Opening Bell: 05.06.13

Author:
Publish date:
Updated on

Berkshire Hathaway’s 2013 Shareholder Meeting (DealBook)
Ms. Loomis of Fortune asks a question on behalf of a shareholder in the audience: How would you explain Berkshire and its value premise to the investor’s 13-year-old daughter? Mr. Munger takes first crack as Mr. Buffett helps himself to some See’s Candy fudge: “We like to stay sane while others go crazy. That’s a competitive advantage.”

JPMorgan Investors Urged to Split Chairman Role, Oust Directors (Bloomberg)
Stockholders should vote in favor of a proposal to split the roles of chairman and chief executive officer, both currently held by Jamie Dimon, at New York-based JPMorgan’s annual meeting May 21, Institutional Shareholder Services said in a report. ISS, which advises investors on proxy voting and corporate governance, cited “failures of stewardship” in opposing the re-election of three risk-committee directors. ... ISS recommended that shareholders oppose the re-election of Risk Policy Committee members David Cote, Ellen Futter and panel Chairman James Crown. Former KPMG International Chairman Timothy Flynn, who was appointed to the committee after the loss disclosure last year, should be re-elected, ISS said. “The CIO losses revealed multiple points of failure in the risk oversight process, and certain members of the RPC lack relevant industry expertise,” ISS wrote.

As Companies Step Up Buybacks, Executives Benefit, Too (WSJ)
As corporations step up stock repurchases to return cash to shareholders, compensation targets tied to per-share earnings—a common factor in executive-pay calculations—are helping to increase many executives' pay. The link worries some investors and compensation advisers because they fear the figure is too easily manipulated. The debate is a tricky one, though, because buybacks are generally seen as a plus for shareholders and thus something to be encouraged.

In Commerce Pick’s ’08 Answers on Finances, Possible Hints at Road Ahead (NYT)
Republican senators are likely to be interested in the Pritzker family’s reputation as innovators in the use of offshore trusts and foreign bank secrecy laws to shelter their wealth from income, capital gains and inheritance taxes. Even after tax code loopholes were closed, the family’s trusts were grandfathered in and it kept benefiting from them. Indeed, Senator Charles E. Grassley, Republican of Iowa, has called for scrutiny of her family’s trusts, saying she was “associated with the kind of tax avoidance activity that the president dismisses as fat cat shenanigans for others. It’s hypocritical to overlook tax avoidance when it’s convenient.”

Warren Buffett: Stocks Will Go 'Far Higher' Over Time (CNBC)
Even as stock indexes hit all-time highs, Warren Buffett predicts they'll go "far higher" in the long run. ... Acknowledging that milestones like Dow 15,000 can draw attention to stocks, Buffett said people should pay more attention when indexes cross those milestones on the way down because that's when stocks are "cheaper" and more attractive to buy. There could be a pullback for stocks at any time, Buffett said, advising against attempts to time the market. "People pay way too much attention to the short term."

Harvard's Niall Ferguson Apologizes for 'Stupid' Keynes Remarks (CNBC)
Asked about Keynes' observation that "in the long run we are all dead," Ferguson said that Keynes had been indifferent to the long run because he had no children, and that he had no children because he was gay. ... On Saturday, Niall Ferguson posted an apology on Twitter: "I apologize deeply and unreservedly for stupid and tactless remarks about Keynesthat I made. I should not have suggested—in an off-the-cuff response that was not part of my presentation—that Keynes was indifferent to the long run because he had no children, nor that he had no children because he was gay. This was doubly stupid," Ferguson wrote on his blog. "First, it is obvious that people who do not have children also care about future generations," he wrote. "Second, I had forgotten that Keynes's wife Lydia miscarried."

Obama backs rise in US gas exports (FT)
Barack Obama said at the weekend the US was likely to be a net gas exporter by 2020, the strongest sign yet that the president is swinging his support behind higher energy sales overseas. The Department of Energy is studying applications for new liquefied natural gas terminals, with approval of one in Texas likely within months. It would be only the second such approval granted for sales to countries without trade agreements with the US, such as Japan, the world’s largest importer of LNG.

Brussels steps up efforts over tax avoidance (FT)
Brussels is increasing efforts to clamp down on tax avoidance by wealthy investors, including private equity partners and hedge funds, by forcing all 27 EU members to share confidential information on individuals’ investment income and capital gains for the first time. Europe’s five largest economies – the UK, France, Germany, Italy and Spain – recently agreed to start sharing this information but extending the rules to the rest of the bloc would encompass countries such as Luxembourg and Ireland, where many of the continent’s biggest investment funds are domiciled. The move comes amid a renewed international push to tackle tax evasion and avoidance.

EU regulator takes aim at Google over Apple mobile patent lawsuit (Reuters)
The European Commission said it believed Motorola Mobility, a unit of Google, was abusing its market position by seeking and enforcing an injunction against Apple in Germany over patents essential to mobile phone standards. ... "I think that companies should spend their time innovating and competing on the merits of the products they offer - not misusing their intellectual property rights to hold up competitors to the detriment of innovation and consumer choice," Competition Commissioner Joaquin Almunia said.

Buyout Consortium Said Near a Deal for BMC (DealBook)
A group of private equity firms led by Bain Capital and Golden Gate Capital is near a deal to buy BMC Software, people briefed on the matter said on Sunday, nearly a year after an activist hedge fund sought to push the technology company onto the auction block. The group is expected to pay around $46 a share, one of these people said, valuing the company at over $6.5 billion. A deal could be announced as soon as Monday, though these people said that final details were still being negotiated and talks could still fall apart.

Mike Tyson champ-ing at bit to do Shakespeare (NYDN)
Now that he’s wrapped his one-man show, “Mike Tyson: Undisputed Truth,” the former heavyweight champion of the world is ready to knock out the Bard. “Wouldn’t Shakespeare be awesome?” Tyson asked us a few days before ending his show in Westbury, Conn., Sunday. “That black guy ... could you imagine me in ‘Othello?’” According to the 46-year-old former pugilist, all he needs is a little time to train and he’ll be ready for the lead in Shakespeare’s great tragedy.

Related

Opening Bell: 12.14.12

UBS Unit Said to Be Close to Guilty Plea in Rate-Rigging Scandal (NYT) Federal prosecutors are close to securing a guilty plea from a UBS subsidiary at the center of a global investigation into interest rate manipulation, the first big bank to agree to criminal charges in more than a decade. UBS is in final negotiations with American, British and Swiss authorities to settle accusations that its employees reported false rates, a deal in which the bank's Japanese unit is expected to plead guilty to a criminal charge, according to people briefed on the matter who spoke of private discussions on the condition of anonymity. Along with the rare admission of criminal wrongdoing at the subsidiary, UBS could face about $1 billion in fines and regulatory sanctions, the people said. Meet Them In St. Louis: Bankers Move (WSJ) Smaller cities around the nation have emerged as unlikely hives of financial-services hiring, thanks to lower wages, municipal-tax incentives and the misfortunes of older hubs that are home to companies ravaged by the 2008-2009 financial crisis. The beneficiaries are spread across the U.S., according to an analysis of data by The Wall Street Journal. In St. Louis, the 19th-largest U.S. metropolitan area, securities-industry employment surged 85% between January 2007 and September 2012 to a recent 12,190, according to figures compiled by Moody's Analytics. New York lost 9% of its jobs in the securities, commodities, asset-management and fiduciary-trust areas over the same period, leaving it with 195,000. Counter-Terrorism Tools Used to Spot Staff Fraud (FT) JPMorgan Chase has turned to technology used for countering terrorism to spot fraud risk among its own employees and to tackle problems such as deciding how much to charge when selling property behind troubled mortgages. The technology involves crunching vast amounts of data to identify hard-to-detect patterns in markets or individual behavior that could reveal risks or openings to make money. Other banks are also turning to "big data", the name given to using large bodies of information, to identify potential rogue traders who might land them with massive losses, according to experts in the field...Guy Chiarello, JPMorgan's chief information officer, said the bank was mining massive bodies of data in "a couple of dozen projects" that promised to have a significant affect on its business, although he refused to give further details. According to three people familiar with its activities, JPMorgan has used Palantir Technologies, a Silicon Valley company whose technology was honed while working for the US intelligence services, for part of its effort. It first used the technology to spot fraudsters trying to hack into client accounts or ATMs, but has recently started to turn it on its own 250,000-strong staff. Obama Meets Boehner at White House for Budget Talks (Bloomberg) President Barack Obama and House Speaker John Boehner met for a third time at the White House to discuss averting spending cuts and tax increases before a year- end deadline. Boehner and Obama met for almost an hour yesterday, with no public announcement of progress. In January, more than $600 billion in spending cuts and tax increases, the so-called fiscal cliff, are scheduled to begin. “The president and speaker had a frank meeting in the Oval Office,” Boehner spokesman Brendan Buck said in an e-mailed statement, adding that the “lines of communication remain open.” Britain's Queen Quizzes Central Bank on Financial Crisis (CNBC) During a visit to the Bank of England on Thursday, the Queen was overheard asking whether a "lax" attitude to financial regulation had contributed to the financial crisis. After touring the vast vaults of gold bullion that lie beneath the central bank in London, Queen Elizabeth reportedly asked the central bank officials whether the Financial Services Authority (FSA) that was meant to regulate the banking system had not been aggressive enough - "did not have the teeth" - in its response to the crisis...The Queen was then told that officials in the room were charged with ensuring the crisis did not happen again. The Queen's husband, Prince Philip, then jokingly asked "There's not another one coming, is there?" before telling the officials present "Don't do it again." John McAfee Returns to US, Admits Playing 'Crazy Card' (ABC) After three weeks ducking authorities in Belize, by hiding in attics, in the jungle and in dingy hotels, he turned up in Guatemala Dec. 3. Barely a day later he was detained for entering the country illegally. As Guatemala officials grappled with how to handle his request for asylum and the Belize government's demand for his deportation, McAfee fell ill. The mysterious illness, described by his attorney alternately as a heart ailment or a nervous breakdown, led to a scene with reporters chasing his ambulance down the narrow streets of Guatemala City and right into the emergency room, where McAfee appeared unresponsive. He now says it was all a ruse: "It was a deception but who did it hurt? I look pretty healthy, don't I?" He says he faked the illness in order to buy some time for a judge to hear his case and stay his deportation to Belize, a government he believes wants him dead. When asked whether he believes Belize officials where inept, he didn't mince words. "I was on the run with a 20-year-old girl for three and a half weeks inside their borders and everyone was looking for me, and they did not catch me," he said. "I escaped, was captured and they tried to send me back. Now I'm sitting in Miami. There had to be some ineptness." [...] He denies any involvement in his neighbor's death but adds that he is not particularly concerned about clearing his name. He is focused on getting his 20-year-old and 17-year-old girlfriends out of Belize and says he has no idea what he'll do next, where he'll live or how he'll support himself. CNBC v. Buffett (NYP) The “Oracle of Omaha” sent a terse e-mail to editors at CNBC yesterday after a reporter for the cable news network railed against his recent repurchase of Berkshire Hathaway shares. Gary Kaminsky, CNBC’s capital markets editor, took Buffett to task for the $1.2 billion stock buyback, calling it “hypocritical to the maximum level.” Kaminsky claimed that Buffett’s purchase allowed the seller — described by Berkshire as the “estate of a long-time shareholder” — to avoid potentially higher capital gains taxes next year...In his rebuttal e-mail, Buffett said capital gains taxes don’t apply to estates. “Mr. Kaminsky also made the statement that the estate that was a seller was better off by selling in 2012 than 2013,” he wrote. “This, too, was incorrect.” He said capital gains are wiped out by stepped-up basis rules, with assets marked at their current fair-market value at the time of death. Buffett also blasted Kaminsky for saying his buyback was hypocritical on principal as Buffett is known to eschew buybacks. Buffett attached a copy of Berkshire’s 1984 annual report showing he has outlined conditions under which he would favor buybacks. CNBC anchor Melissa Lee read a correction late Tuesday that thanked the famed investor for “watching and setting us straight.” Fisher: Fed Risks 'Hotel California' Monetary Policy (CNBC) Dallas Fed President Richard Fisher told CNBC that he's worried the U.S. central bank is in a "Hotel California" type of monetary policy because of its "engorged balance sheet." Evoking lyrics from the famous song by The Eagles, he said he feared the Fed would be able to "check out anytime you like, but never leave." Fisher said on "Squawk Box" that he argued against revealing the new inflation and unemployment targets set by the Fed this week, saying he's worried that the markets will become "overly concerned" with the thresholds. Euro-Zone Downturn Eases (WSJ) Data company Markit said on Friday its preliminary purchasing managers' index, a gauge of activity among euro-zone factories and services companies, rose to 47.3 in December from 46.5 in November. A reading above 50.0 would signal an expansion. The national measure for Germany picked up to 50.5 from 49.2 in November, indicating that activity rose in the euro zone's largest member. "The euro-zone downturn showed further signs of easing in December, adding to hopes that the outlook for next year is brightening," said Chris Williamson, chief economist at Markit. Residents find neighbor at their door with machete (KS) A 38-year-old Bremerton man was arrested by police Monday night for allegedly confronting his neighbors with a machete in response to alleged vandalism at his residence, according to documents filed in Kitsap County District Court. Officers were called to a Nollwood Lane address shortly after 8 p.m. Monday. Two residents said when they answered a knock at their door, a man was standing in the doorway holding a machete. The man, a neighbor, reportedly said he was tired of vandalism to his home and blamed it on a family member of his neighbors, police said. The neighbors attempted to slam the door on the man, but he reportedly put his foot into the door holding it open, police said. The neighbors were ultimately able to close it, though the suspect denies he put his foot in the door. Police interviewed the man, 38, who admitted he'd retrieved the machete out of anger after another incident of vandalism.

Opening Bell: 5.5.15

Federal Reserve names names; Credit Suisse taken down a peg; Greece outlook: not good; Einhorn no fan of frackers; Guy stuffs $19k of cocaine in his underwear; and more.