Opening Bell: 05.31.12

At Core Of Greek Chaos, A Reviled Tax (WSJ) So despised is the property tax that its critics—which is to say, most of Greece—refer to it as the haratsi, after a per capita tax imposed by the occupying Ottomans. About three-quarters of Greece's households own their homes. Like many other European countries, Greece already has some property taxes. But those have been aimed mostly at higher-value properties and raised little revenue. JPMorgan To Spin Out 'Special Investments' (FT) The unit, whose investments include LightSquared, the wireless internet provider, will be moved to the bank’s corporate division and prevented from seeking fresh investment opportunities, bankers were told on Wednesday. Woman Who Wouldn't Be Intimidated By Citigroup Wins $31 Million (Bloomberg Markets) Sherry Hunt never expected to be a senior manager at a Wall Street bank. She was a country girl, raised in rural Michigan by a dad who taught her to fish and a mom who showed her how to find wild mushrooms. She listened to Marty Robbins and Buck Owens on the radio and came to believe that God has a bigger plan, that everything happens for a reason. She got married at 16 and didn’t go to college. After she had her first child at 17, she needed a job. A friend helped her find one in 1975, processing home loans at a small bank in Alaska. Sherry Hunt never expected to be a senior manager at a Wall Street bank. She was a country girl, raised in rural Michigan by a dad who taught her to fish and a mom who showed her how to find wild mushrooms. She listened to Marty Robbins and Buck Owens on the radio and came to believe that God has a bigger plan, that everything happens for a reason. She got married at 16 and didn’t go to college. After she had her first child at 17, she needed a job. A friend helped her find one in 1975, processing home loans at a small bank in Alaska...In March 2011, more than two years after Citigroup took $45 billion in bailouts from the U.S. government and billions more from the Federal Reserve -- more in total than any other U.S. bank -- Jeffery Polkinghorne, an O’Fallon executive in charge of loan quality, asked Hunt and a colleague to stay in a conference room after a meeting. The encounter with Polkinghorne was brief and tense, Hunt says. The number of loans classified as defective would have to fall, he told them, or it would be “your asses on the line.” Hunt says it was clear what Polkinghorne was asking -- and she wanted no part of it. Jobless Claims Increased Last Week (Bloomberg) First-time claims for jobless benefits increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week, the Labor Department said today. The initial claims exceeded the median estimate of 370,000 in a Bloomberg News survey of economists. The number of people on unemployment benefit rolls dropped. For French CEO's, Politics Means Big Pay Cuts (WSJ) Top managers at France's state-owned companies are expected to face significant pay cuts next month, when Socialist President François Hollande plans to begin enforcing salary caps as part of his broader electoral pledge to get tough on the rich. During the presidential campaign, Mr. Hollande vowed to curb "excessive" remunerations at France's 52 state-controlled or partially state-owned companies by ordering that executive pay not exceed 20 times the salary of the lowest-ranking employees. New York Plans to Ban Sale of Big Sizes of Sugary Drinks (NYT) The proposed ban would affect virtually the entire menu of popular sugary drinks found in delis, fast-food franchises and even sports arenas, from energy drinks to pre-sweetened iced teas. The sale of any cup or bottle of sweetened drink larger than 16 fluid ounces — about the size of a medium coffee, and smaller than a common soda bottle — would be prohibited under the first-in-the-nation plan, which could take effect as soon as next March. Gorman, Greifeld ‘Face’ off (NYP) Morgan Stanley is prepared to take Nasdaq to court to recoup money it believes it lost in the flubbed Facebook initial public offering. CEO James Gorman’s investment bank, which led the now-notorious, snafu-ridden Facebook IPO, believes Bob Greifeld’s Nasdaq owes it roughly $10 million, sources said. The investment bank, which quarterbacked the $16 billion Facebook offering, had to shell out to clients a seven-figure sum to resolve a litany of Nasdaq trading glitches. Morgan Stanley's Facebook Analyst: Sober Man in World of Hype (Reuters) Scott Devitt was one of a number of analysts to lower his revenue and earnings expectations for the social media giant after the company informed analysts that it was dropping its quarterly and annual revenue guidance. Facebook also issued an amended prospectus cautioning that the shift of its users to mobile platforms could have a negative impact on revenue growth. Such a move was highly unusual because it occurred just days before Facebook's highly anticipated IPO, whose lead underwriter was Morgan Stanley, Devitt's employer. The investment bank not only had control over the process, but over 38 percent of Facebook shares being sold. Devitt's and other analysts' revised revenue forecasts were shared via phone calls with institutional investors, but not with retail investors, before the stock began trading publicly. That in turn raised questions over whether the playing field was skewed against Main Street investors from the start and sparked lawsuits. Citigroup Debt Viewed As Risky (WSJ) Gimme Credit, a fixed-income research company based in New York, said it expects debt issued by the third-biggest U.S. bank by assets to perform less well over the next six months than bonds issued by the company's peers. Russian Zuckerberg Throws Money Paper Planes At Passersby (MSN) Russian millionaire Pavel Durov reportedly spent last weekend flying paper airplanes made from 5,000-ruble notes (equal to about $160) out the window of his office in St. Petersburg. The 27-year-old gave away around $2,000 before he stopped because "people turned into animals" grabbing the cash. Durov is the CEO of Russia's largest social network Vkontakte, which sort of makes him the Russki Mark Zuckerberg. Scarf-Wearing Pig Stuns Motorists (UPI) Pennsylvania State Police said a baby pig wearing a scarf crossed rush hour traffic in Pittsburgh and disappeared into the woods. Police said the fashionable swine was spotted crossing the inbound lanes of Parkway West near the Green Tree exit around 8:30 a.m. Wednesday, and many motorists pulled off the parkway and stopped to take pictures of the unusual pedestrian. Troopers said the pig had crossed over a guardrail and into the woods by the time they arrived, and they were unable to locate the animal.
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At Core Of Greek Chaos, A Reviled Tax (WSJ)
So despised is the property tax that its critics—which is to say, most of Greece—refer to it as the haratsi, after a per capita tax imposed by the occupying Ottomans. About three-quarters of Greece's households own their homes. Like many other European countries, Greece already has some property taxes. But those have been aimed mostly at higher-value properties and raised little revenue.

JPMorgan To Spin Out 'Special Investments' (FT)
The unit, whose investments include LightSquared, the wireless internet provider, will be moved to the bank’s corporate division and prevented from seeking fresh investment opportunities, bankers were told on Wednesday.

Woman Who Wouldn't Be Intimidated By Citigroup Wins $31 Million (Bloomberg Markets)
Sherry Hunt never expected to be a senior manager at a Wall Street bank. She was a country girl, raised in rural Michigan by a dad who taught her to fish and a mom who showed her how to find wild mushrooms. She listened to Marty Robbins and Buck Owens on the radio and came to believe that God has a bigger plan, that everything happens for a reason. She got married at 16 and didn’t go to college. After she had her first child at 17, she needed a job. A friend helped her find one in 1975, processing home loans at a small bank in Alaska...In March 2011, more than two years after Citigroup took $45 billion in bailouts from the U.S. government and billions more from the Federal Reserve -- more in total than any other U.S. bank -- Jeffery Polkinghorne, an O’Fallon executive in charge of loan quality, asked Hunt and a colleague to stay in a conference room after a meeting. The encounter with Polkinghorne was brief and tense, Hunt says. The number of loans classified as defective would have to fall, he told them, or it would be “your asses on the line.” Hunt says it was clear what Polkinghorne was asking -- and she wanted no part of it.

Jobless Claims Increased Last Week (Bloomberg)
First-time claims for jobless benefits increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week, the Labor Department said today. The initial claims exceeded the median estimate of 370,000 in a Bloomberg News survey of economists. The number of people on unemployment benefit rolls dropped.

For French CEO's, Politics Means Big Pay Cuts (WSJ)
Top managers at France's state-owned companies are expected to face significant pay cuts next month, when Socialist President François Hollande plans to begin enforcing salary caps as part of his broader electoral pledge to get tough on the rich. During the presidential campaign, Mr. Hollande vowed to curb "excessive" remunerations at France's 52 state-controlled or partially state-owned companies by ordering that executive pay not exceed 20 times the salary of the lowest-ranking employees.

New York Plans to Ban Sale of Big Sizes of Sugary Drinks (NYT)
The proposed ban would affect virtually the entire menu of popular sugary drinks found in delis, fast-food franchises and even sports arenas, from energy drinks to pre-sweetened iced teas. The sale of any cup or bottle of sweetened drink larger than 16 fluid ounces — about the size of a medium coffee, and smaller than a common soda bottle — would be prohibited under the first-in-the-nation plan, which could take effect as soon as next March.

Gorman, Greifeld ‘Face’ off (NYP)
Morgan Stanley is prepared to take Nasdaq to court to recoup money it believes it lost in the flubbed Facebook initial public offering. CEO James Gorman’s investment bank, which led the now-notorious, snafu-ridden Facebook IPO, believes Bob Greifeld’s Nasdaq owes it roughly $10 million, sources said. The investment bank, which quarterbacked the $16 billion Facebook offering, had to shell out to clients a seven-figure sum to resolve a litany of Nasdaq trading glitches.

Morgan Stanley's Facebook Analyst: Sober Man in World of Hype (Reuters)
Scott Devitt was one of a number of analysts to lower his revenue and earnings expectations for the social media giant after the company informed analysts that it was dropping its quarterly and annual revenue guidance. Facebook also issued an amended prospectus cautioning that the shift of its users to mobile platforms could have a negative impact on revenue growth. Such a move was highly unusual because it occurred just days before Facebook's highly anticipated IPO, whose lead underwriter was Morgan Stanley, Devitt's employer. The investment bank not only had control over the process, but over 38 percent of Facebook shares being sold. Devitt's and other analysts' revised revenue forecasts were shared via phone calls with institutional investors, but not with retail investors, before the stock began trading publicly. That in turn raised questions over whether the playing field was skewed against Main Street investors from the start and sparked lawsuits.

Citigroup Debt Viewed As Risky (WSJ)
Gimme Credit, a fixed-income research company based in New York, said it expects debt issued by the third-biggest U.S. bank by assets to perform less well over the next six months than bonds issued by the company's peers.

Russian Zuckerberg Throws Money Paper Planes At Passersby (MSN)
Russian millionaire Pavel Durov reportedly spent last weekend flying paper airplanes made from 5,000-ruble notes (equal to about $160) out the window of his office in St. Petersburg. The 27-year-old gave away around $2,000 before he stopped because "people turned into animals" grabbing the cash. Durov is the CEO of Russia's largest social network Vkontakte, which sort of makes him the Russki Mark Zuckerberg.

After JPMorgan Loss, U.S. Regulator Ponders Tighter Volcker Rule (Bloomberg)
The U.S. Commodity Futures Trading Commission is gathering input today for a final rule, required from five U.S. regulators under the 2010 Dodd-Frank Act. “We’re entrusted by Congress to figure out how to prohibit proprietary trading so taxpayers don’t stand behind these institutions, but permit market making which is important to markets and permit hedging which helps lower risks of the institutions,” Gary Gensler, CFTC chairman, told Congress on May 22. “It’s that challenge.”

Scarf-Wearing Pig Stuns Motorists (UPI)
Pennsylvania State Police said a baby pig wearing a scarf crossed rush hour traffic in Pittsburgh and disappeared into the woods. Police said the fashionable swine was spotted crossing the inbound lanes of Parkway West near the Green Tree exit around 8:30 a.m. Wednesday, and many motorists pulled off the parkway and stopped to take pictures of the unusual pedestrian. Troopers said the pig had crossed over a guardrail and into the woods by the time they arrived, and they were unable to locate the animal.

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Opening Bell: 08.02.12

Knight Says Glitch Cost It $440 Million (WSJ) Knight, in a press statement Thursday, said the problematic software had been removed from its systems and that the firm would conduct business making markets and trading on behalf of its clients Thursday. Knight's broker-dealer subsidiaries are in compliance with requirements to hold capital, the company said. The estimated $440 million loss disclosed Thursday by Knight follows a $35.4 million hit taken by the company in the problematic stock-market debut of Facebook. Goldman Leads Foreign Banks Accelerating Job Cuts In Japan (Bloomberg) Goldman Sachs led foreign banks in accelerating job cuts at their Japanese brokerages last fiscal year as employees relocated to other Asian financial centers and firms trimmed costs amid a global industry slump. The number of staff at nine global securities firms in Japan fell by 537, or 7.3 percent, to a combined 6,796 as of March 31, more than double the previous year’s 3.2 percent reduction, according to company regulatory filings. Wall Street and European banks have been eliminating jobs and transferring staff from Japan to Hong Kong and Singapore to reduce expenses as the euro region’s debt woes dent global investor confidence. The worst may be over as Japan recovers from last year’s nuclear crisis and some U.S. firms start hiring junior bankers for mergers advice and asset management, said Katsunobu Komizo, a Tokyo-based recruiting consultant. BNP Paribas Second Quarter Net Falls, Hits Capital Goal Early (Reuters) Second-quarter net income fell to 1.85 billion euros ($2.27 billion), beating the average of analyst estimates of 1.74 billion in a Reuters poll. Revenue dropped 8 percent to 10.10 billion, broadly in line with the poll average of 10.13 billion. The bank hit an 8.9 percent core Tier 1 ratio under stricter new Basel III methodology due to come into force from 2013. It is six months ahead of its target to hit 9 percent by end-2013. AIG Pushing Plan For Independence (WSJ) Several analysts who follow the company say the government's stake could be cut below 30% before the November elections, if asset sales expected by AIG in the coming months help the company raise a total of $10 billion to $15 billion in excess capital. The buybacks are likely to accompany one or more public share offerings of AIG stock by the Treasury, which over the past 16 months has reduced its stake from a peak of 92% through a series of at-market sales. Boulder police: Longmont man urinated on woman at bar after she rejected his advances (CD) Boulder police arrested a Longmont man who witnesses said urinated on a woman at a local bar after she rejected his advances Saturday night, according to a report. The woman told police she was standing next to the bar at Shooters Grill and Bar, 1801 13th St., about 11:45 p.m. Saturday when a man -- later identified as Timothy Paez, 22 -- came up behind her and put his arm around her. The woman turned around and said, "Um, really?," and Paez took his arm off her, according to the report. According to police, a few seconds later, the woman said she felt some sort of liquid hitting her leg. She initially thought Paez was spilling his beer on her, but when she turned around she told police she saw Paez with his penis exposed urinating on her leg and the front of the bar. Berkshire Benefits As Buffett Wagers On U.S. Housing (Bloomberg) “I don’t know if he’s lucky, smart or patriotic, but it’s worked out for him,” Cliff Gallant, an analyst at KBW Inc., said in a phone interview. He estimates that Berkshire will post an operating profit of $1,750 a share for the second quarter, a 6.7 percent increase from a year earlier. Bacon To Return $2 Billion (NYP) Louis Moore Bacon plans to give back $2 billion, or 25 percent of his main hedge fund, to investors, saying it may be too big for him to achieve past returns as “liquidity and opportunities have become more constrained.” Bacon, who seeks to exploit macroeconomic trends such as changes in interest rates and currencies, returned a “disappointing” 0.35 percent in the first half and a “tolerable” 6 percent in the past year, according to a letter sent yesterday to clients. He has gained on average more than 18 percent a year since starting the Moore Global Investments fund in 1989. Jobless Claims Increase (WSJ) Initial jobless claims, an indication of layoffs, increased by 8,000 to a seasonally adjusted 365,000 in the week ended July 28, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires had forecast 370,000 new applications for jobless benefits last week. Your 119 Billion Google Searches Now A Central Bank Tool (Bloomberg) Margo Sugarman spent months last year searching on Google for the appliances to complete her dream kitchen, scouring the Internet for information on the latest double ovens and low-noise mixers. Not only did those queries guide the Tel Mond, Israel, resident to the best deals for her 70,000-shekel ($17,680) renovation, they also helped the Bank of Israel, which looks to searches like Sugarman’s to assess the state of the nation’s $243 billion economy. The central bank stands at the forefront of the world’s hunt for new economic indicators, analyzing keyword counts for everything from aerobics classes to refrigerators -- reported by Google almost as soon as the queries take place -- to gauge consumer demand before official statistics are released. The Federal Reserve and the central banks of England, Italy, Spain and Chile have followed up with their own studies to see if search volumes track trends in the economies they oversee. For Retiring GE Executive, $89,000/Month Not to Work (WSJ) John Krenicki is giving up his General Electric paycheck. But he's going to be collecting an allowance. As part of a deal to keep the veteran executive from joining a competitor for an usually long three years, the conglomerate has agreed to pay Mr. Krenicki $89,000 a month until 2022. The payment to Mr. Krenicki, who is 50 years old, was dubbed a retirement allowance by GE and is worth $1 million a year.

Opening Bell: 07.18.12

BofA Swings To Profit, Topping Analysts' Estimates (WSJ) Bank of America reported a profit of $2.46 billion, compared with a year-earlier loss of $8.83 billion. On a per-share basis, which reflect the payment of preferred dividends, earnings came in at 19 cents from a loss of 90 cents a year earlier. The year-ago quarter's results included a charge of $1.23 a share in mortgage-related and other adjustments. Total revenue surged 66% to $21.97 billion. Analysts polled by Thomson Reuters expected earnings of 14 cents a share on $22.87 billion in revenue. The bank's profit was helped by reduced provisions for loan losses as credit quality continued to improve. Credit-loss provisions totaled $1.77 billion compared with $3.26 billion a year ago and $2.42 billion in the first quarter. HSBC Probe Brings Promises Regulator, Bank Will Clean Up Act (Bloomberg) HSBC executives apologized for opening their U.S. affiliate to a river of Mexican drug lords’ cash, and the U.S. regulator that failed to stem the flow vowed to prevent a repeat. “I deeply regret we did not act sooner and more decisively,” Comptroller of the Currency Thomas Curry said at a day-long hearing yesterday of the Senate Permanent Subcommittee on Investigations. He said his agency, which regulates HSBC’s U.S. arm, is partially responsible for letting Europe’s largest bank give terrorists, drug cartels and criminals access to the U.S. financial system and will take “a much more aggressive posture.” Opinion: Investing In America Produces The Best Returns, By Lloyd Blankfein (Politico) The question I’m most often asked these days is, “Where should I invest?” In recent years, we all know, there has been an unusually high degree of uncertainty. It falls into two broad categories: cyclical concerns that focus on the outlook for near-term economic growth and structural concerns that center on the viability of existing political or economic systems — for example, the European Union. The cyclical and structural challenges are considerable, and in some cases, even daunting. But when I meet with chief executive officers and institutional investors and they ask me where to invest, my response is that the United States remains as attractive as ever. And it would be even more attractive if it can make some short-term progress in a few key areas. Hugh Hendry: ‘Bad Things are Going to Happen’ (FT) Hendry believes that financial markets are single-digit years away from a crash that will present investors with opportunities of a lifetime. “Bad things are going to happen and I still think the closest analogy is the 1930s.” For Yahoo CEO, Two New Roles (WSJ) Just hours after Yahoo named Marissa Mayer as its new chief, the real conversation kicked in: how she will juggle pregnancy and being the CEO charged with saving a foundering Internet giant. The 37 year-old former Google executive is expecting her first child, a son, in early October. On Tuesday, she started her new job at Yahoo, which reported another quarter of lackluster sales growth...No Yahoo directors expressed concern about her pregnancy, according to Ms. Mayer, who told the board in late June, about a week after Yahoo's recruiter contacted her. She says she plans to work during her maternity leave, which will last several weeks...Ms. Mayer's husband, Zachary Bogue, a former attorney, is co-managing partner at Data Collective, an early-stage venture capital fund specializing in tech start-ups. JFK jet in laser scare (NYP) A lunatic aimed a powerful laser beam at an airliner flying over Long Island on its way into JFK — sending the pilot to the hospital and endangering the lives of the 84 people aboard. The first officer on JetBlue Flight 657 from Syracuse was treated for injuries to both eyes after the blinding flash of light lit up the cockpit Sunday night — as the FBI and Suffolk cops hunted for the person responsible, who could face federal prison time. The Embraer E190 jet landed safely, and the injured pilot — identified by sources as First Officer Robert Pemberton, 52 — was met at the gate and taken to Jamaica Hospital. Authorities believe the beam came from around West Islip, Babylon or Lindenhurst. “You wouldn’t think a pen laser would go that far of a distance,” said shocked West Babylon resident Cindy Konik, 50...A startled co-pilot, who was not identified, immediately took over the controls from his temporarily blinded colleague. “We just got lasered up here — two green flashes into the cockpit,” the captain radioed controllers at Ronkonkoma. Credit Suisse Sets Capital Plan (WSJ) moved Wednesday to stanch recent concerns about its financial strength, saying it is raising capital through the sale of convertible bonds, more divestments and the launch of another cost-savings program. It is a surprise twist in a spat with the country's central bank, which recently warned that Switzerland's number two bank wasn't strong enough to withstand a major crisis. Credit Suisse initially rejected the central bank's criticism, saying it was among the world's best-capitalized banks. This didn't impress investors, who offloaded their shares, wiping out 2 billion Swiss francs ($2.05 billion) in market value. At one point last month the bank even felt compelled to reassure investors that it was profitable in the second quarter, even though profitability over the period was never in doubt. Strong Possibility Of Further Fed Easing By September: Goldman (CNBC) In a testimony before the Senate Banking Committee on Tuesday, Federal Reserve Chairman Ben Bernanke offered no new hints that the central bank is planning more easing, but repeated a pledge that the Fed “is prepared to take further action as appropriate to promote stronger economic recovery.” “While we think that a modest easing step is a strong possibility at the August or September meeting, we suspect that a large move is more likely to come after the election or in early 2013, barring rapid further deterioration in the already-cautious near term Fed economic outlook,” Goldman Sachs conomist Andrew Tilton said in a report. BlackRock's Net Slips 11% (WSJ) BlackRock reported a profit of $554 million, or $3.08 a share, compared with a year-earlier profit of $619 million, or $3.21 a share. Stripping out one-time items, per-share earnings rose to $3.10 from $3. Revenue slipped 5% to $2.23 billion. Analysts expected earnings of $3.01 a share on $2.26 billion in revenue, according to a poll conducted by Thomson Reuters. BNY Mellon profit falls 37 percent on litigation charge (Reuters) Bank of New York Mellon Corp said on Wednesday that second-quarter net income had fallen 37 percent on lower foreign exchange revenue and after it paid $212 million to settle an investor lawsuit. The world's largest custody bank reported net income of $466 million, or 39 cents a share, compared with $735 million, or 59 cents a share, a year earlier. As announced earlier this month, the results included an after-tax charge of $212 million to settle an investor lawsuit accusing the bank of imprudently investing their cash in a risky debt vehicle that collapsed in 2008. Quarterly revenue fell to $3.62 billion from $3.85 billion. Residents warned: 6-foot lizard loose in Colorado (AP) A sheriff has warned residents in a tourist town northwest of Colorado Springs that a strong, aggressive 6-foot lizard that eats small animals — including dogs and cats — is on the loose in the area. Teller County Sheriff Mike Ensinger said Tuesday that a 25-pound pet Nile monitor lizard has gone missing after breaking a mesh leash and crawling away. Ensinger said about 400 homes in the Woodland Park area were warned. He added that the animal, which escaped Monday and is known as Dino, has not bitten any humans — yet. "We have a 6-foot reptile out and about," Ensinger said. "If it gets hungry enough, we don't know what it will do." Ensinger said officers may use a tracking dog if Dino isn't located by Tuesday afternoon. "I'm not going after it," Ensinger said. "I don't do reptiles."

Opening Bell: 12.07.12

SEC Warns Netflix CEO Over Facebook Post (WSJ) Mr. Hastings boasted on his Facebook page in July that Netflix exceeded 1 billion hours of video streaming in a month for the first time. The post may have violated rules of fair disclosure, the SEC said. The SEC said it may also issue a cease-and-desist proceeding against Netflix and Mr. Hastings. Mr. Hastings responded in another Facebook post Thursday. He said further disclosure at the time wasn't necessary because he has more than 200,000 subscribers to his Facebook page, which makes it a "very public" forum. Netflix had also disclosed on its blog in June that it was nearing the 1 billion streaming hours milestone, he said. Mr. Hastings, who is also on the board of Facebook, added that, at any rate, such information isn't a "material" event to investors. Germany's Central Bank Cuts Forecasts (WSJ) "The cyclical outlook for the German economy has dimmed [and] there are even indications that economic activity may fall in the final quarter of 2012 and the first quarter of 2013," the Bundesbank said in its monthly report. In its semiannual economic projections, the central bank slashed its forecast for German growth next year to 0.4% from its previous estimate of 1.6% in June. It also lowered its forecast for 2012 growth to 0.7% from 1.0%. Moody's: It's Deal Or Die (NYP) The American economy will fall into “severe recession by the spring” unless Congress lessens the tax increases and spending cuts that are set to begin in January, said Mark Zandi, chief economist at Moody’s Analytics. “We’ve got to nail this down; uncertainty is killing us,” Zandi told lawmakers yesterday at a Joint Economic Committee hearing in Washington...If Congress were to “kick the can down the road” by extending the current tax-and-spend policies, Zandi predicted the US would lose its Aaa rating because “it would signal that the political will is lacking to put the nation on a sustainable fiscal path.” Fiscal Cliff? France Has ‘Fiscal Mountain’: PPR CEO (CNBC) The head of one of France's biggest companies has warned that France's problems dwarf those of the U.S. in an interview with CNBC. Francois-Henri Pinault, chief executive of luxury goods company PPR, said: "When we talk about the fiscal cliff in France it's a mountain, it's much higher than a cliff. And when it comes to France the only solution that has been put on the table is tax raises, nothing about cutting expenses. So it's a completely different situation." Greece sticks to buyback plan, says will shield banks (Reuters) Greece says it is sticking to plans to close its offer to buy back its own bonds from investors on Friday in a deal that should meet a debt writedown target set by its international lenders. The government said it would shield the country's banks from any lawsuits over losses booked if they take part in the buyback. The buyback, part of a broader debt relief package worth 40 billion euros ($52 billion) agreed by Greece's euro zone and International Monetary Fund lenders last month, is central to efforts to bring its debt to manageable levels. Judge: Ganek, Steinberg conspirators (NYP) Manhattan federal judge Richard Sullivan yesterday ruled that SAC Capital money manager Michael Steinberg and Level Global co-founder David Ganek can be named co-conspirators in the current insider trading case unfolding downtown. Neither Steinberg nor Ganek has been charged in the case, but the ruling lets prosecutors submit their e-mails and instant messages as evidence in their case against Todd Newman, a former portfolio manager at Diamondback, and Anthony Chiasson, Ganek’s former Level Global partner. The feds have accused Chiasson and Newman of improperly profiting off insider tips on Dell and Nvidia. Chiasson lawyer Greg Morvillo objected, saying that Chiasson’s former analyst Sam Adondakis, who pleaded guilty, testified that he never told Ganek he had an inside source at Dell. Judge Sullivan said the evidence is “certainly circumstantial” but sufficient enough for the government’s request to be granted. Sullivan cited the “precise information” Ganek had received leading up to Dell’s earnings as well as the “large trading positions” he authorized on the computer maker. The judge relied on three e-mail communications to implicate Steinberg, one of which he said made “clear references to keeping things on the down-low and being extra sensitive.” Burglary suspect calls 911 after Springtown homeowner holds him at gunpoint (DN) In a strange flip of events, a burglary suspect called 911 early Tuesday to report that he was being held at gunpoint by a Springtown homeowner and his son. The homeowner called 911, too, but by then he was in control, holding him at gunpoint and demanding to know what he was doing in his home. “Just unlucky, I guess,” the man responded, according to a release from the Parker County Sheriff’s Department. The incident happened around 12:30 a.m. when the homeowner and his wife woke up to find an intruder in the bedroom of their home in the 100 block of Lelon Lane. The suspect, identified as 41-year-old Christopher Lance Moore of Bedford, left the home and sat in his GMC pickup, parked in the family’s driveway. The homeowner followed him with a pistol, took the suspect’s keys and blocked his getaway with his own vehicle, while his stepson trained a shotgun on Moore, Fox 4 News reports. “If he gets out of the truck, shoot him in the legs,” James Gerow told his son. “You ain’t gotta kill him; just shoot him in the legs. … If he’d got out, I’d have expected him to shoot him.” When deputies arrived, both men were on the phone with 911. Deputies asked Moore why he had broken into the home, to which he merely said he had “bad intentions.” Morgan Stanley Alters Broker Pay Plan as Revenue Bonus Takes Hit (Bloomberg) Morgan Stanley, the brokerage with the biggest corps of financial advisers, changed its wealth- management compensation plan to encourage brokers to increase revenue and allow them to buy discounted stock. The 2013 program pays a bonus of 2 to 5 percentage points of revenue for advisers who bring in new assets and are in the top 40 percent in revenue growth, according to terms outlined in a summary obtained yesterday by Bloomberg News. That comes at the expense of a 2 percentage-point reduction in the revenue bonus paid to all brokers who generate at least $750,000. JPM Bonus Bummer (Bloomberg) JPMorgan Chase’s bonus pool for the corporate and investment bank may shrink as much as 2 percent this year as the firm completes performance reviews, three executives with direct knowledge of the process said. Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion (Bloomberg) A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. Danger Lurks Inside The Bond Boom (WSJ) Amid the rush of bond deals, which already have topped $1 trillion in value, these managers—from BlackRock to Federated Investment Management Co.—are pointing to unusual wrinkles suggesting that now could be one of the most dangerous times in decades to lend to investment-grade companies. Interest rates are so low and bond prices so high, they warn, that there is little room left for gains. Some worry that even a small increase in interest rates—a traditional enemy of bond returns—could eat away at bond prices. College Student Poisons Roommate's Iced Tea With Bleach Following Argument (DM) A college student faces 15 years in jail after she allegedly sprayed bleach into her roommate's iced tea. Kayla Ashlyn Bonkowski, 19, was charged with felony poisoning and appeared in court on Wednesday. She reportedly told police that she had put chemicals in the drink following an argument about cleaning the dishes with her 20-year-old roommate Emily Joseph. The poisoning occurred on November 7 at the students' apartment in Union Township, located near the Mount Pleasant school of Central Michigan University, authorities said. Miss Joseph was taken to hospital for treatment but later released. After she filed a complaint, Bonkowski was arrested. The 19-year-old 'verbally admitted' to police that she put bleach in the drink because 'Joseph is mean', according to ABC. She was arraigned on Wednesday at 2pm before posting $2,000 bond. She entered a plea of not guilty to the charge of poisoning a food, drink, medicine or water supply. The college student faces up to 15 years in prison. Reached by e-mail, Bonkowski said on Wednesday morning that she needed to consult with a lawyer before commenting.

Opening Bell: 11.01.12

Wall Street Sputters Back To Life (WSJ) It wasn't until Mayor Michael Bloomberg and NYSE Euronext Chief Executive Officer Duncan Niederauer rang the opening bell that traders knew for sure that the systems would work. "Out of this postapocalyptic world that we're all looking at, that's a ray of good news, that they're actually able to get the exchange open," said Keith Bliss, senior vice president at Cuttone & Co., a brokerage with operations on the NYSE floor. Barclays Faces $435 Million Fine, Another Probe (WSJ) Barclays aced a double-barreled assault from U.S. authorities, as the federal energy-market regulator sought a record $435 million in penalties for the bank's alleged manipulation of U.S. electricity markets, and the lender also disclosed that it was facing a U.S. anticorruption investigation. The corruption investigation focuses on potential violations during the bank's efforts to raise money from Middle Eastern investors in the early days of the financial crisis. The probe, being conducted by the Justice Department and the Securities and Exchange Commission, is at an early stage. Wells Expands Into Investment Banking As Others Retreat (Reuters) The growth worries some investors who want the notoriously conservative bank to stick to its knitting, but Wells Fargo believes that now is a good time to hire. "Our eyes are wide open," said John Shrewsberry, head of the bank's investment banking and capital markets operations, known as Wells Fargo Securities. "There are a lot of very talented people at different stages of availability," he added in an interview this week. The fourth-largest U.S. bank says it can earn solid returns in investment banking while taking little risk for itself. It is focusing on services that its corporate lending customers need, such as stock and bond underwriting and merger advice. For investors, it is looking at areas like processing futures and swaps trades. The bank shies away from riskier undertakings like trading for its own account. The Wells Fargo Securities unit is relatively small now. It's biggest hub is in Charlotte, North Carolina, far from the storm that has hobbled Wall Street this week. In a few years, the unit could account for twice as much of the firm's revenue as it does now - an estimated 10 percent compared to its current five, Deutsche Bank analyst Matt O'Connor wrote in a report. Sandy's Economic Cost: Up To $50 Billion And Counting (CNBC) By contrast, the two costliest hurricanes in U.S. history to date were Katrina, with estimated losses of $146 billion, and Andrew, with loses estimated at $44 billion. But there are offsets and Moody's Mark Zandi and other economists note that there will be considerable rebuilding that will accompany the storm. Because the storm hit early in the quarter, Zandi points out that if $20 billion is spent cleaning up and rebuilding, the actual measured impact on gross domestic product could be zero. IHS Global Insight U.S. Economists Gregory Daco and Nigel Gault are doubtful. They note that the rebuilding often takes the place of investment elsewhere and often not everything is rebuilt. “The effect on growth for the fourth quarter will not be catastrophic but might still be noticeable, especially in an economy with little momentum anyway,” IHS wrote. The debate begs the question of whether such natural disasters can ultimately stimulate an economy. Eric Strobl, of the Ecole Polytechnique in Paris, who has studied the impact of hurricanes for more than a decade, found that hurricanes at the local level are usually negative for growth. NYC Struggles to Come Back to Life as Storm Chaos Lingers (Bloomberg) New York City struggled to return to normal life after superstorm Sandy, managing a partial resumption of mass transit amid a landscape of miles-long traffic jams, widespread blackouts and swarms of marooned residents. Limited service on the Metro-North and Long Island Rail Road commuter trains began today, and service on 14 of 23 subway lines will resume tomorrow, Governor Andrew Cuomo said at a news briefing in Manhattan. Still, power losses kept thousands of people and businesses in the dark and prevented trains from running below 34th Street in Manhattan. Basements and homes were waterlogged or submerged, and 6,300 remained in shelters...The lack of transit options is unprecedented, said Bernie Wagenblast, who has monitored metro traffic for more than 30 years, including stints as a radio reporter on WABC and WINS. “It reminds me a little of back in the ’70s when we had the gas crisis and cars were lined up for long, long distances trying to get gasoline,” Wagenblast said. “Now you’ve got cars in addition to people with their gas cans waiting on line who are trying to get fuel.” In Manhattan, an unofficial line divided the haves with power from the have-nots. South of about 34th Street, far fewer shops or restaurants than usual were open. Traffic lights were inoperable, though an unspoken etiquette emerged as many drivers took turns letting one another pass through intersections. Work was stopped at the Ground Zero construction site, which is still flooded. LaGuardia Airport, the only one of the three major New York-area airports that remains closed, can’t resume flights until floodwaters are drained and ground lights and equipment are checked. Labor Dept. Report on Jobs to Appear Friday as Planned (NYT) The hurricane had shut down government offices on Monday and Tuesday, and threatened to delay the release of the monthly jobs numbers. That led to hand-wringing in the presidential campaigns and even some accusations that the Obama administration might delay the numbers for its political benefit. But a Labor Department spokesman said Wednesday in an e-mail message that the report would come out as planned, at 8:30 a.m. E.S.T. on Friday. The Philadelphia 76ers unveil the world’s largest T-shirt cannon (YS) On opening night, the Sixers [unveiled] Big Bella, the world's largest T-shirt launcher that fires 100 tees in just 60 seconds. Big Bella weighs 600 pounds and, when firing T-shirts into the upper reaches of the Wells Fargo Center, can be up to 10 feet high. The team commissioned the creation of Big Bella from FX in Motion, an entertainment elements company out of New Berlin, Wisc. The team will also drop T-shirts, free game tickets and other promotional items from the rafters of the Wells Fargo Center down to fans below in a new themed "Sixers Parachute Drop." Australia Targets China’s Rich With “Millionaire” Visa (Deal Journal) Got 5 million Australian dollars (US$5.2 million) spare and need a residency visa? Australia’s doors will soon be open. From Nov. 24, Australia will accept applications under a new program, known as the Significant Investor Visa scheme, aimed at attracting the world’s wealthy to make the move and park their money Down Under. The only catch is that the A$5 million must be invested in state and territory Australian government debt, privately-owned Australian companies and managed funds that invest in Australian assets regulated by the Australian Securities & Investment Commission for four years. The new visa has already got financial advisers throughout Australia devising investment solutions for applicants. Consultants expect no shortage of takers especially from China, which is seeing an increasing flow of wealthy citizens sending money overseas, investing in assets as diverse as condos in Cyprus, or education for children overseas. A Wall Street Journal analysis of these flows suggests that in the 12 months through September, about US$225 billion headed out of China, equivalent to about 3% of the nation’s economic output last year. Harvard Business School Survey: HBS Students Favor Obama (Harbus) Surveys completed by 668 members of the HBS student body last week revealed that President Barack Obama had the support of 65% of the student community. Challenger Mitt Romney captured 32% of the vote while the remainder said they supported a third-party candidate, were unsure, or did not plan to vote. A Year After MF Global's Collapse, Brokerage Firms Feel Less Pressure For Change (Dealbook) For their part, many MF Global employees remain chastened by their firm’s collapse. Lawmakers hauled Mr. Corzine, a former senator from New Jersey, to Washington three times to testify before Congressional committees. Some MF Global employees remain unemployed while others took major pay cuts to work for the trustee unwinding the firm’s assets. Several MF Global employees planned to gather on Thursday for drinks at a Midtown Manhattan bar, just blocks from their old firm, to commiserate on their trying year. They canceled the event after another disaster, Hurricane Sandy, left some people stranded without power. Hawaii Tourist Saved By Taekwondo Skills (ABC) A 12-foot-long tiger shark messed with the wrong person. Mariko Haugen, a taekwando black belt, was enjoying a swim in Maui, Hawaii, when she was confronted by the creature. “She saw it a few seconds before it hit – and she gave it her best Tae Kwon Do black belt punch in the nose,” Don Haugen, Mariko’s husband, wrote on Facebook. Haugen’s husband and another man saw the attack and helped carry her to safety. She received more than 100 stitches to close wounds on her right hand and thigh.

Opening Bell: 10.18.12

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: 04.18.13

Morgan Stanley Sees Core Earnings Weaken (WSJ) Morgan Stanley saw core earnings weaken, although the investment bank swung to a first-quarter profit as it benefited from a comparison with a year-earlier period bogged down by a heavy charge. For the quarter, the bank reported a profit of $984 million, compared with a year-earlier loss of $94 million. The per-share profit, which reflects the payment of preferred dividends, was 49 cents compared with a loss of six cents a year earlier. The latest period featured a decline in fixed-income trading revenue, but strong stock trading and continued improvements in Morgan Stanley's wealth-management division, which was buoyed by strong markets. ... Revenue jumped 18% to $8.16 billion. Excluding debt valuation, revenue was $8.48 billion. Analysts polled by Thomson Reuters most recently expected earnings, excluding debt-valuation adjustments, of 57 cents, on revenue of $8.35 billion. Blackstone First-Quarter Profit Rises on Fund Performance (Bloomberg) Blackstone Group LP (BX), the world’s biggest buyout firm, said first-quarter profit rose 28 percent as market gains lifted the carrying value of its holdings. Economic net income, a measure of earnings excluding some costs tied to the firm’s 2007 initial public offering, increased to $628.3 million, or 55 cents a share, from $491.2 million, or 44 cents, a year earlier, New York-based Blackstone said today in a statement. Analysts had expected earnings of 53 cents a share, according to the average of 15 estimates in a Bloomberg survey. Barclays Head of Investment Banking Rich Ricci to Retire in June (Bloomberg) Barclays Plc’s Rich Ricci, the head of investment banking and one of the last members of former Chief Executive Officer Robert Diamond’s management team, will retire at the end of June. Ricci, 49, will be replaced by Eric Bommensath and Tom King, 52, as co-chief executive officers of corporate and investment banking in May, the London-based bank said in a statement today. “The market will see this as an inevitable and appropriate piece of transitioning,” said Ian Gordon, an analyst at Investec Plc (INVP) in London. “Few tears will be shed and the reshuffle will be broadly welcomed.” Special Report: The battle for the Swiss soul (Reuters) A sign on display in UBS's museum, from a bank founded in 1747 in the Italian-speaking part of Switzerland, could almost be Switzerland's mantra: "MASSIMA DISCREZIONE" it promises. Swiss bankers have long adhered to an unwritten code similar to that observed by doctors or priests. Bankers do not acknowledge clients in public for fear of exposing them as account holders; they often carry business cards with just a name, rather than bank or contact details; and, at least until the 1990s, they never advertised abroad. ... Even today, few Swiss like to discuss the fact that much of the country's prosperity was built on bankers helping foreigners evade taxes. Visitors should avoid personal questions, advises Communicaid, a consultancy which advises businesses on cross-cultural awareness. It would also be wise to steer clear of discussing "Swiss banks, money or Switzerland's military role in World War One or Two." Reinhart/Rogoff and Growth in a Time Before Debt (RortyBomb via Felix Salmon) Here is a simple question: does a high debt-to-GDP ratio better predict future growth rates, or past ones? If the former is true, it would be consistent with the argument that higher debt levels cause growth to fall. On the other hand, if higher debt "predicts" past growth, that is a signature of reverse causality. ... As is evident, current period debt-to-GDP is a pretty poor predictor of future GDP growth at debt-to-GDP ratios of 30 or greater—the range where one might expect to find a tipping point dynamic. But it does a great job predicting past growth. Ottawa sets up taxpayer-funded food truck in Mexico to promote Canadian cuisine (National Post) When author Anita Stewart first heard about the Canadian government’s new food truck parked in Mexico City, she laughed so hard she cried. The new Canada-branded, taxpayer-funded venture, which kicked off its three-week pilot project last week, is serving up a Mexican-ized version of poutine, using Oaxaca cheese instead of curds. Also on the menu are Alberta beef tourtière, and maple-glazed Albacore tuna. China Vows Wider Yuan Movement (WSJ) China's central bank plans to widen the yuan's trading band in the near future, People's Bank of China Vice Governor Yi Gang said Wednesday, suggesting that China's leaders will press ahead with change despite the surprise slowing of the economy. "The exchange rate is going to be more market-oriented," Mr. Yi said on a panel at the International Monetary Fund spring meetings in Washington. "I think in the near future we are going to increase the floating band even further." IMF warns on risks of excessive easing (FT) Extraordinarily loose monetary policy risks sparking credit bubbles that threaten to tip the world back into financial crisis, the International Monetary Fund warned on Wednesday. In its global financial stability report, the fund cautioned that policy reforms were needed urgently to restore long-term health to the financial system before the long-term dangers of monetary stimulus materialised. German Parliament Approves Bailout for Cyprus (WSJ) German Finance Minister Wolfgang Schäuble called the vote a "strong signal" by Germany in favor of the euro and the euro zone. The parliament also voted in favor of a seven-year extension of the maturity on European Financial Stability Facility loans for Ireland and Portugal with a large majority. SEC to Move Past Financial Crisis Cases Under New Chairman White (Bloomberg) Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a “bold and unrelenting” enforcement program at the agency charged with regulating Wall Street. With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge. White, who was sworn in last week, has already provided a few signals about what that might be. During her Senate confirmation hearing, she said she intends to focus on high- frequency and automated trading. She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years. Dispute in Hamptons Set Off by Effort to Hold Back Ocean (NYT) Soon after Hurricane Sandy hit last fall, Joshua Harris, a billionaire hedge fund founder and an owner of the Philadelphia 76ers, began to fear that his $25 million home on the water in Southampton might fall victim to the next major storm. So he installed a costly defense against incoming waves: a shield of large metal plates on the beach, camouflaged by sand. His neighbor, Mark Rachesky, another billionaire hedge fund founder, put up similar fortifications between his home and the surf. Chris Shumway, who closed his $8 billion hedge fund two years ago, trucked in boulders the size of Volkswagens. Across a section of this wealthy town, some residents, accustomed to having their way in the business world, are now trying to hold back the ocean. ‘Elvis’ is busted in ricin terror (NYP) The FBI last night busted a troubled Mississippi Elvis impersonator as the poison-wielding man who mailed ricin-laced letters to President Obama and two other officials. ... Despite his rock ’n’ roll hobby, Curtis shows his angry side on Facebook, where he lashes out in a conspiracy-filled rant. “I’m on the hidden front lines of a secret war,” he wrote. “They burned down my home, killed my dogs, my cat, my rabbit, blew up my 1966 Plymouth Valiant . . . and guess what? I am still a thorn in their corrupt anals! I will remain here until Jesus Christ decides it’s time for me to go.”

Opening Bell: 04.03.13

Barclays High-Pay Culture Brought Disrepute: Report (WSJ) Barclays PLC suffered from "a lack of self-awareness" in recent years as a culture of high pay and short-term incentives brought the bank into disrepute, according to an independent report by lawyer and investment banker Anthony Salz. The Salz Review, which was commissioned by Barclays' former chairman after the bank admitted to trying to rig interbank interest rates last summer, describes how in about 10 years the lender expanded to become a disparate set of businesses, each with its own culture. "The result of this growth was that Barclays became complex to manage," the report published Wednesday said. "Despite some attempts to establish group-wide values, the culture that emerged tended to favor transactions over relationships, the short term over sustainability, and financial over other business purposes." The 235-page report—which cost Barclays about £17 million ($25.7 million) to have produced—recommended a series of reforms aimed at trying to foster a common sense of purpose across the bank. To this end, Barclays' board must play a more active role in overseeing the business and Barclays' human resources department must be given more power to stand up on issues such as pay, the report said. Ex-Goldman Sachs Trader Taylor Said to Surrender to FBI (Bloomberg) Former Goldman Sachs Group Inc. traderMatthew Taylor planned to surrender today to the Federal Bureau of Investigation, a person familiar with the matter said. Taylor was accused Nov. 8 by the U.S. Commodity Futures Trading Commission of concealing an $8.3 billion position in 2007 that caused New York-based Goldman Sachs to lose $118 million. Morgan Stanley hired Taylor in March 2008, less than three months after Goldman Sachs disclosed in a public filing that he had been fired for building an “inappropriately large” proprietary trading position. Cyprus Bailout Details Emerge After IMF Deal (WSJ) The IMF statement set out the tough terms the tiny nation of 800,000 has to meet to get the bailout, calling the task ahead "challenging." Cyprus, an economy of roughly €17 billion in annual output, needs to push through cuts and savings worth 4.5% of gross domestic product by 2018 to hit a primary-surplus target of 4% of GDP outlined in the bailout deal, the IMF statement said. These cuts will come on top of savings worth 5% of GDP the government is already implementing through to 2015. An extra 2% of GDP in extra revenue will come from an increase in the country's corporate tax from 10% to 12.5% and an increase in the tax on interest income from 15% to 30%. The country's corporate-tax rate will remain among the lowest in Europe, on an equal footing with Ireland's, and will allow Cyprus to continue to use its tax regime to attract businesses, but the increase in withholding tax will make it substantially less attractive as a place for individuals to leave their savings. Cyprus Leader Invites Family Firm Probe (FT) Cyprus president Nicos Anastasiades has urged judges investigating the country's banking disaster to examine transactions handled by his family law firm as "a priority" in a bid to defuse public anger over last-minute transfers by well-connected Cypriots, Russians and Ukrainians who thereby avoided a "haircut" on their uninsured deposits. The move followed questions over whether a company managed by the president's son-in-law made use of inside information to transfer more than 20 million euros out of Laiki Bank days before its collapse. Marc Lasry In French Follies (NYP) Lasry, the CEO and co-founder of Avenue Capital, is on his way to getting a plum assignment as the US ambassador to France as a reward for his many years as a big Democratic fundraiser. But the Moroccan-born, French-speaking American could encounter some uncomfortable moments when he lands in Paris, given his views on the land of fine wine, crusty baguettes — and European socialism. “We don’t invest in France,” he said at a New York hedge-fund conference sponsored by French bank BNP in June 2010, even apologizing to his hosts as he made the comment. Lasry, who is a bankruptcy lawyer by training, loves to chide other countries for their creditor-unfriendly ways. His $11.7 billion distressed debt fund buys up beaten-down credits of companies headed towards bankruptcy, with the payout determined by their ranking in the process. That can be dicey in countries like France, he explained at the BNP conference, as “the legal system is very much tilted towards helping unions and workers.” As a result, he said, “you might find your claim disallowed.” 1,000 pot plants seized in Queens in warehouse raid (NYDN) A massive drug operation went up in smoke Tuesday when law enforcement officials raided an indoor marijuana farm in Queens. Authorities seized more than 1,000 pot plants - along with grow lights and other gear - from the 44th Rd. warehouse in Long Island City just after 3 p.m. , police sources said. Officials from the NYPD, state police and the federal Drug Enforcement Agency also rounded up five suspects in the sweep. New York-for-Buenos Aires Swap Theory Spreads: Argentina Credit (Bloomberg) Argentina’s refusal to improve its offer to holders of defaulted debt suing for full payment in the U.S. is deepening speculation that the nation will sever ties with the overseas bond market. The proposal submitted on March 29 mimics the terms of Argentina’s 2005 and 2010 debt exchanges, a move that could lead to a default on the restructured notes unless the country removes them from U.S. jurisdiction. BofA Chief Moynihan Said to Summon Managers for Revenue Push (Bloomberg) Bank of America Corp. Chief Executive Officer Brian T. Moynihan has summoned more than 100 of his regional leaders to a private meeting today where they’ll be pushed to boost the lender’s flagging revenue, said two people with direct knowledge of the project. Managers at the two-day event in Chicago will be judged on how much progress they’ve made in helping to sell more products to the 53 million customers of the second-biggest U.S. lender, said the people, who asked for anonymity because Moynihan’s plan hasn’t been made public. Revenue has dropped every year of Moynihan’s three-year tenure as he sold assets, repaired the firm’s balance sheet and settled more than $40 billion in claims tied to defective mortgages. Private Sector Adds 158,000 Jobs (WSJ) Economists surveyed by Dow Jones Newswires expected ADP to report a gain of 192,000 private jobs. However, the February job gain was revised up to 237,000 from 198,000 reported a month ago. SEC Embraces Social Media (WSJ) In a ruling that portends changes to how companies communicate with investors, the Securities and Exchange Commission said Tuesday that postings on sites such as Facebook and Twitter are just as good as news releases and company websites as long as the companies have told investors which outlets they intend to use. Gray seal pup saved from death on Montauk beach now recovering (NYDN) The three-month-old seal, underweight at 40 pounds, is now resting in one of the foundation's rehabilitation tanks at the Atlantic Marine World aquarium in Riverhead. "She feels very sassy in her tank and doesn't appreciate anything we are doing for her," laughed Kimberly Durham, director of the rescue program, "which is a good sign. A nasty seal is a good sign that she is getting better because they are wild animals.

Opening Bell: 07.16.12

Citigroup Profit Beats Analysts’ Estimates On Investment Bank (Bloomberg) Citi reported a 12 percent drop in second-quarter profit that beat analysts’ estimates on revenue from advising on mergers and underwriting stocks and bonds. Net income declined to $2.95 billion, or 95 cents a share, from $3.34 billion, or $1.09, a year earlier, the New York-based bank said today in a statement. Excluding accounting adjustments and a loss from the sale of a stake in a Turkish bank, earnings were $1 a share, compared with the average estimate of 89 cents in a Bloomberg survey of 18 analysts. HSBC Seeks To Evict Occupiers In Hong Kong (WSJ) HSBC said Monday it is seeking the right to evict an encampment of protesters that has been occupying the ground floor of the bank's Hong Kong headquarters since October, drawing inspiration from the Occupy Wall Street protests in New York last year. Libor Flaws Allowed Banks To Rig Rates Without Conspiracy (Bloomberg) FYI: “It is far easier to manipulate Libor than it may appear,” Andrew Verstein, a lecturer at Yale Law School, said in a paper to be published in the Winter 2013 issue of the Yale Journal on Regulation. “No conspiracy is required.” States Join Libor Probe (WSJ) Prosecutors in New York and Connecticut are investigating whether their states incurred losses as a result of interest-rate manipulation by banks, a probe that could lead to a wider multistate enforcement action, according to New York officials. The joint probe by New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen could lead to civil enforcement action, including possible breaches of antitrust and fraud laws, the officials said. Libor Probe May Yield Criminal Charges By September (Bloomberg) Barclays traders involved in allegedly manipulating Libor rates between 2005 and 2007 may be charged by U.S. prosecutors before the Labor Day holiday on Sept. 3, said a person familiar with the Justice Department investigation in Washington. Zuckerberg’s Loan Gives New Meaning To The 1% (Bloomberg) The Facebook founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. Missteps Doomed Barclays Leaders (WSJ) Mr. Diamond's downfall may have been hastened because the U.S.-born investment banker, who became chief executive at the start of 2011, had never won acceptance by Britain's political and financial establishment. When the rate-fixing scandal erupted, Mr. Diamond had few allies. It wasn't for lack of trying. Mr. Diamond enthusiastically embraced British culture and tried to overcome his reputation as a brash American. Mr. Diamond, a native of Concord, Mass., supported the Chelsea Football Club, handing out trophies himself when the team won England's premier soccer league in 2010. A month before the Libor settlement, Mr. Diamond hosted British aristocrats and Barclays' clients at the annual Chelsea Flower Show, providing Champagne and canapés as his guests inspected elaborate gardens and floral arrangements...But Mr. Diamond, age 60, was criticized for his lofty pay packages, as well as perceived risks in the investment-banking business he built. He sometimes appeared tone deaf in a country still angry about the role of banks in the financial crisis. "There was a period of remorse and apology," he told Parliament last year. "That period needs to be over." Activists Go After Big Game (WSJ) William Ackman's $2 billion bet that he can boost the value of consumer-products giant Procter & Gamble Co. reflects a new era of activist investing, in which no company is too big a target and restless institutional investors are more willing to rock the boat. Mr. Ackman's Pershing Square Capital Management LP owns a little more than 1% of P&G's shares. A few years ago, that would have been considered too small a stake in too big a company to exert much influence on management, the board or other investors. Tax Cuts Perpetuate Inequality, Should End: Summers (CNBC) The United States should not extend Bush-era tax cuts for the wealthiest Americans even as the so-called ‘fiscal cliff’ looms because it will perpetuate income inequality, says Larry Summers, former U.S. Treasury Secretary. Instead, these revenues should go towards strengthening public education and ensuring that low-income students are presented with equal opportunities as their wealthy counterparts so that they can participate in the economy. Tax breaks for the wealthy cannot continue to exist because it leads to a “perpetuation of privilege”, Summers said in the editorial in the Financial Times on Sunday. Unless steps were taken to “responsibly” increase the burden on those with high income and redistribute the proceeds, the trend toward inequality will continue, he said. Devils On The (B)rink (NYP) New Jersey Devils owner Jeff Vanderbeek is talking to private-equity firms and hedge funds about buying into his financially strapped team, according to sources close to the situation Vanderbeek is looking to sell a majority stake, but keep operating control, sources said. The talks, coming three weeks after the 55-year old former Wall Street executive seemed close to inking a deal with an investor to save the team, are leading some in the financial world to believe the deal has fallen apart. If that’s so, it would be a terrible break for Vanderbeek, who is facing an Aug. 14 deadline to get the Devils’ financing in order...Creditors are owed $80 million. Downgrade Anniversary Shows Investors Gained Buying U.S. (Bloomberg) When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened. Woman tells police man sucked her toe at Grovetown Walmart (AC) The 18-year-old said she was shopping when a man, who looked to be in his late 30s or early 40s, walked up and asked if her toenails were painted, according to a Columbia County Sheriff’s Office incident report. After replying yes and questioning why he wanted to know, the woman was asked if she’d watched America’s Funniest Home Videos. The man told her he was with the TV show and if she complied with his requests, everything she purchased that day would be free. She said she reluctantly agreed to let him take a photo of her foot. He asked if he could kiss her foot as part of the prank and she agreed. The man guided her to an area behind a clothing rack, dropped to the floor, grabbed her ankle and told her, “Don’t worry. I don’t bite.” He then started sucking on her big toe. The woman said she screamed at him to stop. Before the man ran from the store, he told her, “It tasted so good, though.”