Opening Bell: 05.29.13

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Improving U.S., rebounding Japan can't stop OECD cutting world growth forecast (Reuters)
The recession-hit euro zone will fall further behind a generally improving United States and a rebounding Japan this year, the OECD said on Wednesday, cutting its global growth forecasts. In its twice-yearly Economic Outlook, the Organisation for Economic Cooperation and Development forecast the world economy would grow 3.1 percent this year before accelerating to 4 percent in 2014. The estimates marked a slightly more pessimistic view after in November the Paris-based think tank forecast global growth of 3.4 percent this year and 4.2 percent next year.

Treasury 10-Year Yields Climb to 13-Month High on Fed Outlook (Bloomberg)
Treasury 10-year yields rose to the highest level in more than 13 months as signs the U.S. economy is recovering fueled speculation the Federal Reserve will trim its debt purchases. ... “If the data continues to be on the strong side, then the sell-off will persist,” said Patrick Jacq, a senior fixed-income strategist at BNP Paribas SA in Paris. “The first step was some comments from Fed members suggesting that they may exit sooner than expected or at least ease quantitative easing. And then there was key economic data that was above expectations.”

Apple's Cook Hints at Wearable Devices (WSJ)
Most of Mr. Cook's speech was dedicated to defending Apple's prowess as a tech trend-setter, amid recent complaints that the Silicon Valley company has failed to introduce any groundbreaking products lately. "We have several more game changers in us" that the company has been "working on for a while," Mr. Cook said at the event. Mr. Cook praised devices such as Nike Inc.'s FuelBand, an activity tracker worn on the wrist. He said such wearable products "could be a profound area for technology," while expressing less excitement about Google Glass, Google Inc.'s high-tech eyeglasses that serve as a kind of heads-up display to view Internet content. He said it's "tough to see" Google's product having mass-market appeal.

Switzerland frees banks to settle U.S. tax evasion cases (Reuters)
The Swiss government agreed on Wednesday to create a legal basis that will allow its banks to settle investigations by U.S. authorities into their role in helping wealthy Americans evade billions of dollars in tax. ... Special permission will be granted to allow banks to turn over new information about the behavior of their staff and clients, although the government said no changes would be made to rules protecting clients' identities.

Liberty Reserve Joe Bogus Account Said to Reflect Evasion (Bloomberg)
Liberty Reserve SA, whose operators are charged with running a scheme that masked more than $6 billion of criminal proceeds, was designed to help users evade scrutiny, U.S. prosecutors said. The digital currency company, unlike traditional banks or legitimate online payment processors, didn’t require users to validate their identity and allowed accounts to be opened under fictitious names such as “Russia Hackers” and “Hacker Account,” according to prosecutors. An undercover agent was able to establish a Liberty Reserve account using the alias “Joe Bogus,” listing his address as “123 Fake Main Street” in “Completely Made Up City, New York,” said Manhattan U.S. Attorney Preet Bharara. He said the prosecution is believed to be the largest money-laundering case brought by the U.S.

Are Canada’s $100 polymer bills really maple-scented? (CTV News)
The penny may be history, but some Canadians suspect the Bank of Canada has been circulating a new scent along with its plastic bank notes. Dozens of people who contacted the bank in the months after the polymer notes first appeared asked about a secret scratch-and-sniff patch that apparently smells like maple syrup. "I would like to know ... once and for all if these bills are in fact scented, as I do detect a hint of maple when smelling the bill," says a typical email from a perplexed citizen. Said another: "They all have a scent which I'd say smells like maple? Please advise if this is normal?" ... For the record, bank official Jeremy Harrison says no scent has been added to any of the new bank notes.

EU eases hard line on austerity (FT)
Brussels will on Wednesday give its clearest signal yet that it is moving away from a crisis response based on austerity, allowing three of the EU’s five largest economies to overshoot budget deficit limits and pushing instead for broader reform. In its annual verdict on national budgets of all 27 EU members France, Spain and the Netherlands will be given a waiver on the annual 3 per cent deficit limit. Brussels will also free Italy from intensive fiscal monitoring despite its new prime minister’s decision to reverse a series of tax increases imposed by his predecessor. The European Commission will make these moves on the condition that national governments embark on stalled labour market reforms.

ECB: Cyprus Shock Caused Deposit Flight (WSJ)
The euro zone's botched bailout of Cyprus caused a mini-run on banks in many of the currency union's 17 members in April, exacerbating the decline in lending to the real economy, data from the European Central Bank showed Wednesday. ... Although European officials rushed to stress that Cyprus's problems were unique, depositors in other countries, most notably in those with stressed banking sectors of their own, appear to have feared that their savings could face similar treatment as the euro zone tries to revive a partly moribund banking system.

Dell Buyout Battle Approaches Heated Phase (WSJ)
Within days, the company and its would-be buyers are expected to be able to contact investors directly to try to persuade them to vote for the deal, which will let them sell their holdings for $13.65 a share. On Tuesday, Dell shares rose two cents to $13.36. The deal has been hotly contested almost since its signing, with a portion of the long-term shareholder base already aligned against it. In the final vote, the outcome could come down to how hedge funds and the company's small shareholders end up voting, say people familiar with such showdowns. "In a close fight, it really gets down to dialing for dollars," said Brad Allen, director of Branav Shareholder Advisory Services Inc.

Smithfield to Be Sold to Shuanghui Group of China (DealBook)
Shuanghui Group of China has agreed to buy the American meat processor Smithfield Foods for around $4.7 billion, the two companies announced Wednesday. Under the terms of the deal, Shuanghui, which is the largest pork processor in China, will pay $34 a share to acquire Smithfield, representing at 31 percent premium on the company’s closing share price on Tuesday.

Where We Stand: The Class of 2013 Senior Survey (Harvard Crimson)
Of those [graduating Harvard seniors] who will be working, the most popular industry is consulting, drawing 16 percent of employed seniors. Another 15 percent will be working in finance, nearly doubling the 9 percent who entered the sector last year but still paling in comparison to 2007, when before the financial crisis, 47 percent of graduating seniors went into finance. ... 16 percent of the class has tried at least one of cocaine, ecstasy, mushrooms, LSD, and other illicit substances. Very large majorities of those who have used these drugs first tried them after starting college. 9 percent of the class has used drugs like Adderall and Ritalin ...

Cops testing night vision goggles find crab poachers hiding in the dark (NYP)
Two cops testing night vision goggles from an NYPD helicopter during a routine training exercise stumbled upon a crab-poaching operation Monday night, police said. Officer Lester Sanabria was piloting a helicopter about 500 feet off the ground around 9:45 p.m., when he and his partner Chris Maher spotted several creeping around an abandoned beach in Jamaica Bay in the pitch-black night, cops said. They hovered down to about 200 feet off the ground and their high-tech eyewear revealed Robert Wolter, 28, and Joseph Knauer, 33, loading two vessels with horseshoe crabs, Maher said. The crabs fuel a $60 million-a-year market for pharmaceutical companies that process their copper-based blood to sanitize medical equipment. One quart of the blood can fetch up to $15,000, according to experts.

Related

Opening Bell: 10.04.12

France’s LBO Firms See ‘Death’ From Hollande’s 75% Carry Tax (Bloomberg) Hollande, who released his first annual budget on Sept. 28, plans to tax fund managers’ share of the profit from their investments, known as carried interest, at a rate of as much as 75 percent, part of a wider effort to increase taxes on the wealthy and narrow the country’s deficit. France also plans to as much as double taxes on capital gains and restrict the amount of debt interest payments a company can deduct from its taxable income, a measure that will reduce returns on leveraged buyouts. Facebook Test Turns Users Into Advertisers (FT) Facebook is testing a new product in the US that allows ordinary users to pay to promote their own status updates, marking a shift in the social network’s willingness to charge its users for a core service. The product has potential to generate revenues, analysts said, but could also threaten the organic feel of the site as people pay to market their own social lives. Mark Zuckerberg Confirms: 'I wear the same thing everyday' (DL) "I mean, I wear the same thing every day, right? I mean, it's literally, if you could see my closet," Zuckerberg starts to explain, as Lauer asks if he owns 12 of the same gray t-shirt. "Maybe about 20," Zuckerberg admits, somewhere between discussing the future of Facebook, his daily routine, the iPhone 5, and his wedding to college sweetheart Priscilla Chan last May. The Facebook CEO says that he doesn't really have much in his closet — it's mainly used by his wife, who graduated from medical school at the University of California at San Francisco shortly before their marriage. Instead, Zuckerberg's identical t-shirt collection lives in the one drawer he's allotted. Tiger Global Up 22.4 Percent (Reuters) Tiger Global, one of the world's best-performing hedge funds, ended the third quarter with strong gains, leaving the fund up 22.4 percent for the year, two people familiar with the numbers said on Wednesday. The roughly $6 billion fund, run by Chase Coleman and Feroz Dewan, has been the darling of the investment community for its string of strong returns at a time when the average hedge fund is delivering only low single-digit returns. In 2011, when most funds nursed losses, Tiger Global captured headlines with a 45 percent gain for the year after having made a good chunk of money on the short side, people familiar with the portfolio said. 'Dark Pool' And SEC Settle (WSJ) The Securities and Exchange Commission alleged in its order that Boston-based broker-dealer eBX LLC allowed the third-party operator of its trading platform, called LeveL ATS, to use details on client orders, including the stocks involved and whether they were buy or sell orders, to its own advantage. That operator is Lava Trading, an electronic-trading unit of Citigroup, according to eBX. eBX agreed to pay $800,000 to settle the SEC's allegations. It did so without admitting or denying wrongdoing. Mohamed El-Erian: No corner offices at PIMCO (Fortune) "It doesn't matter whether you're CEO or whether you're an associate, you have the same size office. No corner offices. Just a conference room. And then I knew that I had made the right decision when my very first outing with PIMCO, I had come from the IMF, 15 years working on emerging markets. I had a swagger, I thought I knew what I was talking about. I put forward my view, and this summer intern felt safe enough to get up and say, "You know what? Mohamed is wrong and this is why he's wrong." The fact that PIMCO had created this safe zone where a summer intern could get up and question someone who was supposed to be an expert confirmed to me that I was in the right place." Bank-Friendly U.S. Regulator Shifts Focus to Revamp Reputation (Bloomberg) In a stately hearing room stuffed with senators and bankers, Thomas Curry began his apologies. His agency should have stopped a major bank from helping drug cartels launder cash. The violations went on for years while his agency was overly passive. “I deeply regret we did not act sooner,” he said. Curry had been on the job for just over three months on that day in July, so the mistakes hadn’t been made on his watch. His apologies were less a confession than a signal the new Comptroller of the Currency -- long seen as the most bank- friendly of U.S. regulators -- was changing course. “I’m not interested in what people thought about in the past,” Curry said in an interview. “My focus is going forward.” Since he took over in March, at least two key staff members closely associated with the agency’s pro-industry stance have departed, notably chief counsel Julie Williams. Williams, a 19- year OCC veteran, was known for helping nationally chartered banks resist state regulation by arguing they were preempted by often less-stringent federal rules. Curry has also raised the profile of consumer protection and shifted focus toward “operational risk” -- the idea that bank practices and management can pose as much of a threat to safety and soundness as external forces. Argentine Navy Ship Seized In Asset Fight (FT) An Argentine naval vessel crewed by more than 200 sailors has been seized in Ghana as part of an attempt by the US hedge fund Elliott Capital Management to collect on bonds on which Buenos Aires defaulted in 2001. A Ghanaian court ordered an injunction and interim preservation order against the ARA Libertad, a 100-metre long tall ship, following an application by Elliott subsidiary NML Capital on Tuesday. The hedge fund, run by the US billionaire Paul Singer, has been closely monitoring the course of the Libertad, according to sources familiar with the firm. Elliott had been waiting for the ship to stop in a port where it would have a chance to enforce legal judgments previously awarded by UK and US courts. The hedge fund declined to comment. Argentina slammed the interception of the Libertad as a “trick which these unscrupulous financiers” had pulled, adding that it “violates the Vienna Convention on diplomatic immunity”. Morgan Stanley commodities talks with Qatar hit snag (Reuters) Morgan Stanley's talks with Qatar's sovereign wealth fund over the sale of its commodities business have run into difficulty, and the deal may need to be reworked if it is to go ahead, banking sources said. One of the top banks in commodity trading over the past 30 years, Morgan Stanley has been in discussion for more than a year with Qatar over the sale of at least a majority stake in the energy-focused trading business, the bankers said. "There have been some differences, and Qatar is a bit lukewarm about it," one said. "It's not dead yet but definitely not imminent." Maple syrup stolen in Quebec seized by police in New Brunswick (The Star) Quebec police have seized between 700 and 800 barrels of maple syrup from a New Brunswick exporter, linking the drums to August’s massive heist of the sweet stuff. Étienne St-Pierre, owner of S.K. Exports in Kedgwick, N.B., told the Star that police executed a search warrant Sept. 26 and hauled away the barrels. “They said they were searching to find some stolen drums from Quebec,” he said. “It was a surprise. That was the first news I received.” St-Pierre said each barrel weighs about 270 kilograms and holds 170 litres of syrup, meaning police seized at least 119,000 litres of gooey Quebec gold. A spokesperson for the Sûreté du Québec, Sgt. Bruno Beaulieu, confirmed a search warrant had been executed in Kedgwick but said he could not comment on the investigation. The Federation of Quebec Maple Syrup Producers has never revealed the amount of syrup stolen from its secure St-Louis-de-Blandford, Que. warehouse in August. The facility held about 3.75 million litres of syrup, enough to fill one and a half Olympic swimming pools. St-Pierre said he obtained the barrels from a regular Quebec supplier, who he refused to identify.

(Getty Images)

Opening Bell: 6.13.17

Inside Gary Cohn's unenviable White House job; Tim Cook dishes on Apple's autonomous car project; a thing called "potcoin" sent Dennis Rodman to North Korea; and more.

Opening Bell: 8.13.15

Dean Foods/Phil Mickelson probe; Greece woes; Citigroup's bad bank makes good; "Man Assaults Brother For Not Sharing Big Macs, Police Say"; and more.

Mmm...sunscreen. (Getty Images)

Opening Bell: 8.23.16

China's Bank of Tangshan called "mirage" of shadow lending; Trump getting little love from hedge funds; No one wants to buy Lyft; KFC introduces fried chicken-scented sunscreen; and more.

Opening Bell: 02.28.13

EU Bonus Rules Meet Anger (WSJ) The new rules would prevent banks from promising bonuses that exceed an employee's salary—though, with shareholder approval, bonus payments could rise to double the salary. The rules, which are supposed to kick in at the beginning of next year and appear to be the world's toughest, still need to be approved by EU member states and the full European Parliament. European banking executives and trade groups say the rules—which are likely to apply to all European bank's employees around the world—will put the industry at a severe disadvantage relative to U.S. and Asian banks, and that it will provoke unintended consequences. Banks early Thursday weren't yet publicly commenting as they digested the news. But executives privately didn't hold back. "It's a disaster," said a senior investment-banking executive at a top European bank. "It's a crazy policy" that could jeopardize European banks' abilities to hire employees in the U.S. or Asia. Jockeying Stalls Deal On Spending Cuts (WSJ) With mandatory across-the-board spending cuts set to begin Friday, the White House and congressional Republicans are poised to let the deadline pass, each calculating that their hand in negotiations only grows stronger if they scorn a quick compromise. The first face-to-face meeting on the issue between President Barack Obama and congressional leaders won't happen until Friday—the deadline for Mr. Obama to set in motion $85 billion in broad spending cuts. None of the participants expect the morning meeting at the White House to produce a breakthrough. In the run-up, with no serious talks under way, each side is maneuvering to ensure the other catches the blame if the cuts kick in. Cuts Unlike To Deliver Promised US Budget Savings (Reuters) The $85 billion cut to budget authority amounts to about 2.4 percent of the $3.6 trillion the U.S. government is expected to spend in the fiscal year that ends on Sept. 30. The actual amount of savings is much less - $43 billion in the current fiscal year, according to the Congressional Budget Office. That's because federal agencies don't spend all of the money they are allocated in any given fiscal year. A $1 billion aircraft carrier, for example, may take years to build. Even at that lower level, the effects are likely to ripple across the world's largest economy in a way that will work against deficit-reduction efforts. Scrutiny Of Heinz Trades Grows (WSJ) The Financial Industry Regulatory Authority, a Wall Street self-regulator, and the Federal Bureau of Investigation are reviewing numerous trades in Heinz stock shortly before the buyout announcement sent the share price soaring Feb. 14, the people said. The inquiries add to an investigation the Securities and Exchange Commission disclosed Feb. 15 into what it called a "highly suspicious" $90,000 purchase of stock options the day before the deal, a position with a potential profit of $1.7 million. The FBI also has said it launched a criminal investigation into options activity ahead of the deal. Flowers Foods Set To Buy Wonderbread From Hostess (NYP) After no other bidders emerged to challenge it, Flowers Foods is set to snare Wonder and a slew of other bread brands being sold by bankrupt Hostess Brands for $360 million. How The Pope's Retirement Package Compares To Yours (CNBC) Let's start with the basics: The pope emeritus will receive a monthly pension of 2,500 euros, according to Italian newspaper La Stampa. That translates to almost $3,300, or close to the monthly maximum of $3,350 that Social Security will pay to an American who retires this year. Few people will actually qualify for that amount. For starters, you would have to wait until 70 to retire. You would also have to spend most of your working life earning Social Security's taxable maximum pay, which is set at $113,700 this year. "That's quite rare," said Richard Johnson, director of the program on retirement policy at the Urban Institute. He pointed out that the average Social Security check is about $1,200 a month — not enough to pay for the typical American retiree's expenses. "For most people, if you look at the median, Social Security counts for about 40 percent of their income. So it's important, but people rely a lot on other savings, like pensions or 401(k) savings," Johnson said. A big nest egg is not something the pope emeritus has to worry about. The Roman Catholic Church will cover his living expenses, provide him with a spacious home inside the Vatican and pay for everything from cooked meals to housekeepers, according to The Telegraph. Such services are not available to the typical American senior, unless he or she pays for an assisted living facility or resides in a nursing home, Johnson said...Health care costs are one of the big risks that older Americans face, and while Medicare pays for the bulk of their expenses, many things are left uncovered, Johnson said. Meanwhile, the pope emeritus will continue to be a member of the Vatican's generous private health care policy, the BBC reported. Blackstone Profits From Regulation With Citigroup Deal (Bloomberg) Blackstone has devised a way to profit from regulation: It’s helping banks meet tougher capital rules without the pain of selling assets or raising equity. The firm last year insured Citigroup against any initial losses on a $1.2 billion pool of shipping loans, said two people with knowledge of the transaction, who asked not to be identified because the matter is private. The regulatory capital trade, Blackstone’s first, will let Citigroup cut how much it setsaside to cover defaults by as much as 96 percent, while keeping the loans on its balance sheet, the people said. RBS Moves To Appease UK (WSJ) The 81%-state-owned bank unveiled a series of moves to ease government and regulatory pressure on the bank to become more U.K. focused and better capitalized. Chief Executive Stephen Hester confirmed that it would list around 25% of the U.S.-based RBS Citizens bank in the next two years "to highlight the valuable nature of the business." RBS also said it would further pare back its investment bank, shedding jobs and cutting risk-weighted assets to £80 billion ($121.3 billion), from £101.3 billion at the end of 2012. Unemployment aid claims fall by 22,000 last week (AP) The number of Americans seeking unemployment aid fell 22,000 last week to a seasonally adjusted 344,000, evidence that the job market may be picking up. The four-week average of applications dropped 6,750 to 355,000, the Labor Department said Thursday. That was the first drop in three weeks. Too Big To Fail Hurting Too Small To Compete Banks (Bloomberg) Investors such as Joshua Siegel, founder and managing principal at New York-based StoneCastle Partners LLC, see bigger changes at the other end of the spectrum. Small banks will seek mergers because their management teams are aging and new regulations are too costly to bear, he says. “If you need one major overriding theme of the industry in the next three, five, seven, 10 years: massive consolidation, thousands of banks,” says Siegel, whose firm managed $5.1 billion as of the end of last year and invests in small banks. In the U.S., “I do see probably anywhere from 2,000 to 4,000 banks being swallowed up, and what you’ll see then is a more- concentrated system.” Dennis Rodman Tells Kim Jong Un: You Have A Friend For Life (NYP) Rodman and Kim sat side by side at an exhibition game in Pyongyang on Thursday, chatting as they watched players from North Korea and the US play in mixed teams, Alex Detrick, a spokesman for the New York-based VICE media company, told The Associated Press. Rodman later addressed Kim before a crowd of thousands, telling him, "You have a friend for life," Detrick said. The encounter makes Rodman the most high-profile American to meet with the young North Korean leader, said to be a diehard basketball fan.