Opening Bell: 05.15.13

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Euro-Zone Recession Extends Into 2013 (WSJ)
Economic output contracted in the euro zone for a sixth-straight quarter, as a slight recovery in Germany failed to offset recessions in France and Italy. The report underlines a challenge facing European policy makers struggling to turn improved conditions in financial markets into renewed business activity. Without expanding economies, unemployment is likely to keep rising, particularly in southern Europe, weighing on business and household spending. ... Gross domestic product fell 0.2% in the first quarter from the final three months of 2012, according to a report Wednesday from the European Union's statistics office Eurostat. In annualized terms, which is how the U.S. and some other countries report output, GDP fell 0.9%, according to J.P. Morgan.

Rising revenues to shrink deficit rapidly through 2015: CBO (Reuters)
The deficit is shrinking considerably more quickly than previously thought, the Congressional Budget Office said on Tuesday in a report that could sap Congress' sense of urgency to find further budget savings. In one fell swoop, the non-partisan budget referee slashed its deficit forecast for the current fiscal year by $203 billion from estimates made in February to $642 billion - making it the smallest budget shortfall since 2008.

HSBC eyes up to 14,000 fresh job cuts (FT)
HSBC announced another round of heavy cost-cutting on Wednesday in a programme that could lead to between 4,000 and 14,000 more job losses. The bank said it would seek $2bn-$3bn of additional annual cost savings on top of the $4bn already achieved. But Stuart Gulliver, chief executive, still had to row back from a key efficiency target. The bank would in future aim for a cost-income ratio of close to 55 per cent, rather than the 48-52 per cent range previously targeted.

JPMorgan investors take heat off Dimon (FT)
Large shareholders and other people familiar with early voting patterns said an investor proposal to strip Mr Dimon, the chief executive, of his dual role as chairman was on track to gather less than 50 per cent of the vote. However, some large investors who are backing Mr Dimon are voting against the re-election of other board members, leaving in doubt the position of directors such as Ellen Futter, a lightning rod for corporate governance activists, whose qualifications to serve on the board’s risk committee have been questioned.

Subscribers Fear Bloomberg Is Becoming Their Rival (DealBook)
The most obvious business line that competes with Wall Street is Tradebook, a subsidiary of Bloomberg that is registered to trade on behalf of clients, collecting valuable commissions for each trade. It is fighting for those commissions with trading desks across Wall Street. Tradebook was originally created in 1996, 14 years after Mr. Bloomberg founded the larger company. For many years, Tradebook failed to gain much traction, but in 2010 it hired an ambitious new chief executive, Ray Tierney, from Morgan Stanley. Mr. Tierney has helped Tradebook win a greater market share in stocks and options and has developed new products. Last fall, it introduced Bloomberg Pool, which serves as a competitor to Wall Street’s dark pools, where stock trades are executed away from the public exchanges.

Newlywed, 21, busted allegedly soliciting hooker for sex on honeymoon (NYDN)
A newlywed husband solicited sex from a prostitute while on his honeymoon with his new wife, authorities say. Mohammed Ahmed, 21, allegedly left his blushing bride in their luxury suite so he could meet up with the hooker he'd spotted online — but she turned out to be an undercover cop. ... When he didn't return, his wife contacted cops to report him missing — only to find he'd been thrown in jail and booked on charges of soliciting prostitution.

Greece Bulls Charge Into Corporate Bonds (WSJ)
Months of relative calm in Europe—and the pressure to go somewhere, anywhere, for yield in a low-interest-rate world—has investors taking another look. The Athens stock market has rallied more than 80% in the past 12 months, with the Athex Composite Index rising 0.8% on Tuesday. Greek government bonds have been on a tear since June. The latest sign: Hedge funds and private banks are seeking out bonds issued by Greek companies, which are tapping credit markets in increasing numbers. Among the buyers are York Capital Management, Dromeus Capital, LNG Capital and CQS LLP. Third Point LLC, run by Daniel Loeb, is starting a hedge fund focused on buying Greek assets.

EU Oil Manipulation Probe Shines Light on Platts Pricing Window (Bloomberg)
The investigation by the European Commission shines a light on how price reporting companies including Platts, the energy news and data provider owned by McGraw Hill Financial Inc., help determine the cost of raw materials used in everything from plastic bags to jet fuel. The suspected violations are related to the Platts’ Market-On-Close assessment process, or so-called window, and may have been ongoing since 2002, Statoil said.

Repossessions Rise Along With Auto Industry Rebound (CNBC)
An increase in auto repossessions due to borrowers defaulting on their car loans is raising new questions about whether the auto industry is going too far selling new cars and trucks to those with subprime credit records. According to Experian Automotive, the percentage of auto repos in the first quarter jumped 16.9 percent, and the average charge-off for bad loans jumped more than $600 to $7,401.

Private-Equity Firms Build Instead of Buy (WSJ)
"You've seen a radical shift in what private equity has done these last few years," said Blackstone's president, Hamilton "Tony" James. "You're forced to cast your nets a bit wider and find things where the space isn't so crowded." ... Blackstone, Apollo, KKR and Carlyle Group—all publicly held—now have operations far afield from their traditional financial plays. Only about a third of the investor assets Apollo manages now are tied to corporate buyouts—down from about 75% in 2007. At Blackstone, the portion of managed assets that is in buyout funds is below 25%, versus twice that nearly a decade ago.

Did Thermo Fisher know about the drug cartel in its midst? (Fortune / Dan Primack)
Private equity firm OpenGate Capital is suing lab equipment giant Thermo Fisher Scientific, claiming that it was duped into buying a business whose primary manufacturing facility had been overrun by a Mexican drug cartel. ... OpenGate claims to have immediately begun to investigate the situation, and learned that Gulf Cartel incursions occurred "every day," with members having been known to brandish weapons at employees in order to gain parking lot access (at times, they allegedly left "tractor-trailers filled with unknown cargo" overnight). It also learned that on Sept. 23, 2012 -- in the middle of deal negotiations -- "armed militants entered the cafeteria at the Reynosa Facility after being followed by rivals (either opposing cartel members or soldiers). They stayed for an hour or more before leaving."

Angry Maserati owner destroys $430,000 car with sledgehammer (Wheels.ca)
A man hired “smashers” to help him pound his car to a pulp outside the Qingdao Auto Show on Tuesday in what he says was a protest against bad service by the dealership, the China Car Times reports. The owner was apparently unhappy with Furi Group, the company responsible for Maserati distribution in the Qingdao area, because they allegedly repaired his $430,000 Quattroporte with second-hand parts rather than the new parts he paid for and did not make all the repairs he requested.

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Current Employees Star In S&P Suit (WSJ) As ammunition against Standard & Poor's Ratings Services, the Justice Department packed its fraud lawsuit with vivid details about more than 25 employees who allegedly put triple-A ratings on shaky bundles of subprime mortgages—or dithered on downgrading the securities as the housing market was collapsing. David Tesher, an S&P managing director in charge of one of the firm's two collateralized-debt-obligation groups, let analysts who reported to him put the highest possible ratings on deals S&P "knew did not accurately reflect the true credit risks," the U.S. government alleged in the suit filed Feb. 4. When a different group of analysts warned that more and more borrowers were falling behind on their payments, Mr. Tesher didn't tell his analysts, federal prosecutors claim. They put his name in the 128-page lawsuit a total of 59 times. Fresh Front In Budget Battle (WSJ) A White House official said the administration wouldn't go along with such a plan to extend the lower spending levels. And Democrats are insisting that the House GOP bill also give new latitude to domestic agencies as well as the Pentagon. But an aide to Senate Democratic leaders said such a measure might be politically difficult for the lawmakers to oppose, lest they bear the blame for shutting down the government. "There's an emerging consensus that it would be a difficult battle to have," said the Senate leadership aide. "I don't think we could force a shutdown." Dimon: Let’s put ‘London Whale’ on ice (NYP) That’s the message Jamie Dimon hopes to deliver at JPMorgan Chase’s annual investor day in New York tomorrow, some nine months after the infamous “London Whale” blew a $6 billion hole in the bank’s balance sheet. Dimon will stress that the nation’s biggest bank has been growing its business and taking market share in a bid to convince investors and analysts that there will be no further whale sightings. JPMorgan, for instance, has boosted its private banker ranks to better cater to wealthy investors, adding some 650 bankers since 2008, according to people familiar with the matter. Dimon is also expected to tout the bank’s ability to ring up record profits in good times and bad. JPMorgan reaped $21.3 billion in profits in 2012, a record year despite rocky markets that shook rivals here and abroad. Knight Capital to Sell Credit Brokerage Unit to Stifel: Report (Reuters) Knight Capital Group, which recently agreed to be bought for $1.4 billion by Getco Holding, has struck a deal to sell its credit-brokerage unit to Stifel Financial, a person familiar with the matter told Reuters. The terms of the deal were not known. But Stifel will be picking up investment-grade, high-yield, asset-backed and mortgage-backed debt brokers in the U.S. and Europe through the deal the source said. Foreign Money Is Revisiting Greece (WSJ) A steady trickle of foreign money pumped €109 million ($143.8 million) into Greek stocks in the last six months of 2012, followed by an additional €27.6 million in January, according to the Athens Stock Exchange. That money helped lift Greece's major stock index 33.4% last year, making it—bizarrely—the best-performing stock market in the European Union. It is up an additional 10.51% this year, to 1003.32, although it remains well off its high of 6355 reached more than 12 years ago. IKEA Meatballs Pulled After Horse-Meat Traces Found (WSJ) IKEA on Monday became the latest company to be drawn into Europe's snowballing horse-meat scandal, as the Swedish furniture giant said it has recalled a batch of meatballs that had been distributed to 13 European countries. The move comes after Czech food inspectors found traces of horse meat in IKEA's meatballs. The company also said it is withdrawing meatball products from sale in Sweden. Japan Picks BOJ Critic to Be Its Next Chief (WSJ) Prime Minister Shinzo Abe plans to nominate former finance-ministry official Haruhiko Kuroda, 68 years old, as the next Bank of Japan governor, according to government officials. Mr. Kuroda, currently chief of the Asian Development Bank, ran the Japanese finance ministry's currency policy for four years in the early 2000s. There, among other things, he oversaw an extended effort to drive down the yen's value in order to make Japanese exports more affordable on the world market. Barnes & Noble Chairman to Bid for Company's Retail Assets (Reuters) Barnes & Noble Chairman Leonard Riggio has told the board he plans to buy all the retail assets of the company. The retail business includes, among other things, Barnes & Noble Booksellers and barnesandnoble.com but excludes Nook Media, Riggio said in a regulatory filing on Monday. Mets Expect To Lose Money And Fans This Year (NYP) The team is expecting to lose more than $10 million this year, after bleeding red the past two seasons, while attendance is projected to fall for a fifth straight year. Monti Gets Investors’ Approval as Bonds Cast Doubt on Berlusconi (Bloomberg) Monti “is the first leader to make it clear you have to look out for future generations and not just tomorrow’s vote,” said Fabrizio Fiorini, chief investment officer at Aletti Gestielle SGR SpA. “This concept of looking out for future generations is absolutely new for Italy.” Angry moms condemn Geico’s cellphone app commercial they claim promotes bestiality (NYDN) One Million Moms wants auto insurance firm Geico to pull its latest TV campaign in which a woman appears to be flirting with a pig. The conservative Christian group that monitors children’s programming issued a statement to condemn the clip. “The Geico marketing team may have thought this would be humorous, but it is disgusting to see how the company takes lightly the act of bestiality,” One Million Moms said in a statement. The press release, which urges members to email their disgust to the firm, added that the advert was “repulsive” and “unnecessary.” It was also a “horrible commercial for families to see,” the group said. The commercial starts with Maxwell the Geico pig and the woman in a parked car on what appears to be a lover’s lane. Not knowing the car has broken down, the woman seems keen to make out with the pig. But he is uninterested and instead shows her the Geico app and the game Fruit Ninjas on his cellphone. Geico has not commented on the complaint.

Looking a little sadder than usual. Dietmar Rabich / Wikimedia Commons / “Frankfurt am Main, Skulptur -Bulle & Bär- -- 2015 -- 6763” / CC BY-SA 4.0, via Wikimedia Commons

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