Opening Bell: 10.09.12

Stress For Banks As Tests, Loom (WSJ) U.S. banks and the Federal Reserve are battling over a new round of "stress tests" even before the annual exams get going later this fall. The clash centers on the math regulators are using to produce the results. Bankers want more detail on how the calculations are made, and the Fed thus far has resisted disclosing more than it has already. A senior Fed supervision official, Timothy Clark, irked some bankers last month when he said at a private conference they wouldn't get additional information about the methodology, according to people who attended the event in Boston. Wells Fargo Treasurer Paul Ackerman said at the same conference that he still doesn't understand why the Fed's estimates are so different from Wells's. His remarks drew applause from bankers in the audience, said the people who attended. Bonus Round Is Over (NYP) Wall Street traders, among the best paid in financial circles, are facing another meager bonus season this year — at least by Street standards — after a rough 2011 saw bonuses slashed by as much as 30 percent. Although some groups will fare better than others, equity traders could see their prized bonuses shredded again in 2012 — by as much as 35 percent, according to recruiters and others. In addition to lower bonuses, Wall Streeters are likely to see less of the payout in cash and more in stock — with the stock facing longer deferral periods, one recruiter, Michael Karp, co-founder of Options Group, said. Deutsche Bank has already moved from three-year deferral periods to stricter five-year deferrals and it’s expected that other banks will follow suit. IMF Sees ‘Alarmingly High’ Risk of Deeper Global Slump (Bloomberg) The world economy will grow 3.3 percent this year, the slowest since the 2009 recession, and 3.6 percent next year, the IMF said today, compared with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent. Depositors Turn Up Heat On Ailing Spanish Banks (WSJ) Eugenio Nuñez Cobás stormed into a bank branch in this coastal town one morning in August with three dozen fellow customers yelling "Thieves! Thieves! Thieves!" Then they returned to the street and pelted the facade with eggs, forcing the branch to close for the day. Athens Preparing for Anti-Austerity Protests Aimed at Merkel (Bloomberg) Greece’s capital will grind to a halt today for German Chancellor Angela Merkel’s first visit since the financial crisis began, with 7,000 officers deployed around Athens to prevent violence at planned protests. Authorities have declared entire sections of downtown off- limits, notably Prime Minister Antonis Samaras’s office, where the two leaders, will meet and the German embassy. Merkel is due to arrive at 1:30 p.m., around the same time as three separate protest marches gather in front of Parliament. Can Marissa Mayer Really Have It All? (NYM) When faced with a difficult decision, Mayer likes to create a spreadsheet. She went to Stanford as an undergrad, switching from pre-med to an esoteric major called “symbolic systems,” which is a mixture of philosophy, brain science, and artificial intelligence (anybody anywhere can do pre-med, she thought), and then continued on, getting an advanced degree in computer science. She entered the job market in the spring of 1999, at the height of the dot-com boom, and got more than a dozen offers—from several dot-coms, including Google (she interviewed with Page and Sergey Brin at a Ping-Pong table), and one from McKinsey & Co. “I like to do matrices,” she told NPR. “One option per line, different facets for each column. Salary, location, happiness index, failure index, and all that.” That spring, her matrix pointed her toward Google. “To my credit, I actually gave Google a hundred times more likely chance of succeeding than any of the other start-ups [from which she got offers], because I gave them a 2 percent chance of success. I gave all the other start-ups a .02 percent chance of success.” A Beacon For DC, By Ben Bernanke (WSJ) People decry the absence of leadership in Washington these days. My response: Look no further than the home-team dugout at Nationals Park. Under Manager Davey Johnson's confident, laid-back leadership, the Washington Nationals, defying all preseason conventional wisdom, have claimed the 2012 championship of the National League Eastern Division and the best regular-season record in Major League Baseball...Davey, who earned a degree in mathematics from Trinity University, is the epitome of the head-and-heart consensus. He was an early proponent of the use of statistical analysis in baseball decision-making, and it is clear in his tactical management of games that he is very conversant with sabermetric principles. He well understands, for instance, how to use statistics in determining lineups and pitcher-hitter matchups. At the same time, Davey is also really good at identifying and nurturing talent. Most strikingly, he has shown himself willing to sacrifice short-term tactical advantage for the long-term benefit of bolstering the confidence of a player in whom he sees great potential. He lets players play through slumps and gives pitchers who have gotten behind a chance to dig themselves out. His reasoning: Giving a promising player the opportunity the prove himself will often do more for the team in the long run than making an ostensibly better tactical decision in the short run—even if it costs the team a game or two. McKinsey casts gloomy eye on world banking (Reuters) Banks worldwide remain scarred by the 2007-2009 financial crisis and are years away from developing new business models that will produce sustainable profits, according to a new study. Despite progress in meeting regulators' requirements to build capital, revenue growth is slow, costs are rising and new competitors exploiting digital technologies are emerging, McKinsey & Co said in a report released on Monday evening. Obama's Next Fed Chief: Who Gets The Job If Obama Wins Second Term? (WaPo) The top contenders are: Ben Bernanke, Larry Summers, Janet Yellen, Roger Ferguson, Bill Dudley, Tim Geithner, and Don Kohn. Man Dies After Live Roach-Eating Contest In Florida (AP) The winner of a roach-eating contest in South Florida died shortly after downing dozens of the live bugs as well as worms, authorities said Monday. About 30 contestants ate the insects during Friday night's contest at Ben Siegel Reptile Store in Deerfield Beach about 40 miles north of Miami. The grand prize was a python. Edward Archbold, 32, of West Palm Beach became ill shortly after the contest ended and collapsed in front of the store, according to a Broward Sheriff's Office statement released Monday. He was taken to the hospital where he was pronounced dead. Authorities were waiting for results of an autopsy to determine a cause of death...None of the other contestants became ill, the sheriff's office said. There was no updated phone number listed for Archbold in West Palm Beach. "We feel terribly awful," said store owner Ben Siegel, who added that Archbold did not appear to be sick before the contest. "He looked like he just wanted to show off and was very nice," Siegel said, adding that Archbold was "the life of the party."
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Stress For Banks As Tests, Loom (WSJ)
U.S. banks and the Federal Reserve are battling over a new round of "stress tests" even before the annual exams get going later this fall. The clash centers on the math regulators are using to produce the results. Bankers want more detail on how the calculations are made, and the Fed thus far has resisted disclosing more than it has already. A senior Fed supervision official, Timothy Clark, irked some bankers last month when he said at a private conference they wouldn't get additional information about the methodology, according to people who attended the event in Boston. Wells Fargo Treasurer Paul Ackerman said at the same conference that he still doesn't understand why the Fed's estimates are so different from Wells's. His remarks drew applause from bankers in the audience, said the people who attended.

Bonus Round Is Over (NYP)
Wall Street traders, among the best paid in financial circles, are facing another meager bonus season this year — at least by Street standards — after a rough 2011 saw bonuses slashed by as much as 30 percent. Although some groups will fare better than others, equity traders could see their prized bonuses shredded again in 2012 — by as much as 35 percent, according to recruiters and others. In addition to lower bonuses, Wall Streeters are likely to see less of the payout in cash and more in stock — with the stock facing longer deferral periods, one recruiter, Michael Karp, co-founder of Options Group, said. Deutsche Bank has already moved from three-year deferral periods to stricter five-year deferrals and it’s expected that other banks will follow suit.

IMF Sees ‘Alarmingly High’ Risk of Deeper Global Slump (Bloomberg)
The world economy will grow 3.3 percent this year, the slowest since the 2009 recession, and 3.6 percent next year, the IMF said today, compared with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent.

Depositors Turn Up Heat On Ailing Spanish Banks (WSJ)
Eugenio Nuñez Cobás stormed into a bank branch in this coastal town one morning in August with three dozen fellow customers yelling "Thieves! Thieves! Thieves!" Then they returned to the street and pelted the facade with eggs, forcing the branch to close for the day.

Athens Preparing for Anti-Austerity Protests Aimed at Merkel (Bloomberg)
Greece’s capital will grind to a halt today for German Chancellor Angela Merkel’s first visit since the financial crisis began, with 7,000 officers deployed around Athens to prevent violence at planned protests. Authorities have declared entire sections of downtown off- limits, notably Prime Minister Antonis Samaras’s office, where the two leaders, will meet and the German embassy. Merkel is due to arrive at 1:30 p.m., around the same time as three separate protest marches gather in front of Parliament.

Can Marissa Mayer Really Have It All? (NYM)
When faced with a difficult decision, Mayer likes to create a spreadsheet. She went to Stanford as an undergrad, switching from pre-med to an esoteric major called “symbolic systems,” which is a mixture of philosophy, brain science, and artificial intelligence (anybody anywhere can do pre-med, she thought), and then continued on, getting an advanced degree in computer science. She entered the job market in the spring of 1999, at the height of the dot-com boom, and got more than a dozen offers—from several dot-coms, including Google (she interviewed with Page and Sergey Brin at a Ping-Pong table), and one from McKinsey & Co. “I like to do matrices,” she told NPR. “One option per line, different facets for each column. Salary, location, happiness index, failure index, and all that.” That spring, her matrix pointed her toward Google. “To my credit, I actually gave Google a hundred times more likely chance of succeeding than any of the other start-ups [from which she got offers], because I gave them a 2 percent chance of success. I gave all the other start-ups a .02 percent chance of success.”

A Beacon For DC, By Ben Bernanke (WSJ)
"People decry the absence of leadership in Washington these days. My response: Look no further than the home-team dugout at Nationals Park. Under Manager Davey Johnson's confident, laid-back leadership, the Washington Nationals, defying all preseason conventional wisdom, have claimed the 2012 championship of the National League Eastern Division and the best regular-season record in Major League Baseball...Davey, who earned a degree in mathematics from Trinity University, is the epitome of the head-and-heart consensus. He was an early proponent of the use of statistical analysis in baseball decision-making, and it is clear in his tactical management of games that he is very conversant with sabermetric principles. He well understands, for instance, how to use statistics in determining lineups and pitcher-hitter matchups. At the same time, Davey is also really good at identifying and nurturing talent. Most strikingly, he has shown himself willing to sacrifice short-term tactical advantage for the long-term benefit of bolstering the confidence of a player in whom he sees great potential. He lets players play through slumps and gives pitchers who have gotten behind a chance to dig themselves out. His reasoning: Giving a promising player the opportunity the prove himself will often do more for the team in the long run than making an ostensibly better tactical decision in the short run—even if it costs the team a game or two."

McKinsey casts gloomy eye on world banking (Reuters)
Banks worldwide remain scarred by the 2007-2009 financial crisis and are years away from developing new business models that will produce sustainable profits, according to a new study. Despite progress in meeting regulators' requirements to build capital, revenue growth is slow, costs are rising and new competitors exploiting digital technologies are emerging, McKinsey & Co said in a report released on Monday evening.

Obama's Next Fed Chief: Who Gets The Job If Obama Wins Second Term? (WaPo)
The top contenders are: Ben Bernanke, Larry Summers, Janet Yellen, Roger Ferguson, Bill Dudley, Tim Geithner, and Don Kohn.

Man Dies After Live Roach-Eating Contest In Florida (AP)
The winner of a roach-eating contest in South Florida died shortly after downing dozens of the live bugs as well as worms, authorities said Monday. About 30 contestants ate the insects during Friday night's contest at Ben Siegel Reptile Store in Deerfield Beach about 40 miles north of Miami. The grand prize was a python. Edward Archbold, 32, of West Palm Beach became ill shortly after the contest ended and collapsed in front of the store, according to a Broward Sheriff's Office statement released Monday. He was taken to the hospital where he was pronounced dead. Authorities were waiting for results of an autopsy to determine a cause of death...None of the other contestants became ill, the sheriff's office said. There was no updated phone number listed for Archbold in West Palm Beach. "We feel terribly awful," said store owner Ben Siegel, who added that Archbold did not appear to be sick before the contest. "He looked like he just wanted to show off and was very nice," Siegel said, adding that Archbold was "the life of the party."

Related

Opening Bell: 03.22.13

Clock Ticks On Cyprus (WSJ) Cyprus, in an 11th-hour bid to unlock international aid, reopen the nation's banking system and preserve membership in the euro, readied a plan that would restructure its second-largest lender and enforce unprecedented restrictions on financial transactions. The proposals, if they take effect, would allow authorities to restrict noncash transactions, curtail check cashing, limit withdrawals and even convert checking accounts into fixed-term deposits when banks reopen. They have been closed since March 16. Parliament is set to debate the measures on Friday. If Cyprus can't pass them, it could find itself with little choice but to leave the euro zone—opening a Pandora's box that could threaten Spain and Italy. Time is short: The European Central Bank on Thursday threatened to cut off a financial lifeline if Cyprus's banks aren't stabilized by Monday. Credit Suisse Chief Gets 34% Raise (WSJ) Credit Suisse rewarded Chief Executive Brady Dougan for repositioning the bank in 2012 with a 34% pay rise, despite a fall in net profit for the year and a backdrop of growing criticism of executive remuneration. Mr. Dougan earned 7.77 million Swiss francs ($8.21 million), up from 5.8 million francs in 2011, when he took a pay cut as Switzerland's No. 2 bank by assets slogged through a difficult year in which its stock price fell 41%. Europe’s Bonus Clampdown Hits Two-Thirds of Fund Managers (Bloomberg) The European Parliament’s vote to cap bonuses in the asset-management industry could affect two- thirds of senior fund managers in the U.K., U.S. funds in Europe and hedge funds open to small investors. Bonuses should not exceed base salaries for managers of mutual funds regulated by the European Union, known as UCITS, European lawmakers in the economic and monetary affairs committee voted yesterday. The rules would cover 5 trillion euros ($6.5 trillion) of assets in UCITS, which include funds managed outside Europe and some linked to hedge-fund strategies such as John Paulson’s New York-based Paulson & Co. and Och-Ziff Capital Management Group. “If the final rules are even close to what has been agreed today, then this will fundamentally change the way asset managers are paid,” said Jon Terry, a partner at PricewaterhouseCoopers LLC. Asset managers “are now facing the toughest pay rules across the whole of the financial-services sector.” Boaz Says Dimon Should Have Known (NYP) The buck stops with Jamie Dimon. That’s the view of Boaz Weinstein, the hedge-fund manager who first speared the “London Whale” that led to $6.2 billion in trading losses for Dimon’s JPMorgan. Despite making a bundle by taking the other side of the bank’s bad bet, Boaz says that requiring bank CEOs to sign off on such trades is the only way to prevent debacles. As the “ultimate boss” of JPMorgan, Dimon should have had to approve the complicated trade, he said. “If you had a rule that anytime, anyone wants to make an investment in any one thing greater than $10 billion or $20 billion, the boss has to sign off on it,” then those types of disasters wouldn’t happen, Boaz said yesterday at the Absolute Return Symposium in Manhattan. Long Island Man Accepts Plea Deal in Fake Drowning (AP) The man, Raymond Roth, 48, of Massapequa, pleaded guilty to fourth-degree conspiracy. “The restitution Mr. Roth is ordered to pay ensures that the taxpayers won’t foot the bill for this scam,” said Kathleen M. Rice, the Nassau County district attorney. Prosecutors said Mr. Roth and his son, Jonathan Roth, 22, had plotted to collect about $400,000 in life insurance. The younger man’s case is pending. On July 28, Jonathan Roth told the authorities that his father had gone for a swim at Jones Beach and never came back. Responders searched for Raymond Roth for several days, while he was actually on his way to Orlando, Fla., prosecutors said. Raymond Roth’s wife found e-mails discussing the plot, and the authorities were alerted. Raymond Roth’s lawyer, Brian Davis, said on Thursday that he believed the plea bargain was fair, adding, “At this point, he wants to put it behind him.” Mood Sours In Northern Europe (WSJ) A worsening mood among businesses largely predated fraught negotiations over a Cypriot bailout, which economists say could stoke tensions surrounding the euro zone's debt crisis. Poorer sentiment among businesses lessens the chances of a rise in corporate investment, crucial for an economic recovery in the bloc at a time when most of its member states are cutting spending to control their debts. Economists See No Crisis With U.S. Debt as Economy Gains (Bloomberg) Three years after a government spending surge in response to the recession drove the U.S. past that red line -- the nation’s $16.7 trillion total debt is now 106 percent of the $15.8 trillion economy -- key indicators reflect gathering strength. Businesses have increased spending by 27 percent since the end of 2009. The annual rate of new home construction jumped about 60 percent. Employers have created almost 6 million jobs. And with borrowing costs near record lows, the cost of paying off the debt is lower now than in the year Ronald Reagan left the White House, as a percentage of the economy. BP to return $8 billion to shareholders from TNK-BP sale (Reuters) BP, which completed the sale of the half-owned TNK-BP to Russian state oil firm Rosneft on Thursday, said the move, designed to increase the value of remaining shares, was an amount equivalent to the value of the company's original investment in TNK-BP in 2003. Man finds knife blade in his back three years after stabbing (TS) A Northwest Territories man was just scratching what he thought was an annoying old itch earlier this week when it turned out to be a knife blade that had been buried in his flesh for almost three years. “I jumped in a cab and went straight to emergency,” said Billy McNeely, 32. The story goes back to an April 2010 birthday party in McNeely’s home town of Fort Good Hope, N.W.T. McNeely said a fight broke out between himself and another man over an arm-wrestling contest that ended up with McNeely being stabbed five times. “They stitched me up and bandaged me up,” said McNeely. “They never took X-rays.” Ever since, McNeely has had a lump in his back where the knife went in. Doctors and nurses told him nerves had been damaged in the stabbing. But the old wound never stopped nagging. “I always had back pains. There was always a burning feeling with it.” The injury was constantly itchy and irritated. It set off metal detectors. That was explained away as a metal fragment that had lodged in his bone. On Monday, while McNeely and his girlfriend were asleep in bed, the pain came back. “I sat up, I tried to rub it and scratch it the way I always did, and then the tip of my nail caught a piece of something solid, something sharp. “My girlfriend got up and she started playing around with it and she manoeuvred my back in a certain way and the tip of a blade poked out of my skin.” Doctors dug out a blade measuring about seven centimetres long.

Opening Bell: 03.09.12

US Adds 227,000 Jobs (WSJ) U.S. job creation remained solid in February and was stronger in previous months than initially thought, marking one of the economy's best stretches of the nearly three-year-old recovery. Jobs outside of agriculture grew by 227,000 last month, the Labor Department said Friday. Meanwhile, employers added 284,000 jobs in January—roughly 40,000 higher than an initial estimate—and job creation was also revised higher for December. Overall, the economy has added an average 245,000 jobs over the past three months—more than double the pace of job creation between May and November. The unemployment rate, obtained by a separate survey of U.S. households, remained at 8.3%, as both hiring and the number of job seekers increased. Greece Passes Key Debt Test (WSJ) Just over 80% of Greece's private-sector creditors had agreed by a Thursday evening deadline to turn in their bonds for new ones with less than half the face value, touching off a massive debt swap that marks a seminal moment in Europe's long-frustrated efforts to rescue its most financially vulnerable nation. The Greek government announced the results of its proposed restructuring early Friday morning. It said 83% of bondholders had voluntarily submitted to the deal, and that it would invoke so-called collective-action clauses to impose the exchange on most of the rest, bringing participation up to 96%. Citigroup Gives Vikram Pandit $14.9 Million 2011 Pay Package (Bloomberg) The bank said it gave Chief Executive Officer Vikram Pandit $14.9 million in total compensation for 2011, including his first bonus since the lender almost collapsed in 2008. The package included $1.67 million of salary and a $5.33 million cash bonus, the New York-based lender said yesterday in a regulatory filing. The award reflects Citigroup’s return to profitability under Pandit, who became CEO in December 2007, the bank’s personnel and compensation committee said in the filing. The payout also rewards his performance last year, which he spent grappling with a revenue slump as the European sovereign-debt crisis roiled markets. DA putting the screws to 'brothel boss' Anna Gristina (NYP) They pressed her over and over, pushed a list of 10 Big Apple power players at her — and demanded she spill the beans on the roster of real-estate moguls and investment bankers. “Some I knew, some I didn’t,” accused Upper East Side brothel boss Anna Gristina told The Post yesterday about an hours-long grilling she received from Manhattan prosecutors. But they kept pressing, bringing in more and more investigators to intimidate her. “In effect, it was, ‘Tell us what we want, and we’ll let you go,’ ” Gristina said. But her defiance, she believes, is what led them to charge her with a single count of prostitution. And that’s when she realized she must be part of a much larger investigation. “It’s not about me; it’s bigger than me,” Gristina said during an exclusive interview at Rikers Island, where she remains jailed. “They’re trying to sweat me out. They are clearly trying to break me.” The self-described “hockey mom” and real-estate developer claims to have no idea why prosecutors are so intent on digging up dirt on those men — half of whom she said she knew as either friends or business associates. “I’d bite my tongue off before I’d tell them anything,” Gristina vowed. Nasdaq, NYSE still fighting over Facebook listing (NYP) The chief executives of both exchanges are said to have taken the rare move of personally appearing at pitch meetings..."The history would go toward Nasdaq, but the trend is toward the NYSE," said the co-head of NYSE's listings business, Scott Cutler. Meanwhile, his Nasdaq counterpart, Robert McCooey, shot back, "Just because someone climbs to the highest mountain and shouts that they're the home for technology doesn't mean they're the home for technology. Just because I could say 'I'm 6 foot 2 and I look like Brad Pitt' doesn't mean it's true." Banks foreclosing on churches in record numbers (Reuters) The surge in church foreclosures represents a new wave of distressed property seizures triggered by the 2008 financial crash, analysts say, with many banks no longer willing to grant struggling religious organizations forbearance. Since 2010, 270 churches have been sold after defaulting on their loans, with 90 percent of those sales coming after a lender-triggered foreclosure, according to the real estate information company CoStar Group. In 2011, 138 churches were sold by banks, an annual record, with no sign that these religious foreclosures are abating, according to CoStar. That compares to just 24 sales in 2008 and only a handful in the decade before. BofA Makes Mortgage Deal (WSJ) More than 200,000 financially strapped households will have a chance to sharply reduce their mortgage balances under a side deal negotiated by Bank of America Corp. that could allow the bank to avoid as much as $850 million in penalties. Under the arrangement, part of the recent $25 billion settlement of alleged foreclosure abuses between government officials and five large lenders, Bank of America will make deeper and broader cuts in balances than other banks. The plan will offer qualifying borrowers a chance to cut their mortgage balances to their home's current market value. Other banks are required under the national settlement to cut principal to no more than 120% of the home's value. Donald Trump, pal of New York Jets owner Woody Johnson, would love to see Peyton Manning play for the Miami Dolphins (NYDN) “First of all (Dolphins owner) Steve Ross is a very good friend of mine,” Trump bellowed before a roomful of reporters and TV cameras at the WGC Cadillac Championship, where Tiger Woods, Phil Mickelson and Rory McIlroy were fighting it out in the first round. “He’s a member of my club in Palm Beach and I think Peyton would be great for Miami. It would be a fantastic thing for this area...I’m a fan. I’m a friend. I did a commercial with Peyton and his brother for Oreo, which got the commercial of the year, and I think it was because of them, not of me. But I did a big commercial and it was an amazing commercial."

Opening Bell: 05.22.12

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

Opening Bell: 03.04.13

Euro-Zone Deal Faces Hurdles (WSJ) Germany's reluctance to put its taxpayers' money at risk in other countries' banks is proving the biggest obstacle to letting the euro zone's bailout fund, the European Stability Mechanism, invest directly in banks that need more capital. In Ireland, Spain, Greece and Cyprus, bailouts of struggling banks are placing heavy burdens on the state, adding to fast-rising national debts. Buffett Disappointed With Berkshire's 'Subpar' $24 Billion Gain (CNBC) Warren Buffett called 2012 "subpar" in his annual letter to shareholders as Berkshire Hathaway's per-share book value rose 14.4 percent, less than the S&P 500's 16-percent increase. It's the ninth time in 48 years this has happened. Buffett notes that the S&P has outpaced Berkshire over the past four years and if the market continues to gain this year the benchmark stock index could have its first five-year win ever. "When the partnership I ran took control of Berkshire in 1965, I could never have dreamed that a year in which we had a gain of $24.1 billion would be subpar ... But subpar it was." Buffett: Berkshire on hunt for more Heinz-like deals (Reuters) "If we get a chance to buy another Heinz, we will do that," Buffett said on CNBC. Berkshire likes the ketchup maker's business, the price of the $23 billion deal, and its partner in the transaction, private equity firm 3G Capital, Buffett said in an extended interview. HSBC Reports Declining Profit and Says Costs Are Increasing (Bloomberg) Pretax profit for 2012 dropped 5.6 percent to $20.65 billion, trailing the $23.49 billion estimate of 26 analysts surveyed by Bloomberg. Revenue fell 5.4 percent to $68.33 billion from $72.28 billion, HSBC said today in a statement. Chief Executive Officer Stuart Gulliver is being thwarted in his plan to reduce costs to 48 percent to 52 percent of revenue as the London-based lender set aside $1.9 billion to settle U.S. money-laundering probes and boosted spending on compliance by $500 million. Expenses as a proportion of revenue climbed to 62.8 percent from 57.5 percent, and wage inflation in markets such as Latin America is increasing, HSBC said today. Swiss Back Executive-Pay Controls (WSJ) The plan, dubbed the "rip off" initiative by the country's media, bans so-called golden-handshake and golden-parachute severance agreements. It also requires greater transparency on loans and retirement packages for senior executives and directors. Beauty queen took my heart, then she took me for $96,000 ride: hedge-funder's suit (NYP) Rishi Bajaj, 33, says he opened his heart, then his wallet, to Miss New Mexico Teen USA 2007 Liz Kranz after she told him she was considering selling her eggs to raise cash for a relative in rehab. The sob story got the beauty a $20,000 loan from Bajaj, he claims in a Manhattan Supreme Court lawsuit. Bajaj, who co-manages the $620 million hedge fund Altai Capital, then told Kranz, 24, to pick out a car for the couple to share — and was “surprised” when she selected a 2012 BMW that came with a $17,070 down payment. They met in July 2012 and dated for “several months,” even vacationing together in Italy, where, Bajaj said in court papers, he let Kranz use his American Express card. Kranz, of the Lower East Side, was also allowed to use Bajaj’s AmEx to buy a dress for a wedding they attended. Bajaj and Kranz, who lived briefly in LA, eventually broke up. There were “disagreements about their remaining obligations to each other,” Bajaj said in court papers. He claims the pageant queen kept her hands on his credit card and racked up tens of thousands in charges...In all, Bajaj claims Kranz spent $58,860 on his credit card over three months last year. In a November letter, his lawyer accused her of “theft, fraud and other egregious misconduct” and demanded she repay the full $58,860 in credit-card purchases. NYC to be hit hard by sequester: Merrill Lynch economist (NYP) Two months’ worth of job gains are about to vanish nationwide, warns a Merrill Lynch economist — and New York City, whose unemployment rate is already at an eye-popping 8.8 percent, will be hit exceptionally hard in this employment carnage as Washington begins to enact a series of controversial spending cuts known as the sequester. “It will set the economy back a few months in the job market,” Ethan Harris, co-head of global economics research at Bank of America Merrill Lynch, told The Post. “The national job market recovery has been modest, and it has been weaker locally in New York.” Nationally, Harris calculated a loss of about 300,000 jobs, roughly two months of average job gains, if the sequester is enacted untouched. Job-Hunt Time Shrinks in U.S. From Record High (Bloomberg) For 13 million out-of-work Americans, record spells of joblessness are abating. The median duration fell to 16 weeks in January from 25 weeks in June 2010, Labor Department data show. Fewer people compete for each opening as hiring expands, and persistent long-term unemployment is starting to mend. The progress supports Federal Reserve Chairman Ben S. Bernanke’s view that America’s labor market remains flexible and isn’t succumbing to hysteresis, or permanently higher joblessness, similar to Europe in the 1980s, said Dale Mortensen, a professor of economics at Northwestern University in Evanston, Illinois, and 2010 Nobel laureate. That suggests continued monetary stimulus can bring about a faster healing. Slim Risks Losing World’s Richest Person Title as Troubles Mount (Bloomberg) Slim’s lead over the next-wealthiest man, Bill Gates, narrowed last week to about $4.8 billion -- the closest spread in almost a year. The Lebanese immigrant’s son, who acquired Mexico’s phone monopoly and turned it into a pan-Latin American powerhouse, lost almost a 10th of his net worth last month, winnowing his fortune to $71 billion, according to the Bloomberg Billionaires Index. Dennis Rodman: Kim Jong Un Wants President Obama to ‘Call Him’ (ABC) In his first interview since returning to the U.S. from an unprecedented visit to North Korea last week, former NBA star Dennis Rodman said he bears a message for President Obama from the country’s oppressive leader, Kim Jong Un. “He wants Obama to do one thing: Call him,” Rodman told ABC’s George Stephanopoulos on “This Week.” “He said, ‘If you can, Dennis – I don’t want [to] do war. I don’t want to do war.’ He said that to me.” The athlete also offered Kim some diplomatic advice for potential future talks with President Obama. “[Kim] loves basketball. And I said the same thing, I said, ‘Obama loves basketball.’ Let’s start there,” Rodman said.

Opening Bell: 12.10.12

U.S. authorities probe SAC for Weight Watchers (Reuters) U.S. authorities are investigating Steven A. Cohen's SAC Capital Advisors hedge fund for possible insider trading in the shares of the popular diet company Weight Watchers International Inc, according to people familiar with the matter. The investigation focuses on trading in Weight Watchers shares in the first half of 2011, when SAC Capital had taken a sizeable position in the stock, and potentially could implicate the billionaire hedge fund manager, the sources said on Friday. Regulatory filings show that Cohen's $14 billion fund briefly held 2.1 million shares in Weight Watchers during the period under scrutiny by authorities - at which time the diet company's stock price roughly doubled. The inquiry is in its early stages and it is not clear whether anything improper was done either by SAC Capital or Cohen himself, said the people familiar with the matter, who requested anonymity. The trading in Weight Watchers would be permissible as long as it was based on fundamental research or derived from individuals who did not have access to non-public corporate information. Big Money Bets On Housing Rebound (NYT) A flurry of private-equity giants and hedge funds have spent billions of dollars to buy thousands of foreclosed single-family homes. They are purchasing them on the cheap through bank auctions, multiple listing services, short sales and bulk purchases from local investors in need of cash, with plans to fix up the properties, rent them out and watch their values soar as the industry rebounds. They have raised as much as $8 billion to invest, according to Jade Rahmani, an analyst at Keefe Bruyette & Woods. The Blackstone Group, the New York private-equity firm run by Stephen A. Schwarzman, has spent more than $1 billion to buy 6,500 single-family homes so far this year. The Colony Capital Group, headed by the Los Angeles billionaire Thomas J. Barrack Jr., has bought 4,000. Wall Street workers expecting worst bonus season since 2008 (NYP) State Comptroller Thomas DiNapoli estimates that the average bonus this year will be $101,000 — a 16.5 percent decline from last year and almost a 50 percent decline since 2006, when the average was $191,360. ‘‘I don’t think this year’s bonuses are going to be very good,’’ said Dan Shaffer, CEO of Shaffer Asset Management. ‘‘I don’t believe the typical bonuses, as we used to know them, exist anymore.’’ Obama Meets with Boehner Privately at White House (Bloomberg) The meeting was the first known face-to-face conversation between the two leaders since Nov. 16, when Boehner and other congressional leaders sat down with Obama at the White House. They have talked on the telephone since then. Obama met with Nancy Pelosi, the House Democratic minority leader, on Dec. 7. Investors offer about $38.8 billion in Greek debt buyback (Reuters) Greece is set to purchase back about half of its debt owned by private investors, broadly succeeding in a bond buyback that is key to the country's international bailout, a Greek government official said on Saturday. Hefner Husband Takes Insider Trading Into Playboy Bedroom (Bloomberg) Christie Hefner, [daughter of Hugh and] former chief executive officer of Playboy Enterprises Inc., said she was shocked as her husband of 15 years, William Marovitz, confessed to her that he was being investigated for suspicious trading in Playboy shares. They were in their apartment atop a 42-story Lincoln Park tower overlooking the glittering Chicago skyline and Lake Michigan on a March evening in 2010. “He told me he had been contacted by the SEC,” Hefner said later in testimony before the U.S. Securities and Exchange Commission, which didn’t accuse her of any wrongdoing. “And when did you learn your husband owned shares of Playboy?” she was asked. “In that conversation,” she replied. Hefner's husband is just one of more than 400 persons the SEC and the U.S. Department of Justice have accused of insider trading in a crackdown in the last five years, according to data compiled by Bloomberg. All involved betrayal -- of clients, employers, relatives or friends. The Hefner episode and a handful of cases like it include an especially cruel breach of trust: betrayal of a wife by a husband. Tennis star Novak buys up world's supply of donkey cheese at £400 a pound for new restaurant chain (DM) The cheese, known as pule, will be one of the key attractions at a chain of restaurants the Wimbledon champion and world number one is opening in his Serbian homeland...The Zasavica farm, which lies 50 miles west of the Serbian capital Belgrade, boasts a herd of 130 and is said to be the only place in the world where donkeys are milked for cheese. Banking Industry Squirms Over European Rate Probe (WSJ) The scandal over banks' attempted manipulation of interest rates has mostly centered on the London interbank offered rate. But Libor's lesser known cousin, the euro interbank offered rate, or Euribor, is facing mounting attacks. The European Union is expected soon to accuse multiple banks of attempted collusion in the setting of Euribor, according to people briefed on the probe. Barclays has already acknowledged trying to rig the rate, and other banks are likely to be pressed by regulators in the U.S., U.K. and elsewhere into similar admissions, according to industry and regulatory officials. Mortgage Crisis Presents a New Reckoning to Banks (NYT) Regulators, prosecutors, investors and insurers have filed dozens of new claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and others, related to more than $1 trillion worth of securities backed by residential mortgages. Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life. Crisis Measure Nears End (WSJ) Barring action by Congress, the FDIC on Dec. 31 will stop providing an unlimited guarantee on zero-interest bank accounts used by businesses and municipalities for payroll and other services. The guarantee would then revert to the normal $250,000 in insurance per depositor at any given bank. If the guarantee isn't extended, FBR Capital Markets estimates as much as $250 billion in deposits could flow out of smaller banks to large banks or big money-market mutual funds. Stylish primate charms Toronto shoppers (The Star) A North York Ikea store attracted an unusual customer Sunday afternoon, when a tiny monkey dressed in a fitted faux shearling coat and diapers appeared in the store’s upper parking garage around 2 p.m. “It was just running around screaming,” said shopper Bronwyn Page...“It was really cute,” said Lisa Lin, another shopper. “It was smaller than a cat.” But if the monkey had hoped to stock up on Billy bookcases or Swedish meatballs, its plans were thwarted. The diminutive shopper never made it into the store, said manager Alvaro Carmona. No one was hurt in the incident, which lasted no more than half an hour, he added. Animal Services identified the monkey as a rhesus macaque, an Asian species that is prohibited in Ontario. The monkeys are known for their ability to live in diverse habitats – although Canadian winters obviously require a warm coat. The owner of the primate turned himself in to Animal Services just after 5 p.m. He was charged with owning a prohibited animal, an offence that carries a $200 fine. The seven-month-old monkey has somehow managed to escape his owner’s car in the Ikea parking lot, said animal control officer David Behan.

Opening Bell: 12.20.12

Report Says Libor-Tied Losses at Fannie, Freddie May Top $3 Billion (WSJ) Fannie Mae and Freddie Mac may have lost more than $3 billion as a result of banks' alleged manipulation of a key interest rate, according to an internal report by a federal watchdog sent to the mortgage companies' regulator and reviewed by The Wall Street Journal. The unpublished report urges Fannie and Freddie to consider suing the banks involved in setting the London interbank offered rate, which would add to the mounting legal headaches financial firms such as UBS AG and Barclays face from cities, insurers, investors and lenders over claims tied to the benchmark rate. Libor Documents May Boost Civil Suits (WSJ) Analysts have published a range of estimates of the potential impact to the industry of lawsuits stemming from the manipulation—in some cases they reach into the tens of billions of dollars or more. It likely will be years before the extent of any liabilities becomes clear. For the lawsuits to succeed, plaintiffs must prove that banks successfully altered the interest-rate benchmarks and caused the plaintiffs to suffer a loss. Michael Hausfeld, chairman of Hausfeld LLP, a co-lead counsel on one of the lawsuits, said the UBS settlement was "extremely useful" for the litigation. The "extraordinary emails" published by the regulators exposed the "pervasiveness of the culture and the activity." UBS Trader Hayes Exposed at Core of Libor Investigation (Bloomberg) Tom Hayes, one of two former UBS AG traders charged by U.S. prosecutors, is portrayed by American regulators as the kingpin of a three-year campaign that succeeded in manipulating global interest rates. Hayes, 33, was charged with wire fraud and price-fixing, the Department of Justice said in a criminal complaint unsealed yesterday. The trader and Roger Darin, a former short-term interest-rates trader at UBS whose responsibilities included the firm’s yen Libor quotes, were also charged with conspiracy...Hayes colluded with brokers, counterparts at other firms and his colleagues to manipulate the rate, the Justice Department said. Between 2006 and 2009, a UBS trader made at least 800 requests to the firm’s yen Libor rate-setters, about 100 to traders at other banks, and 1,200 to interdealer brokers, according to the Commodity Futures Trading Commission, which didn’t identify Hayes by name. “Many UBS yen derivatives traders and managers were involved in the manipulative conduct and made requests to serve their own trading positions’ interests,” the CFTC said. “But the volume of unlawful requests submitted by one particular senior yen derivatives trader in Tokyo dwarfed them all.” IntercontinentalExchange Agrees to Acquire NYSE Euronext (Bloomberg) IntercontinentalExchange Inc., the 12-year-old energy and commodity futures bourse, agreed to acquire NYSE Euronext for cash and stock worth $8.2 billion, moving to take control of the world’s biggest equities market. ICE, based in Atlanta, will pay $33.12 a share for the owner of the New York Stock Exchange, 38 percent above yesterday’s closing price, according to a statement today. Both boards approved the proposal and the companies expect to complete the transaction in the second half of 2013. Last year, the U.S. Justice Department blocked a joint hostile bid by ICE and Nasdaq OMX Group for the New York-based company on concern the combination would dominate U.S. stock listings. Greece Faces 'Make or Break' Year (FT) We can make it next year if we can stick to the program agreed with the EU and IMF," finance minister Yannis Stournaras said in an interview with the Financial Times. However, "the break would be if the political system finds the situation too difficult to handle", he added, referring to the danger of social unrest about austerity that could force the two left-of-center parties to bring down the governing coalition. "What we have done so far is necessary but not sufficient to achieve a permanent solution for Greece," Mr Stournaras said. "The issue now is implementation." Boehner's 'Plan B' Gets Pushback (WSJ) The mood at the White House was gloomy, while on Capitol Hill it fluctuated. Few seemed confident the nation would avoid the tax increases and spending cuts known as the fiscal cliff, but others noted major Washington deals are usually reached only after several near-death experiences. Preparing for the World's End, Just in Case (WSJ) Tony Brown, a private investigator in Southern California, says he has spent nearly $60,000 preparing for Teotwawki — an acronym for "the end of the world as we know it"—or SHTF—when the "s--- hits the fan." Mr. Brown has purchased an ultralight plane and amassed three tons of food in his kitchen, about a third in freeze-dried meals. About a year ago, Mr. Brown started a website to recruit a community of preppers to plan for a cataclysm. In the first several months, he said he received few inquiries. But by the summer, traffic to the site soared and applications have come rolling in since. He recently capped the group at 175 members—all are responsible for their own one-year supply of food—though he is still seeking a doctor, meteorologist and ham-radio operator. Mr. Brown has contingency plans for four doomsday scenarios he deems most likely—a supervolcano, solar flare, major earthquake or hyper inflation—and a large underground bunker in case of a nuclear attack. He doesn't believe the world will end on Dec. 21, "but, just in case, I want to have everything ready by then," he said. US Economy Grew 3.1%; Jobless Claims Rise (Reuters) Weekly jobless claims rose to 361,000 in the latest week. Claims has been expected to rise to 357,000, from 343,000 the prior week. BofA’s Moynihan Said to Kill Proposal to Cut Pay for Brokers (Bloomberg) Bank of America Corp. Chief Executive Officer Brian T. Moynihan blocked a proposal to cut the main component of most brokers’ pay for 2013, said a person with direct knowledge of the matter. The plan would have reduced the so-called grid payout for Merrill Lynch financial advisers by two percentage points, the person said, requesting anonymity because it wasn’t made public. The changes, which would have affected advisers generating less than $1 million in commissions, were seen as a way to cushion the costs of new bonuses, the person said. In $18 Million Theft, Victim Was a Canadian Maple Syrup Cartel (NYT) It was an inside job of sorts. Thieves with access to a warehouse and a careful plan loaded up trucks and, over time, made off with $18 million of a valuable commodity. The question is what was more unusual: that the commodity in question was maple syrup, or that it came from something called the global strategic maple syrup reserve, run by what amounts to a Canadian cartel. On Tuesday, the police in Quebec arrested three men in connection with the theft from the warehouse, which is southwest of Quebec City. The authorities are searching for five others suspected of being involved, and law enforcement agencies in other parts of Canada and the United States are trying to recover some of the stolen syrup. Both the size and the international scope of the theft underscore Quebec’s outsize position in the maple syrup industry. Depending on the year, the province can produce more than three-quarters of the world’s supply. And its marketing organization appears to have taken some tips from the producers of another valuable liquid commodity when it comes to exploiting market dominance. “It’s like OPEC,” said Simon Trépanier, acting general manager of the Federation of Quebec Maple Syrup Producers. “We’re not producing all the maple syrup in the world. But by producing 70 to 78 percent, we have the ability to adjust the quantity that is in the marketplace.” NYers who believe in Mayan apocalypse search for sex before the world ends (NYP) While some people around the world are arming themselves and digging into bunkers, many New Yorkers are simply hoping for a hot time. “I will be looking for an end-of-the-world hook-up,” Dennis Cintron, 29, a Lower East Side bartender, told The Post. “If you’re going to go out, go out with a bang.” Cintron said he’ll buy new clothes and get a haircut for the big day because he wants some “companionship” to ring in the rapture. Sara Saperstein, 26, of Bushwick is also hoping for one last romp. “It’s like New Year’s. I want to go out on a wild note!” Saperstein said. She won’t have trouble finding a spot for that. More than a dozen bars and clubs in New York City are throwing end-of-days bashes, including a comedy show at the Bell House in Gowanus and an “End of the Funking World Party” at B.B. King Blues Club in Midtown. Other singles posted ads on Craigslist.org and OKCupid.com, seeking apocalypse-themed dates, “casual encounters” and even “end of the world sex.” “If you’ve got no plans for the apocalypse, let’s get together,” wrote a 30-year-old single guy from Midtown. He added, “Send me how you’d like to spend your last hours on earth — and a photo.”

Opening Bell: 02.28.13

EU Bonus Rules Meet Anger (WSJ) The new rules would prevent banks from promising bonuses that exceed an employee's salary—though, with shareholder approval, bonus payments could rise to double the salary. The rules, which are supposed to kick in at the beginning of next year and appear to be the world's toughest, still need to be approved by EU member states and the full European Parliament. European banking executives and trade groups say the rules—which are likely to apply to all European bank's employees around the world—will put the industry at a severe disadvantage relative to U.S. and Asian banks, and that it will provoke unintended consequences. Banks early Thursday weren't yet publicly commenting as they digested the news. But executives privately didn't hold back. "It's a disaster," said a senior investment-banking executive at a top European bank. "It's a crazy policy" that could jeopardize European banks' abilities to hire employees in the U.S. or Asia. Jockeying Stalls Deal On Spending Cuts (WSJ) With mandatory across-the-board spending cuts set to begin Friday, the White House and congressional Republicans are poised to let the deadline pass, each calculating that their hand in negotiations only grows stronger if they scorn a quick compromise. The first face-to-face meeting on the issue between President Barack Obama and congressional leaders won't happen until Friday—the deadline for Mr. Obama to set in motion $85 billion in broad spending cuts. None of the participants expect the morning meeting at the White House to produce a breakthrough. In the run-up, with no serious talks under way, each side is maneuvering to ensure the other catches the blame if the cuts kick in. Cuts Unlike To Deliver Promised US Budget Savings (Reuters) The $85 billion cut to budget authority amounts to about 2.4 percent of the $3.6 trillion the U.S. government is expected to spend in the fiscal year that ends on Sept. 30. The actual amount of savings is much less - $43 billion in the current fiscal year, according to the Congressional Budget Office. That's because federal agencies don't spend all of the money they are allocated in any given fiscal year. A $1 billion aircraft carrier, for example, may take years to build. Even at that lower level, the effects are likely to ripple across the world's largest economy in a way that will work against deficit-reduction efforts. Scrutiny Of Heinz Trades Grows (WSJ) The Financial Industry Regulatory Authority, a Wall Street self-regulator, and the Federal Bureau of Investigation are reviewing numerous trades in Heinz stock shortly before the buyout announcement sent the share price soaring Feb. 14, the people said. The inquiries add to an investigation the Securities and Exchange Commission disclosed Feb. 15 into what it called a "highly suspicious" $90,000 purchase of stock options the day before the deal, a position with a potential profit of $1.7 million. The FBI also has said it launched a criminal investigation into options activity ahead of the deal. Flowers Foods Set To Buy Wonderbread From Hostess (NYP) After no other bidders emerged to challenge it, Flowers Foods is set to snare Wonder and a slew of other bread brands being sold by bankrupt Hostess Brands for $360 million. How The Pope's Retirement Package Compares To Yours (CNBC) Let's start with the basics: The pope emeritus will receive a monthly pension of 2,500 euros, according to Italian newspaper La Stampa. That translates to almost $3,300, or close to the monthly maximum of $3,350 that Social Security will pay to an American who retires this year. Few people will actually qualify for that amount. For starters, you would have to wait until 70 to retire. You would also have to spend most of your working life earning Social Security's taxable maximum pay, which is set at $113,700 this year. "That's quite rare," said Richard Johnson, director of the program on retirement policy at the Urban Institute. He pointed out that the average Social Security check is about $1,200 a month — not enough to pay for the typical American retiree's expenses. "For most people, if you look at the median, Social Security counts for about 40 percent of their income. So it's important, but people rely a lot on other savings, like pensions or 401(k) savings," Johnson said. A big nest egg is not something the pope emeritus has to worry about. The Roman Catholic Church will cover his living expenses, provide him with a spacious home inside the Vatican and pay for everything from cooked meals to housekeepers, according to The Telegraph. Such services are not available to the typical American senior, unless he or she pays for an assisted living facility or resides in a nursing home, Johnson said...Health care costs are one of the big risks that older Americans face, and while Medicare pays for the bulk of their expenses, many things are left uncovered, Johnson said. Meanwhile, the pope emeritus will continue to be a member of the Vatican's generous private health care policy, the BBC reported. Blackstone Profits From Regulation With Citigroup Deal (Bloomberg) Blackstone has devised a way to profit from regulation: It’s helping banks meet tougher capital rules without the pain of selling assets or raising equity. The firm last year insured Citigroup against any initial losses on a $1.2 billion pool of shipping loans, said two people with knowledge of the transaction, who asked not to be identified because the matter is private. The regulatory capital trade, Blackstone’s first, will let Citigroup cut how much it setsaside to cover defaults by as much as 96 percent, while keeping the loans on its balance sheet, the people said. RBS Moves To Appease UK (WSJ) The 81%-state-owned bank unveiled a series of moves to ease government and regulatory pressure on the bank to become more U.K. focused and better capitalized. Chief Executive Stephen Hester confirmed that it would list around 25% of the U.S.-based RBS Citizens bank in the next two years "to highlight the valuable nature of the business." RBS also said it would further pare back its investment bank, shedding jobs and cutting risk-weighted assets to £80 billion ($121.3 billion), from £101.3 billion at the end of 2012. Unemployment aid claims fall by 22,000 last week (AP) The number of Americans seeking unemployment aid fell 22,000 last week to a seasonally adjusted 344,000, evidence that the job market may be picking up. The four-week average of applications dropped 6,750 to 355,000, the Labor Department said Thursday. That was the first drop in three weeks. Too Big To Fail Hurting Too Small To Compete Banks (Bloomberg) Investors such as Joshua Siegel, founder and managing principal at New York-based StoneCastle Partners LLC, see bigger changes at the other end of the spectrum. Small banks will seek mergers because their management teams are aging and new regulations are too costly to bear, he says. “If you need one major overriding theme of the industry in the next three, five, seven, 10 years: massive consolidation, thousands of banks,” says Siegel, whose firm managed $5.1 billion as of the end of last year and invests in small banks. In the U.S., “I do see probably anywhere from 2,000 to 4,000 banks being swallowed up, and what you’ll see then is a more- concentrated system.” Dennis Rodman Tells Kim Jong Un: You Have A Friend For Life (NYP) Rodman and Kim sat side by side at an exhibition game in Pyongyang on Thursday, chatting as they watched players from North Korea and the US play in mixed teams, Alex Detrick, a spokesman for the New York-based VICE media company, told The Associated Press. Rodman later addressed Kim before a crowd of thousands, telling him, "You have a friend for life," Detrick said. The encounter makes Rodman the most high-profile American to meet with the young North Korean leader, said to be a diehard basketball fan.

Opening Bell: 07.10.12

Diamond To Forgo Deferred Bonuses (WSJ) Former Barclays Chief Executive Robert Diamond has given up bonuses of up to £20 million ($31 million) in an apparent effort to shield the lender as the bank looks to defuse anger following the rate-fixing scandal...According to Mr. Diamond's contract, he will receive up to 12 months' salary, pension allowance and other benefits. Barclays Chairman Marcus Agius said that this amounts to around £2 million. Paulson Funds Fell In June As Rally Undercut Euro Wager (Bloomberg) The $22 billion firm had losses in all its funds last month as stock markets rose. The losses were led by a 7.9 percent drop in his Advantage Plus Fund, according to an update to investors obtained by Bloomberg News. That leaves the fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, down 16 percent this year. Einhorn says Fed stimulus counterproductive (Reuters) "I think it's actually counterproductive," Einhorn said of the stimulus program, adding that it lowers the standard of living and drives up food and oil prices. He said he would suggest a rise in interest rates on U.S. Treasury bonds to "a reasonable level" of 2 to 3 percent. Einhorn said Apple, which he praised at this year's Ira Sohn investing conference, was "the best big-growth company we have." "We're two, three years into the Apple investment, and the way it seems headed it's likely we'll be there for a good while longer," he said. "I think the stock is very very substantially undervalued." He said Amazon.com Inc was "tough on its competitors" because it does not "feel the need to make a profit." "It's very hard to compete against somebody who doesn't feel the need to make a profit," he said, adding that he is not "short" Amazon. Investment Bankers Face Termination As Europe Fees Fall (Bloomberg) Credit Suisse and UBS face the most pressure to boost efficiency as that country runs ahead of others in introducing tougher capital and liquidity rules to curtail risk-taking, making some businesses unviable...While the situation may be most acute at the Swiss banks, similar dynamics are at work at other firms as the debt crisis drags on, capital requirements ratchet higher and economic growth grinds to a halt. “Bankers are really gloomy and a lot of people are worried about their jobs,” said Edward Cumming-Bruce, a partner at London-based advisory firm Gleacher Shacklock LLP who has more than 20 years’ experience. “Banks are under remorseless pressure to cut costs and balance sheets as we witness a significant change in the way the financial industry works.” Sitting for More Than Three Hours a Day Cuts Life Expectancy (WSJ) Sitting down for more than three hours a day can shave a person's life expectancy by two years, even if he or she is physically active and refrains from dangerous habits like smoking, according to a study to be published on Tuesday in the online journal BMJ Open. Watching TV for more than two hours a day can exacerbate that problem, decreasing life expectancy by another 1.4 years, said the report, which analyzed five underlying studies of nearly 167,000 people over a range of four to 14 years. Futures Broker Freezes Accounts (WSJ) Peregrine, based in Cedar Falls, Iowa, couldn't be reached for comment on the NFA action, but in an earlier statement to clients said "some accounting irregularities are being investigated regarding company accounts." "What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds," said PFGBest in its statement. Also in the statement, the firm said Russell R. Wasendorf Sr., its founder, chairman and chief executive, had experienced a "recent emergency" and described it as a "suicide attempt." A spokeswoman for PFGBest said Mr. Wasendorf was in critical condition in a hospital. Four Companies Break Through IPO Drought (WSJ) What do two fast-growing technology companies, an iconic guitar maker and a skin-infection specialist have in common? All four aim to break the latest dry spell in the IPO market. Fender Musical Instruments Corp., which has supplied guitars to rock artists from Buddy Holly to Kurt Cobain and John Mayer, network-security firm Palo Alto Networks Inc., travel website Kayak Software Corp. and pharmaceutical firm Durata Therapeutics Inc. said Monday that they plan to push ahead with initial public offerings in coming weeks. JPMorgan Silence On Risk Model Spurs Calls For Disclosure (Bloomberg) The U.S. Securities and Exchange Commission is probing JPMorgan’s belated May 10 disclosure that a change to its mathematical model for gauging trading risk helped fuel the loss in its chief investment office. While the SEC would have to prove that the biggest U.S. bank improperly kept important information from investors, regulators probably will press Wall Street firms to tell more about the risks they’re taking, three former SEC lawyers said. Would You Stress Over A Millionaire Wife? (CNBC) The study, conducted by SEI and Phoenix Marketing, found that a third of the women who are the financial leads in millionaire households say their partner feels “stressed” by their financial roles. By contrast, only 14 percent of males in male-led millionaire households said they feel tension from their partner. Actor who kicked in doors to Ed Sullivan theater escapes jail time (NYDN) The struggling actor who kicked in the glass doors to the Ed Sullivan Theatre and urinated on the lobby floor last year got lucky with a no-jail sentence Monday. But he had to pay $7,377.28 in restitution. James Whittemore, 23, who now deejays in Massachusetts under the name DJ Nutron, never formally apologized to David Letterman face to face, but he said he'd like to..."Someone stole my iPhone, I quit my job, my girlfriend broke up with me, I was having a rough day," he said.