greek Prime Minister Antonis Samaras on Friday, meetings the chancellor's aides say will help determine Berlin's course. Austria's AAA Rating Under Attack From East and West (CNBC) Of the three major credit rating agencies, only Fitch Ratings still rates Austria triple-A with stable outlook. Moody’s Investors Service put Austria’s top notch rating on negative watch in February, while Standard & Poor’s downgraded the country to double-A plus with negative outlook in January. Facebook Challenged By Swedish Count’s Jet-Set Website (Bloomberg) The BestofAllWorlds site, which starts Aug. 27, will allow users to mingle online with like-minded people, find restaurants and nightlife in city guides and discover who’s attending events such as Art Basel in Miami and England’s Royal Ascot horse racing, said Erik Wachtmeister, whose father was a Swedish ambassador to the U.S. “Facebook is a monopoly in the social sphere, but it only gives little value,” Wachtmeister said in an interview in London. “We can deliver clever filters, cut through the mess and get information that’s relevant and we can trust.” Fed Probes RBS Over Dealings With Iran (FT) The UK bank is being probed by being probed by the Federal Reserve and Department of Justice after volunteering information to them and U.K. regulators about 18 months ago, several people close to the situation said. The bank uncovered the alleged failings after Chief Executive Stephen Hester initiated an internal review not long after his arrival three years ago...The probe marks the latest blow for RBS following a series of mishaps including an IT failure, widespread mis-selling of retail and small-business products and its involvement in the scandal over the alleged manipulation of Libor interest rates Suspect asks DeLand doughnut shop worker for pen to write robbery note (NYP) An embarrassed Atlantic City casino is suing 14 gamblers — including two Big Apple residents — demanding they return the whopping $1.5 million they collectively won after realizing the mini-Baccarat table they were playing at was using unshuffled decks of cards. The sharp-eyed gamblers racked up a staggering 41 winning bets in a row at the Golden Nugget after seeing cards in the eight-deck shoe coming out in sequence and adjusted their wagers accordingly — as the clueless croupiers kept on dealing. Stunned casino workers swarmed the hot table suspecting the players of cheating — but only later realized that the cards that had been ordered as pre-shuffled from a Missouri company “were not shuffled at all,” a Golden Nugget spokeswoman said yesterday. “The gamblers unlawfully took advantage of the Golden Nugget when they caught on to the pattern and increased their bets from as little as $10 to $5,000,” the casino said in a written statement...It has been met with a countersuit from three of the bettors, including Queens resident Ping Lin, who allegedly managed to collect $50,000 from the casino, and Brooklyn cook Hua Shi, who allegedly collected $149,000. They claim they should be allowed to cash in chips they won and keep the cash they already managed to collect. Nomura Retrenches, Mends Fences (WSJ) Nomura's new leaders are discussing the future of that global push as well as how to repair the company's relationship with financial authorities. On the table are deep cuts in overseas operations and a possible change to a controversial compensation plan, among other policy options, that could shift away from the globalization strategy set by former Chief Executive Kenichi Watanabe and his deputy Takumi Shibata through the acquisition of Lehman Brothers' European and Asian businesses in 2008, say people close to the talks. Last Man Standing Means Europe Investment Banks Resist Shrinking (Bloomberg) Europe’s failure to resolve its sovereign-debt crisis will force investment-banking chiefs in the region to consider shuttering entire businesses rather than rely on piecemeal job reductions to reviveprofit. Dealmaking fees may drop 25 percent this year from 2009, when the crisis began in Greece, research firm Freeman & Co. estimates. European banks have cut about 172,000 positions since then, according to data compiled by Bloomberg, the same strategy they used after Lehman Brothers Holdings Inc. collapsed in 2008. Florida couple arrested after swinger’s party takes violent turn (NYDN) Tina Michelle Norris, 39, and her boyfriend James Albert Barfield, 56, both invited guests over to their home for sex Sunday night, the Hernando Today reported. But Norris got mad when she saw her boyfriend in bed with another woman and Barfield lost his cool when he saw his girlfriend under the sheets with two other men, according to the newspaper. The pair quickly got physical, with Norris sustaining a bloody lip and Barfield suffering multiple scratch marks on his neck and back, cops told Hernando Today. Police got quite the eyeful when they arrived at 6 a.m. to arrest the couple, both of whom were still donning their birthday suits. Norris was "very intoxicated and uncooperative" and refused to put her clothes back on, Deputy Cari Smith wrote in her affidavit. Barfield was also nude when Smith arrived at the home. A roommate, who was sleeping in a separate room of the house at the time of the incident, said she awoke to shouting and yelling. She went out into the hallway and found Norris and Barfield "pushing and shoving each other from one end of the house to the other (while) breaking things in the process," Smith wrote.

Opening Bell

UBS In $1.5 Billion Libor Fine (WSJ) As part of the deal, UBS acknowledged that dozens of its employees were involved in widespread efforts to manipulate the London interbank offered rate, or Libor, as well as other benchmark rates, which together serve as the basis for interest rates on hundreds of trillions of dollars of financial contracts around the world. UBS's unit in Japan, where much of the attempted manipulation took place, pleaded guilty to one U.S. count of fraud. Authorities on Wednesday painted a picture of "routine and widespread" attempts by UBS employees to rig Libor and the euro interbank offered rate, or Euribor. The U.K. Financial Services Authority said it had identified more than 2,000 such attempts between 2005 and 2010 with the participation or awareness of at least 45 UBS traders and executives. Regulators on Wednesday released a trove of internal UBS emails and other communications—many of them colorful and expletive-laden—in which bank traders, sometimes with the knowledge of their managers, sought to manipulate the rates in order to boost their trading profits or mask the Swiss bank's mounting financial problems in 2008. UBS Traders' 'Humongous' Libor-Fixing Boasts (CNBC) The FSA documents suggest a macho trading culture on the UBS trading floor. Trader A also said: "if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today ... I will ****ing do one humongous deal with you ... Like a 50,000 buck deal." Traders and brokers implicated in the scandal referred to each other as "the three muscateers [sic]" and "captain caos [sic]." SAC's top consumer trader draws scrutiny from U.S. authorities (Reuters) U.S. authorities are examining trading by one of SAC Capital Advisors' most successful portfolio managers, Gabriel Plotkin, as part of a probe into the $14 billion hedge fund firm's investment in Weight Watchers International Inc last year, according to a person familiar with the investigation. Plotkin, a specialist in consumer and retail stocks who makes investment decisions for more than $1.2 billion worth of assets, is among several SAC portfolio managers whose trades are being investigated, said the source, who did not want to be identified. The source would not name the other managers. Federal authorities are trying to determine whether any of SAC Capital's retail and consumer portfolio managers traded Weight Watchers shares based on non-public confidential information about the diet company, said the source and another person familiar with the investigation. The two sources said it is too soon to conclude if there was any insider trading. Authorities have not charged Plotkin with any wrongdoing. Banks See Biggest Returns Since ’03 as Employees Suffer (Bloomberg) Shareholders, impatient for the industry to boost profit, were rewarded as Wall Street firms cut jobs and pay, and exited businesses. The shrinking unnerved employees, who watched the chiefs of two big banks lose their jobs and others contend with a drop in deal making and stock trading, stiffer regulations, trading losses, rating downgrades and scandals involving interest-rate manipulation and money laundering. “There’s always grumbling on Wall Street, which is pathetic given how overpaid we all are, but there is a level of angst this year that is just unprecedented,” Gordon Dean, who left a 26-year career at Morgan Stanley (MS) to co-found a San Francisco boutique advisory firm this year, said in a telephone interview. “It’s just a profound sadness and dissatisfaction.” Greek Bond Bet Pays Off for Hedge Fund (FT) One of the world's most prominent hedge funds is sitting on a $500 million profit after making a bet that Greece would not be forced to leave the euro zone, bucking the trend in a difficult year for the industry. Third Point, headed by the billionaire US investor Dan Loeb, tendered the majority of a $1 billion position in Greek government bonds, built up only months earlier, as part of a landmark debt buyback deal by Athens on Monday, according to people familiar with the firm. The windfall marks out the New York-based firm as one of the few hedge fund managers to have profited from the eurozone crisis. Standard and Poor's, the rating agency, raised its assessment of Greece's sovereign debt by several notches on Tuesday, citing the euro zone's"strong determination" to keep the country inside the common currency area. Fitch Warns US Could Lose AAA If 'Fiscal Cliff' Hits (Reuters) "Failure to avoid the fiscal cliff.. would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the US into an avoidable and unnecessary recession," Fitch said in its 2013 global outlook published on Wednesday. "That could erode medium-term growth potential and financial stability. In such a scenario, there would be an increased likelihood that the U.S. would lose its AAA status." Science explains Rudolph's red reindeer nose (CNET) A collection of Dutch scientists contributed to a paper titled "Microcirculatory investigations of nasal mucosa in reindeer Rangifer tarandus (Mammalia, Artiodactyla, Cervidae): Rudolph's nose was overheated." According to the paper, "The exceptional physical burden of flying with a sleigh with Santa Claus as a heavy load could have caused cerebral and bodily hyperthermia, resulting in an overworked nasal cooling mechanism that resembles an overheated cooling radiator in a car: Rudolph suffered from hyperemia of the nasal mucosa (a red nose) under more extreme heat loads during flight with a sleigh." Of course, scientists don't like to put all their scientific eggs into just one basket of science. The paper's authors acknowledge other theories for the red nose, including the common cold, alcoholic intoxication, or a parasitic infection of the nostrils. GM To Buy Back Stock From Treasury (WSJ) GM said it will purchase 200 million shares of stock held by the U.S. Treasury Department in the first step of the government's eventual exit from the auto maker within the next 12 to 15 months. The auto maker will pay $5.5 billion for the shares in a deal that is expected to close by the end of the year. The repurchase price of $27.50 a share represents a 7.9% premium over the closing price on Dec. 18. Berlusconi Says Italy May Be Forced to Leave the Euro Zone (Reuters) "If Germany doesn't accept that the ECB must be a real central bank, if interest rates don't come down, we will be forced to leave the euro and return to our own currency in order to be competitive," Berlusconi said in comments reported by Italian news agencies Ansa and Agi. Knight, Getco Confirm Merger (WSJ) The $1.8 billion deal for Knight, which values the firm at $1.4 billion plus $400 million in debt held by Getco, will create a trading powerhouse ranking as one of the largest players on U.S. exchanges and the main trading partner of online brokerage firms that service everyday investors. Porsche Executives Charged Over VW Bid (WSJ) Prosecutors have charged the former top executives of Porsche Automobil Holding SE with allegedly manipulating financial markets during the company's attempt to take over Volkswagen AG in 2008, lawyers representing the executives said Wednesday. A court in Stuttgart must now decide whether to open criminal proceedings against Porsche's former chief executive Wendelin Wiedeking and former finance chief Holger Härter, who are suspected of misleading investors when they denied trying to take over VW in 2008. Market manipulation in Germany can be punished with up to five years' imprisonment. From early March to October of 2008, Porsche issued at least five statements denying it was trying to raise its stake in Volkswagen to 75%, but the prosecutors allege that Messrs. Wiedeking and Härter had already decided to try to raise the stake and were preparing for the move by purchasing buy options on ordinary and preference shares of Volkswagen. The denials induced investors to sell or make bets the shares would fall by so-called short selling, the prosecutors said, which benefited Porsche by lowering the share price ahead of the planned takeover. Spanx Bandit On The Loose After JCPenney Heist (TSG) An unknown thief (or thieves) stole a whopping $4182 worth of the popular body shapers from a JCPenney in Vero Beach, according to an Indian River County Sheriff’s Office report. The Spanx theft was reported Friday afternoon after a JCPenney employee noticed “the empty rack in the women’s undergarment section.” The worker noted that the Spanx stock had been there the prior evening. A subsequent search of the store revealed that about 100 Spanx “were taken along with their plastic hangers.” The purloined undergarments--tan and black tops and bottoms--were from Spanx’s Assets Red Hot Label line, police reported. A JCPenney store manager gave cops an itemized list of the boosted body shapers, but it appears the Spanx Bandit will escape unscathed. Due to a lack of witnesses, evidence, or store surveillance video, no further investigative activity could be undertaken by a sheriff’s deputy.

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