Opening Bell: 08.17.12

Facebook Investors Cash Out (WSJ) Mr. Zuckerberg has long exhorted employees not to pay attention to the stock price, instead pushing them to focus on developing the social network. But in a companywide meeting earlier this month, he conceded that it may be "painful" to watch as investors continue to retreat from Facebook's stock, according to people familiar with the meeting. Facebook Second-Worst IPO Performer After Share Lock-Up (Bloomberg) Facebook's 6.3 percent drop yesterday, after the end of restrictions on share sales by its biggest investors, was the second-largest post-lock-up decline among companies that have gone public since January 2011. Wall Street Bonus Estimates Cut By Pay Consultant Johnson (Bloomberg) Incentive pay for senior management, excluding the executives named on proxy filings, will be unchanged to 10 percent higher, Johnson Associates estimated in an Aug. 14 report. That’s down from May, when the firm predicted senior managers would get bonus boosts of 5 percent to 15 percent. The biggest increases are still likely to come in fixed- income and is now forecast to be 10 percent to 20 percent instead of 15 percent to 25 percent, the new report showed. “They had a terrible 2011, so it’s off of a low base,” Johnson said. “We hoped that that business would have recovered more dramatically, but it hasn’t, so I guess you’d say it’s gone from terrible to so-so.” Executives Say Obama Better For World Economy (Reuters) Twice as many business executives around the world say the global economy will prosper better with President Barack Obama than with Mitt Romney, according to a poll out Friday. Democrat Obama was chosen by 42.7 percent in the 1,700-respondent poll, compared with 20.5 percent for Romney. The rest said "neither." 'Broken' Fund Shifts Blame (WSJ) Nearly four years after the collapse of Lehman Brothers Holdings Inc. "broke the buck" at his money-market mutual fund, Bruce R. Bent is blaming the U.S. government. The 75-year-old Mr. Bent and his son, Bruce Bent II, are set to go on trial in October on civil charges of misleading investors, ratings firms and trustees of the Reserve Primary fund as it wobbled in September 2008. The Securities and Exchange Commission alleges that the two men falsely claimed they would prop up the fund's $1 net asset value even though they "secretly harbored" doubts. The two Bents have denied the allegations in the SEC's civil lawsuit ever since it was filed in U.S. District Court for the Southern District of New York in 2009. Former Spitzer call girl Ashley Dupre is engaged and pregnant (NYP) “On the record, yes, I can confirm I’m almost seven months,” Dupre, 27, enthused when contacted yesterday. “I can’t tell you when the wedding date is just yet.” In four short years, Dupre’s gone from Client No. 9 to Husband No. 1, and now owns Femme by Ashley, a lingerie and swimwear shop in Red Bank, NJ, which she her husband to be, New Jersey asphalt scion Thomas “TJ” Earle, helped her open in May. Ex-MS Banker In China Bribery Case (CNBC) Garth Peterson joined Morgan Stanley in Asia in 2002, just as the Chinese real estate market was taking off. His job would be making real estate deals for the firm, and Peterson seemed the ideal person for the position. A blonde, blue-eyed American raised in Singapore, Peterson — then in his early 30s — was fluent in Mandarin, and in the local culture. “The language is, you know, essential, I would say, being able to speak Mandarin well,” Peterson said. “But beyond that, I worked in the Chinese real estate industry since 1993.” In 2006 alone, according to news reports at the time, Morgan Stanley invested $3 billion in Chinese real estate. Peterson, by then a vice president, was at the forefront. “I was given more and more support, and the business just grew exponentially,” he said. Today, his fortunes have drastically changed. On Thursday, Peterson was sentenced to 9 months in prison and 3 years supervised release after pleading guilty to evading Morgan Stanley’s internal controls — a federal offense. Prosecutors said he engineered a deal that transferred Morgan Stanley’s interest in a multi-million dollar Shanghai real estate development to a shell company secretly controlled by Peterson and a Chinese government official. The official, who was not identified, made an instant paper profit of $2.5 million. Treasury To Amend Terms Of Fannie, Freddie Bailout (WSJ) Under the new arrangement between Treasury and the companies' federal regulator, all the firms' quarterly profits would be turned over to the government as a dividend payment; the government wouldn't require such payments in periods when the firms are unprofitable. Backstop For Futures Trades (WSJ) Support is growing for an insurance fund that would protect customers of futures brokerages that collapse. While numerous hurdles remain, the process took an important step Thursday when futures-exchange operator CME Group met with other industry officials and a customer-advocacy group in Chicago to discuss how to set up a customer-protection fund. It could take months or even longer for a specific plan to emerge, but participants in the meeting said it is increasingly likely that the government, futures industry or both will propose such an insurance fund. "Restoring customer confidence is very important," and "we're looking at all potential solutions, including an insurance fund," said Walt Lukken, president of the Futures Industry Association, a trade group.
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Facebook Investors Cash Out (WSJ)
Mr. Zuckerberg has long exhorted employees not to pay attention to the stock price, instead pushing them to focus on developing the social network. But in a companywide meeting earlier this month, he conceded that it may be "painful" to watch as investors continue to retreat from Facebook's stock, according to people familiar with the meeting.

Facebook Second-Worst IPO Performer After Share Lock-Up (Bloomberg)
Facebook's 6.3 percent drop yesterday, after the end of restrictions on share sales by its biggest investors, was the second-largest post-lock-up decline among companies that have gone public since January 2011.

Wall Street Bonus Estimates Cut By Pay Consultant Johnson (Bloomberg)
Incentive pay for senior management, excluding the executives named on proxy filings, will be unchanged to 10 percent higher, Johnson Associates estimated in an Aug. 14 report. That’s down from May, when the firm predicted senior managers would get bonus boosts of 5 percent to 15 percent. The biggest increases are still likely to come in fixed- income and is now forecast to be 10 percent to 20 percent instead of 15 percent to 25 percent, the new report showed. “They had a terrible 2011, so it’s off of a low base,” Johnson said. “We hoped that that business would have recovered more dramatically, but it hasn’t, so I guess you’d say it’s gone from terrible to so-so.”

Executives Say Obama Better For World Economy (Reuters)
Twice as many business executives around the world say the global economy will prosper better with President Barack Obama than with Mitt Romney, according to a poll out Friday. Democrat Obama was chosen by 42.7 percent in the 1,700-respondent poll, compared with 20.5 percent for Romney. The rest said "neither."

'Broken' Fund Shifts Blame (WSJ)
Nearly four years after the collapse of Lehman Brothers Holdings Inc. "broke the buck" at his money-market mutual fund, Bruce R. Bent is blaming the U.S. government. The 75-year-old Mr. Bent and his son, Bruce Bent II, are set to go on trial in October on civil charges of misleading investors, ratings firms and trustees of the Reserve Primary fund as it wobbled in September 2008. The Securities and Exchange Commission alleges that the two men falsely claimed they would prop up the fund's $1 net asset value even though they "secretly harbored" doubts. The two Bents have denied the allegations in the SEC's civil lawsuit ever since it was filed in U.S. District Court for the Southern District of New York in 2009.

Former Spitzer call girl Ashley Dupre is engaged and pregnant (NYP)
“On the record, yes, I can confirm I’m almost seven months,” Dupre, 27, enthused when contacted yesterday. “I can’t tell you when the wedding date is just yet.” In four short years, Dupre’s gone from Client No. 9 to Husband No. 1, and now owns Femme by Ashley, a lingerie and swimwear shop in Red Bank, NJ, which her husband to be, New Jersey asphalt scion Thomas “TJ” Earle, helped her open in May.

Ex-MS Banker In China Bribery Case (CNBC)
Garth Peterson joined Morgan Stanley in Asia in 2002, just as the Chinese real estate market was taking off. His job would be making real estate deals for the firm, and Peterson seemed the ideal person for the position. A blonde, blue-eyed American raised in Singapore, Peterson — then in his early 30s — was fluent in Mandarin, and in the local culture. “The language is, you know, essential, I would say, being able to speak Mandarin well,” Peterson said. “But beyond that, I worked in the Chinese real estate industry since 1993.” In 2006 alone, according to news reports at the time, Morgan Stanley invested $3 billion in Chinese real estate. Peterson, by then a vice president, was at the forefront. “I was given more and more support, and the business just grew exponentially,” he said. Today, his fortunes have drastically changed. On Thursday, Peterson was sentenced to 9 months in prison and 3 years supervised release after pleading guilty to evading Morgan Stanley’s internal controls — a federal offense. Prosecutors said he engineered a deal that transferred Morgan Stanley’s interest in a multi-million dollar Shanghai real estate development to a shell company secretly controlled by Peterson and a Chinese government official. The official, who was not identified, made an instant paper profit of $2.5 million.

Treasury To Amend Terms Of Fannie, Freddie Bailout (WSJ)
Under the new arrangement between Treasury and the companies' federal regulator, all the firms' quarterly profits would be turned over to the government as a dividend payment; the government wouldn't require such payments in periods when the firms are unprofitable.

Backstop For Futures Trades (WSJ)
Support is growing for an insurance fund that would protect customers of futures brokerages that collapse. While numerous hurdles remain, the process took an important step Thursday when futures-exchange operator CME Group met with other industry officials and a customer-advocacy group in Chicago to discuss how to set up a customer-protection fund. It could take months or even longer for a specific plan to emerge, but participants in the meeting said it is increasingly likely that the government, futures industry or both will propose such an insurance fund. "Restoring customer confidence is very important," and "we're looking at all potential solutions, including an insurance fund," said Walt Lukken, president of the Futures Industry Association, a trade group.

Long-lost Gorilla Brothers Reunited (Mirror)
Kesho and little brother Alf shook hands, hugged and even laughed as they became reacquainted at a safari park in Wiltshire. The brothers were born and raised in captivity but were parted in 2010 when the elder sibling was sent to London Zoo as part of a breeding programme. But attempts to father a baby gorilla were unsuccessful as 13-year-old Kesho proved to be infertile. He has now been sent to a new three million pounds gorilla enclosure at Longleat Safari Park, Wilts, where nine-year-old Alf has also set up residence. Despite Kesho's reproductive deficiencies, his time spent in female company led to his appearance to change dramatically. His rise in testosterone levels gave him a famous silverback, his weight ballooned by 200lbs and his neck and head also grew in size. Although he looked drastically different, Alf instantly recognised his big brother when the pair were reunited at Longleat.

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Opening Bell: 02.19.13

SAC’s Cohen May Face SEC Suit as Deposition Hurts Case (Bloomberg) U.S. investigators have subpoenaed a 2011 deposition of SAC Capital Advisors LP founder Steven Cohen, whose sworn statements on insider-trading compliance may hurt him as he tries to persuade regulators not to file a lawsuit with the potential to shut his $14 billion firm. The SEC told the hedge fund Nov. 20 that it planned to sue SAC for securities fraud and so-called control-person liability for failing to supervise employees. The same day, the agency accused an ex-SAC portfolio manager and his hedge-fund unit of insider trading for persuading Cohen, 56, to make $700 million in illegal trades. Prosecutors also indicted the manager. Cohen’s testimony, reviewed by Bloomberg News, establishes his personal control over the unit, CR Intrinsic, and records his unfamiliarity with his firm’s compliance and ethics policies on insider trading. “I’ve read the compliance manual, but I don’t remember exactly what it says,” Cohen said. Morgan Stanley Strives to Coordinate 2 Departments Often at Odds (Dealbook) Traditionally, traders and investment bankers think of themselves as the elite of Wall Street and look down on the retail business, seeing it as pedestrian...Yet since Morgan Stanley moved to acquire control of the Smith Barney brokerage business from Citigroup in 2009, the balance of power has shifted to wealth management, which now accounts for almost 52 percent of the company’s earnings, up from roughly 16 percent in 2006. Paulson Leads Funds to Bermuda Tax Dodge Aiding Billionaires (Bloomberg) A decade after the U.S. Internal Revenue Service threatened to crack down on what it said were abuses by hedge-fund backed reinsurers, more high-profile money managers are setting up shop in tax havens. Paulson, SAC Capital Advisors LP’s Steven A. Cohen and Third Point LLC’s Daniel Loeb have started Bermuda reinsurance companies since 2011, following a similar Cayman Islands venture by Greenlight Capital Inc.’s David Einhorn. Options Activity Questioned Again (WSJ) Over the past year, unusually large positions were established shortly in advance of news that moved shares of Nexen Inc., Youku Inc., Human Genome Sciences Inc., Constellation Brands Inc. and, most recently, CBS Corp. All turned profitable after the news. A spokeswoman for the SEC, which regulates stock and options trading, said the agency would neither confirm nor deny the existence of inquiries into trading tied to those companies. No charges have been filed in the Heinz case, which was linked to a Swiss trading account, but the move to freeze the assets is one of the fastest enforcement actions ever filed by the agency, according to officials. The SEC said Friday that the timing and size of the trades were highly suspicious given the account had no history of trading in Heinz securities in the last six months. Prosecutors, Shifting Strategy, Build New Wall Street Cases (Dealbook) Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks. In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations...The new strategy first materialized in recent settlements with UBS and the Royal Bank of Scotland, which were accused of manipulating interest rates to bolster profit. As part of a broader deal, the banks’ Japanese subsidiaries pleaded guilty to felony wire fraud. Russians Wade Into the Snow to Seek Treasure From the Sky (NYT) Ever since the meteor exploded somewhere over this impoverished Siberian town, Larisa V. Briyukova wondered what to do with the fist-size stone she found under a hole in the roof tiles of her woodshed. On Monday, a stranger knocked on her door, offering about $60, Ms. Briyukova said. After some haggling, they settled on a price of $230. A few hours later, another man pulled up, looked at the hole in the roof and offered $1,300. “Now I regret selling it,” said Ms. Briyukova, a 43-year-old homemaker. “But then, who knows? The police might have come and taken it away anyway.” On Friday, terror rained from the skies, blowing out windows and scaring people over an enormous swath of Siberia. But by Monday, for many people what fell from the sky had turned to pure gold, and it touched off a rush to retrieve the fragments, many buried in deep February snows. Many of those out prospecting looked a lot like Sasha Zarezina, 8, who happily plunged into a snowbank here in this village of a thousand, laughing, kicking and throwing up plumes of powdery snow. Then she stopped, bent over and started to dig. “I found one!” she yelled. A warm breath and a rub on her pants later, a small black pebble, oval like a river rock, charred and smooth, was freed of ice. While trade in material from meteorites is largely illegal, there is a flourishing global market, with fragments widely available for sale on the Internet, usually at modest prices. At least one from the recent meteor was available on eBay on Monday for $32, and there is a Web site called Star-bits.com devoted to the trade — much to the displeasure of scientists and the countries where the objects were found. UK's Lloyds fined $6.7 million for mis-sold insurance (Reuters) Britain's financial regulator on Tuesday fined Lloyds Banking Group 4.3 million pounds ($6.7 million) for failing to handle complaints relating to insurance sold on loans and mortgages properly. The Financial Services Authority (FSA) said failings in the bank's systems and controls resulted in up to 140,000 customers experiencing delays in receiving compensation for being mis-sold payment protection insurance (PPI). Horsemeat Scandal Draws in Nestlé (FT) Switzerland-based Nestle on Monday removed pasta meals from shelves in Italy and Spain and suspended deliveries of all processed products containing meat from German supplier, H.J. Schypke, after tests revealed traces of horse DNA above 1 per cent. Nestle said it had informed the authorities. Is Berlusconi Getting a Poll Bounce From Tax Evaders? (CNBC) The media mogul, who has been convicted of tax fraud, has promised to introduce a tax amnesty for evaders if elected and to abolish the real estate tax. Swelling U.S. Labor Force Keeps Fed at Ease (Bloomberg) In the short run, the larger labor force will have an unfortunate side effect: It will slow the fall in unemployment. Mellman sees the jobless rate dropping to 7.5 percent by year- end from 7.9 percent now. It fell 0.7 percentage point in 2012. In the longer run, a bigger supply of labor is good news because it swells the pool of Americans available and willing to work, enhancing the economy’s potential to grow, according to Julie Hotchkiss, a policy adviser at the Federal Reserve Bank of Atlanta. It also has a silver lining for investors. The gradual fall in unemployment will allow policy makers to keep monetary policy looser for longer without having to worry about igniting a wage- driven rise in inflation. Couple Getting Affectionate Drive Through Home (WO) "She told the investigating trooper that her and the boyfriend were getting a little amorous and the trooper suspects that's probably why she lost control of the vehicle," said Florida Highway Patrol spokeswoman Kim Montes. Walker lost control of the vehicle and slammed into an unoccupied home. The vehicle went all the way through the house. The impact was so dramatic, the pressure blew a window in another part of the house out. Florida Highway Patrol troopers said Walker was injured when debris fell inside the vehicle. She was taken to Halifax Medical Center to be checked out. Her boyfriend, Charles Phillips, was not hurt.

Opening Bell: 03.12.13

Apple To Announce Plans For Cash Hoard (WSJ) Apple will outline what it plans to do with a growing pile of cash by next month, according to Howard Ward, chief investment officer at Gamco Investors Inc. Apple, which has been grappling with investor criticism over the handling of its $137.1 billion in cash and investments, will add $42 billion in earnings to that sum in 2013, Ward said. Greenlight Capital Inc.’s David Einhorn has been urging Cupertino, California-based Apple to issue high-yielding preferred shares to spread the funds among investors. Investors are also urging Apple to consider a higher dividend payout. “We’re going to get an announcement from the company as to how they intend to reallocate some of their cash,” Ward said in an interview today on Bloomberg Radio’s “Surveillance” with Tom Keene. “They will put a floor under their stock at a higher price than it is today.” AIG shareholders win class-action status in lawsuit versus U.S. (Reuters) Two groups of American International Group shareholders won class-action status from a federal judge on Monday in a $25 billion lawsuit by former Chief Executive Maurice "Hank" Greenberg over alleged losses caused by the U.S. government's bailout of the insurer. U.S. Court of Federal Claims Judge Thomas Wheeler also appointed Greenberg's lawyer, David Boies, of Boies, Schiller & Flexner LLP, as lead counsel for the classes. Greenberg's Starr International Co, once AIG's largest shareholder with a 12 percent stake, sued the United States in 2011 over what eventually became a $182.3 billion bailout for the New York-based insurer. It said that by taking a 79.9 percent AIG stake and then conducting a reverse stock split without letting existing shareholders vote, the government conducted an illegal taking that violated the 5th Amendment of the U.S. Constitution. Citing Boies' estimate that "tens of thousands" of shareholders might be affected, Wheeler said "class certification is by far the most efficient method of adjudicating these claims." Both Sides Of SEC Nominee Face Heat (WSJ) In one version, Ms. White is a no-holds-barred crime fighter known for stretching the law to jail mob bosses and international terrorists. In another, Ms. White is a friend of Wall Street who worked for the past decade for the law firm Debevoise & Plimpton LLP, where she represented giant banks such as J.P. Morgan Chase. Blackstone: We're Betting Big On Residential Real Estate (CNBC) "Blackstone is now the largest owner of individual houses in the United States," Schwarzman told CNBC's "Squawk on the Street" Monday, pointing to his company's $3 billion portfolio of residential real estate. But given the nascent recovery in the housing market, they're not buying and selling them quickly but rather renting them out. "It's a good business for us. It's a new thing, but it's also good for America," he said. Icahn Gets Confidential Look At Feds Books (Reuters) Dell Inc has agreed to give Carl Icahn a closer look at its books, less than a week after the activist investor joined a growing chorus of opposition to founder Michael Dell's plan to take the world's No. 3 personal computer maker private...A source with knowledge of the situation said Icahn's and Dell's confidentiality agreement does not have a contractual "standstill" obligation - meaning he is not obligated to stop trading stock in the company. But the activist investor would not be able to trade the stock while he is privy to non-public information in any case, the source added. Phoenix society gives gator happier life with prosthesis (AZC) The alligator is Mr. Stubbs, who is part science project, part human endeavor, and much more. He’s also half-gator, half-rubber. The 11-year-old crocodilian now sports a 3-foot-long prosthetic tail, attached firmly with nylon straps. It replaces the original, which was bitten off more than eight years ago. As far as anyone at the Phoenix Herpetological Society knows, Mr. Stubbs is the first alligator to tolerate, if not sport, a prosthesis. It will take months, however, before Mr. Stubbs learns how to properly use the tail. For now, handlers are happy with smaller milestones. “The fact he doesn’t try to bite it (the tail) is a good sign,” said Russ Johnson, president of the Phoenix Herpetological Society. “Learning how to use it is going to take a lot of training.” The months-long project was overseen by someone well-versed in anatomy. Marc Jacofsky is executive vice president of research and development at the CORE Institute in Phoenix, which specializes in orthopedic care — for humans. While visiting the Herpetological Society, Jacofsky was asked if it would be possible to make an artificial tail for Mr. Stubbs. “I looked and saw there was enough there that we could probably do something that wouldn’t involve surgery,” Jacofsky said. “I also liked the idea because it would improve his life. Our motto at the CORE Institute is ‘Keep life in motion,’ and this certainly fit in with that. I was on board.” Jacofsky estimated the project has cost the Core Institute about $6,000 in donated labor and materials. Mr. Stubbs had been a project since shortly after arriving at the center in May 2005. The then-3-year-old gator was one of 32 confiscated from the back of a truck pulled over near Casa Grande, Johnson said. Officers called in the Arizona Game and Fish Department as soon as the cargo made its presence known. “Scared the heck out of the officer,” Johnson said. “No one expects to find alligators when you look into the back of a truck.” Greece Faces 150,000 Job-Cut Hurdle to Aid Payment (Bloomberg) Greece is locked in talks with international creditors in Athens about shrinking the government workforce by enough to keep bailout payments flowing. Identifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a 2.8 billion-euro ($3.6 billion) aid instalment due this month. More than a week of talks on that has so far failed to clinch an agreement. Failed Sale Of Gleacher Is A Warning For Directors (WSJ) The Dell drama is still unfolding, but for a cautionary tale of how boards, even when they may be well-intentioned, can harm investors of a takeover target, take Gleacher. Shares in the small investment bank have lost more than 60% in the past year as the prospects for a deal evaporated, business dwindled and star traders left. Ironically for a firm that bears the name of Eric Gleacher, who made his name advising on big deals in the 1980s, the company failed to sell itself. At least as some critics see it, its independent directors are to blame. SEC Says Illinois Hid Pension Troubles (WSJ) For years, Illinois officials misled investors and shortchanged the state pension system, leaving future generations of taxpayers to foot the bill, U.S. securities regulators allege. The Securities and Exchange Commission on Monday charged Illinois with securities fraud, marking only the second time the agency has filed civil-fraud charges against a state. Bernanke Provokes Mystery Over Fed Stimulus Exit (Bloomberg) When Ben S. Bernanke asserted last month that the Federal Reserve doesn’t ever have to sell assets, he raised questions about how the central bank can withdraw its record monetary stimulus without stoking inflation. The Fed may decide to hold the bonds on its balance sheet to maturity as part of a review of the exit strategy Bernanke expects will be done “sometime soon,” he told lawmakers in Washington on Feb. 27. This would help address concerns that dumping assets on the market will lead to a rapid rise in borrowing costs. It also allows the Fed to avoid realizing losses on its bond holdings as interest rates climb. Man shot in buttocks at Calle Ocho Festival unaware he was wounded (Miami Herald) The shooting occurred around 4:30 p.m. as the man walked along Southwest Eighth Street and 11th Avenue, part of the throng of revelers who gather annually at the street festival in Little Havana. It’s unclear if something sparked the violence between the two men, or if the shooting was unprovoked. At first the victim did not realize he had been shot and kept strolling along the festival route. “He discovered later that he was bleeding and then passed out,” said Miami police spokesman Sgt. Freddie Cruz. The victim, who was hit in the left buttocks, was taken to Jackson Memorial Hospital, where he is in stable condition and expected to recover.

Opening Bell: 04.02.12

Greece Faces Bond-Swap Holdouts (WSJ) The majority of investors holding foreign law Greek bonds haven't yet been included in the country's debt-swap deal as they have rejected or failed to agree to the exchange, said the country's debt agency Monday, setting a new deadline for the offer. Financiers and Sex Trafficking (NYT) "THE biggest forum for sex trafficking of under-age girls in the United States appears to be a Web site called Backpage.com. This emporium for girls and women — some under age or forced into prostitution — is in turn owned by an opaque private company called Village Voice Media. Until now it has been unclear who the ultimate owners are. That mystery is solved. The owners turn out to include private equity financiers, including Goldman Sachs with a 16 percent stake. Goldman Sachs was mortified when I began inquiring last week about its stake in America’s leading Web site for prostitution ads. It began working frantically to unload its shares, and on Friday afternoon it called to say that it had just signed an agreement to sell its stake to management. 'We had no influence over operations,' Andrea Raphael, a Goldman Sachs spokeswoman, told me." Bond King's Trade Pays Off (WSJ) After suffering one of his worst performances ever in 2011, over the past three months, Bill Gross, manager of Pacific Investment Management Co.'s Total Return Fund, rode an aggressive bet on mortgage bonds to beat most of the fund's rivals and the index against which bond-fund managers measure themselves. Mr. Gross's fund, the world's biggest bond fund with $252 billion in assets, recorded a 2.88% return in the three months through March. The performance beat the benchmark Barclays Capital Aggregate Bond Index by 2.58 percentage points, ranking in the top 11% of all bond mutual funds for the quarter, according to investment-research firm Morningstar Inc. In Wake of Groupon Issues, Critics Wary of JOBS Act (WSJ) A little-noticed provision in the new JOBS Act would allow companies to iron out disagreements with regulators behind closed doors before they go public—a provision that might have prevented investors from finding out about Groupon Inc.'s early accounting questions until after they had been resolved...Critics say that measure would allow a company like Groupon, which had well-publicized disagreements with the SEC over its accounting last year, to resolve such issues under the radar, without investors learning of them until later although still before any IPO. Goldman Eyes $3 Billion Property Debt Fund (Reuters) A private equity arm of Goldman Sachs is looking to launch a $3 billion property debt fund in a bid to take advantage of a growing shortage of real estate financing across the UK and Europe...Real Estate Principal Investment Area (REPIA) is exploring options to create a fund that would provide senior and mezzanine loans to property investors, and will target property lending that is riskier but which would offer higher potential returns. Md. woman won't share $105M lotto jackpot with McD's co-workers (NYP) Workers at the fast-food joint who pooled their cash for tickets are furious at a colleague who claims she won with a ticket she bought for herself and has no intention of sharing. “We had a group plan, but I went and played by myself. [The ‘winning’ ticket] wasn’t on the group plan,” McDonald’s “winner’’ Mirlande Wilson 37, told The Post yesterday, insisting she alone bought one of the three tickets nationwide that will split a record $656 million payout...[On Saturday], a delirious Wilson had called co-workers to break the news — tellingly used the first-person singular. “I won! I won!” she cried, Allen said. Another colleague, Davon Wilson, no relation, said he was there when Mirlande Wilson called. “She said, ‘Turn on the news.’ She said she had won. I thought it was a joke or something. She doesn’t seem like a person who’d do this,” he said. Allan said he and Layla went to Wilson’s home and pounded on the door for 20 minutes until she finally came out. “These people are going to kill you. It’s not worth your life!” Allen said he told her. “All right! All right! I’ll share, but I can’t find the ticket right now,” she finally said, according to Allen. Resistance to austerity stirs in southern Europe (Reuters) An unexpectedly broad general strike in Spain on Thursday and mounting opposition to Prime Minister Mario Monti in Italy are among indicators that resistance is growing in a region at the center of concerns about a resurgence of the euro zone debt crisis. Biggest Bond Traders See Worst Over for Treasuries (Bloomberg) Signs of strength in the economy, which caused a 5.56 percent loss in bonds maturing in 10 years or more last quarter, may fade in the second half of 2012, the dealers say. Tax cuts are expiring, $1 trillion of mandatory federal budget cuts are due to kick in and $100-a-barrel oil is eating into consumer spending. With inflation in check, Fed Chairman Ben S. Bernanke said last week that the central bank will consider further stimulus, even after upgrading its economic outlook March 13. Marc Faber: "Massive Wealth Destruction Is About To Hit Investors" (CNBC) FYI. Twitter takes Connecticut official's April Fools' Day joke to the public (NHR) It all started with a tweet at 5:30 a.m. Sunday, from state government official Mike Lawlor: “Rep. Dargan in hospital following accident.” By 11 a.m., news organizations statewide, including the NewHaven Register, were retweeting the “news” and calling officials to confirm details of the accident. After all, it was assumed, it must be accurate if the tweet came from the highly respected Lawlor, a former longtime state representative and now the state’s undersecretary for Criminal Justice Policy and Planning. But no... Dargan was reached by phone and confirmed he was fine and did not have an accident. “I am fine. Lawlor must have tweeted it.

Opening Bell: 05.24.12

Europe Plans Girds Greece Exit (WSJ) Emerging from Wednesday night's informal European Union summit, Italian Prime Minister Mario Monti said most leaders had backed issuing common debt, or euro-zone bonds, to help support troubled members. But Germany and others opposed them and demanded Greece do more. "We want Greece to remain in the euro zone," German Chancellor Angela Merkel told reporters after nearly eight hours of talks. "But the precondition is that Greece upholds the commitments it has made." Citi: Greek To Exit Euro, New Currency To Fall 60% (CNBC) Greece will leave the euro zone next year and the country's new currency will "immediately fall by 60 percent," according to Citi chief economist Willem Buiter. "The elections (on June 17th) will not produce a viable government that can follow the troika plan, leading to a stalemate between the Greek government and official creditors, and to the suspension of EFSF-IMF funding,” Buiter wrote in Citi's latest Global Economic Outlook. Slim Family Sees European Crisis As Good Time To Invest (Bloomberg) Carlos Slim sees Europe’s debt crisis as a “good moment” to apply his strategy of investing in times of turmoil, said the billionaire’s son, America Movil SAB Co-Chairman Carlos Slim Domit. America Movil, controlled by the elder Slim, announced a $3.4 billion bid to increase its stake in former Dutch phone monopoly Royal KPN NV earlier this month. While the acquisition would be Slim’s first major European foray, it follows a longstanding pattern, his son said. America Movil tries to stay as efficient and financially sound as possible so that it can quickly capitalize on fresh opportunities, he said. “When hard times come, you can look at opportunities in a very agile way,” Slim Domit, 45, said in an interview this week in Mexico City. “Europe is in a good moment.” After Facebook Fiasco, NYSE-Nasdaq Rivalry Heats Up (WSJ) "In the short term, if I'm deciding which platform to go with, I'd think twice at this point" before choosing Nasdaq, said Sang Lee, managing partner with Aite Group, a consultancy that researches exchanges. Investors Leery Of Paulson's Big Gold Bet (NYP) Investors are upset over Paulson’s huge gold positions — specifically, his outsize holding of AngloGold Ashanti, down 20 percent this year. That has dragged down two of Paulson’s funds. “I would be happier if he cut the gold position in half,” says one investor who put in a notice to take his money out of the fund in June. “He would have been up 4 percent in the first quarter if it weren’t for the goddamned gold.” Auction Of Ronald Reagan's Blood Stirs Debate (WSJ) Since his death in 2004 at age 93, President Ronald Reagan's popularity has only increased. Republican candidates invoke his name and policies. About 400,000 visitors a year flock to his hilltop museum outside Los Angeles, where a gift shop sells biographies, photos and his favorite jelly beans. Many people, it seems, want a piece of Mr. Reagan. But now, the sale of a very personal effect of the late president is stirring a controversy. Bidding for a vial purported to hold Mr. Reagan's blood topped $14,000 Wednesday in an online auction scheduled to end Thursday—if the Ronald Reagan Presidential Foundation doesn't try to block the sale first. PFC Auctions, based in the British Channel Islands, is offering the vial, said to have been obtained from a Maryland laboratory after the failed assassination attempt on Mr. Reagan in 1981. The sample was sent to the lab to test Mr. Reagan's blood for lead. A lab employee kept the vial as a memento and later passed it on to her adult child, according to the auction site. The head of the Reagan Foundation, a nonprofit group, called the sale "a craven act" and is fighting to stop it. It is uncertain what claims, if any, the foundation may have on the vial, which appears to contain dried blood residue, as depicted in a picture on the auction site...The seller, an admirer of Mr. Reagan's free-market policies, said in comments on the auction page, "I was a real fan of Reaganomics and felt that Pres. Reagan himself would rather see me sell it rather than donating it." Morgan Stanley, Others Make Profit of $100 Million Stabilizing Facebook (WSJ) These gains are expected to be offset somewhat by losses associated with reimbursing clients who lost money because of technology snafus at the Nasdaq Stock Market in Facebook's first day of trading, one of these people added. The Next Treasury Secretary (NYT) On the Democratic side, possibilities include Laurence D. Fink of BlackRock, the asset manager; Erskine Bowles, who served on President Obama’s National Commission on Fiscal Responsibility and Reform; Daniel K. Tarullo, a member of the Federal Reserve Board; and Roger C. Altman, the investment banker. For the Republicans, the front-runners include Robert B. Zoellick, the head of the World Bank; John B. Taylor, the Stanford economist; Glenn Hubbard, the head of Columbia Business School and a Mitt Romney adviser; and Kevin Warsh, a former member of the Federal Reserve Board. Spain To Recapitalize Bankia (WSJ) The Spanish government will provide about €9 billion ($11.4 billion) to cover Bankia SA's provisioning needs, Finance Minister Luis de Guindos said Wednesday, in the latest sign that Spain's economic deterioration is forcing authorities to inject more public funds to bail out ailing banks. Since Bankia won't be able to meet provisioning and capital needs, Spain's Fund for Orderly Bank Restructuring will be ready to inject capital into Bankia's unlisted parent company, Banco Financiero & de Ahorros SA, which holds the company's most toxic real-estate assets, Mr. de Guindos told legislators in Parliament. Indian State OKs Shooting Tiger Poachers On Sight (AP) A state in western India has declared war on animal poaching by allowing forest guards to shoot hunters on sight in an effort to curb rampant attacks on tigers and other wildlife. The government in Maharashtra says injuring or killing suspected poachers will no longer be considered a crime. Forest guards should not be "booked for human rights violations when they have taken action against poachers," Maharashtra Forest Minister Patangrao Kadam said Tuesday. The state also will send more rangers and jeeps into the forest, and will offer secret payments to informers who give tips about poachers and animal smugglers, he said.

Opening Bell: 05.30.12

Anger Over Christine Lagarde's Tax-Free Salary (Independent) Lagarde was accused of hypocrisy yesterday after it emerged that she pays no income tax – just days after blaming the Greeks for causing their financial peril by dodging their own bills. The managing director of the International Monetary Fund is paid a salary of $467,940 (£298,675), automatically increased every year according to inflation. On top of that she receives an allowance of $83,760 – payable without "justification" – and additional expenses for entertainment, making her total package worth more than the amount received by US President Barack Obama according to reports last night. Unlike Mr Obama, however, she does not have to pay any tax on this substantial income because of her diplomatic status. EU Proposes 'Banking Union' (WSJ) The 17 countries that use the euro should consider setting up a "banking union" that allows them to share the burden of bank failures, the European Union's executive arm said Wednesday in a report on the currency union's crisis-fighting efforts. To further stop expensive bank bailouts from pulling down governments' own finances, allowing the euro zone's new rescue fund to directly boost the capital of banks "might be envisaged," the European Commission said. Greeks Flock To Germany Even As They Criticize It (CNBC) Germany, Europe's economic powerhouse and a country which has been criticized by many Greeks over its harsh demands for austerity cuts in return for bailout cash, has experienced an influx of young skilled immigrants. Der Spiegel magazine noted that while Greek newspapers "printed cartoons depicting the Germans as Nazis, concentration camp guards and euro zone imperialists who allow their debtors to bleed to death," the Greeks have kept arriving — bringing an "anything is better than Athens" attitude with them. Pissarides Says Euro Exit Would Aid Rich Greeks At Cost To Poor (Bloomberg) Nobel economics laureate Christopher Pissarides said wealthy Greeks would benefit at the expense of poorer citizens were the country to exit the euro. “A lot of Greeks” have withdrawn money and deposited it with banks elswhere in the 17-nation currency zone, Pissarides said in an interview in London today. If the country returned to the drachma, the new currency would be so devalued they could buy it cheaply on international markets with the cash they’d exported, enabling them to buy more assets in Greece. While poorer Greeks are equally able to appreciate the difficulties facing their country, they’re not as able to shield their funds from an exit from the common currency, Pissarides said. They need to preserve quick access to their savings, which isn’t as easy to do if it’s held at a foreign bank, and such lenders may not always accept small deposits. Zuckerberg Drops Off Billionaires Index As Facebook Falls (Bloomberg) The 28-year-old’s fortune fell to $14.7 billion yesterday from $16.2 billion on May 25, as shares of the world’s largest social-networking company dropped 9.6 percent to $28.84. Woman's Boyfriend Took Car Without Permission Before She Slammed It Into House (NYP, earlier) Dan Sajewski, 23, arrived at his family’s Huntington estate last weekend with Anderson, 21, his on-again, off-again waitress girlfriend. While his parents vacationed on Long Island’s North Fork, the duo helped themselves to his mother’s 2003 Mercedes-Benz CLK 320, a birthday gift from Sajewski’s anesthesiologist father, a source said. They took a joyride to the Hamptons, where they had a little too much fun. A field Breathalyzer test revealed that Anderson drove home with a .30 Blood-Alcohol Content — nearly four times the legal limit and the equivalent of about 15 drinks, prosecutors said at her arraignment yesterday. They drove back to Huntington and she was speeding along Southdown Road when she failed to turn at a T-instersection — ramming through the front of Indiere’s house, obliterating her kitchen, and exiting through the back wall, prosecutors said. “We can’t believe he just let this girl drive a car he wasn’t even supposed to have in the first place,” a Sajewski family member said. “He’s done this before; he took his sister’s Jeep and just took off. “He was trying to get the car home before the family got home from their own Memorial Day weekend. He’s not exactly the model son.’’ The relative added that Sajewski didn’t call his father about the accident until two hours later. In the police report, Anderson told cops “her power steering got stuck, causing her to crash,” and that she only drank “three beers.” Housing Market Crawls Back (WSJ) Housing prices across the U.S. fell in March, but not as much as in earlier months, according to a report Tuesday that offered fresh evidence of a real-estate market on the mend. Compared with February, prices fell just 0.03% in March, and after adjusting for seasonal factors, they rose 0.09%, according to the S&P/Case-Shiller 20-city home-price index. "This is the first flat report we've had in quite some time," said David M. Blitzer, chairman of the Index Committee at S&P Indices. Still, "while there has been improvement in some regions, housing prices have not turned" everywhere, he said. Bankers Hired By Blackberry Maker (NYP) Research In Motion said yesterday it hired investment banks JPMorgan and RBC to review its “options,” which most investors took to mean a potential sale, and warned of another quarterly loss. Gold Investors Rush For The Exits (WSJ) Investors in SPDR Gold Shares and iShares Gold Trust, two high-profile exchange-traded funds that hold physical bullion, also have pulled back recently. Through Friday, the two funds had reduced the number of tons of gold they're holding this month. As of May 15, hedge funds, pension funds and other money managers also had slashed their bets that gold prices will rise in the futures market, to the lowest level since January 20, 2009, according to weekly data released by the U.S. Commodity Futures Trading Commission. The bullish bets rose slightly last week, but remain near the low for the year. Police Find Another Human Body Part In Package In Ottawa (OC) Police found a human hand at the Ottawa Postal Terminal Tuesday night, hours after a bloody foot was delivered to the Conservative party's Ottawa headquarters just blocks from Parliament Hill. Ottawa police were still trying to understand what they were dealing with even as detectives in Montreal combed through a crime scene where a torso was found in a suitcase in that city's Snowdon district. Police discovered the second package, sent from the same place as the package sent to Tory headquarters, Tuesday evening. Officers carried it from the huge Riverside Drive terminal in a brown paper bag, which they X-rayed before they opened it to find the hand. The gruesome events began shortly before noon when access to the Conservative party's headquarters was restricted after the fire department's Hazmat team was called in to investigate a suspicious package. A party staffer had started to open a blood-stained box sent to the office at 130 Albert St. before police were called to investigate. At first, it was thought there was a human heart inside, but after the box was X-rayed, police confirmed that it contained a foot.

Opening Bell: 01.04.13

SEC Drops Case Against Ex-Berkshire Exec Sokol (Reuters) The U.S. securities regulator has decided not to take action against David Sokol, once considered a possible candidate for the top job at Warren Buffett's Berkshire Hathaway, Sokol's lawyer told Reuters. In 2011, Buffett said Sokol violated the company's insider trading rules to score a $3 million windfall profit on shares of U.S. chemicals maker Lubrizol, which rose by nearly a third after Berkshire Hathaway announced it would buy the company. The U.S. Securities and Exchange Commission began investigating Sokol's investment in Lubrizol shortly after Sokol resigned from Berkshire Hathaway. Sokol's lawyer Barry Wm. Levine told Reuters late on Thursday that he was informed that the SEC had wrapped up its probe and decided not to take action against Sokol. "SEC has terminated its investigation and has concluded not to bring any proceedings against Sokol," said Levine, a lawyer at legal firm Dickstein Shapiro. Sokol has been "completely cleared" as there was no evidence against his client, Levine said. Cohen’s SAC Tops Most Profitable List Amid Insider Probes (Bloomberg) SAC Capital International, Cohen’s flagship fund, was the world’s most-profitable hedge fund in the first 10 months of 2012, earning $789.5 million for Cohen, 56, and his managers, according to Bloomberg Markets’ annual ranking of hedge funds...SAC Capital International is No. 1 not because of performance; it ties for No. 86 on that measure, with a 10 percent return in the Markets ranking of the 100 top-performing funds. Rather, the fund earned the most money because Cohen charges some of the highest fees on Wall Street. While most funds impose a 1 to 2 percent management fee and then take 15 to 20 percent of the profits, Cohen levies 3 percent and as much as 50 percent, according to investors. Geithner's Planned Departure Puts Obama In A Tough Spot (Reuters) The Treasury Department said Geithner would stick to his previously announced schedule to stay until sometime around the Jan. 21 inauguration. Obama chose Geithner to lead the just-ended negotiations with Congress to avert the Dec. 31 fiscal cliff of spending cuts and tax hikes that threatened to push the economy back into recession. But the deal, which preserved most of the Bush-era tax breaks for Americans, sets up a series of crucial fiscal deadlines by delaying automatic spending cuts until March 1 and not increasing the government's borrowing limit. That puts Obama in the tough spot of nominating another Treasury secretary and asking the Senate to approve his choice when lawmakers are in the middle of another budget battle. Egan Jones Says Further US Downgrades Unlikely (CNBC) "This latest round (of negotiations) indicates a sign of health. You have a major ideological clash going on in Congress and many people uncomfortable with it, but it is part of democracy. The more positive light is that we actually have a deal and can move forward," Sean Egan, managing director of Egan-Jones told CNBC on Friday. "We've gotten a lot more comfortable about the U.S. and we probably won't take additional negative actions for the foreseeable future," he added. Almost All of Wall Street Got 2012 Market Calls Wrong (Bloomberg) From John Paulson’s call for a collapse in Europe to Morgan Stanley’s warning that U.S. stocks would decline, Wall Street got little right in its prognosis for the year just ended. Paulson, who manages $19 billion in hedge funds, said the euro would fall apart and bet against the region’s debt. Morgan Stanley predicted the Standard & Poor’s 500 Index would lose 7 percent and Credit Suisse foresaw wider swings in equity prices. All of them proved wrong last year and investors would have done better listening to Goldman Sachs Chief Executive Officer Lloyd C. Blankfein, who said the real risk was being too pessimistic. The ill-timed advice shows that even the largest banks and most-successful investors failed to anticipate how government actions would influence markets. Unprecedented central bank stimulus in the U.S. and Europe sparked a 16 percent gain in the S&P 500 including dividends, led to a 23 percent drop in the Chicago Board Options Exchange Volatility Index, paid investors in Greek debt 78 percent and gave Treasuries a 2.2 percent return even after Warren Buffett called bonds “dangerous.” Fed Divided Over Bond Buys (WSJ) A new fault line has opened up at the Federal Reserve over how long to continue bond-buying programs aimed at spurring stronger economic growth. Minutes released Thursday of the Fed's Dec. 11-12 policy meeting showed that officials were divided. Some wanted to continue the programs through the end of 2013, others wanted to end them well before then and a minority wanted to halt the programs right away. Swiss Bank Pleads Guilty In Probe (WSJ) In the latest blow to Switzerland's centuries-old banking practices, the country's oldest bank pleaded guilty to a criminal conspiracy charge in the U.S. on Thursday and admitted that it helped wealthy Americans for years avoid tens of millions of dollars in taxes by hiding their income from secret accounts abroad. Wegelin & Co., founded in 1741, is the latest Swiss bank to reach a deal with U.S. prosecutors as they crack down on Americans who kept their money in secret accounts overseas and the entities which helped them. Three Wegelin bankers also were charged criminally in the U.S. last year. Subway worker tells customer to 'fight me like a man,' during confrontation over ketchup (WFTV) Luis Martinez said he stopped by a Subway shop in a Walmart on South Semoran Boulevard late Tuesday night to get something to eat. He said he ordered a Philly cheese steak the way he always does. "American cheese, onions and ketchup," said Martinez. Lawrence Ordone was working behind the counter. "He wants ketchup on the Philly cheese steak and I have never put -- we don't even have ketchup at Subway -- I've never put ketchup on anybody's sandwich," said Ordone. Martinez said he didn't want the sandwich without the ketchup and that a man next to him in line offered to buy the sandwich. Ordone said that Martinez mouthed off at the man. Martinez denied saying anything, but neither he or Ordone disputed what they said happened next. "That's when I flew off the handle," said Ordone. "He shoved a chair to the side, like knocked it down to come at me, and I said, 'This is going to be serious,'" said Martinez. "I said, 'Let's go, fight me like a man,'" said Ordone. "I was scared. Next thing, I'm thinking a gun's going to come out," said Martinez. Ordone said he blocked the customer so he couldn't get out. "He threatened to kill me in front of my wife," said Martinez. Martinez called 911, but by the time police got there the Subway worker had already left. Ordone said he was fired from his job Wednesday, and that he is baffled the confrontation started over something as simple as ketchup. "There's ketchup three aisles down. You can go buy your own ketchup, and I promise to God, you can put as much as you want on it and nobody's going to say nothing," said Ordone. Economy Adds 155,000 Jobs (WSJ) Rebuilding following superstorm Sandy, which struck the Northeast in late October, likely added to job growth last month. Nationally, employment in the construction sector advanced by 30,000 jobs. Meanwhile, manufacturing payrolls increased by 25,000 and health-care jobs grew by 45,000. JPMorgan Faces Sanction for Refusing to Provide Madoff Documents (Bloomberg) The Treasury Department’s inspector general has threatened to punish JPMorgan Chase for failing to turn over documents to regulators investigating the bank’s ties to Bernard Madoff’s Ponzi scheme. Inspector General Eric Thorson gave the largest U.S. bank a Jan. 11 deadline to cooperate with the Office of the Comptroller of the Currency probe or risk sanctions for impeding the agency’s oversight. JPMorgan, according to the Dec. 21 letter, contends the information is protected by attorney-client privilege. Rich Catch a Break With Budget Deal Providing Deductions (Bloomberg) “The increases in taxes and limits to deductions are more favorable than expected,” said Christopher Zander, partner and head of wealth planning at Evercore Partners Inc. (EVR)’s wealth management unit. “They could have been worse for high net-worth taxpayers.” Regulators to ease up on banks to get credit flowing (Reuters) Banks will get more time to build up cash buffers to protect against market shocks under a rule change that could help free up credit for struggling economies, a European regulatory source said. The Basel Committee, made up of banking supervisors from nearly 30 countries, is expected to announce the revision on Sunday to its "liquidity coverage" ratio or LCR, part of efforts to make banks less likely to need taxpayer help again in a crisis. The change comes after heavy pressure from banks and some regulators, who feared Basel's original version would suck up too much liquidity at a time when ailing economies are badly in need of a ready supply of credit to finance growth. 'Stripper' arrested after performance art leads to ruckus in Hallandale (SS) According to police and witnesses, Mena, 25, was first spotted standing and yelling in the middle of A1A outside her condo building along the 1800 block of South Ocean Drive about 10:45 a.m. on Wednesday. Noel von Kauffman, 40, said he was walking along the street when he noticed Mena trying to direct traffic while wearing a tank-top, cut-off jean shorts and tall boots...At some point, Mena picked up a traffic cone and threw it at a car driven by Dieter Heinrich, 49, of Dania Beach, according to an arrest report. The cone broke the car's side mirror, causing about $300 in damages, the report indicated. When Heinrich got out of his car, Mena allegedly spat in his face. Von Kauffman said he jumped in to help Heinrich, who had children in the back seat of his car. Mena scratched von Kauffman's wrist as the two men tried to restrain her and move her away from the busy roadway, according to the police report. After pinning her to the ground, von Kauffman said the woman first tried to say the incident was part of a television show and that everything was being caught on camera. Then she claimed she was a federal agent. Then she said she was friends with Hallandale Beach Mayor Joy Cooper and everyone involved would be in trouble, von Kauffman said.

Opening Bell: 04.25.12

Credit Suisse Sees Profit Drop (WSJ) Credit Suisse Wednesday reported a sharp drop in net profit for the first quarter, pressured by an accounting loss on its own debt and lower revenue at its investment bank, which shed risky assets to adapt to a tougher regulatory and market environment. Still, the bank managed a sharp turnaround from a dismal fourth quarter when it reported a loss, on improving market conditions. But Chief Financial Officer David Mathers warned that this may not necessarily be the trend going forward, as markets weren't as favorable in April as they were during the first quarter. Credit Suisse said net profit fell 96% to 44 million Swiss francs ($48.3 million) in the first quarter from 1.14 billion francs a year earlier. This was better than the net loss expected by analysts. Excluding a raft of one-off items, net profit would be 1.36 billion francs, Credit Suisse said. Net profit suffered from a 1.55 billion franc accounting loss on the bank's own credit. The bank also recorded costs of 534 million francs for 2011 bonuses. Moody's Hears It From Banks (WSJ) In the latest sign that U.S. banks are bridling at tighter oversight that began after the financial crisis, a handful of big lenders have been jawboning Moody's Investors Service ahead of potential downgrades expected this spring. Bank of America Corp. Chief Executive Brian Moynihan and Citigroup Inc. CEO Vikram Pandit have argued against downgrades in person, people familiar with the talks said. An executive at Goldman Sachs Group Inc. last week publicly questioned Moody's methods on a conference call with analysts and investors. Morgan Stanley CEO James Gorman, who has met with the ratings firm more often than usual in the past quarter, called Moody's decision to delay any potential downgrades by a month "constructive." Housing Declared Bottoming in U.S. After Six-Year Slump (Bloomberg) The U.S. housing market is showing more signs of stabilization as price declines ease and home demand improves, spurring several economists to call a bottom to the worst real estate collapse since the 1930s. “The crash is over,” Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester, Pennsylvania, said in a telephone interview yesterday. “Home sales -- both new and existing -- and housing starts are now off the bottom.” US taxpayers still on hook for $119B in TARP funds (MarketWatch) US taxpayers are still owed $119 billion in outstanding Troubled Asset Relief Program (TARP) funds, a watchdog for the government crisis program said Wednesday in a quarterly report to Congress. That number is down from $133 billion in TARP funds owed as of January, according to the author of the report, the Office of the Special Inspector General for the TARP. The government expects TARP to lose $60 billion. Surviving ’Taxmageddon’ Without Maiming Economy (Bloomberg) Peter Orszag: "At the end of this year, all the Bush tax cuts expire -- amounting to about $250 billion a year. The payroll-tax holiday, at more than $100 billion a year, ends too, as do expanded unemployment-insurance benefits. And we face other spending cuts of about $100 billion, from the sequester set up by the 2011 debt-limit deal. All told, this fiscal tightening adds up to about $500 billion -- or more than 3 percent of gross domestic product. The economy will be in no shape to handle that much of a squeeze. If we do nothing to reduce or stop it, the economy could be thrown back into a recession." Goose strike forces JetBlue flight into emergency landing at Westchester (NYP) Geese smacked into a JetBlue plane taking off from Westchester Airport last night, forcing the pilots to make an immediate emergency landing. “We got to come back. We hit two big geese,” a pilot aboard Flight 571 to West Palm Beach, Fla., radioed to controllers after the plane took off at 6:45 p.m. “We are declaring an emergency.” The pilots made it just six miles northwest of the airport before turning around. They were back on the ground seven minutes later. “JetBlue 571, nice to have you back,” a relieved controller radioed as the plane touched down at 6:52. The geese smashed into the jet’s windshield. “I was petrified,’’ said passenger Janice Hilbrink, of White Plains. “Seriously very frightened. “I heard the noise. It was very loud and the plane had a lot of turbulence. The pilot told us the windshield was cracked.’’ When she got off the plane, “the whole front of it was covered in bird.’’ Missing MF Global Funds Found (CNNM) Investigators probing the collapse of bankrupt brokerage MF Global said Tuesday that they have located the $1.6 billion in customer money that had gone missing from the firm. But just how much of those funds can be returned to the firm's clients, and who will be held responsible for their misappropriation, remains to be seen. James Giddens, the trustee overseeing the liquidation of MF Global Inc, told the Senate Banking Committee on Tuesday that his team's analysis of how the money went missing "is substantially concluded." "We can trace where the cash and securities in the firm went, and that we've done," Giddens said. Europe Struggles With Painful Deficit Cures (WSJ) The target, set in 2009, is still seen as an important signal that the budget rules won't be flouted as they were in the past. But meeting the 2013 goal, which for most countries was a deficit of 3% of gross domestic product, will entail more spending cuts or tax increases by governments across the EU. Soros And Roubini Take Aim At Euro Zone (CNBC) Nouriel Roubini, an economist and founder of RGE Monitor used a series of tweets on Tuesday evening to call for action on weakening the euro. “If domestic demand is going to be anemic and weak in this fiscal adjustment because of private and public sector deleveraging you need net exports to improve to restore growth,” wrote Roubini who believes much looser monetary policy is needed. “In order to have an improvement in net exports you need a weaker currency and a much more easy monetary policy to help induce that nominal and real depreciation that is not occurring right now in the euro zone,” said Roubini. “That’s one of the reasons why we’re getting a recession that’s even more severe,” he said. During a debate on Tuesday, billionaire Investor George Soros made it clear what side of the growth versus austerity debate he is on. “Europe is similar to the Soviet Union in the way that the euro crisis has the potential of destroying, undermining the European Union,” he said. “The euro is undermining the political cohesion of the European Union, and, if it continues like that, could even destroy the European Union,” said Soros. New Fashion Wrinkle: Stylishly Hiding the Gun (NYT, related) Woolrich, a 182-year-old clothing company, describes its new chino pants as an elegant and sturdy fashion statement, with a clean profile and fabric that provides comfort and flexibility. And they are great for hiding a handgun. The company has added a second pocket behind the traditional front pocket for a weapon. Or, for those who prefer to pack their gun in a holster, it can be tucked inside the stretchable waistband...The chinos, which cost $65, are not for commandos, but rather, the company says, for the fashion-aware gun owner.

Opening Bell: 11.08.12

On Wall Street, Time To Mend Fences With Obama (NYT) Few industries have made such a one-sided bet as Wall Street did in opposing President Obama and supporting his Republican rival. The top five sources of contributions to Mr. Romney, a former top private equity executive, were big banks like Goldman Sachs and JPMorgan Chase, according to the Center for Responsive Politics. Wealthy financiers — led by hedge fund investors — were the biggest group of givers to the main “super PAC” backing Mr. Romney, providing almost $33 million, and gave generously to outside groups in races around the country. On Wednesday, Dan Loeb, who had supported Mr. Obama in 2008, was sanguine. “You win some, you lose some,” he said in an interview. “We can all disagree. I have friends and we have spirited discussions. Sure, I am not getting invited to the White House anytime soon, but as citizens of the country we are all friendly.” [...] “Wall Street is now going to have to figure out how to make this relationship work,” said Glenn Schorr, an analyst who follows the big banks for the investment bank Nomura. “It’s not impossible, but it’s not the starting point they had hoped for.” Morgan Stanley Reassures Its Bankers (WSJ) The New York bank said Monday that investment-banking chief Paul Taubman would leave the firm at year-end. Mr. Taubman was passed over for a new job overseeing both the trading and investment-banking operations, people involved in the process said. The position went to Colm Kelleher, who has overseen sales and trading. To calm nerves and soothe egos among the firms' bankers, Morgan Stanley gathered its new team of investment-banking leaders in New York this week. Mr. Kelleher and one of his new banking lieutenants, Franck Petitgas, traveled from their London office, and Mr. Petitgas spent much of the week meeting with managers in the investment-banking division and senior bankers, people familiar with the discussions said. Top executives reassured senior bankers Monday that the investment-banking business was a priority for Morgan Stanley. In a memo to employees, Chief Executive James Gorman said Morgan Stanley would "continue to build on our leadership position in investment banking and capital markets." The messages came as some rank-and-file bankers at Morgan Stanley privately expressed surprise and dismay at the news from Mr. Taubman, who announced his departure to colleagues in an emotional meeting Monday with Messrs. Kelleher and Gorman in attendance. Some Morgan Stanley bankers said they worried that the new chiefs of investment banking didn't have the stature of Mr. Taubman, who spent a significant amount of time as a mergers banker and was known internally for his staunch support of the firm's investment-banking franchise. "People are upset," one senior person inside the company said. Wall Street Trades Foiled Romney Dreams For Bowles Hopes (Bloomberg) Wall Street executives who lost a bet that Republican Mitt Romney would defeat President Barack Obama are bracing for tougher regulation and hoping a deal can be struck with Congress to cut the deficit. Obama’s choice to succeed Treasury Secretary Timothy F. Geithner will be watched closely for signs about the administration’s approach to business and the deficit, industry executives said. Erskine Bowles, who served as chief of staff under former President Bill Clinton, would be a sign that Obama is willing to endorse a bipartisan debt-reduction plan supported by many business leaders, they said. “With the appointment of the Treasury secretary, Obama will be sending an important message to the public and to the foreign governments who own a lot of Treasuries,” Curtis Arledge, chief executive officer of Bank of New York Mellon Corp.’s investment-management arm, which oversees $1.4 trillion, told journalists in New York yesterday. “If he goes with somebody like Erskine Bowles, then the message will be that he cares about the deficit and is serious about cutting it.” Focus Shifts To Fiscal Cliff (WSJ) Barry Knapp, head of U.S. equity portfolio strategy at Barclays, turned more bearish after seeing the election results, arguing that the risk of fiscal-cliff disaster increased to more than half, from about 30% before. "When I look at what happened, I see a government that grew farther apart, which might be worse than the status quo," Mr. Knapp said. "The risk of going off the cliff has just gotten huge." Jobless Claims Fall (WSJ) Initial jobless claims, which are a measure of layoffs, decreased by 8,000 to a seasonally adjusted 355,000 in the week ended Nov. 3, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires expected 365,000 new applications for jobless benefits. Greek Jobless Rate Hits New High (WSJ) Elstat, the Greek statistical agency, Thursday said the seasonally adjusted rate of unemployment increased to 25.4% from 24.8% in July and 18.4% in August 2011. That was just below the 25.5% unemployment rate recorded by Spain in the same month, the highest in the European Union. Herd of elephants go on drunken rampage after mammoth booze up (Metro) The trunk and disorderly mammals ransacked a shop, three houses and ruined crops in the eastern village of Dumurkota, India. Police say the gang of over-the-limit tuskers downed more than 500litres of moonshine alcohol, managing to drink the place dry in a matter of minutes. The unruly mob demolished dozens of houses in their desperate hunt for more booze after hoovering up the hard stuff in record time. Local police officer Asish Samanat said the drunken elephants were more 'aggressive' than usual after their mammoth drinking session. 'Unfortunately these animals live in close proximity to man and they recognised the smell of the drink,' he explained. 'They were like any other drunk - aggressive and unreasonable but much, much bigger.' ECB Stands Ready to Buy Bonds as Economy Weakens (Bloomberg) “We are ready to undertake” Outright Monetary Transactions, “which will help to avoid extreme scenarios,” Draghi said today at a press conference in Frankfurt after policy makers left the benchmark interest rate at a historic low of 0.75 percent. “The risks surrounding the economic outlook remain on the downside” and underlying inflation pressures “should remain moderate,” he said. SocGen CEO Blames ‘Stupid’ Accounting for Profit Drop (CNBC) “Exceptional items are related in particular to this stupid accounting thing which means that when you have a credit that is improving, your CDS is going down and you have to recognise negative revenues,” Frederic Oudea told CNBC in Paris. SocGen’s third-quarter net profit was 85 million euros, down by 86 percent on the same period in 2011, after losses on asset sales. That was lower than analysts’ mean estimate of 139.1 million euros. Blackstone Leads Hedge Funds Attracting Bond-Rally Bears (Bloomberg) Funds that bet on both gains and losses in credit attracted $12.6 billion of deposits in the three months ended Sept. 30, the most since the period ended Dec. 31, 2007, according to HFR. Blackstone Group LP raised $4.05 billion during the period for its debt unit, which includes so-called long-short funds. Panning Capital Management, which was founded by Kieran Goodwin this year, started such a fund on Nov. 1 with $500 million. Two-Tier Global Housing Market Could Lead to Bubble: Goldman (CNBC) In a report titled: “Just don’t look down some house markets are flying again” Goldman argues easy money policies by the world’s major central banks has had a ripple effect on countries which have avoided the worst of the global financial crisis, boosting their house prices. According to Goldman, there now exist housing “high-flyers” - countries that have experienced real house price increases and “low-lyers” - countries where the housing market downturn appears to be more protracted. “High flyers” include Germany, Finland, Norway, France, Switzerland and Israel as well as Canada and Australia. The “low lyers” include the U.S., and the euro zone periphery of Spain, Greece, Italy and Ireland- but also those places where prices fell in the post-crisis period but have since stabilized such as the U.K., Japan and Denmark. Judge throws Dallas attorney back in jail after his Design District office trashed, vandalized with obscene drawings (DN) Attorney Tom Corea was charged earlier this year with four felonies alleging he stole from his clients. He was arrested, posted bond and was released. Weeks later, he was evicted for not paying rent for his upscale office in the 2000 block of Farrington Street near Interstate 35E and Market Center Boulevard, according to testimony before state District Judge Mike Snipes. Corea was ordered out by Oct. 31. When the president of the real estate company that represents the building, Doug Molny, showed up the next day to check out the property, he found “complete destruction,” including “penis graffiti on every single wall throughout the building,” Molny said. Written next to some of the penises was the name Doug. Molny said it appeared someone took a sledgehammer to granite counters. Additionally, doors, light fixtures, cabinets and appliances were destroyed or removed.