Opening Bell: 02.24.12

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Lampert Gains $160 Million on Sears Shares (Bloomberg)
Eddie Lampert, the hedge fund manager who controls Sears Holdings Corp. (SHLD), has more than $160 million in paper profits on shares of the retailer acquired last month from a long-standing client, the Ziff family. The billionaire paid $130 million in early January to personally acquire Sears shares from ESL Investors LLC, a partnership he runs for the Ziffs that follows the same strategy as his hedge fund, according to court documents and regulatory filings. The retailer’s stock has more than doubled since then, rebounding from a three-year low and ranking as the best- performing member of the benchmark Standard & Poor’s 500 Index.

AIG Cites ‘Sustainable Operating Profit’ (Bloomberg)
AIG’s biggest unit, property-casualty insurer Chartis, and its plane-leasing business swung to operating profits in the period, the New York-based company said in a statement yesterday as it posted net income of $19.8 billion.

Japanese Fund Loses $2.3 Billion (WSJ)
Japan's financial regulator said Friday it has halted operations of a little-known Tokyo money-management company after the firm allegedly lost billions of dollars in client money. In one of the biggest cases of its kind in Japan, with Tokyo's reputation as a financial center still bruised by the billion-dollar Olympus Corp. accounting scandal, the regulator said investigators found that AIJ Investment Advisors Co. can't account for "most of" the 183 billion yen, or about $2.3 billion, in pension-fund assets under management.

Delusions About The Detroit Bailout (NYT)
Steve Rattner: "As a presidential aspirant, Mr. Romney evidently hasn’t felt a need to be consistent or specific as to what should have been done to address the collapse of the auto industry starting in late 2008. But the gist is that the government should have stayed on the sidelines and allowed the companies to go through what he calls “managed bankruptcies,” financed by private capital. That sounds like a wonderfully sensible approach — except that it’s utter fantasy. In late 2008 and early 2009, when G.M. and Chrysler had exhausted their liquidity, every scrap of private capital had fled to the sidelines. I know this because the administration’s auto task force, for which I was the lead adviser, spoke diligently to all conceivable providers of funds, and not one had the slightest interest in financing those companies on any terms. If Mr. Romney disagrees, he should come forward with specific names of willing investors in place of empty rhetoric. I predict that he won’t be able to, because there aren’t any."

ECB's Mario Draghi Takes Tough Line On Austerity (WSJ)
No more Mr. Nice Guy! "You know there was a time when [economist] Rudi Dornbusch used to say that the Europeans are so rich they can afford to pay everybody for not working. That's gone," Mr. Draghi said.

There's 'No Quick Fix' to Sharp Rise in Oil Price Says Geithner (CNBC)
Geithner attributed the rise in crude prices, which have sent gasoline above $4 a gallon in some parts of the country to two factors: Better growth expectations, along with "saber rattling" from Iran over its desire to advance its nuclear program. "There's no quick fix to this, no short-term fix," Geithner said. "The best strategy for the country is to continue to make some long-term investments, to expand production in the United States, to reduce our dependence on foreign oil, to encourage Americans to use more efficient clean sources of energy, to encourage Americans to be more efficient in how they use energy."

Darren Rovel Did An Investigative Report On Girl Scout Cookies (CNBC)
It turns out that Thin Mints are made in the same factory as Keebler Grasshopper cookies. Tagalongs are made in the same factory as Keebler Peanut Butter-Filled cookies and Samoas are made in the same factory as Keebler Coconut Dreams. One might think that Kellogg is cannibalizing sales of Girl Scout Cookies by producing look- and “tastealikes” year round, but Amanda Hamaker, manager of product sales for the Girl Scouts says that’s not the case. “We’ve had the conversation about the cookies being made in the same factory,” Hamaker said. “But we haven’t seen a decline in Girl Scout Cookies because of what they’re doing...Girl Scout consumers love our cookies, but they purchase them because there are supporting girls. That’s not happening at the supermarket.”

BofA Ends Sales of Certain Mortgages to Fannie (WSJ)
The Charlotte, N.C., company said Thursday in its annual report filed with regulators that it stopped selling mortgages to Fannie Mae this month, with the exception of loans made under the government's Making Home Affordable Program. Bank of America said in the filing that its decision to slow loan sales to Fannie "was influenced, in part, by our ongoing differences with FNMA in other contexts, including repurchase claims," referring to Fannie Mae's requests that the bank buy back mortgages that didn't meet underwriting standards.

Torre-Caruso out of Dodgers' bidding (AP)
Joe Torre's group has dropped out of bidding for the bankrupt Los Angeles Dodgers because current owner Frank McCourt won't include the parking lots outside the stadium...Under McCourt's agreement with MLB, filed with U.S. Bankruptcy Court in Delaware, he is to select a winning bid by April and close a sale by April 30 — the day he is to make a $131 million divorce payment to former wife Jamie. Also considered among the favorites are bids by Steve Cohen of the hedge fund SAC Capital Advisors and by a group that includes Mark Walter, chief executive officer of the Guggenheim Partners financial services firm.

Casino mogul eager to throw dice in New York (NYP)
Billionaire gambling mogul Sheldon Adelson is considering building a massive betting and convention resort in New York if the state legalizes Las Vegas-style casinos. Adelson’s Las Vegas Sands Corp.’s interest in New York would appear to be a direct challenge to Genting, the firm that now operates the racino at Aqueduct Racetrack in Queens and that plans to build the nation’s largest convention center there, with the blessing of Gov. Cuomo.

Buffett Reveals Warts as He Prepares Annual Letter (Bloomberg)
Warren Buffett bought oil stocks near the peak of an energy boom, declined to spend $35 million on a growing television station and swapped a Berkshire Hathaway Inc. (BRK/A) stake for a shoe company he later said was worthless. In each case, shareholders of Omaha, Nebraska-based Berkshire were charged or deprived of at least $1 billion. And in each case, Buffett apologized in writing.

John Edwards Sex Tape Suit Settled, Tapes to Be Destroyed (ABC)
The long-running court battle over a sexually explicit videotape featuring former Democratic presidential candidate John Edwards and his mistress, Rielle Hunter, has been settled out of court today and all copies of the tape will be destroyed, ABC News has learned. According to North Carolina court officials and a Hunter spokesperson, Hunter and former Edwards’ aide Andrew Young, along with his wife Cheri, agreed to end their dispute more than two years after the case was originally filed. Under the terms of the settlement, all known copies of the sex tape are to be destroyed within 30 days. If other copies of the tape surface later, the agreement requires those to be destroyed as well...Hunter spokesperson RoseMarie Terenzio told ABC News today that ”Ms. Hunter is very pleased. She won.”

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Germany Hints At More Financing (WSJ) Germany on Wednesday signaled its willingness to provide additional financing for the euro zone's bailout fund and accept lower interest on loans to Athens, in order to get the Greek rescue back on track and free the next tranche of about €44 billion ($56.40 billion) in loans for the euro zone's weakest member. Merkel Sees Chance For Greek Deal Monday (Reuters) "I believe there are chances, one doesn't know for sure, but there are chances to get a solution on Monday," Merkel told the Bundestag lower house of parliament in a debate on the German budget. But the longing for one act, one miracle solution, one truth that means all our problems are gone tomorrow...this will not be fulfilled. What was neglected over years, over decades, cannot be taken care of overnight and therefore we will need to continue to move step by step." H-P Says It Was Duped (WSJ) The technology giant said that an internal investigation had revealed "serious accounting improprieties" and "outright misrepresentations" in connection with U.K. software maker Autonomy, which H-P acquired for $11.1 billion in October 2011. "There appears to have been a willful sustained effort" to inflate Autonomy's revenue and profitability, said Chief Executive Meg Whitman. "This was designed to be hidden." Michael Lynch, Autonomy's founder and former CEO, fired back hours later, denying improper accounting and accusing H-P of trying to hide its mismanagement. "We completely reject the allegations," said Mr. Lynch, who left H-P earlier this year. "As soon as there is some flesh put on the bones we will show they are not true." Analysts Had Questioned Autonomy’s Accounting Years Ago (CNBC) Paul Morland, technology research analyst at broking and advisory house Peel Hunt, told CNBC that he had noticed three red flags in Autonomy’s accounts in the years leading up to the HP acquisition: poor cash conversion, an inflated organic growth rate, and the categorizing of hardware sales as software. London Bankers Become Landlords as Rents Hit Record (Bloomberg) Vivek Jeswani became a landlord by accident when Deutsche Bank AG (DBK) transferred him to New York two weeks after he moved into a new home in central London. Now back in the U.K., Jeswani views the apartment in Baker Street, the fictional home of Sherlock Holmes, as one of his best assets and is about to buy another home to expand his rental business. “There are no other investments as attractive and you’ve got some security if you’ve got an asset you can use yourself,” the 36-year-old risk officer at China Construction Bank Corp.’s U.K. unit said. “There’s a good yield over 5 percent and being in central London, you’ve got demand domestically and internationally.” Trading Charges Reach SAC (WSJ) The hedge funds reaped $276 million in profits and losses avoided based on that information, criminal and civil authorities said—far dwarfing that of any previous insider-trading case. The bulk of the trading profits generated by Mr. Martoma was paid to Mr. Cohen, a person close to the hedge fund said. Fed Still Trying To Push Down Rates (WSJ) Fed Chairman Ben Bernanke suggested that the central bank will keep trying to push down long-term interest rates in 2013, as federal tax and spending policies become a more substantial headwind to the U.S. economy. "We will continue to do our best to add monetary-policy support to the recovery," Mr. Bernanke said at the New York Economic Club, answering a question about how the Federal Reserve would respond to impending spending cuts or tax increases that might restrain economic growth. 'Stiletto Surgery' alters pinky toe for better fit (Fox) These days, some women will do just about anything to fit into their favorite pair of high heels – including surgery. A growing number of women are paying thousands of dollars to surgically alter their feet just to make wearing heels a more comfortable experience. Surgical procedures such as shortening toes, receiving foot injections and even completely cutting off pinky toes are on the rise. “Unless you’ve been there, and you can’t find shoes, and you’re in pain, don’t judge,” said Susan Deming, a patient who recently underwent a toe-shortening procedure. Adoboli’s Fate Decided at Wine Bar as UBS Market Bets Unraveled (Bloomberg) On a cool late summer evening last year in London’s financial district, with the euro-zone crisis worsening and Greece tottering on the edge of default, Kweku Adoboli says he asked the three traders who worked with him at UBS AG’s exchange-traded funds desk to join him for a drink. Adoboli said in a post on his Facebook page that he needed “a miracle” as his bets on the market imploded. That night at a wine bar across the street from their office, Adoboli asked John Hughes, the senior trader on the ETF desk, and two junior traders, what to do. The others decided he should take the blame for billions of dollars in losses and an elaborate web of secret trades in what he called an umbrella account that once held $40 million in hidden profits. “I knew I was going to lose my job anyway, I had already resigned myself to that, so fair enough,” the 32-year-old Adoboli testified last month about the meeting, which the other traders deny took place. Jobless Claims in U.S. Decrease (Bloomberg) Fewer Americans filed applications for unemployment benefits last week as damage to the labor market caused by superstorm Sandy began to subside. Jobless claims decreased by 41,000 to 410,000 in the week ended Nov. 17, the Labor Department reported today in Washington. The number of applications matched the median forecast of 48 economists surveyed by Bloomberg. Soros Buying Gold as Record Prices Seen on Stimulus (Bloomberg) The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 11 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.66 billion bet through the SPDR Gold Trust, the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show. 'Cannibal Cop' Gilberto Valle planned to to cook up 'some girl meat' on Thanksgiving (NYDN) The "Cannibal Cop" had his own twist for a Thanksgiving dinner this year — cooking up “some girl meat,” prosecutors revealed Tuesday. Gilberto Valle, 28 — who allegedly kept a database of at least 100 women he plotted to rape, cook and eat — planned the freakish feast with one of his online conspirators earlier this year, prosecutors said. “I’m planning on getting me some girl meat,” he wrote to his pal on Feb. 9. “Really tell me more,” responded the friend. “It’s this November, for Thanksgiving. It’s a long way off but I’m getting the plan in motion now,” Valle wrote.