Opening Bell: 03.18.13

Cypriot Outrage Over Tax Could Derail Euro-Area Bailout (Bloomberg) While demanding that the levy raise the targeted 5.8 billion euros ($7.6 billion), finance officials said easing the cost to smaller savers was up to Cyprus. A vote on the tax, needed to secure 10 billion euros in rescue loans, was delayed for a second day. Banks may not reopen tomorrow after a holiday today, state-run broadcaster CYBC reported. “If the government wants to change the structure of the solidarity levy for the banking sector, the government can decide as such,” European Central Bank Executive Board member Joerg Asmussen said today in Berlin. “What’s important is that the planned revenue of 5.8 billion euros remain.” Cyprus Can't Put 'Genie Back in the Bottle': O'Neill (CNBC) "I'm still trying to get my head around [it]," O'Neill said in a "Squawk Box" interview. He added that Cyprus won't be able to "put the Genie back in the bottle" despite whether or not the depositor hair-cut gets approval. "This is a biggie, in my opinion," O'Neill said. "I think my biggest concern with this is not whether or not this ultimately gets done, not that the idea that Cyprus would come up with something like this, but that the EU (European Union) would back it and go along these things." 'Wash Trades' Are Scrutinized (WSJ) U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes. Such transactions, known as wash trades, are banned by U.S. law because they can feed false information into the market and be used to manipulate prices. Intentionally taking both sides of a trade can minimize financial risk for the trading firm while potentially creating a false impression of higher volume in the market. Anti-Euro Party Mobilizes In Germany (WSJ) A prominent group of anti-euro German economists and business leaders has formed a political party to challenge Germany's support for euro-zone bailouts, a move that could test the ruling center-right coalition's hold on conservative votes in the fall general election. With just six months until the election, the new party, which calls itself Alternative for Germany, is unlikely to gain enough traction to win seats in Parliament, analysts say. Yet even if the party comes in below the 5% threshold needed to win representation, it could still attract enough conservative votes to prevent a return of the current coalition government, a combination of Angela Merkel's Christian Democrats, their Bavarian sister party, and the pro-business Free Democrats. Woman Busted In Alleged Deer Head Heist (NWFDN) The story begins when a man and woman were evicted from their apartment on James Lee Boulevard and temporarily moved in with another woman, according to an arrest report. On Jan. 24 the couple argued with the woman and moved out, taking most of their belongings with them. They left behind two mounted deer heads the woman was storing in her motor home. Divided Views of SAC Capital Settlement (NYT) Inside SAC's Stamford, Conn., headquarters, the resolution of the civil actions — announced Friday by the Securities and Exchange Commission — was seen as a victory. In a statement, the fund, which neither admitted nor denied wrongdoing, called the settlements "a substantial step toward resolving all outstanding regulatory matters."...Friday's settlements — for $602 million and $14 million — were criticized by a number of rival hedge fund managers and securities lawyers as not tough enough. Despite the S.E.C.'s trumpeting the $602 million payment as the largest settlement of an insider trading case, critics said that the commission could have sought a harsher punishment. "While $616 million would normally be a massive penalty, for Cohen this is basically a drop in the bucket," said Bradley D. Simon, a criminal defense lawyer and former federal prosecutor in New York. "There is also no debarment or admission of wrongdoing." HSBC Set to Cut Thousands More Jobs (FT) HSBC is gearing up for thousands more job cuts, with Europe's biggest bank by market value set to outline the next stage in its strategic overhaul at an investor day in two months' time. "There is no fantastical new strategy out there," said one person familiar with the bank's planning. "But there's still huge potential to be more efficient." Number Of Cases Filed By SEC Slows (WSJ) The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year, as its efforts to punish misconduct related to the financial crisis start to ebb. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years, said people familiar with the matter. Road Rage on I-78: Shot Fired at Woman's Car (Patch) According to troopers: The victim, who troopers did not identify by name, encountered a silver-colored, compact, four-door SUV with New Jersey license plates that was traveling about 40mph in the left lane and swerving close to a tractor-trailer in the right lane. The 39-year-old Bethlehem woman blew her car horn at the compact silver SUV. The SUV driver responded by flipping her the middle finger, then taking off “at a high rate of speed.” The silver SUV then got into the right lane and slowed down. The Bethlehem woman continued driving east in the left lane and started to pass the silver SUV as they passed the Route 33 interchange. But as that happened, the woman heard a loud bang. The SUV then “sped off again at a high rate of speed.” The victim pulled over a short time later to call 911. Arriving troopers found a single bullet hole in the passenger side rear door. The victim was not injured.
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Cypriot Outrage Over Tax Could Derail Euro-Area Bailout (Bloomberg)
While demanding that the levy raise the targeted 5.8 billion euros ($7.6 billion), finance officials said easing the cost to smaller savers was up to Cyprus. A vote on the tax, needed to secure 10 billion euros in rescue loans, was delayed for a second day. Banks may not reopen tomorrow after a holiday today, state-run broadcaster CYBC reported. “If the government wants to change the structure of the solidarity levy for the banking sector, the government can decide as such,” European Central Bank Executive Board member Joerg Asmussen said today in Berlin. “What’s important is that the planned revenue of 5.8 billion euros remain.”

Cyprus Can't Put 'Genie Back in the Bottle': O'Neill (CNBC)
"I'm still trying to get my head around [it]," O'Neill said in a "Squawk Box" interview. He added that Cyprus won't be able to "put the Genie back in the bottle" despite whether or not the depositor hair-cut gets approval. "This is a biggie, in my opinion," O'Neill said. "I think my biggest concern with this is not whether or not this ultimately gets done, not that the idea that Cyprus would come up with something like this, but that the EU (European Union) would back it and go along these things."

'Wash Trades' Are Scrutinized (WSJ)
U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes. Such transactions, known as wash trades, are banned by U.S. law because they can feed false information into the market and be used to manipulate prices. Intentionally taking both sides of a trade can minimize financial risk for the trading firm while potentially creating a false impression of higher volume in the market.

Anti-Euro Party Mobilizes In Germany (WSJ)
A prominent group of anti-euro German economists and business leaders has formed a political party to challenge Germany's support for euro-zone bailouts, a move that could test the ruling center-right coalition's hold on conservative votes in the fall general election. With just six months until the election, the new party, which calls itself Alternative for Germany, is unlikely to gain enough traction to win seats in Parliament, analysts say. Yet even if the party comes in below the 5% threshold needed to win representation, it could still attract enough conservative votes to prevent a return of the current coalition government, a combination of Angela Merkel's Christian Democrats, their Bavarian sister party, and the pro-business Free Democrats.

Woman Busted In Alleged Deer Head Heist (NWFDN)
The story begins when a man and woman were evicted from their apartment on James Lee Boulevard and temporarily moved in with another woman, according to an arrest report. On Jan. 24 the couple argued with the woman and moved out, taking most of their belongings with them. They left behind two mounted deer heads the woman was storing in her motor home.

Divided Views of SAC Capital Settlement (NYT)
Inside SAC's Stamford, Conn., headquarters, the resolution of the civil actions — announced Friday by the Securities and Exchange Commission — was seen as a victory. In a statement, the fund, which neither admitted nor denied wrongdoing, called the settlements "a substantial step toward resolving all outstanding regulatory matters."...Friday's settlements — for $602 million and $14 million — were criticized by a number of rival hedge fund managers and securities lawyers as not tough enough. Despite the S.E.C.'s trumpeting the $602 million payment as the largest settlement of an insider trading case, critics said that the commission could have sought a harsher punishment. "While $616 million would normally be a massive penalty, for Cohen this is basically a drop in the bucket," said Bradley D. Simon, a criminal defense lawyer and former federal prosecutor in New York. "There is also no debarment or admission of wrongdoing."

HSBC Set to Cut Thousands More Jobs (FT)
HSBC is gearing up for thousands more job cuts, with Europe's biggest bank by market value set to outline the next stage in its strategic overhaul at an investor day in two months' time. "There is no fantastical new strategy out there," said one person familiar with the bank's planning. "But there's still huge potential to be more efficient."

Number Of Cases Filed By SEC Slows (WSJ)
The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year, as its efforts to punish misconduct related to the financial crisis start to ebb. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years, said people familiar with the matter.

Road Rage on I-78: Shot Fired at Woman's Car (Patch)
According to troopers: The victim, who troopers did not identify by name, encountered a silver-colored, compact, four-door SUV with New Jersey license plates that was traveling about 40mph in the left lane and swerving close to a tractor-trailer in the right lane. The 39-year-old Bethlehem woman blew her car horn at the compact silver SUV. The SUV driver responded by flipping her the middle finger, then taking off “at a high rate of speed.” The silver SUV then got into the right lane and slowed down. The Bethlehem woman continued driving east in the left lane and started to pass the silver SUV as they passed the Route 33 interchange. But as that happened, the woman heard a loud bang. The SUV then “sped off again at a high rate of speed.” The victim pulled over a short time later to call 911. Arriving troopers found a single bullet hole in the passenger side rear door. The victim was not injured.

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Opening Bell: 03.27.13

Cyprus Sets Bank Restructuring (WSJ) Cyprus's central bank chief said Tuesday that large depositors at the island's biggest lender, Bank of Cyprus Pcl, could lose as much as 40% on their deposits. In a television interview later, the finance minister said large uninsured deposit holders at the second-biggest, Cyprus Popular Bank Pcl, might only see one-fifth of their money returned and could wait several years before being paid back. Central banker Panicos Demetriades said at a news conference that a special administrator would be appointed to oversee both the winding down of Cyprus Popular, also known as Laiki, and the merger of its healthy assets with Bank of Cyprus. Plans for the move prompted Bank of Cyprus Chairman Andreas Artemis to submit his resignation earlier in the day. UK Banks Facing Capital Shortfall (WSJ) U.K. banks must come up with £25 billion in fresh capital by the end of the year to start plugging an estimated £50 billion ($75.8 billion) capital shortfall across the sector, the Bank of England's Financial Policy Committee said Wednesday. Banks Looking At $100 Billion Legal Tab (WSJ) The largest U.S. banks—Citigroup, J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo—together have paid $61.3 billion to settle credit-crisis and mortgage claims over the past three years, according to SNL Financial, Charlottesville, Va. Research firm Compass Point Research & Trading LLC estimates that U.S. banks will wind up owing a further $24.7 billion related to the repurchase of faulty mortgage loans. From Finance to Sex Therapy: London Bankers Escape (CNBC) Mike Lousada, an investment banker turned sex therapist, told CNBC that City workers should "follow their passion" and find an interest they could even develop into their own business. Having worked for two decades at Nomura, JP Morgan, Barclays and Societe Generale "amongst others," Lousada told CNBC that his change of career from banking to sexual healing was a life choice. "I felt my City career no longer had meaning for me and I wanted to pursue something which gave my life meaning and purpose. As I grew, emotionally, I realized how unfulfilled I felt and I knew that there was something else calling me which would be more fulfilling," he told CNBC. Called the "orgasm guru" among London's chattering classes, Lousada has built up a reputation as a talented sex therapist with a long waiting list of clients paying 300 pounds ($454) for a therapy session with him. Woman Attempts To Hide Tadpoles In Her Mouth At The Airport (UPI) When airport security found a bottle of liquid in the woman's carry-on luggage, they informed her that she'd either have to immediately drink or dispose of the liquid. The woman tipped back the small bottle and drank its contents, but security became suspicious when she refused to swallow. The woman eventually spit out was she was holding in her mouth: tadpoles. Lehman plans to distribute $14.2 billion to creditors (Reuters) The distribution includes about $9.4 billion to third-party creditors and affiliates, $4.4 billion among other debtors, and $370 million for newly-allowed claims. Berkshire Set To Get Big Goldman Stake (WSJ) The billionaire chief executive of Berkshire Hathaway accepted the stake in exchange for giving up his company's right to purchase a larger number of Goldman shares at a below-market price, according to terms of the deal announced Tuesday. The pact, worth about $1.5 billion after Tuesday's close, puts an exclamation point on the Omaha, Neb. company's financial-crisis lifeline to Goldman. Berkshire's realized and paper winnings on the 2008 preferred-stock investment now exceed $3 billion, making it one of Mr. Buffett's most lucrative bets in recent years. G4S Readies Guards as Cypriot Banks Prepare to Open (Reuters) The world's largest security firm, G4S, moves cash and will provide guards for Cypriot lenders including Bank of Cyprus and Cyprus Popular Bank, the two biggest, which are to be combined and see large depositors' accounts frozen under a bailout agreed at the weekend. Cypriot banks have been shut for more than a week while the government worked out the bailout and will stay closed until Thursday to prevent a run. Meanwhile, Cypriots have been queuing to withdraw cash from automatic teller machines, with limits at some shrinking down to 100 euros a day. John Arghyrou, managing director of the Cyprus business for G4S, said its 750 employees have been working through the night, going out to replenish cash machines with police guard. Licensing rules prevented the firm from bringing in extra staff to handle the unprecedented workload. Man charged with assault after roommate drew on him (WJLA) A 31-year-old Arlington man is in jail after he was accused of assaulting his roommate when he realized he had drawn male genitalia on him. The alleged assault happened at about 5:30 a.m. Saturday inside a home in the 3100 block of North 17th Street. The accused, James Denham Watson, woke up to find that his roommate drew on his face. Watson then allegedly assaulted his roommate, leaving him with serious, extensive injuries to the face. He was taken to Virginia Hospital Center to be treated for his injuries. The suspect was subsequently arrested and charged with malicious wounding. He's being held without bond. The drawing on Watson's face was still present when he was booked.

Opening Bell: 02.22.13

AIG Swings to Loss on Sandy Costs, Sale of Unit (WSJ) AIG posted a loss of $3.96 billion, or $2.68 a share, compared with profit of $21.5 billion, or $11.31, a year earlier. Its life-insurance and retirement-services business earned $1.09 billion, up 20% from a year earlier. The company also said it would take a loss of about $4.4 billion on the planned sale of a 90% stake in the plane unit, International Lease Finance Corp. AIG's full-year net income of $3.4 billion marked a sharp decline from the $20.6 billion profit the company posted for 2011, when it adjusted its balance sheet to reflect its expected use of more than $18 billion in tax benefits. CFTC Sues CME Group, Alleging Trade-Data Leaks (WSJ) U.S. regulators took aim at the world's largest futures-exchange operator, accusing CME Group Inc. and two former employees of allegedly sharing details on clients' trades with a commodities broker. The civil charges, leveled Thursday by the Commodity Futures Trading Commission, mark the first time the agency has sued CME in federal court. The case also highlights how regulators have responded to flagging confidence in the financial markets by scrutinizing more closely some of Wall Street's central pillars: the exchanges. The CFTC charged a unit of Chicago-based CME and two former employees with disclosing private information about trading in its big energy markets to an outside party between 2008 and 2010 in return for meals and entertainment. CME said Thursday it would contest the charges. "Markets are too important for this [type of allegation] to be taken lightly," Bart Chilton, a CFTC commissioner, said in an interview. Citigroup bows to shareholder pressure, overhauls pay (Reuters) Citigroup said on Thursday it has overhauled an executive pay plan that shareholders rejected last year as overly generous, revising it to tie bonus payments more closely to stock performance and profitability. The company also said it will pay new Chief Executive Mike Corbat $11.5 million for his work in 2012, in line with remuneration for his peers at other major banks. The new plan was crafted after board Chairman Michael O'Neill and other directors met with "nearly 20" shareholders representing more than 30 percent of Citigroup stock, Citi said in a filing. Watchdog Says LinkedIn paid no federal income tax over past three years (NYP) The Mountain View, Calif., social network for professionals escaped the tax man because of a rule that allows companies to deduct expenses from employee stock awards, the watchdog, the Center for Tax Justice, told The Post. It’s a longstanding accounting trick that has spared many tech firms — including Amazon and Yahoo from 2009 to 2011 — from sharing any of their profits with the IRS, the CTJ said. “On $160 million profits over the last three years, LinkedIn paid zero federal income taxes,” said the CTJ’s Rebecca Wilkins. “The stock option deduction was big enough to wipe out all their taxes.” Unemployment applications up 20,000 last week to 362,000 (AP) The Labor Department said Thursday that thefour-week average, a less volatile measure, rose 8,000 to 360,750, the highest in six weeks. Trump Twitter Mystery! Who Hacked the Donald? (CNBC) In what appears to be the latest in a minor wave of attacks on Twitter accounts belonging to out-sized corporate entities, an out-of-character tweet from Donald Trump's verified account set the Internet abuzz, and then disappeared, shortly before noon ET on Thursday. "These hoes think they classy, well that's the class I'm skippen," read the suspect remark issued from @realDonaldTrump. It was a glaring non sequitur following tweets such as "Republicans must be careful with immigration—don't give our country away," and "Wow, Macy's numbers just in-Trump is doing better than ever — thanks for your great support!" "Yes, obviously the account has been hacked and we are looking for the perpetrator," Rhona Graff, senior vice president, assistant to the president of the Trump Organization, told NBC News via email. This confirmation was quickly echoed by Trump himself, in a tweet that read, "My Twitter has been seriously hacked — and we are looking for the perpetrators." UBS to Trade Equity Swaps in China in Structured-Product Push (Bloomberg) Chinese regulators last month decided to allow UBS to trade total return swaps, Thomas Fang, the bank’s managing director for equities derivatives sales for Asia, said in a phone interview. The bank will use the derivatives to create structured products tied to local stocks, with plans to boost the size of its staff in the country for the business, Fang said. The China Securities Regulatory Commission’s press office didn’t immediately respond to a faxed request for confirmation. A Tax That May Change The Trading Game (NYT) The tax would be tiny for investors who buy and hold, but could prove to be significant for traders who place millions of orders a day. Under the proposal, a trade of shares worth 10,000 euros would face a tax of one-tenth of 1 percent, or 10 euros. A trade of a derivative would face a tax of one-hundredth of 1 percent. But that tax would be applied to the notional value, which can be very large relative to the cost of the derivative. So a credit-default swap on 1 million euros of debt would have a tax of 100 euros, or about 0.4 percent of the annual premium on such a swap. On Currencies, What's Fair Is Hard to Say (WSJ) What's the fair value of a euro? That depends on whether the answer comes from Berlin or Paris. German Chancellor Angela Merkel on Wednesday weighed in on what the currency should be worth, saying the euro's exchange rate is "normal in the historical context." French Finance Minister Pierre Moscovici had a different take earlier this month, calling the euro "perhaps too strong." Economists say Ms. Merkel is right—technically. The euro's buying power is roughly where it should be, according to the Peterson Institute for International Economics, which judges currencies based on countries' current-account balance. But others caution Germany's relatively robust economy props up the euro's value; if weaker countries like Spain or Italy still had their own currencies, they'd be worth much less. Singapore GDP Growth Beats Initial Estimate as Asia Recovers (Bloomberg) Gross domestic product rose an annualized 3.3 percent in the three months through December from the previous quarter, when it shrank a revised 4.6 percent, the Trade Ministry said in a statement today. That compares with a January estimate of 1.8 percent and the median in a Bloomberg News survey for a 2 percent expansion. KFC employee fired for making out with boob-shaped mashed potatoes (DD) A KFC employee in Tennessee is out of a job after photos of the culprit making out with a plate of mashed potatoes ended up on Facebook. The mashed potatoes, which were apparently not served to some unknowing customer, had been arranged into the shape of a woman's boob. In the photos, the former employee can be found licking what we'd have to consider the underboob of the mashed potato mammary before throwing it into an oven. The photo became public information when it showed up on the Facebook page for Johnson City, Tenn., news channel WJHL, where it was shared 2,000 times and received more than 700 comments. Once the news organization was able to determine its locational origin—the KFC on North Roan Street—the suspected employee was terminated. KFC spokesman Rick Maynard confirmed the firing but would not name the culprit because that "wouldn't be appropriate." He stressed that the employee who took the photos is no longer with the company. "Nothing is more important to KFC than food safety," he wrote to WJHL. "As soon as our franchisee became aware of the issue, immediate action was taken.

Opening Bell: 11.07.12

Obama Wins Re-Election With Romney Defeated In Key States (Bloomberg) Obama defeated Republican Mitt Romney, winning at least 303 electoral votes in yesterday’s election with 270 needed for the victory. With one state -- Florida -- yet to be decided, Romney had 206 electoral votes...Obama won the battleground states of Ohio, Virginia, Iowa, New Hampshire, Wisconsin, Nevada and Colorado. He also carried Pennsylvania, where Romney made an 11th-hour bid for support to try to derail the president’s drive for re-election. North Carolina was the only battleground Romney won. Romney Campaigns To The End (WSJ) Hours before Mitt Romney lost his six-year quest to win the presidency, he said he had prepared only one speech—a victory speech...Until the final hour, Mr. Romney and his aides expressed confidence that he would win. The candidate, who prefers data and metrics to chitchat, appeared to be caught off guard by the loss even though he trailed in polls in crucial battlegrounds such as Ohio. Triumph Of The Nerds: Nate Silver Wins In 50 States (Mashable) The Fivethirtyeight.com analyst, despite being pilloried by the pundits, outdid even his 2008 prediction. In that year, his mathematical model correctly called 49 out of 50 states, missing only Indiana (which went to Obama by 0.1%.) This year, according to all projections, Silver’s model has correctly predicted 50 out of 50 states. A last-minute flip for Florida, which finally went blue in Silver’s prediction on Monday night, helped him to a perfect game. Loser Ryan Also A Winner (NYP) The Republican vice-presidential hopeful hedged his bet by running for re-election to his congressional seat in Wisconsin — where last night, he was declared the winner for an eighth straight time. Goldman Partners Pocket $22 Million (WSJ) More than 30 executives, including Chief Executive Officer Lloyd C. Blankfein, recently cashed in stock options awarded in the afterglow of the company's initial public offering in 1999. According to a securities filing, the executives, all Goldman partners, pocketed a total of $21.8 million by exercising options and selling the underlying shares in the three days after the firm reported third-quarter results in mid-October. The options expire at the end of November, and cashing in produced instant profits because Goldman's share price is more than 50% higher than when the options were awarded in 2002. "By exercising 10-year-old options before they expired later this year, executives captured some of the value we have built for shareholders over that period," said a spokesman for the securities firm. In contrast, many of the executives' remaining options are worthless, at least for now, because they were granted from 2005 to 2008. The stock peaked in October 2007 at about $239, or 89% higher than Tuesday's closing price of $126.25 in New York Stock Exchange composite trading at 4 p.m. The biggest gain went to Michael S. Sherwood, a Goldman vice chairman and the firm's top executive in Europe, who received $5.2 million from exercising options on 115,211 shares. Mr. Blankfein collected $3.1 million, while departing Chief Financial Officer David A. Viniar got $2.3 million, the filing shows. JPMorgan Nears SEC Settlement (WSJ) JPMorgan is close to a settlement with the Securities and Exchange Commission that would end one probe into how the company's Bear Stearns Cos. unit packaged and sold home loans to investors, according to people familiar with the case. A pact with the nation's largest bank by assets would be the first tangible victory in a wide-ranging SEC investigation into Wall Street's sale of mortgage-backed securities before the onset of the financial crisis. Since 2010, the SEC has issued more than 300 subpoenas or document requests related to the probe and collected more than 30 million pages of documents, enforcement chief Robert Khuzami said earlier this year. BNP Paribas Third Quarter Net Doubles On Trading Gains (Bloomberg) Pretax profit at BNP Paribas’s corporate- and investment- banking unit, or CIB, rose 7.3 percent to 732 million euros, beating analysts’ estimate of 686 million euros. Revenue from equity and advisory operations climbed 51 percent to 444 million euros, while fixed-income sales more than doubled to 1.13 billion euros. After Obama Victory, Donald Trump Rants On Twitter (ABC) “We can’t let this happen. We should march on Washington and stop this travesty,” Trump Tweeted. “Our nation is totally divided! Lets fight like hell and stop this great and disgusting injustice! The world is laughing at us. This election is a total sham and a travesty. We are not a democracy! And then: “Our country is now in serious and unprecedented trouble…like never before. Our nation is a once great nation divided! The electoral college is a disaster for a democracy. Hopefully the House of Representatives can hold our country together for four more years…stay strong and never give up! House of Representatives shouldn’t give anything to Obama unless he terminates Obamacare.” And finally: “This election is a total sham and a travesty. We are not a democracy!” Fitch: No Fiscal Honeymoon For President Obama (CNBC) President Barack Obama will need to quickly secure agreement on avoiding the "fiscal cliff" and raising the debt ceiling following Tuesday's elections, Fitch Ratings said. The economic policy challenge facing the president is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the U.S., according to Fitch. Resolution of these fiscal policy choices would likely result in the U.S. retaining its triple-A status from Fitch, the firm said. Failure to avoid the so-called fiscal cliff and raise the debt ceiling in a timely manner, as well as securing agreement on credible deficit reduction, would likely result in a rating downgrade in 2013, Fitch said. The New Haven For Investors (WSJ) Treasurys have a new rival for safe-haven status: U.S. companies. Bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasurys, a sign that investors perceive them as a safer bet. It is a rare phenomenon that some market observers said could be the beginning of a new era for debt markets. It could ultimately mean some companies will borrow at lower rates than the U.S. government. Swiss, Greeks Begin Talks On Tax Deal (WSJ) Switzerland has begun formal talks on a deal to tax assets stashed in secret Swiss bank accounts by Greek citizens, in line with similar agreements struck with other European countries, the Swiss government said Wednesday. Woman Wearing MIT Shirt Nearly Banned From Voting In Boca Raton (BNN) A woman attempting to vote in West Boca Raton yesterday was initially prohibited from entering the polling place because she was wearing a t-shirt with the letters MIT. BocaNewsNow.com heard from multiple sources that an election supervisor at the polling place ultimately realized that MIT stands for “Massachusetts Institute of Technology” — a school where students tend to know how to spell — and was not a campaign shirt for the Republican candidate, who spells his name MITT. Campaigning is not permitted within several yards of a polling place. The woman was ultimately allowed to vote.

Opening Bell: 02.04.13

UK Regulators Could Split Banks (WSJ) U.K. Treasury chief George Osborne on Monday will announce new powers for regulators to split up banks that flout rules designed to ring-fence retail banking from riskier investment-banking activity. In a wide-ranging speech on banking in Bournemouth, England, Mr. Osborne is expected to say the new powers are needed so that taxpayers will never again be on the hook when banks fail, as they were during the financial crisis. "We're not going to repeat the mistakes of the past. In America and elsewhere, banks found ways to undermine and get around the rules," Mr. Osborne will say, according to the extracts of his speech. "We could see that again—so we are going to arm ourselves in advance. In the jargon, we will "electrify the ring fence." New Details Suggest a Defense in SAC Case (NYT) In bringing its charges, the government said that SAC not only sold out of its position, but also bet against — or shorted — the drug companies' stocks before the public announcement of the bad news. The SAC short position, according to prosecutors, allowed it to earn big profits after shares of the companies, Elan and Wyeth, plummeted. "The fund didn't merely avoid losses, it greedily schemed to profit further by shorting Elan and Wyeth stock," said April Brooks, a senior F.B.I. official in New York, during a press conference on Nov. 20, the day Mr. Martoma was arrested. Internal SAC trading records, according to people directly involved in the case, indicate that the hedge fund did not have a negative bet in place in advance of the announcement of the drug trial's disappointing results. Instead, the records indicated that SAC, through a series of trades, including a complex transaction known as an equity swap, had virtually no exposure — neither long nor short — heading into the disclosure of the drug data. Blackstone To Become Investment Bank? (FT) Blackstone, one of the world's largest alternative asset managers, has quietly secured a securities underwriting licence as its expanding capital markets operation strays into investment banking territory. The licence marks the latest stage in the transformation of big listed private equity groups as they become more broadly based alternative asset managers. Apollo and KKR , two of Blackstone's biggest rivals, also have securities underwriting licences. The move highlights the pressure listed private equity groups are under to generate new sources of fee income to satisfy their public shareholders. "The private equity business is lousy for shareholders," says the head of capital markets for one buyout firm that is not listed. Obama: more tax revenue needed to address deficit (Reuters) President Barack Obama said on Sunday more tax revenue would be needed to reduce the U.S. deficit and signaled he would push hard to get rid of loopholes such as the "carried interest" tax break enjoyed by private equity and hedge fund managers. Herbalife Is The Subject Of 'Pending' Probe (NYP) The Los Angeles-based distributor of nutritional products is the subject of a law enforcement investigation, The Post has learned. The existence of the probe emerged after the Federal Trade Commission, responding to a Freedom of Information Law request by The Post, released 192 complaints filed against Herbalife over the past seven years. New Orleans Braces From Fallout From Blackout (AP) The outage, blamed on an unspecified "abnormality" in the Superdome's power system, was an embarrassment for New Orleans, which was hosting its first Super Bowl since 2002 and was eager to show off how it has been rebuilt since Hurricane Katrina. Mayor Mitch Landrieu called Sunday night's outage "an unfortunate moment in what has been an otherwise shining Super Bowl week for the city of New Orleans." He said he expected to receive "a full after-action report from all parties involved" in the coming days...For 34 minutes, the players tried to stay loose, the fans milled about in darkened corridors, and stadium officials scrambled to figure out what went wrong. The Ravens barely hung on for a 34-31 victory over the San Francisco 49ers, needing a goal-line stand in the closing minutes to preserve the championship. "It really hurt us," Baltimore fullback Vonta Leach said. "We had lot of momentum." There is sure to be some fallout for the city and the Superdome — especially since New Orleans plans to bid for the title game in 2018, in conjunction with the 300th anniversary of its founding. Escalators stopped working and credit-card machines shut down, though auxiliary power kept the playing field and concourses from going totally dark. "We sincerely apologize for the incident," Superdome spokesman Eric Eagan said. Most fans seemed to take the outage in stride, even starting up the wave to pass the time. "So we had to spend 30 minutes in the dark? That was just more time for fans to refill their drinks," said Amanda Black of Columbus, Miss. Question of Aiding Cyprus Places Germany in a Bind (NYT) In recent days, Germany has signaled that it is reluctantly edging toward a bailout for Cyprus, a haven for Russian cash, after lifelines have been extended to Greece, Ireland and Portugal to prevent potentially calamitous defaults. While Cyprus makes up just a sliver of the euro zone economy, it is proving to be a first-rate political headache. "I don't think that Germany has ever in the history of the euro zone crisis left itself so little wiggle room," said Nicholas Spiro, the managing director of Spiro Sovereign Strategy in London. "But Germany wants the euro to succeed and survive, and they are saying we can't afford a Cyprus bankruptcy." BlackRock Sued by Funds Over Securities Lending Fees (Bloomberg) BlackRock is accused in a lawsuit by two pension funds of reaping “grossly excessive” compensation from securities- lending returns associated with iShares Inc. “Defendants have systematically violated their fiduciary duties, setting up an excessive fee structure designed to loot securities lending returns properly due to iShares investors,” the funds, which invest in iShares, said in a complaint in federal court in Nashville, Tennessee. Two Top Barclays Executives Resign (WSJ) Barclays, whose chairman, chief executive and chief operating officer all resigned last summer in the wake of a series of controversies, said Sunday evening that finance chief Chris Lucas and Mark Harding, its general counsel, will both be retiring in coming months...Messrs. Lucas and Harding were longtime Barclays veterans who worked closely with former CEO Robert Diamond, who resigned last summer after the bank admitted that it had tried to rig benchmark interest rates and paid a roughly $450 million penalty. Youngest American Woman Billionaire Found With In-N-Out (Bloomberg) Lunchtime at the flagship In-N-Out Burger restaurant in Baldwin Park, California, is a study in efficiency. As the order line swells, smiling workers swoop in to operate empty cash registers. Another staffer cleans tables, asking customers if they’re enjoying their hamburger. Outside, a woman armed with a hand-held ordering machine speeds up the drive-through line. Such service has helped In-N-Out create a rabid fan base -- and make Lynsi Torres, the chain’s 30-year-old owner and president, one of the youngest female billionaires on Earth. New store openings often resemble product releases from Apple, with customers lined up hours in advance. City officials plead with the Irvine, California-based company to open restaurants in their municipalities. “They have done a fantastic job of building and maintaining a kind of cult following,” said Bob Goldin, executive vice president of Chicago-based food industry research firm Technomic Inc. “Someone would love to buy them.” That someone includes billionaire investor Warren Buffett, who told a group of visiting business students in 2005 that he’d like to own the chain, according to an account of the meeting on the UCLA Anderson School of Management website. Mint officially ends distribution of Canadian penny (CP) The phasing-out of the penny will lurch ahead today with the Royal Canadian Mint officially ending its distribution of one-cent coins to Canada's financial institutions. The move comes nearly a year after Finance Minister Jim Flaherty announced the demise of the penny, whose production cost came to exceed its monetary value. But as it faces extinction in the pockets and tills of most Canadians, the humble penny is still in demand in some artistic circles where it retains significant value. Renee Gruszecki, a Halifax-based academic and archivist, has spent the past year making a living through a jewelry business devoted primarily to preserving the country's stray cents. About 30,000 strategically sorted pennies fill Gruszecki's home and eventually find their way into the accessories produced at Coin Coin Designs and Co. Gruszecki, a long-time collector of lucky pennies, believes her pieces will help preserve a symbol that is both an object of superstition and a Canadian icon. "The maple leaf is synonymous with everything Canadian. We all identify with it," she said in a telephone interview. "Now it's just no longer going to be present among us, so I'm saddened by that." The Bank of Canada's Currency Museum has already taken steps to preserve the penny's place in Canadian culture. A mural consisting of nearly 16,000 one-cent pieces has been assembled at the museum to commemorate the coin's history, said assistant curator Raewyn Passmore. The mosaic, which depicts a giant penny measuring about two square metres, is comprised of coins ranging from the lustrous to the tarnished.

Opening Bell: 03.21.13

ECB Threatens To Cut Off Cypriot Banks (WSJ) The European Central Bank ramped up pressure on Cyprus to seal a bailout agreement with the European Union and the International Monetary Fund by Monday, making further funding for the island's ailing banks contingent on a deal. The ECB said it would extend emergency funding that has kept the island's banks in operation while the bailout plan was being negotiated in recent months only until Monday. "Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an European Union/International Monetary Fund program is in place that would ensure the solvency of the concerned banks," the ECB said in a statement. Italy's Five-Star Party Reiterates Demand for Euro Referendum (WSJ) Representatives of Italy's Five-Star Movement reiterated their anti-establishment party's demands for a referendum on the country's membership of the euro, and insisted that they should form the country's next government. Italian President Giorgio Napolitano is consulting political leaders on forming a government after last month's inconclusive election result. Deustche Bank Legal Bill Mounts (WSJ) Deustche Bank revised fourth-quarter earnings downward, setting aside about €600 million ($773 million) in legal provisions for U.S. mortgage litigation in another sign that mounting legal liabilities are cutting into investment -bank profits. The bank updated its fourth-quarter net loss to 2.54 billion euros, wider than the originally reported loss of €2.17 billion. This compared with a profit of €147 million a year earlier. The bank also reiterated that it would make first-quarter targets for a key measure of the bank's health known as the capital ratio, indicating a strong first quarter, analysts said. Deutsche Bank has now set aside €2.4 billion for litigation, with additional identified non-provisioned legal risks of €1.5 billion. The bank's legal provisions were nearly 10 times net profit of €237 million for 2012, compared with a profit of €4.1 billion in 2011. Total legal risk is likely much higher than what the bank has publicly identified, analysts said. Lululemon Sees Sheerness Issue Hitting Profits (WSJ) Lululemon Athletica said Thursday its fourth-quarter profit climbed 48%, but said it expects the transparency issue related to some of its yoga pants to reduce first-quarter earnings by 11 to 12 cents a share. Bernanke Saying He’s Dispensable Suggests Tenure Ending (Bloomberg) Federal Reserve Chairman Ben S. Bernanke said he’s “spoken to the president a bit” about his future and that he feels no personal responsibility to stay at the helm until the Fed winds down its unprecedented policies to stimulate the economy. “I don’t think that I’m the only person in the world who can manage the exit,” Bernanke said when asked at a news conference in Washington if he’s discussed his plans with President Barack Obama. His term expires at the end of January. Personal assistant pleads guilty to embezzling 821G from hedge funder Todd Meister (NYP) After a year of denials, glamorous Ukranian embezzler Renata Shamrakova admitted in Manhattan Supreme Court yesterday that she stole nearly $1 million while working as the personal assistant to hedge funder Todd Meister. Under the plea deal, she will serve no jail time but must repay what she took within two years. “Yes, your honor,” Shamrakova told the judge, when asked if she had committed grand larceny in the second degree by stealing from Meister, 42, a Harvard-educated money man who famously married Nicky Hilton for just six weeks in 2004. Shamrakova, 28, wore a gray cashmere sweater over a short, floral-print skirt and spoke in a quiet, girlish voice as she sat at the defense table and admitted her crimes. In addition to ripping off Meister, she tried to dodge a search warrant by hiding financial records. Dell Walks Fine Line in Pitch for Buyout (WSJ) Mr. Dell needs to persuade Dell Inc. investors that the prospects for the company he founded in his dorm room in 1984 and has been running for the past six years are anything but rosy if he is to succeed with his plan to take the computer maker private. Friday marks the end of a 45-day window to flush out alternative offers to the $24.4 billion buyout deal that Mr. Dell and private-equity firm Silver Lake Partners reached last month. The $13.65-a-share offer has sparked derision from some shareholders who believe the price undervalues the Round Rock, Texas, company. No alternative bid has been offered, but late Wednesday Blackstone Group LP was working on a few scenarios for a potential bid that would see the private-equity giant team with a partner to buy all or part of the computer maker, according to people familiar with the matter. JPMorgan To Return Money To MF Global Customers (AP) JPMorgan Chase has agreed to a deal that will return $546 million to former customers of trading firm MF Global Holdings Ltd., which collapsed in 2011 with $1.6 billion missing from its accounts. Initial Jobless Claims in U.S. Rise Less Than Forecast (Bloomberg) Applications for jobless benefits increased by 2,000 to 336,000 in the week ended March 16, Labor Department figures showed today. Economists projected 340,000 claims, according to the median estimate in a Bloomberg survey. The monthly average, which smoothes the week-to-week volatility, dropped to the lowest level since February 2008. Regulator finds flaws in Deutsche Bank's Libor supervision (Reuters) German markets watchdog Bafin is set to tell Deutsche Bank of "organizational flaws" in how it supervised its contribution to the setting of inter-bank lending rates at the heart of the international rate-rigging scandal, sources familiar with the watchdog's investigation said. Wis. limits use of nude beach to reduce sex, drugs (AP) Wisconsin authorities announced Tuesday they will shut down one of nation's most popular nude beaches on weekdays after struggling for years to curtail sex and drugs on the sandbar and surrounding woods. Nudists from around the country have been traveling to the public beach on the Wisconsin River near Mazomanie, about 25 miles northwest of Madison, for decades as word spread that prosecutors in ultra-liberal Dane County wouldn't go after anyone for showing skin. But visitors haven't stopped at just stripping down. They've been slipping off into the woods for trysts and drugs. Authorities say that's crossing the line, but they haven't been able to stop the shenanigans. Their frustration reached a tipping point Tuesday, when the state Department of Natural Resources announced it will close the beach, the islands immediately off it and the surrounding woods to the public on weekdays, when wardens say troublemakers tend to operate unseen. The closures begin immediately. The area will remain open on weekends, though. Bob Morton, executive director of the Austin, Tex.-based Naturist Action Committee, which lobbies on behalf of nudists, has visited the beach several times. He criticized the DNR for not consulting with beachgoers before closing the area. "Honestly, we're on their side when it comes to enforcing things that are lewd and lascivious," Morton said. "There's something to be said about consulting the users of the place. There's got to be more to this somewhere."

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: 03.20.13

JPMorgan Bosses Hit By Bank Regulator (WSJ) JP Morgan was downgraded in a confidential government scorecard over concerns about the company's management and its board, a blow to a firm that has long been considered one of the best-run on Wall Street. The New York company's management rating from the Office of the Comptroller of the Currency fell one notch last July to a level that signifies oversight "needs improvement," following the revelation of what are known as the "London whale" trading losses, said people familiar with the regulatory assessment. Grading is on a scale of 1 to 5, with 5 being worst. J.P. Morgan had been at level 2, indicating "satisfactory management." The people said the downgrade to level 3 wasn't solely related to a London employee's large trades—in indexes tracking the health of a group of companies—that led to losses exceeding $6 billion. BlackRock’s CEO Fink Says Cyprus Is Not a Major Problem (Bloomberg) Laurence D. Fink, chief executive officer of BlackRock, the world’s largest asset manager, said Cyprus is not a major problem and U.S. equities will rise 20 percent this year as the economy rebounds. “It has some symbolism impact on Europe, but it’s not a really major economic issue,” Fink said of Cyprus in a Bloomberg Television interview in Hong Kong today. “It’s a $10 billion issue. It does remind us of the frailty of Europe. It does remind us that the European fix will be multiple years.” Freddie Mac Sues Big Banks (WSJ) sued more than a dozen of the world's biggest banks for alleged manipulation of interest rates, in the first government-backed private litigation over the rate-rigging scandal. The lawsuit, filed in U.S. District Court for the Eastern District of Virginia, by the mortgage-finance giant joins scores of other suits piling up in U.S. courts, seeking billions of dollars in damages from banks that allegedly manipulated the London interbank offered rate and other crucial financial benchmarks. Freddie Mac sued the British Bankers' Association alongside the banks, putting the private association of large British banks for the first time in the cross hairs of a Libor lawsuit. A probe by U.S. and U.K. regulators has uncovered evidence of widespread rate rigging by some traders. Three banks have agreed to pay penalties totaling about $2.5 billion, and about a dozen companies remain under investigation. The BBA has agreed to transfer its responsibility for overseeing Libor to a new operator. Litigation Forces Deutsche Bank to Restate Profits (Reuters) Deutsche Bank cut its previously reported 2012 pretax profit by 600 million euros ($773 million) on Wednesday, hit by new charges related to mortgage-related lawsuits and other regulatory investigations. Europe's biggest bank by assets declined to say why it had increased litigation provisions to 2.4 billion euros, forcing it to correct its Jan. 31 earnings report which already showed the worst quarterly loss in four years. Yoga-Pants Supplier Says Lululemon Stretches Truth (WSJ) A Taiwanese supplier to Lululemon Athletica was bent out of shape on Tuesday after the yoga-clothes retailer blamed it for producing a shipment of pants that were unacceptably see-through. The supplier, Eclat Textile Co. of Taiwan, hit back at Lululemon, saying the clothes it shipped weren't "problematic." "All shipments to Lululemon went through a certification process which Lululemon had approved," Eclat Chief Financial Officer Roger Lo said in an interview. "All the pants were manufactured according to the requirements set out in the contract with Lululemon." Bernanke Seen Keeping Up Pace of QE Until Fourth Quarter (Bloomberg) The Fed chief will probably halt the unprecedented easing in the first half of next year after expanding central bank assets to a record of about $4 trillion, according to median estimates by 46 economists surveyed March 13-18 before a two-day meeting of policy makers ending today. Unemployment will have fallen to 7.3 percent from its current 7.7 percent when the Fed starts to pull back on its buying, the economists said. Supreme Court Sacks Goldman (NYP) The Supreme Court yesterday refused to hear the bank’s appeal of a federal court ruling in a lawsuit alleging it misled investors about dicey mortgage-backed securities. SEC Digging Into Fund Fees (WSJ) The Securities and Exchange Commission is closely scrutinizing the fees and expenses, including travel and entertainment, that hedge funds and private-equity firms charge to their investors. As part of the Dodd-Frank financial law, the SEC now oversees more than 1,500 additional such advisers that were required to register with the agency. In that capacity, the SEC is checking to ensure they are charging their investors reasonable expenses. "Exotic" expenses like travel, entertainment and consulting arrangements are more likely to attract the agency's attention than routine charges like legal and accounting fees, say compliance consultants who advise funds on registration and reporting requirements. A Volatile Investor Buys Into a Softer Approach (WSJ) It has been a long slog for Mr. Hohn, whose fund bets big on a small number of out-of-favor stocks and often holds on for several years. It lost 43% in 2008, among the worst losses by a hedge-fund that year, according to industry-tracker HFR. Hedge funds on average lost 19% that year. Even the Standard & Poor's 500-stock index, which plunged as the economy descended into the worst financial crisis in decades, did better. But with a 30% return in 2012 and a 14% gain this year, TCI has crossed its high-water mark, or the point at which investment gains make up for losses and managers can begin collecting performance fees again, according to clients. "A lot of people wrote me off," Mr. Hohn said in an interview last month. "A lot of people fired us, a few people stuck by us, and we've worked and worked and made it all back for them." JPMorgan, MF Global Trustee Reach $546 Million Settlement (Reuters) As part of a settlement reached with James Giddens, the trustee who is tasked with liquidating MF Global Inc, JPMorgan will pay $100 million that will be made available for distribution to former MF Global customers. JPMorgan will also return more than $29 million of the brokerage's funds held by the bank, while releasing claims on$417 million that was previously returned to Giddens. Man, 18, forbidden from saying 'bingo' for 6 months (NKY) As part of 18-year-old Austin Whaley’s punishment, Kenton District Judge Douglas Grothaus recently ordered the Covington man not to say the word “bingo” for six months. “Just like you can’t run into a theater and yell ‘fire’ when it’s not on fire, you can’t run into a crowded bingo hall and yell ‘bingo’ when there isn’t one,” said Park Hills Police Sgt. Richard Webster, the officer who cited Whaley. On Feb. 9, Webster was working an off-duty security detail at a Covington bingo hall on West Pike Street when Whaley entered the hall with several other youths and yelled “bingo,” Webster said. “This caused the hall to quit operating since they thought someone had won,” Webster wrote on his citation. “This delayed the game by several minutes and caused alarm to patrons.” Webster said the crowd of mostly elderly women did not take kindly to Whaley’s bingo call. “At first, everybody started moaning and groaning when they thought they’d lost,” Webster said. “When they realized it wasn’t a real bingo, they started hooting and hollering and yelling and cussing. People take their bingo very seriously.” Had Whaley apologized for his actions, Webster said he probably would have sent him on his way with a warning. “But he refused to say he was sorry,” Webster said...WhenWhaley appeared in Kenton District Court last week, the judge ordered Whaley: “Do not say the word ‘bingo’ for six months.” The youthful defendant could have faced up to 90 days in a jail and a $250 fine on the misdemeanor charge. So long as Whaley, who had no prior criminal record, doesn’t get into any more trouble within six months, though, the charge will be dismissed.

Opening Bell: 04.02.13

Cyprus Finance Minister Sarris Resigns After Brokering Rescue (Bloomberg) Cyprus Finance Minister Michael Sarris quit the government today after helping clinch the final terms of an international aid agreement to stave off a financial collapse of the island. Sarris told reporters in Nicosia that he resigned due to a committee set up today to investigate the reasons that led to Cyprus’s economic crisis. Sarris has served as chairman of Cyprus Popular Bank Pcl, the second-largest lender, which has been shut as part of the financial rescue. Fannie Logs Record Profit (WSJ) Fannie Mae reported an annual profit of $17.2 billion on Tuesday, its first annual profit since 2006 and its largest annual profit ever, boosted by the housing market's turnaround and sustained declines in the number of soured home loans. Fannie's profit compares with a year-earlier loss of $16.9 billion. Fannie and its smaller sibling, Freddie Mac, posted banner earnings for 2012 because rising home prices have allowed them to set aside much less to cover the cost of defaulting home loans. Bank of America Finds Profit in Foreign Tax Credit Moves (Bloomberg) Bank of America Corp. more than doubled its profits in 2012 -- with some help from the tax code. What the bank calls “restructuring” of its non-U.S. operations yielded $1.7 billion in foreign tax credits, or 41 percent of the $4.2 billion the company reported in 2012 earnings, according to securities documents including the form 10-K it filed Feb. 28. While the maneuvers didn’t provide an immediate cash tax benefit for Bank of America, the foreign tax credits count toward net income under accounting rules. Goldman Unit To Seek Risk (WSJ) Goldman Sachs is launching a specialty finance company to invest in high-risk debt primarily of midsize U.S. companies with no credit ratings. The New York firm said in a filing with the Securities and Exchange Commission late Friday that it plans to offer shares in the new unit, Goldman Sachs Liberty Harbor Capital LLC, "as soon as practicable after the effective date of this registration statement." SEC Ex-Chief Lands at Consultant (WSJ) Promontory Financial Group LLC is expected to announce Tuesday that it has hired Ms. Schapiro, who was chairman of the Securities and Exchange Commission for nearly four years. "In my case, there's no revolving door…I won't ever be going back to government," the 57-year-old Ms. Schapiro said in an interview. She decided that after spending "28 of the last 32 years as a regulator," now was the "right time…to do something different." Mothers brawl during Seattle zoo Easter egg hunt (SPI) A fight between two women during an Easter egg hunt at Woodland Park Zoo led to a bloody nose and several crying children Sunday, according to police and a witness. The incident began about 1 p.m. when a woman allegedly pushed a child aside as her own child was scrambling toward some brightly colored eggs, police spokesman Jonah Spagenthal-Lee said. “The shoving sparked a confrontation between the first woman (the supposed shover) and the second child’s mother, who began fighting and had to be separated three or four times,” Spagenthal-Lee said in a statement. “The brawl left the first woman with a bloody nose.” The children, mostly 4- to 6-year-olds, were subjected to foul language. The bloody scene left several children crying. Judge Questions Fairness of Citigroup $590 Million Settlement (Reuters) A Manhattan federal judge on Monday signaled he will not rubber-stamp Citigroup's proposed $590 million settlement of a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets. U.S. District Judge Sidney Stein asked lawyers for the bank and its shareholders to address several issues at an April 8 fairness hearing, including requested legal fees and expenses of roughly $100 million, and the absence of payments by former Citigroup executives. Argentine-bond tango heats up (NYP) The yearly cost to insure the debt in the credit default swaps market for five years jumped by nearly 10 percent yesterday after President Cristina Kirchner and her government refused to come up with a better offer for bondholders led by hedge fund billionaire Paul Singer’s Elliott Management. A New York appeals court is expected to rule that Argentina must pay the Elliott group $1.44 billion, and its latest proposal indicated that it will not, which could push its bonds into default. Nasdaq Accepts Credit Rating Risk in Quest to Expand (Bloomberg) For Nasdaq OMX Group Inc., the benefits of expanding into electronic bond trading justify the risk of a lower credit rating. The second-biggest operator of American equity exchanges agreed yesterday to acquire eSpeed, a platform for U.S. Treasuries, from BGC Partners Inc. (BGCP) for $750 million cash, or $1.2 billion should sales goals be met. Moody’s Investors Service said Nasdaq’s Baa3 senior rating may be cut following the deal. Hampton Waffle House employee charged for April Fool’s joke (WTKR) A Hampton Waffle House employee is now charged after officers say she played an April Fool’s joke on them. Susan Tinker is charged for lying about a robbery. Police say around 6 a.m. Monday morning, Tinker called to report the robbery at the restaurant on West Mercury Boulevard. Police say they got to the scene and spent more than an hour investigating. While waiting for the manger to get there to review surveillance tape, they figured out there was no robbery. Tinker told police it was all an April Fool’s joke. But officers say this was no laughing matter. A spokesperson for the Waffle House says they do not tolerate this kind of behavior and Tinker is no longer employed there.