Opening Bell: 01.02.13

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Congress Passes Fiscal Cliff Deal (WSJ)
Congress broke a rancorous stalemate Tuesday to pass legislation designed to avert the so-called fiscal cliff. But the compromise bill, which blocked most impending tax increases and postponed spending cuts largely by raising taxes on upper-income Americans, left a host of issues unresolved and guaranteed continued budget clashes between the parties...The far-reaching agreement will have lasting implications for the tax code, future budget battles and the balance of power in Washington. It raises income-tax rates for the first time in almost two decades and fulfills Mr. Obama's signature campaign promise to prevent rates from rising on the middle class. Not since 1991 has a Republican in Congress supported such a move—a challenge to its brand as the antitax party. In policy terms, it permanently codifies most of the tax rates that were set only temporarily in the Bush era. After years of failed efforts, the bill permanently keeps the middle class from being hit by the alternative minimum tax, a 1960s edifice intended only for America's wealthiest.

After fiscal win, Obama warns Congress on debt fight (Reuters)
Speaking after winning a "fiscal cliff" victory, President Barack Obama vowed on Tuesday to avoid a repeat of last year's divisive fight with Congress over an extension of the nation's borrowing authority. "While I will negotiate over many things, I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up," Obama said in remarks in the White House. He urged "a little less drama" in coming budget talks about cutting government spending.

Bond Tab for Biggest Economies Seen Falling $220 Billion (Bloomberg)
The amount of bills, notes and bonds coming due for the Group of Seven nations plus Brazil, Russia, India and China will drop to $7.38 trillion from $7.60 trillion in 2012, according to data compiled by Bloomberg. Japan, the U.K., Germany, France, Italy and Brazil will see a decline, while the U.S., Canada, Russia, India and China will face an increase.

Hedge Fund Industry Loses Out Again (FT)
Bearish hedge fund managers have lost out in 2012, with the $2 trillion industry suffering another year of disappointing returns as traders were wrongfooted by a change in fortunes for the euro zone. According to Hedge Fund Research, slight gains in December were likely to mean the average hedge fund manager made just more than 5 percent over the year - a period watched closely by many investors after disappointing returns in 2011, when the average hedge fund lost 5 percent. Flows into the industry are also expected to have slowed markedly, hit by a wave of high-profile closures. The first 9 months of last year saw hedge funds pull in a net $30 billion from investors, compared with $70 billion in 2011. As with 2011, the euro zone crisis dominated most funds' trading. Global macro funds, which aim to profit from shifts in economic sentiment, were among the hardest hit, entering a second year of losses for investors...Bearish managers fared worst, as the euro zone avoided a costly breakup even though it fell back into recession in 2012. Comac, a London-based macro hedge fund, was down 8.9 percent for the year in mid-November. So-called "tail risk" funds, which aim to profit in times of market dislocation, also suffered. The $2 billion Capula tail risk fund, the world's largest so-called "black swan" trader, had lost 14 percent by November. Other notable losses for the year included those of John Paulson, the hedge fund manager who made billions shorting U.S. subprime mortgages in 2007. Mr Paulson's flagship Advantage Plus fund lost more than 20 percent in 2012, compounding losses of more than 50 percent the previous year.

Crime Forfeiture Pays for U.S. Attorney’s Office (Sometimes in Dinosaur Bones) (Dealbook)
In the last year, the government’s prosecutorial branch in Manhattan has taken in about $160 million from an online poker operation and more than $2 billion from a failed Ponzi scheme. Last week, it even secured a Tyrannosaurus skeleton from Mongolia valued at more than $1 million. This business is the asset forfeiture unit of the United States attorney’s office in Manhattan. In 2012, the unit recovered about $3 billion in crime proceeds — the largest amount ever recovered by a single United States attorney’s office since the Justice Department established the asset forfeiture program four decades ago. It also accounts for 68 percent of the national total last year from the country’s 93 United States attorney’s offices, according to government figures...last year’s most exotic forfeiture action involved the Mongolian dinosaur case. Last week, a paleontologist admitted to illegally shipping dinosaur fossils to the United States from Asia. As part of a plea agreement, the paleontologist, Eric Prokopi, agreed to forfeit a Tyrannosaurus skeleton that had been put up for auction for more than $1 million, along with five other dinosaur skeletons. The fossils will be returned to the Mongolian government; Mr. Prokopi faces a possible prison sentence. The reptile remnants represent just a fraction of the 2012 forfeiture proceeds secured by Mr. Bharara and his colleagues — proceeds that amounted to more than 60 times the office’s annual budget. “As I like to joke,” Mr. Bharara said, “that’s a lot better than the investment return of any hedge fund.”

Man calls cops to report home invasion, is arrested on pot-growing charges (OS)
Shane Lawrence, 54, was arrested about 4 a.m. on charges of cultivating marijuana, possession of more than 20 grams of marijuana and possession of drug paraphernalia. Lawrence told deputies that two men had broken into his home on Fleming Court in Palm Coast and tried to rob him, the Sheriff's Office said. Fleming gave deputies permission to search inside, they said. That's when investigators said they found a spare bedroom and a bathroom set up as grow rooms with lights and pot-growing chemicals. Deputies confiscated 110 marijuana plants. They could have produced 55 pounds with a street value of $44,000, investigators said.

Banks Near Foreclosure Deal (WSJ)
Banks are hashing out a $10 billion settlement with federal regulators to halt a lengthy process of reviewing thousands of foreclosure cases for errors, after both sides concluded it was too expensive and not delivering enough assistance, according to people familiar with the discussions.

Top Goldman Sachs execs get shares on New Year's Eve (Reuters)
Ten senior Goldman Sachs Group Inc (GS.N) executives, including Chief Executive Lloyd Blankfein, were on New Year's Eve given stock pegged to earlier restricted awards worth tens of millions of dollars. The executives, which also include Chief Operating Officer Gary Cohn, Vice Chairmen Michael Evans and John Weinberg, Global Head of Human Capital Management Edith Cooper, Chief of Staff John Rogers, General Counsel Greg Palm, Global Head of Compliance Alan Cohen, and Chief Accounting Officer Sarah Smith, got a total of 508,104 shares, according to multiple filings late Monday with the U.S. Securities and Exchange Commission. These executives sold 245,838 of those shares to cover tax obligations, and held on to the rest, which were worth $33.1 million. The shares were sold at a price of $126.24 on Monday.

Time For BofA To Bid Warren Buffett Adieu? (WSJ)
BofA investors are hankering for a return of capital: Buying back stock now would be accretive to earnings since the shares trade below tangible book value. But BofA is likely to be conservative on this front. Two years ago, its request was rebuffed by the Fed, leaving Chief Executive Brian Moynihan with egg on his face. This time around, analysts expect the bank may ask the Fed's permission for a slight dividend increase along with modest buyback authority. "BofA seems to recognize that it is still in the early stages of proving its turnaround to both regulators and Wall Street," John McDonald of Sanford C. Bernstein wrote in a recent note.

In IPO Cleanup, India Weighs A Refund Plan (WSJ)
India's capital-markets regulator is taking steps to tame what has been one of the world's wildest IPO markets, with plans including forcing companies' founders to reimburse small investors for some losses. The goal is to convince investors that the stock market is a safe place for their savings. In the first 11 months of 2012, investors pulled out a net total of nearly $2 billion from equity mutual funds, which are used mainly by individuals. "There was a feeling in this country that many IPOs are manipulated," U.K. Sinha, chairman of the Securities & Exchange Board of India, said in an interview.

Billionaires Worth $1.9 Trillion Seek ‘Advantage’ in 2013 (Bloomberg)
The richest people on the planet got even richer in 2012, adding $241 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 100 wealthiest individuals...“Last year was a great one for the world’s billionaires,” said John Catsimatidis, the billionaire owner of Red Apple Group Inc., in an e-mail written poolside on his BlackBerry in the Bahamas. “In 2013, they will continue looking for investments around the world -- and not necessarily in U.S. -- that will give them an advantage.”

Hugh Hefner Marries His Runaway Bride (Reuters)
Octogenarian Playboy founder Hugh Hefner briefly swapped his iconic silk pajamas for a tuxedo to marry Crystal Harris, the one-time "runaway bride" who followed through this time at a New Year's Eve wedding. "Happy New Year from Mr. and Mrs. Hugh Hefner!" the Playboy magazine publisher tweeted early on Tuesday. The message accompanied a photograph of Hefner, 86, wearing what appeared to be purple silk pajamas under a black bathrobe and snuggling his bride, 26, still wearing her pale pink wedding dress. He also wore his trademark captain's hat. An hour earlier, Hefner posted a picture of himself in a tuxedo with his bride under an arch of pink and white flowers at the wedding ceremony in the Playboy Mansion in Beverly Hills, California. "Crystal & I married on New Year's Eve in the Mansion with Keith as my Best Man. Love that girl!" Hefner wrote on Twitter with the picture, referring to his brother Keith Hefner, a songwriter. The couple tied the knot more than a year after their planned 2011 wedding was scuttled when Harris got cold feet. The blonde Playboy Playmate of the Month for December 2009 jettisoned the adult entertainment mogul in what was called a "change of heart" five days before a lavish June 2011 wedding before 300 guests. Harris, who appeared on the July 2011 cover of the adult magazine with a "runaway bride" sticker covering her bottom half, tweeted on Monday that she was ready to commit and changed her name to "Crystal Hefner" on the micro-blogging site.

Related

Opening Bell: 10.05.12

Merkel’s First Greek Crisis Visit Seen Sending Signal to Critics (Bloomberg) German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro. Merkel’s visit to the Greek capital Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency region. “The meeting could mark the turning point to the Greek crisis,” said Constantinos Zouzoulas, an analyst at Axia Ventures Group, a brokerage in Athens. “This is a very significant development for Greece ahead of crucial decisions by the euro zone for the country.” Spain Finance Minister’s ‘No Bailout’ Remark Sparks Laughter (CNBC) “Spain doesn’t need a bailout at all,” finance minister Luis de Guindos said, straight faced and somber, as mirth spread throughout the audience (even de Guindos’ assistant interpreter couldn’t mask a smile). US Probes Credit Suisse Over Mortgages (Reuters) U.S. federal and state authorities are investigating Credit Suisse over mortgage-backed securities packaged and sold by the bank, people familiar with the probe said on Thursday. The Justice Department and the New York Attorney General are among those probing Credit Suisse's actions, according to the sources, who spoke on condition of anonymity. New Shuffle At JPMorgan (WSJ) Barry Zubrow, a trusted lieutenant of J.P. Morgan Chase Chief Executive James Dimon, is expected to give up his job as regulatory affairs chief in what would be the latest reshuffling to follow a multibillion-dollar trading blunder. The change is expected before year-end, said people close to the bank. It is possible the 59-year-old executive will remain with the company in an advisory role, these people added. More executive shifts also are possible. The chairman of the corporate and investment banking unit, Jes Staley, was recently in the running to become chief executive of British banking giant Barclays PLC, according to people close to Mr. Staley, but didn't get the job. He gave up day-to-day oversight of J.P. Morgan's investment bank in a July reorganization. J.P. Morgan declined to comment about Mr. Staley, and he couldn't be reached. Investors Back Away From 'Junk' Bonds (WSJ) The massive "junk"-bond boom is raising alarm bells among some large money managers, who warn the market is showing signs of overheating. So much money has flooded into the junk-bond market from yield-hungry investors that weaker and weaker companies are able to sell bonds, they say. Credit ratings of many borrowers are lower and debt levels are higher, making defaults more likely. And with yields near record lows, they add, investors aren't being compensated for that risk. India’s NSE Says 59 Erroneous Orders Caused Stock Plunge (Bloomberg) “India has joined the big league with this trading disaster,” A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte., which manages about $400 million, said by phone from Singapore. “It’s very surprising so many erroneous orders went through. Exchanges and regulators must be one step ahead as systems and technologies upgrade.” Halloween Horror Story: Case Of The Missing Pumpkin Lattes (WSJ) For Asher Anidjar, the arrival of fall isn't marked by turning leaves or a chilly breeze, but a steaming seasonal drink. Recently, though, when he headed to his local Starbucks for a Pumpkin Spice Latte, he left with a bitter taste in his mouth. They were out of the special sauce that gives the treat its distinctive autumnal flavor. "I just left, depressed," said Mr. Anidjar, a 26-year-old commercial real-estate analyst who lives in Manhattan. The drink crops up on the Starbucks menu annually for a limited time, and this year there has been an unusual run on the pumpkin batch. Thanks in part to a frothy dose of buzz brewed up by the Seattle-based coffee giant before the beverage's Sept. 4 debut, the craze has drained supplies at stores across the country. Baristas are hitting the street, searching for stashes of the flavored sauce at other stores. Customers denied their fix—which costs about $4 for a small cup, or "tall" in Starbucks speak—are tweeting about their dismay. "My world almost ended this morning when the local Starbucks told me they were out of Pumpkin Spice Latte," tweeted Jason Sizemore, 38 years old, of Lexington, Ky. Fed Seeks To Clarify Plans (WSJ) Since August 2011, the Fed has been saying it will keep short-term interest rates near zero until a particular date. Right now that date is mid-2015. The hope has been that these assurances would help hold down longer-term interest rates, as well as short-term ones, and thus boost spending and investment. But the Fed isn't happy with this approach. While central-bank officials believe the assurances have helped hold down long-term interest rates, they find the fixed date to be confusing, and they are looking at a new approach. The idea under consideration is to keep offering assurances of low rates, but tie those assurances to what is happening in the economy rather than a point on the calendar. Dave And Buster's IPO Plan A Bust (Bloomberg) Dave & Buster’s Entertainment, operator of 59 company-owned dining and gaming stores, withdrew its plans for a US initial public offering, citing market conditions. The company had sought to raise as much as $107.7 million. Black Swans In The Red Until Turmoil Hits (NYP) The Apocalypse has not arrived — but that hasn’t stopped some of the country’s wealthiest investors from betting on it. The investors, mostly pensions funds, hedge funds of funds and deep-pocketed individuals that were burned during the financial meltdown in 2008, are jumping into these so-called Black Swan investments that carry promised returns of up to 1,000 percent — if another financial Armageddon strikes. The Cassandras of the hedge-fund world that are offering these funds — also called tail risk funds and often with a geographic focus — would suffer terribly in the absence of disaster...The hot sector has attracted such well-known names as Saba Capital’s Boaz Weinstein, Hayman Capital’s Kyle Bass, Corriente Advisors’ Mark Hart, and Universa’s Mark Spitznagel...When markets are buoyant, of course the funds lose money. Through August, Saba Tail Hedge was down 16 percent, Pine River Tail Hedge had fallen 23 percent and Corriente Europe Divergence is down 24 percent, according to investors. Bass’s Japan short fund, which he launched two years ago, is down more than 60 percent since inception. By design, it will lose all of its investors’ money in three years if Japanese bonds don’t go into a tailspin. Bridezilla’s demanding email to potential bridesmaids: If you can’t commit, ‘you’re going to the wrong wedding’ (NYDN) One woman’s over-the-top email of demands to potential bridesmaids has gone viral since it was posted on Gawker.com. “You all have a big roll [sic] in this wedding, so before we continue I’m going to be setting some ground rules and it’s very important you read and think everything through before you accept this honor to be a bridesmaid,” the unnamed bride-to-be begins. If recipients don’t answer emails when outside the country, can’t attend every wedding-related event, or don’t have the cash for several flights and a bridesmaid’s dress, they might not make the cut. “If money is tight and you can’t afford to contribute to the bachelorette party or won’t be able to afford a dress, then [I] don’t have time to deal with that, I’m sorry,” the woman wrote. Of course, she’ll aim for what’s affordable, but, “If you think it’s going to be a $25 Forever 21 dress then you’re going to the wrong wedding.” The lucky bridesmaids must also be available — at any moment — between February and August. “If you don’t think you’ll be able to attend one party but can make the rest of them, I’m sorry, but I’ll have to take you out as a bridesmaid and put you as a guest,” the woman wrote. And please, don’t ignore phone calls. “I don’t have time to wait around for responses, everyone has their phone on them,” she wrote. “It shouldn’t take you more than a day to get back to me. Really think about everything I've said. This is really going to be the most epic wedding ever so I hope you girls can share this special day with us!"

Opening Bell: 3.12.15

D*ck-pic messaging service valued at $15 billion; White-Collar Felon Registry; "'Suspicious' Avocado Shipment Turned Out To Contain A Literal Ton Of Weed"; AND MORE.