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Opening Bell: 05.24.13

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In Bid for Clarity, Fed Delivers Opacity (WSJ)
As the Fed has tried to explain its thinking, investors have sometimes been caught scratching their heads. Wednesday's stock-market moves put that dynamic into sharp relief. Stock prices soared in the morning when Mr. Bernanke initially sounded reluctant to start reducing the size of the monthly bond purchases, dropped when he sounded like he was entertaining the idea, and then fell further when the Fed's May meeting minutes showed a variety of views on the timing.

The deeper agenda behind "Abenomics" (Reuters)
Abe's unlikely comeback was engineered by a corps of politicians who called themselves the "True Conservatives," many of whom share his commitment to loosening constitutional constraints on the military and restoring traditional values such as group harmony and pride in Japanese culture and history. While the cultural-political agenda is what drove them, Abe and his backers also came to realize that voters cared most about the economy, so this time, they made it the top priority. "Mr. Abe in his first term put more priority on revising the constitution than on the economy," said Yoichi Takahashi, a former finance ministry official who is an adviser to Abe. "Even now, I think that is the case. But I think he realized that in terms of order of priority, he had to work on the economy first."

EU rushes out corporate tax transparency law (FT)
Michel Barnier, EU commissioner for the single market, is working on legislative options for the disclosure rules, including by amending an existing proposal from April on corporate reporting of social and environmental issues. ... Mr Barnier told the Financial Times: “It is necessary that large companies such as Apple, Google, Amazon that we have recently spoken a lot about – but not only these – are obliged to report how much tax they pay to whom and where.”

Bank’s Lobbyists Help in Drafting Financial Bills (DealBook)

P&G Says A.G. Lafley Rejoins as Chairman, CEO (Bloomberg)
Procter & Gamble Co. (PG) is replacing Chief Executive Officer Bob McDonald with his predecessor, A.G. Lafley, as the world’s largest consumer products maker struggles to rekindle growth at home and abroad. McDonald embarked on a turnaround plan last year to cut $10 billion in costs through 2016 and renew focus on the company’s leading businesses after losing market share to such rivals as Unilever. Activist investor Bill Ackman bought a stake valued at $1.8 billion last year and pushed to replace McDonald.

NJ investigators say bars used rubbing alcohol and dirty water - and sold it as top-shelf booze (NYDN)
Rubbing alcohol, dirty water or bottom-shelf booze — that’s what investigators say 29 New Jersey bars and restaurants used in lieu of premium liquor. State officials busted the skeevy taverns, including 13 TGI Fridays locations, during a raid Thursday titled “Operation Swill.” From Wycoff south to Marmora, officials said at a Trenton news conference that bar keeps pulled the wool over patrons’ eyes — and poured well booze down their throats — despite orders for high-end premium drinks. ... Investigators didn’t release which bars used the rubbing alcohol or dirty water.

Asia Goes on a Debt Binge as Much of World Sobers Up (WSJ)
Debt loads in Asia's emerging economies—gauged by public and private debt as a percentage of gross domestic product—now exceed what they were in 1997, when Asia went into a financial crisis that lasted for several years. Much of the run-up has come over the last four years. The overall debt-to-GDP ratio rose to 155% in mid-2012, from 133% in 2008, according to the most recent data from McKinsey Global Institute, a unit of consulting firm McKinsey & Co. China, the world's second-largest economy, has led the borrowing binge. China's debt-to-GDP rose to 183% in mid-2012, from 153% in 2008, according to McKinsey. Some economists, including Nomura Holdings Inc.'s 8604.TO -1.14% Zhiwei Zhang, say China's debt-to-GDP ratio has risen higher and faster, to above 200%, based on government data that more fully incorporate nontraditional "shadow" lending institutions such as trust companies, which operate in parallel to the mainstream banking system.

Spain’s banks face €10bn more provisions (FT)
Spanish banks will need to put aside extra provisions of up to €10bn to cover loans that borrowers will struggle to repay, according to an internal estimate by the Bank of Spain. According to recent data, Spanish banks rolled over more than €200bn of loans before they expired – often because corporate borrowers would be unable to repay their debt on time and in full. The €10bn estimate is the first official assessment of the likely impact of the central bank’s new approach towards these refinanced loans.

How Mervyn King Lost the Battle of Britain’s Banks (WSJ / Simon Nixon)
For the past year, the U.K. banking sector has had to contend with a destabilizing campaign of regulatory innuendo. During that time, Bank of England Governor Sir Mervyn and his colleagues on the Financial Policy Committee bombarded the public with harum-scarum reports and speeches that claimed U.K. banks were woefully undercapitalized and urged them to raise fresh equity. In November, the capital hole was said to be up to GBP60 billion; by March it had been revised down to GBP12.5 billion. Neither the banks nor the public were ever allowed to know which institutions were hiding these shortfalls or what assumptions underlaid the BOE’s headline-grabbing assertions. But two brief statements on Wednesday by Lloyds Banking Group and Royal Bank of Scotland confirmed that this capital hole has now vanished. Neither will be issuing fresh capital. Mr. King and his FPC allies have been comprehensively defeated.

Banker Gladstone Paid Less Than Janitor Rises Arranging Futures (Bloomberg)
[New] rules are accelerating the transformation caused by the financial crisis that began six years ago as well as the mergers and acquisitions among national stock and futures exchanges, most of them member-owned, into publicly held international companies. Those M&A deals have placed a premium on bankers like [Jane] Gladstone, the senior managing director for Evercore’s financial services corporate advisory business in New York, Caroline Silver of Moelis & Co., William Cruger of JPMorgan Chase & Co. and Christian Lown of Morgan Stanley. They’ve made their careers by knowing details of how swaps trade or what the requirement to clear transactions means for the industry as well as how to answer the needs of exchange CEOs. ... “It’s not uncommon for Jane to be the single most productive partner in the firm for the year,” said Altman, 66, a U.S. deputy Treasury secretary from 1993 to 1995.

Florida Man Reveals Murder Plans to Police After Butt-Dialing 911 (Gawker)
Law enforcement officials in Florida believe they know who was behind the May 5th shooting death of a Lauderhill man — because the mastermind accidentally butt-dialed 911 and practically confessed to the crime. Scott Simon, 24, was charged with first-degree murder in connection with the slaying of 33-year-old Nicholas Walker after Simon phoned 911 by mistake and was recorded telling another person that he intends to follow Walker home and murder him.


Opening Bell: 01.23.13

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

By Sachyn Mital (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Opening Bell: 6.15.16

Caspersen's lawyer says fraud was fueled by gambling addiction; Fed expected to hold steady; Billionaire gets approval to build NYC mega-mansion; Sean Penn was going to name his son Steak; and more.