Opening Bell: 11.14.12

Austerity Strikes Sweep Across Europe (WSJ) Unions in Spain, Portugal and Greece went on strike Wednesday to protest government austerity plans amid a wide economic contraction across Europe's periphery, but questions remained about the unions' ability to influence economic policy. The general strike led to minor violent incidents in Spain, even though morning business activity seemed to remain relatively normal. Spain's government said 32 people had been arrested since midnight, and national TV showed small clashes with police, as well as rallies held by union members in transportation hubs like train and subway stations. The Spanish unions are protesting austerity cuts and an unemployment rate at 25% of the workforce. Geithner Warns Against Delaying Solution to US Fiscal Crisis (Reuters) With lawmakers and the White House bickering over how to put the country on a sustainable fiscal path, a number of lawmakers and think tanks have argued for more time. "That will leave all the uncertainty you don't like on the table," Geithner said at an event sponsored by the Wall Street Journal in his first public comments on the looming fiscal crisis since President Barack Obama won re-election last week. Facebook Investors Brace For Big Round Of Unlocked Shares (Bloomberg) Restrictions lift today on 804 million shares held by former employees and those who sold at the initial public offering, almost doubling the total available for trading, according to a regulatory filing. Geithner’s Money Fund Overhaul Push Sparks New Opposition (Bloomberg) Geithner, heading a Washington meeting of the Financial Stability Oversight Council, a group formed by the Dodd-Frank Act to address systemic financial risks, won unanimous approval for a draft recommendation to the SEC spelling out three ways to overhaul the $2.6 trillion industry. A new option would require capital buffers of as much as 3 percent of assets, while two other solutions he offered were opposed earlier by the fund industry and rejected in August by an SEC majority. Representatives for the fund industry, who last month put forth their own plan, immediately denounced the proposals as stale and unhelpful. While Geithner has said the SEC is best positioned to address money funds, he has also said that the regulators’ panel, often referred to as FSOC, might intervene and subject funds to oversight by the Federal Reserve if the SEC fails to act. SEC Expands Knight Probe (WSJ) The Securities and Exchange Commission has deepened its probe into whetherKnight Capital Group Inc. did enough to police its trading systems before computer errors nearly destroyed the brokerage. The inquiry, which began after Knight's errant Aug. 1 trades saddled it with more than $450 million in losses, initially focused more narrowly on what caused the errors. The probe has broadened to look further at the company's risk-control procedures and Knight's compliance with a rule implemented last year—called the market-access rule—that requires brokerages to guard against these sorts of problems, say people familiar with the investigation. Blankfein Warns Over Cuts (FT) The financial industry should not go “overboard” in cutting costs in reaction to current market conditions, the chief executive of Goldman Sachs said yesterday. “Our industry has a long history of letting too many people go at the bottom of the cycle and hiring too many at the top,” Mr. Blankfein told an industry conference in New York. Pepsi's New Fat Blocking Soda Unleashed On Japanese Consumers (Forbes) Up until recently, soda manufacturers have at least tacitly acknowledged that their carbonated swills aren’t healthy options. Up until recently. [Then] yesterday, Pepsi-Cola in Japan launched a fiber-infused iteration of its cola drink. According to Suntory, the sole distributor of Pepsi in Japan, the beverage contains “indigestible dextrin,” more commonly known as dietary fiber. This magic ingredient, Suntory’s website claims, helps reduce the amount of fat that’s absorbed into the body, hence the tagline of the new drink as a “fat-blocking soda.” Suntory also proffers that the drink quells the rise in triglycerides in the blood that normally follows a meal. Rochdale May Be At The End Of Its Rope (NYP) Stamford, Conn.-based Rochdale Securities is struggling to secure a deep-pocketed buyer three weeks after a former trader, identified as David Miller, saddled the firm with $1 billion in “unauthorized” Apple trades that it wasn’t able to cover. CEO Dan Crowley has been working around the clock to identify a “white knight” willing to save the 55-person broker dealer, according to sources. But staffers of the 37-year old firm worry ongoing investigations will turn off suitors and impede the firm’s ability to operate as a broker dealer. BNY Mellon Unit Settles Madoff Suits (WSJ) The Ivy Asset Management unit will pay $210 million to resolve a series of lawsuits claiming that it concealed doubts about the business operated by convicted Ponzi schemer Bernard L. Madoff. Shareholders To Citi: Break This Company Up (AP) Trillium Asset Management, a shareholder advisory firm with more than $1 billion in assets under management, effectively renewed call made recently by Sandy Weill, Citigroup’s former CEO and one of the founding fathers of the “financial supermarket” concept that helped turn Citi into a global banking behemoth. Siewert In Line For Goldman Partnership (NYP) Hired only last March, Richard “Jake” Siewert, the head of corporate communications, could be among the 70 or so new partners the 144-year-old bank is set to announce this morning...Siewert’s predecessor, Lucas Van Praag, made partner in 2006 — five years after joining the firm. Paula Broadwell Warned Gen. Allen Against "Seductress" Jill Kelley (CBS) A senior official has told CBS News correspondent David Martin the vast majority of the emails between Allen and Tampa socialite Jill Kelley were "completely innocuous," and the general believes many of the 20-30,000 pages under scrutiny are duplicates. The official said that in some of the emails, Kelley would say things like, "saw you on television and you were terrific," and Allen would write back with "thanks, sweetheart." The official said the two never discussed sex and that Allen had never been alone with Kelley. Nonetheless, CBS News correspondent Bob Orr says Pentagon and FBI sources describe the communications as "potentially inappropriate" and "flirtatious," and another source says they were likely more than just innocent exchanges -- noting that the Pentagon's Inspector General is involved for a reason. Among the hundreds of emails exchanged between Allen and Kelly - Orr reports that investigators are focusing on one from several months ago. In it, Allen told Kelley he'd just received an anonymous email warning him to stay away from her. Sources say that the anonymous email came from Broadwell, Petraeus' mistress, who allegedly warned Gen. Allen that Kelley was "a seductress." Broadwell allegedly sent similar warnings to other military officers at the U.S. Central Command, located near Kelley's Tampa home. Broadwell, who had been out of sight since the scandal emerged on Friday, was spotted Tuesday night preparing dinner and drinking a glass of wine inside her brother's Washington home.
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Austerity Strikes Sweep Across Europe (WSJ)
Unions in Spain, Portugal and Greece went on strike Wednesday to protest government austerity plans amid a wide economic contraction across Europe's periphery, but questions remained about the unions' ability to influence economic policy. The general strike led to minor violent incidents in Spain, even though morning business activity seemed to remain relatively normal. Spain's government said 32 people had been arrested since midnight, and national TV showed small clashes with police, as well as rallies held by union members in transportation hubs like train and subway stations. The Spanish unions are protesting austerity cuts and an unemployment rate at 25% of the workforce.

Geithner Warns Against Delaying Solution to US Fiscal Crisis (Reuters)
With lawmakers and the White House bickering over how to put the country on a sustainable fiscal path, a number of lawmakers and think tanks have argued for more time. "That will leave all the uncertainty you don't like on the table," Geithner said at an event sponsored by the Wall Street Journal in his first public comments on the looming fiscal crisis since President Barack Obama won re-election last week.

Facebook Investors Brace For Big Round Of Unlocked Shares (Bloomberg)
Restrictions lift today on 804 million shares held by former employees and those who sold at the initial public offering, almost doubling the total available for trading, according to a regulatory filing.

Geithner’s Money Fund Overhaul Push Sparks New Opposition (Bloomberg)
Geithner, heading a Washington meeting of the Financial Stability Oversight Council, a group formed by the Dodd-Frank Act to address systemic financial risks, won unanimous approval for a draft recommendation to the SEC spelling out three ways to overhaul the $2.6 trillion industry. A new option would require capital buffers of as much as 3 percent of assets, while two other solutions he offered were opposed earlier by the fund industry and rejected in August by an SEC majority. Representatives for the fund industry, who last month put forth their own plan, immediately denounced the proposals as stale and unhelpful. While Geithner has said the SEC is best positioned to address money funds, he has also said that the regulators’ panel, often referred to as FSOC, might intervene and subject funds to oversight by the Federal Reserve if the SEC fails to act.

SEC Expands Knight Probe (WSJ)
The Securities and Exchange Commission has deepened its probe into whetherKnight Capital Group Inc. did enough to police its trading systems before computer errors nearly destroyed the brokerage. The inquiry, which began after Knight's errant Aug. 1 trades saddled it with more than $450 million in losses, initially focused more narrowly on what caused the errors. The probe has broadened to look further at the company's risk-control procedures and Knight's compliance with a rule implemented last year—called the market-access rule—that requires brokerages to guard against these sorts of problems, say people familiar with the investigation.

Blankfein Warns Over Cuts (FT)
The financial industry should not go “overboard” in cutting costs in reaction to current market conditions, the chief executive of Goldman Sachs said yesterday. “Our industry has a long history of letting too many people go at the bottom of the cycle and hiring too many at the top,” Mr. Blankfein told an industry conference in New York.

Pepsi's New Fat Blocking Soda Unleashed On Japanese Consumers (Forbes)
Up until recently, soda manufacturers have at least tacitly acknowledged that their carbonated swills aren’t healthy options. [Then] yesterday, Pepsi-Cola in Japan launched a fiber-infused iteration of its cola drink. According to Suntory, the sole distributor of Pepsi in Japan, the beverage contains “indigestible dextrin,” more commonly known as dietary fiber. This magic ingredient, Suntory’s website claims, helps reduce the amount of fat that’s absorbed into the body, hence the tagline of the new drink as a “fat-blocking soda.” Suntory also proffers that the drink quells the rise in triglycerides in the blood that normally follows a meal.

Rochdale May Be At The End Of Its Rope (NYP)
Stamford, Conn.-based Rochdale Securities is struggling to secure a deep-pocketed buyer three weeks after a former trader, identified as David Miller, saddled the firm with $1 billion in “unauthorized” Apple trades that it wasn’t able to cover. CEO Dan Crowley has been working around the clock to identify a “white knight” willing to save the 55-person broker dealer, according to sources. But staffers of the 37-year old firm worry ongoing investigations will turn off suitors and impede the firm’s ability to operate as a broker dealer.

BNY Mellon Unit Settles Madoff Suits (WSJ)
The Ivy Asset Management unit will pay $210 million to resolve a series of lawsuits claiming that it concealed doubts about the business operated by convicted Ponzi schemer Bernard L. Madoff.

Shareholders To Citi: Break This Company Up (AP)
Trillium Asset Management, a shareholder advisory firm with more than $1 billion in assets under management, effectively renewed call made recently by Sandy Weill, Citigroup’s former CEO and one of the founding fathers of the “financial supermarket” concept that helped turn Citi into a global banking behemoth.

Siewert In Line For Goldman Partnership (NYP)
Hired only last March, Richard “Jake” Siewert, the head of corporate communications, could be among the 70 or so new partners the 144-year-old bank is set to announce this morning...Siewert’s predecessor, Lucas Van Praag, made partner in 2006 — five years after joining the firm.

Paula Broadwell Warned Gen. Allen Against "Seductress" Jill Kelley (CBS)
A senior official has told CBS News correspondent David Martin the vast majority of the emails between Allen and Tampa socialite Jill Kelley were "completely innocuous," and the general believes many of the 20-30,000 pages under scrutiny are duplicates. The official said that in some of the emails, Kelley would say things like, "saw you on television and you were terrific," and Allen would write back with "thanks, sweetheart." The official said the two never discussed sex and that Allen had never been alone with Kelley. Nonetheless, CBS News correspondent Bob Orr says Pentagon and FBI sources describe the communications as "potentially inappropriate" and "flirtatious," and another source says they were likely more than just innocent exchanges -- noting that the Pentagon's Inspector General is involved for a reason. Among the hundreds of emails exchanged between Allen and Kelly - Orr reports that investigators are focusing on one from several months ago. In it, Allen told Kelley he'd just received an anonymous email warning him to stay away from her. Sources say that the anonymous email came from Broadwell, Petraeus' mistress, who allegedly warned Gen. Allen that Kelley was "a seductress." Broadwell allegedly sent similar warnings to other military officers at the U.S. Central Command, located near Kelley's Tampa home. Broadwell, who had been out of sight since the scandal emerged on Friday, was spotted Tuesday night preparing dinner and drinking a glass of wine inside her brother's Washington home.

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Opening Bell: 08.03.12

JPMorgan London Whale Was Prodded (WSJ) A JPMorgan executive encouraged the trader known as the "London whale" to boost valuations on some trades, said a person who reviewed communications emerging from the bank's internal probe of recent trading losses. After reviewing emails and voice-mail messages, the bank has concluded that Bruno Iksil, the J.P. Morgan trader nicknamed for the large positions he took in the credit markets, was urged by his boss to put higher values on some positions than they might have fetched in the open market at the time, people familiar with the probe said. The bank's conclusion is based on a series of emails and voice communications in late March and April, as losses on his bullish credit-market bet mounted, the people said. The bank believes they show the executive, Javier Martin-Artajo, pushing Mr. Iksil to adjust trade prices higher, according to people close to the bank's investigation. At the time, Mr. Martin-Artajo was credit-trading chief for the company's Chief Investment Office, or CIO. RBS Loss Widens (WSJ) The 82%-government-owned bank reported a net loss of £1.99 billion ($3.09 billion), wider than the loss of £1.43 billion a year earlier. However, the result was hit by a £3 billion accounting charge for the fair value of the company's debt and a number of provisions for misselling financial products. Analysts focused on the more-positive underlying figures for the half, helping to make its shares the leading gainer on the FTSE 100. Excluding the own-debt charge, RBS would have posted a net profit of £287 million. It posted an operating profit of £1.83 billion, down from the £1.97 billion a year earlier. Nevertheless, RBS warned that it faces a number of lawsuits. The bank is cooperating with regulators in the U.S., Japan and the U.K., who are probing whether banks colluded to try and rig benchmark rates including the London interbank offered rate. RBS said that it had fired a number of traders following the investigations but said it was too early to estimate the fines the bank may have to pay. RBS’s CEO Blames Libor-Manipulation On ‘Handful’ Of Individuals (Bloomberg) RBS dismissed four employees for trying to influence the individual responsible for Libor submissions following an internal investigation, the bank said today, without identifying the staff involved. Hester said it is too early to estimate the potential cost of fines and litigation linked to rate-rigging. “The Libor issue is more to do with the wrongdoing of individuals than it is to do with a systemic problem,” Hester, 51, said on a call with journalists today after the Edinburgh- based bank reported a 22 percent drop in second-quarter operating profit. “It’s hugely regrettable that the actions of a relatively small number of wrongdoers, which seems to be the key issue here, has such a tainting effect on the industry.” Knight Said To Open Books To Suitors As Loss Pressure Grows (Bloomberg) Bank of America Corp. was among several potential partners that was in talks with Knight yesterday, said a person with knowledge of the matter. John Yiannacopoulos, a Bank of America spokesman, declined to comment. Loss Swamps Trading Firm (WSJ) Knight wouldn't comment on the status of the rescue talks. But market participants said the firm is running out of time. In the span of two days, the company's market value has plunged to $253.4 million from $1.01 billion, and its shares continued their nosedive in after-hours trading. "If they don't get an investor within the next 48 to 72 hours, I think Knight's going to have trouble surviving," said David Simon, chief executive of hedge fund Twin Capital Management LLC. Mt. Sinai urologist busted on charges he used spy cam to peek up subway riders’ skirts (NYDN) Dr. Adam Levinson, an assistant professor of urology at the hospital’s school of medicine, allegedly clipped a pen camera to a folded newspaper so he could peek up a woman’s skirt on a southbound 4 train about 5 p.m. Tuesday, authorities and a witness said. Sheldon Birthwright, 46, a construction worker who once worked for the Transportation Security Administration, said he sensed something wrong almost immediately after Levinson stepped on the train at E. 59th St. The doctor — a New York Medical College grad who twice won a national Patients’ Choice Award — held the newspaper at his side as he inched toward a woman wearing a knee-high dress and reading a Kindle. “He’s leaning on the pole right next to the door,” Birthwright told the Daily News. “He has a paper in his hand. But what’s mysterious about it, there’s a pen attached to the paper...He has it down in a very unsuspicious way. But every time the woman would move, he would move.” Catholic Fund Fails To Convince Believers (FT) JPMorgan Asset Management had hoped to attract investors who wanted exposure to investments that would not clash with tenets on issues such as birth control and civil rights. It also eschewed investments in governments of countries that have the death penalty. The aim was to replicate the success of funds compliant with Shariah law which have been in strong demand with Muslim investors. However, JPMorgan is to liquidate the Global Catholic Ethical Balanced Fund just over a year since it was launched. At May 31, it had net assets of just 4.3 million euros ($5.24 million), far short of a $30 million threshold outlined in its prospectus. Fake-bookers (NYP) Facebook admitted that some 83 million of the social network’s 955 million total users are fakes — meaning duplicates, spam or silly pages for pets. That represents nearly 9 percent of profiles on the site. The rash of fakes — equal to the population of Egypt — has shot up since Facebook’s rocky public debut in May, when it estimated “false” profiles accounted for 5 percent to 6 percent of its users. “These estimates are based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination, such as identifying names that appear to be fake or other behavior that appears inauthentic,” the company said in a recent regulatory filing. The spike is a major cause for concern, with advertisers and investors questioning Facebook’s effectiveness in reaching consumers. In particular, Facebook has been under scrutiny for slowing ad sales growth. Economy Adds 163,000 Jobs (WSJ) U.S. employers stepped up hiring in July as the economy continued its uneven recovery heading into this fall's presidential election. U.S. payrolls increased by a seasonally adjusted 163,000 jobs last month, the Labor Department said Friday, but the unemployment rate, obtained by a separate survey of U.S. households, ticked up one-tenth of a percent to 8.3%. Economists surveyed by Dow Jones Newswires expected a gain of 95,000 in payrolls and an 8.2% jobless rate. Family kept grandparents' deaths secret from Chinese diver until she won gold medal (YS) Chinese diver Wu Minxia's celebrations at winning a third Olympic gold medal were cut short after her family revealed the details of a devastating secret they had kept for several years. Wu's parents decided to withhold news of both the death of her grandparents and of her mother's long battle with breast cancer until after she won the 3-meter springboard in London so as to not interfere with her diving career. "It was essential to tell this white lie," said her father Wu Yuming...Wu's mother defended the decision to keep her situation private and admitted she only broached the subject of her breast cancer at this point because she is now in remission. Both of Wu's grandparents died more than a year ago, but the diver knew nothing of their passing until this week.

Opening Bell: 06.22.12

Citigroup Leads Wall Street Banks In Moody’s Downgrade Dismissal (Bloomberg) Moody’s two-grade cut of Citigroup’s ratings was unwarranted, arbitrary and failed to recognize the lender’s financial strength, the New York-based bank said in a statement. Investors shouldn’t rely on “opaque” credit ratings, it said. “Moody’s approach is backward-looking and fails to recognize Citi’s transformation over the past several years,” said the bank. “Citi believes that investors and clients have become much more sophisticated in their credit analysis over the past few years, and that few rely on ratings alone -- particularly from a single agency -- to make their credit decisions.” Moody's Downgrade of Banks ‘Absurd,’ Says Dick Bove (CNBC) “This is one of the most absurd things that Moody’s has ever done perhaps in the history of the company,” said Dick Bove, Vice President of Equity Research in the Financial Sector at Connecticut-based Rochdale Securities. JPMorgan Trading Loss Drove Three-Level Standalone Cut (Bloomberg) “It illustrates the challenges of monitoring and managing risk in a complex global organization and highlights the opacity of such risks,” Moody’s said. Ratings Downgrade Cuts Deeply At Morgan Stanley (NYT) In an e-mail sent to staff members after the downgrade was announced, Mr. Gorman tried to reassure employees about the bank’s future. “While we do not believe that this outcome reflects all of the transformative changes we have made to the firm, there is an acknowledgment in Moody’s decision today that real progress has been made at Morgan Stanley, in what is an extremely difficult environment for our industry,” he wrote. Hedge Funds Mask Identities (WSJ) It is the latest in-vogue accessory among hedge-fund managers: a "masked fund." Bridgewater Associates has "ZQPGGAV00000," John Paulson has "Paulson Fund 1" while Cliff Asness's AQR Capital Management prefers "805-1355888867." The cryptic monikers, more product barcodes than real handles, enable the hedge-fund managers to shield the identities of their funds from the prying eyes of regulators and outsiders in forms filed with the Securities and Exchange Commission...The practice, allowed under a new SEC instruction that lets firms preserve the anonymity of their clients in certain cases, has irked some investors and their advisers. They argue that hiding funds' identities in regulatory filings undermines Washington's efforts to make the reticent world of hedge funds more transparent and hinders investors' efforts to keep tabs on the firms that manage their assets. Emails Ties Goldman Manager, Rajaratnam (WSJ) A current Goldman managing director exchanged emails with Galleon founder Raj Rajaratnam ahead of a daily "morning meeting" at Galleon, according to previously undisclosed emails and wiretapped phone call transcripts reviewed by The Wall Street Journal. In the emails, the Goldman manager offered what he called "tiddie biddies" about some top technology firms, including Apple and Intel Corp. Anderson Cooper Berates Photo-Snapping Airplane Passenger (LAT) "Normally I would just be like, 'We're not going to win this one,' but I've lately become emboldened," Cooper said in an interview. "I grabbed the guy on the shoulder and I said something to the effect of, 'Bitch, what ... are you doing?'" Pimco’s Gross Warns Of Risk Assets (Bloomberg) Gross, who manages $261 billion for the Pimco Total Return Fund (PTTRX), said in a Twitter post that risk markets are vulnerable as the “monetary bag of tricks empties.” Spanish Plan Is Flawed, Says IMF (WSJ) The euro zone needs to quickly set up a mechanism that allows it to directly recapitalize weak banks, "in order to break the negative feedback loop that we have between banks and sovereigns," IMF Managing Director Christine Lagarde said after a meeting with the bloc's finance ministers in Luxembourg. Ms. Lagarde also called for "creative and inventive" measures from the European Central Bank, suggesting that the bank could restart its bond-buying program to keep struggling countries' funding costs in check or further cut already-low interest rates. Einhorn Enters $1 Million Buy-In Poker Tournament For Charity (Bloomberg) Einhorn, who finished 18th in the World Series of Poker’s main event in 2006, is among at least 42 entrants for the July 1-3 charity event in Las Vegas, known as the Big One for One Drop. Angry Moms Take On Nutella (Bloomberg) Laura Rude-Barbato, a coffee shop owner in Imperial Beach, California, used to feed her children Nutella several times a week [because she for some reason didn't realize that a chocolate spread might be filled with sugar]. It was easy to identify with the advertising that depicted a frenzied mom serving up the chocolate-hazelnut spread with the tagline “breakfast never tasted this good,” said Rude-Barbato. Then she noticed the 10.5 grams of sugar per tablespoon. “I had no idea,” she says. “I might as well have been giving my kids a brownie for breakfast.” Rude-Barbato kicked the Nutella habit, then joined a class action lawsuit in a federal court in California that claimed Ferrero SpA’s U.S. unit misled consumers via labeling and marketing into thinking Nutella was healthy.

Opening Bell: 01.23.13

Greece Charges Statisticians Over Size of Deficit (FT) Greece has brought criminal charges against the official responsible for measuring the country's debt, thereby calling into question the validity of its 172 billion euros second bailout by the EU and International Monetary Fund. Andreas Georgiou, head of the independent statistical agency Elstat, and two senior officials are accused of undermining the country's "national interests" by inflating the 2009 budget deficit figure used as the benchmark for successive austerity packages. The three statistical experts face criminal charges of making false statements and corrupt practices, a judicial official said, adding that if found guilty they could serve prison terms of five to 10 years. They have denied any wrongdoing. Spain's Recession Deepens (WSJ) Spain's central bank said a recession in the euro zone's fourth-largest economy deepened slightly in the final quarter of last year, but it said austerity cuts are bringing the country's runaway budget deficit under control. Obama-Bashing Swapped for Pragmatism at Davos (Bloomberg) “We have to move on in our society,” Blackstone found Stephen Schwarzman said today in an interview in Davos with Bloomberg Television’s Erik Schatzker. “I like President Obama as a person, and he’s well- intentioned.” Schwarzman, 65, warned in Davos in 2010 that banks could restrict lending because “their entire world is being shaken and they’re being attacked personally.” Later that year, at a nonprofit group meeting, he likened Obama’s tax proposals to Hitler’s invasion of Poland. Third Point LLC CEO Daniel Loeb, who in 2010 compared Wall Street’s Obama supporters to “battered wives,” will help lead a Jan. 25 Davos dinner discussion, “Can Capitalism Evolve?” Schwarzman apologized in 2010 for his comparison of Obama’s effort to double taxes on private-equity income to the invasion of Poland. He said the analogy was inappropriate and that the administration’s need to work with business “is still of very serious concern.” JPMorgan's Jamie Dimon Apologizes, Attacks (WSJ) James Dimon of J.P. Morgan Chase was prepared in Davos to apologize for the more than $6 billion of trading losses racked up by the so-called London Whale, but he certainly wasn’t prepared to abase himself...Min Zhu, deputy managing director of the International Monetary Fund, reeled off a string of statistics to show that the industry certainly hadn’t cleaned up its act since the crisis, and Paul Singer, principal of hedge fund Elliott Associates, was also keen to lambaste big banks, including Mr. Dimon’s. The two had some testy exchanges and the body language indicated that Messrs. Singer and Dimon have exchanged fire quite a few times previously. Still, Mr. Dimon gave us good as he got. He kicked off with repeating his apology to shareholders for the London Whale trading losses, which led to his own bonus being slashed, saying, “If you’re a shareholder of mine, I apologize deeply.” Having offered this apology he then went on the offense. He pointed out that his bank lent money to a whole host of worthy organizations such as schools, hospitals, governments, and Italian and Spanish corporates and governments. And he also had some snappy comebacks. Elliott’s Singer said that the global banks are “too big, too leveraged, too opaque,” which left Mr. Dimon with an easy retort about how could a hedge fund possibly criticize a bank about being opaque? “Our [securities filing] 10K is 400 pages long,” Mr. Dimon said. “What would you like to know?” Geithner Exit Next Friday (AFP) US Treasury Secretary Timothy Geithner, who steered the administration of President Obama through the financial crisis, will step down from his post Friday, a source told Agence France Presse yesterday. Golfer Mickelson recants tax rant (NYP) Mickelson — who hinted he might move from his home state of California to escape higher taxes — said he regretted his public rant on the issue after setting off a political firestorm. “Finances and taxes are a personal matter and I should not have made my opinions on them public,” according to a statement from Mickelson, who plans to elaborate today at the Farmers Insurance Open. “I apologize to those I have upset or insulted and assure you I intend to not let it happen again.” Senator Lautenberg Suggests Spanking In Store For Mayor Cory Booker (CI via DI) "I have four children, I love each one of them. I can't tell you that one of them wasn't occasionally disrespectful, so I gave them a spanking and everything was OK," Lautenberg said with a smile in his first public comments since Booker announced he was considering a run for Senate. Banker's Latest Bet: Teamwork on Bonds (WSJ) Texas banking tycoon Andrew Beal is known for making unconventional moves, including gambling on high-stakes poker and a self-financed plan to launch rockets into space. His latest gambit: an attempt to wring money from giant banks by banding together aggrieved bondholders. Mr. Beal's CXA Corp. ran a pair of advertisements late last year, one appearing in The Wall Street Journal. The ads listed an alphabet soup of residential mortgage-backed securities held by CXA and asked those with positions in the same securities to join the company in investigating possible infractions by banks that sold the debt. If the groups can prove the mortgages that underlie the bonds were approved through shoddy underwriting, they could be entitled to compensation—CXA's payday alone could be tens of millions of dollars. Firms Keep Stockpiles Of 'Foreign' Cash In US (WSJ) Some companies, including Internet giant Google, software maker Microsoft, and data-storage specialist EMC Corp, keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, according to people familiar with the companies' cash positions. In the eyes of the law, the Internal Revenue Service and company executives, however, this money is overseas. As long as it doesn't flow back to the U.S. parent company, the U.S. doesn't tax it. And as long as it sits in U.S. bank accounts or in U.S. Treasurys, it is safer than if it were plowed into potentially risky foreign investments. SEC Reins In Ratings Firm (WSJ) The U.S. Securities and Exchange Commission barred Egan-Jones Ratings Co. from issuing ratings on certain bonds, an unprecedented step by the regulator and a setback for a small credit-rating firm with a history of courting controversy. The SEC said Tuesday that Egan-Jones couldn't officially rate bonds issued by countries, U.S. states and local governments, or securities backed by assets such as mortgages, for at least the next 18 months. The ban was part of an agreement the SEC reached with Egan-Jones and its president, Sean Egan, to settle charges that they filed inaccurate documents with the regulator in 2008. The SEC alleged that Egan-Jones misled investors about its expertise, and that Mr. Egan caused the firm to violate conflict-of-interest provisions. Lindenhurst dentist busted after reporting to work reeking of booze and drilling teeth while allegedly drunk (NYDN) Dr. Robert Garelick was hauled out of his Lindenhurst office in handcuffs Monday after his dental hygienist smelled booze on his breath and caught him administering Novocain to the wrong side of a patient’s mouth. “I observed Dr. Garelick looking for cavities in the right side of the patient’s mouth, but the cavities were in the left side,” hygienist Kimberly Curtis told police in a written statement. “I pointed this out to the doctor and that’s when he ordered more Novocain for the patient,” Curtis told cops. “So now, he basically numbed the whole patient’s mouth.” After noticing Garelick’s wobbly behavior Monday, Curtis texted co-worker Dina Fara, who called 911. Curtis said she sent the message after Garelick used a drill to treat another patient who had a chipped tooth. “He was filing the tooth down,” Curtis said. “When you’re using that drill, you have to be very careful and have a steady hand.” She said that just before Garelick treated the chipped tooth, he slipped into his office. “I noticed that he was drinking from a white and purple squeeze bottle,” Curtis said. “At first I didn’t think anything was wrong,” Curtis said. “But right after, he took a drink from that bottle, he got up and walked past me. When he did this I smelled a strong odor of alcohol.” The dentist initially claimed he only had a couple of beers with pizza during lunch Monday, according to Suffolk County cops. But Garelick, who was charged with misdemeanor reckless endangerment, later confessed to his drunken dentistry while being taken to a police precinct in the back of squad car. “I never had any beers with my pizza. I’ve been sipping at that bottle all along today,” he told police, referring to his squeeze bottle filled with vodka, according to a criminal complaint.

Opening Bell: 01.08.13

Obama Said Close to Choosing Lew for Treasury Secretary (Bloomberg) President Barack Obama may choose White House Chief of Staff Jack Lew to replace Treasury Secretary Timothy F. Geithner as soon as this week, according to two people familiar with the matter. The selection of Lew would trigger a White House shuffle for Obama’s second term as he replaces his chief of staff and moves senior aides into new roles, said the people, who requested anonymity to discuss personnel matters. While Obama hasn’t made a final decision to pick Lew, the president’s staff has been instructed to prepare for his nomination, said one of the people. Rescued by a Bailout, AIG May Sue Its Savior (NYT) The board of A.I.G. will meet on Wednesday to consider joining a $25 billion shareholder lawsuit against the government, court records show. The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue — the taking of what became a 92 percent stake in the company, the deal's high interest rates and the funneling of billions to the insurer's Wall Street clients — deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for "public use, without just compensation." Greenberg: 'Cadre' Hurt AIG (NYP) Maurice “Hank” Greenberg, former chief executive officer of American International Group, says in a soon-to-be-published book that the company was almost destroyed by overzealous overseers. The insurer was “ultimately taken over and run aground by a cadre of auditors, lawyers, outside directors, and government officials,” according to an excerpt of “The AIG Story” on Amazon.com’s website. JPMorgan’s Staley Quits to Join BlueMountain Hedge Fund (Bloomberg) ames E. Staley, the JPMorgan Chase executive who was once seen as a possible candidate to become chief executive officer, quit to join BlueMountain Capital Management LLC, a $12 billion hedge fund with close ties to the New York bank. Staley, who was at JPMorgan for more than 34 years, most recently as chairman of the corporate and investment bank, will become a managing partner and purchase a stake in BlueMountain, the New York-based firm said today in a statement. Proceeds from the stake sale will be invested in new infrastructure, technology and people, the firm said. “I’m very excited to be joining BlueMountain at a time when sea changes in the financial industry combined with the firm’s unique strengths open up enormous possibilities to deliver value to clients,” Staley, 56, said in the statement. HSBC N.J. Client Admits Conspiracy in Offshore Tax Case (Bloomberg) A New Jersey client of HSBC Holdings pleaded guilty to charges that he hid as much as $4.7 million through Swiss and Indian accounts not declared to the U.S. Internal Revenue Service. Sanjay Sethi, 52, who owns SanVision Technology Inc., conspired with HSBC bankers in New York, London and Geneva to hide assets from the IRS, he admitted yesterday in federal court in Newark, New Jersey. Sethi will pay a $2.37 million penalty for failing to file reports required for foreign accounts. “Sethi and his co-conspirators used nominee and shell companies formed in tax-haven jurisdictions and elsewhere to conceal the defendant’s ownership and control of assets and income from the IRS,” according to his charging document. Bill Ackman Says Just Getting Started Exposing Herbalife (Bloomberg) “We’re prepared to spend whatever it costs and do whatever is required to make sure that the world understands the facts about this company,” he said in a telephone interview. “We can’t imagine how the SEC or the Federal Trade Commission or any other relevant regulator will ignore what we have said.” Ackman said he would make all his information available to U.S. regulators. Chinese Tech Titans Eye Brazil (WSJ) The Chinese like emerging markets because, for a change, they don't have to start way behind established American companies. By moving into Brazil aggressively, Chinese PC maker Lenovo Group and Internet-search company Baidu hope to gain an edge over companies like Hewlett-Packard and Google In addition, some U.S. companies that are leaders at home and in Europe have a smaller footprint here because of Brazil's long history of protectionism and red tape and its high cost of labor, particularly compared with Asia. Oregon brewer Daniel Keeton creates nutritional, non-alcoholic brew for his dog (NYDN) Oregon man Daniel Keeton enjoys serving beer to customers at the brewery he works for, so why shouldn't he serve up some healthy brew for the dog he cares about? The dog brew is non-alcoholic of course, but it is a big hit with Keeton's canine Lola Jane. And now Keeton's special brew is available to anyone who wants it. After years of planning, Keeton launched his company Dawg Grog over the summer. Keeton, who works at Boneyard Brewery in Bend, says Dawg Grog is good for the dogs, and they can't seem to get enough of it. "Bend is a dog-loving community and a beer-loving community," Keeton told the Daily News on Monday. "I wanted to marry those two together in some way." Keeton spent years refining the ingredients to his special brew, which includes low-sodium vegetable broth, water and spent grain from Boneyard Brewery. "After a couple of years of trying recipes I came up with one that I am really happy with, and one that my dog is really happy with," he said. Secret Goldman Team Sidesteps Volcker After Blankfein Vow (Bloomberg) MSI wagers about $1 billion of the New York-based firm’s own funds on the stocks and bonds of companies, including a mortgage servicer and a cement producer, according to interviews with more than 20 people who worked for and with the group, some as recently as last year. The unit, headed by two 1999 Princeton University classmates, has no clients, the people said...The team of about a dozen people, based at the firm’s Manhattan headquarters, is headed by Daniel Oneglia and Geoff Adamson. Oneglia was treasurer of the Princeton eating club Tiger Inn, where his nicknames included “the Don” and “the Weasel,” according to the university’s website. Adamson was coxswain for men’s heavyweight varsity crew. A Boston Globe photo shows teammates flinging him into a Massachusetts lake after a victory. Carlyle Bags $4 Billion Profit From China Insurance Exit (Reuters) Private equity firm Carlyle Group sold its remaining stake in China's No.3 insurer CPIC in a deal valued at $793 million, exiting the business with its largest dollar profit on an investment. After several stake sales in the past two years, Carlyle will finish with a total profit of more than $4 billion, five times the $800 million it invested in CPIC between 2005 and 2007 for a 17 percent stake, Thomson Reuters calculations show. By private equity standards, where making two times cash paid and a few hundred million is considered a success, the CPIC exit is an historic deal for Carlyle. London Quantitative Hedge Funds Report Second Year of Losses (Bloomberg) The performance of the funds belies their popularity with investors, who’ve poured $108.2 billion into the pools since the end of 2008, according to Fairfield, Iowa-based BarclayHedge Ltd. While quants made money during the financial crisis when other hedge funds didn’t, they’ve since stumbled as market sentiment swung from optimism to pessimism following political announcements in Washington and Brussels, breaking up the trends they try to follow. That may force investors to withdraw money. Japan Executives Warn Yen May Get Too Weak (WSJ) The executives, who gathered at an annual New Year's reception held by Japan's three biggest corporate lobbies, praised Prime Minister Shinzo Abe's new government for its proposals to boost the economy and tame the strong yen, which erodes exporters' profits and makes it harder to sell Japan-made goods overseas. But they also cautioned that if the economy stays weak, or if the government doesn't take steps to get its bloated finances under control, investors could lose confidence in Japan and flee, sending the yen into free fall. KFC diner stumbles upon strange brain-like organ in his meal (TS) Disgusted Ibrahim Langoo was tucking into a Gladiator box meal when he spotted what he thought was a “wrinkled brain” inside a piece of chicken. KFC have apologised and, after having the photographs analysed, reckon the unsightly organ may in fact be a kidney. The 19-year-old took a photograph of the three-inch stomach-churning discovery on his mobile phone and complained to staff. Apologetic bosses at the fast-food chain – known for its Finger Lickin’ Good slogan – have now offered him vouchers for even more KFC meals.

Opening Bell: 08.24.12

New York Fed Profits On AIG Bonds (WSJ) The Federal Reserve Bank of New York on Thursday sold the last toxic assets it acquired from the bailout of American International Group Inc., closing the book on its most controversial intervention during the financial crisis with a large gain to taxpayers. The regional Fed bank said it reaped $6.6 billion in profits from selling complex mortgage securities that it took on in late 2008 to stem AIG's cash bleed. Merkel Reiterates Greek Stance (WSJ) "The euro is more than a currency, it's an idea, and that's why it's so important," Ms. Merkel said at a news conference in Berlin, where she earlier met with Greek Prime Minister Antonis Samaras. "I want Greece to remain a part of the euro zone and that's what I am working on." Morgan Stanley Funds In Big Facebook Bet (WSJ) U.S. mutual funds run by Morgan Stanley, the lead underwriter in Facebook Inc.'s $16 billion initial public offering, have disproportionately high investments in the social-media company, leaving fund shareholders exposed to the stock's big drop since its May 18 IPO. New data show that eight of the top nine U.S. mutual funds with Facebook shares as a percentage of total assets are run by Morgan Stanley's asset-management arm, according to fund tracker Morningstar Inc. Don't Be Fooled By Short-Selling Bans (FT) ...the conclusions from the research are clear; these economists do not think short selling bans work. For there is precious little evidence that the ban in US markets truly halted share price declines; on the contrary, the impact was (at best) neutral, they claim. However, the ban hurt market mechanisms, as liquidity dried up. HSBC In Settlement Talks With U.S. Over Money Laundering (Bloomberg) HSBC, which is under investigation by U.S. regulators for laundering funds of sanctioned nations including Iran and Sudan, is in talks to settle the matter, two people with knowledge of the case said. The bank, Europe’s largest by market value, made a $700 million provision in July for any U.S. fines after a Senate Committee found it had given terrorists and drug cartels access to the U.S. financial system. That sum might increase, Chief Executive Officer Stuart Gulliver has said. Night of drinking, sexting and a well-placed bullet leads to prison for Oregon City man (OL) The couple drank at home and at two Oregon City area bars before their late night stop at the KC's Midway, a neighborhood watering hole where Lisa Nunes played video poker and enjoyed her 10th beer -- by her count -- of the day. Lisa Nunes spoke with a man she described as a friend, who left the bar but soon began bombarding her phone with text messages and pictures of his genitals. "I'm 54 years old. I have a relationship with my husband that's non-existent," Lisa Nunes testified. Flirting with a younger man "was exciting, she said. "I was just sexting a guy. It was no big deal," she said. Thomas Nunes, 61, said he was stunned when he saw a few of the messages and a photo. He left briefly then returned, grabbed the phone and went home. He read the all text messages and combed his wife's Facebook account looking for proof of infidelity. "I couldn't believe she was doing it right in front of my face," Nunes said. "I felt betrayed." Shaken, he said he smoked marijuana and talked to his cats for about 20 minutes to calm himself and "reason out a plan." Mitt: I’d give Fed boss the heave-ho (NewsCorp) Republican presidential candidate Mitt Romney said yesterday that if elected, he would select a new Federal Reserve chairman, replacing Ben Bernanke, countering advice Tuesday from top economic adviser Glenn Hubbard that Bernanke should be considered for a third term. Return to Gold Standard Is Seen By Some as 'Ludicrous' (CNBC) The Financial Times reported on Friday that the Republican Party plans to set up a commission to look into re-establishing the link between the dollar and gold as part of its platform to be unveiled at the party convention in Tampa Bay, Fla., next week. But analysts told CNBC that the idea would not work. “I think it’s absolutely nonsensical,” Moorad Choudhry, head of treasury at the corporate banking division of the Royal Bank of Scotland told CNBC Friday. “There’s a very good reason they unhooked it in 1971, because their deficit didn’t enable them to maintain it with the supply of gold. In fact, is there enough gold in the world to back the U.S. debt?” Money Funds Test Geithner, Bernanke As Schapiro Defeated (Bloomberg) Money-market mutual funds, an alternative to bank accounts for individuals and companies, will test the resolve of the U.S. Federal Reserve and Treasury Department to prevent another financial crisis after the $2.6 trillion industry successfully lobbied against more regulation by the Securities and Exchange Commission. Fed Governor Daniel Tarullo has said the central bank could tighten rules on banks’ borrowing from money-market funds, and Boston Fed President Eric Rosengren has said officials have the option to force banks to back their money funds with capital. The Fed and the Treasury could also work through the Financial Stability Oversight Council, a new regulatory panel formed under the Dodd-Frank Act, to seize oversight of money funds from the SEC and grant that power to the Fed. Ryan Lochte Discusses Racing Prince Harry (NBC) Lochte had never met the prince until the royal's entourage approached him that night. "His people came over to my table and said, 'Prince Harry wants to meet you,'" he said. "I was like, 'Lets meet him.' I went over there. I was fully clothed, and he says, 'You want to race me in the pool?' I took off my shirt, jumped in and we started racing." Only hours later, all of the prince’s clothes came off in a now-infamous strip-billiards incident that took place in a hotel suite. Lochte did not get the invite to play strip billiards with the prince and his friends. “He never said anything like that,’’ Lochte said. “After our race and everything, we went our separate ways. I’m kind of happy. I don’t need that.’’

Opening Bell: 04.26.12

Barclays Cautious Despite Investment Bank Gains (WSJ) In the first quarter of 2012 Barclays said total revenue fell 25% to £5.52 billion ($8.92 billion) from £7.34 billion a year before. The group recorded a net loss of £337 million for the quarter compared with net profit of £1.24 billion a year earlier. Chief Executive Bob Diamond said the business environment picked up in the second half of last year, but "frankly it remains quite challenging." Mr. Diamond warned that economic conditions across Europe and the U.K. had deteriorated since January, as the sugar rush caused by cheap loans dished out by the European Central Bank began to fade. "It was not a robust first quarter; it was only robust compared to the third and fourth quarter," Mr. Diamond said. "There is still slow economic growth around the world." Deutsche Bank Profit Drops On Debt Crisis (BW) The slowdown in April hasn’t been “significant” and Deutsche Bank needs to assess the effect of the Easter holidays on revenue, Chief Financial Officer Stefan Krause said today on a conference call. Pretax profit at Deutsche Bank’s investment banking unit fell to 1.72 billion euros in the first quarter from 2.29 billion euros a year earlier and compares with a 422 million loss in the fourth quarter. That beat the 1.64 billion-euro average estimate of eight analysts. More Americans Than Projected Filed Jobless Claims Last Week (Bloomberg) Jobless claims fell by 1,000 to 388,000 in the week ended April 21 from a revised 389,000 the prior period that was the highest since early January, Labor Department figures showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000. SEC Faces Questions About Tipster Policy (WSJ) "Whistleblowers are essential to root out fraud and malfeasance," the senator wrote in a letter sent Wednesday afternoon to SEC Chairman Mary Schapiro and reviewed by the Journal. "I am concerned that the SEC may not be properly protecting the identity of whistleblowers and others who come to the SEC with information on securities law violations." La Guardia flights delayed when dog flees Delta jet and sprints to runway (NYP) A puppy took flight at La Guardia Airport yesterday, speeding down a busy runway and dodging planes and a posse of desperate pursuers. Taxiing airliners ground to a screeching halt, giving their passengers front-row views of the spectacle that at one point saw a frustrated worker get down on his hands and knees in an unsuccessful attempt to convince the 14-month-old Rhodesian ridgeback, named Byrdie, to surrender. In a final fit of desperation, Port Authority cops pulled the dog’s owner, Austin Varner, off her Delta flight and drove her out to the tarmac. Byrdie broke free while being loaded on the plane in a kennel at around 10:20 a.m. — and the 70-pound pooch made a beeline down the tarmac. An air-traffic controller barked into his radio, “We got a dog running like crazy down there.” Former Morgan Stanley Exec Pleads Guilty In Anti-Bribery Case (Reuters) A former Morgan Stanley executive pleaded guilty to conspiring to evade internal controls required by a US anti-bribery law, in a case that underlines the fall of a once high-flying dealmaker for the firm in China. Garth Peterson, who was a managing director in Morgan Stanley’s real estate investment and fund advisory business, also settled yesterday related charges with securities regulators, and agreed to roughly $3.7 million in sanctions and a permanent bar from the industry. Peterson secretly arranged to have millions paid to himself and a Chinese official and disguised the payments as finder’s fees charged to Morgan Stanley, regulators said. Geithner Warns Of Economic Risks (Bloomberg) Treasury Secretary Tim Geithner is warning that the US economy faces risks from the “severe and protracted crisis” in Europe while the feud with Iran has put upward pressure on oil prices. He added the economy will encounter a “fiscal cliff” at the end of the year when large spending cuts and tax increases are set to take effect. “That cliff presents a risk, but it also provides an opportunity for bipartisan agreement Bernanke Says Prepared To Do More As Policy Unchanged (Bloomberg) “We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target,” he said at a press conference today following a meeting of the Federal Open Market Committee in Washington. Additional bond-buying is still “very much on the table.” Bull Market For Chicken Feed (WSJ) In case you were wondering: "Futures for soybean meal, the protein in feed that makes broilers plump and juicy, are up 34% so far this year. Prices for the yellow powder, a soybean byproduct that resembles wheat germ, are outpacing the likes of crude oil and gold." In Mayfair, outrage over tire-slashing arrest (Philly) It was a little more than two months ago when a 44-year-old butcher named David Toledo had a message for the vandal who was slashing car tires up and down his block of Aldine Street and on nearby streets in his Holmesburg neighborhood. “I feel like butchering the one who is doing this,” Toledo said shortly after reporting to police that all four tires on his Jeep Cherokee had been slashed, just one week after the same thing had happened to his wife’s car. Wednesday night, Toledo’s outraged neighbors had a message for him: Back at ya, pal. The news that police had arrested Toledo in connection with the wave of tire slashings that had plagued parts of the Northeast angered and infuriated his neighbors, as they spilled out onto front steps on a bright spring evening to gossip and to vent. Adding insult to the injured tires is the fact that Toledo had been arguably the most vocal neighbor in speaking out against the vandalism and in urging fellow residents to organize a community watch group to nab the slasher.

Opening Bell: 07.13.12

J.P. Morgan Second-Quarter Profit Fell 8.7% (WSJ) JPMorgan's second-quarter earnings fell 8.7% from a year ago, on a double-digit decline in revenue and a $4.4 billion trading loss at its Chief Investment Office. The U.S.'s largest bank by assets also said it would restate its first-quarter results to reduce profits and revenue, amid questions about how traders at the unit marked their positions. Including the restatement, total losses on the Chief Investment Office trading hit $5.1 billion in the first half of 2012. Finance chief Doug Braunstein on Friday put the trading loss through Thursday at $5.8 billion. The bank said the restatement of first-quarter results reflects "recently discovered information that raises questions about the integrity of the trader marks and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter." Overall, the bank posted a $4.96 billion second-quarter profit, worth $1.21 a share. That is down from $5.43 billion, or $1.29 a share, a year ago. Revenue fell 17% from a year earlier to $22.18 billion. Dimon Says Ina Drew Offered To Return 2 Years Of Compensation (Bloomberg) “She has acted with integrity and tried to do what was right for the company at all times, even though she was part of this mistake,” Chief Executive Officer Jamie Dimon said today at a meeting with analysts. “In that spirit, Ina came forward and offered to give up a very significant amount of her past compensation, which is equivalent to the maximum clawback amount.” Dimon said that when Drew decided to retire he received letters from former chairmen in her support, including one who said “she saved the company.” JPMorgan Trader 'London Whale' Leaves: Source (Reuters) Goodnight, sweet prince: Bruno Iksil, the JPMorgan Chase trader known as the "London Whale" has left the bank in the wake of a trading scandal, a person familiar with the situation said. Wells Fargo Profit Up 17% (WSJ) The bank reported a profit of $4.62 billion, up from a year-earlier profit of $3.95 billion. Per-share earnings, reflecting the payment of preferred dividends, rose to 82 cents from 70 cents a year earlier. Analysts polled by Thomson Reuters expected 81 cents. Revenue increased 4.4% to $21.29 billion. Analysts were looking for $21.36 billion. Dogs From NY, Virginia Wed at Charity Extravaganza (AP) Two dogs got married Thursday night at an extravaganza to benefit the Humane Society of New York. Bride Baby Hope Diamond, a white Coton de Tulear with black-gray markings, was led down the aisle, resplendent in her canine couture gown. Her poodle groom, a dapper dude named Chilly Pasternak from Richmond, Va., didn't seem too excited about the whole affair but, nevertheless, went along with the ceremony. After they got hitched, the cuddly couple were presented with a Guinness World Record in the category of most expensive pet wedding at $158,187.26. The luxury goods and services that went into the wedding were all donated. Focus Falls On BOE Libor Claims (WSJ) In one email from June 2008, Tim Geithner, then head of the Federal Reserve Bank of New York and now the U.S. Treasury Secretary, copied Mr. Tucker on a message to Bank of England Governor Mervyn King in which he made several suggestions "to improve the integrity and transparency" of the Libor-setting process, "…including procedures designed to prevent accidental or deliberate misreporting." The memo followed a series of news reports in The Wall Street Journal and elsewhere that questioned whether officials at some banks were gaming Libor. One of Mr. Geithner's suggestions was titled "Eliminate incentive to misreport." Banks’ Libor Costs May Hit $22 Billion (FT) Ballpark. Americans Living Larger As New-Home Sizes Defy Economy (Bloomberg) arger, as in larger homes: two-story foyers, twin front staircases, children’s wings, dedicated man caves, coffee bars, four-car garages, and bedroom closets large enough for a fifth vehicle. The percentage of new single-family homes greater than 3,000 square feet has grown by one-third in the last decade, according to data released last month by the U.S. Census Bureau. The increase has occurred even while 4.3 million homes have been foreclosed upon since January 2007, a result of the housing- bubble collapse and economic meltdown. Slightly more than 1 in 4 new homes built last year were larger than 3,000 square feet, the highest percentage since 2007. Buffett Says Euro Destined For Failure Without Rule Changes (Bloomberg) “Thesystem that they put in place had a fundamental fatal flaw,” Buffett said today on Bloomberg Television’s “In the Loop With Betty Liu” in an interview from the Allen & Co. media conference in Sun Valley, Idaho. “It can’t survive with the present rules. That’s what they’re learning. The question is, can 17 countries get together in a way to essentially re-do something.” ‘Occupy’ catches a few rays in the Sun (NYP) The Occupy Wall Street movement yesterday crashed Allen & Co.’s exclusive media retreat, where the nation’s wealthiest business titans rub elbows every summer. Protesters railing against the growing gap between the rich and everyone else gathered at the Sun Valley Resort near the duck pond, where Google co-founder Sergey Brin and Mayor Mike Bloomberg were enjoying a leisurely lunch. A group of seven people, dressed in “Greed Kills” T-shirts laid on the ground and refused to move. They quickly unfurled a yellow banner that read: “White Collar Crime Scene.” Arnold Schwarzenegger Confirms He’s Doing ‘Twins’ Sequel (Deadline) The former California governor said during Lionsgate‘s panel for the action pic The Expendables 2 today at Comic-Con that he will make a sequel to the 1988 movie Twins in which he co-starred with Danny DeVito. He is reteaming with that movie’s original director Ivan Reitman too, Schwarzenegger said, the project is in development and they are looking for a writer.

Opening Bell: 12.19.12

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