SAC Sees Investors Pulling Out $3.5 Billion (WSJ)
SAC Capital Advisors LP is bracing for investors to pull an estimated $3.5 billion from the firm, according to people briefed on the matter, as the hedge-fund giant continues to battle fallout from an intensifying insider-trading probe. The anticipated withdrawals, which the people described as preliminary estimates that were still in flux, come in response to a quarterly deadline Monday for SAC clients to ask for money back. The firm received withdrawal requests for $1.7 billion in the first quarter. If the estimates hold, the outflows would represent more than half of the firm's remaining outside capital and bring the total that investors have sought back this year to more than $5 billion.
Investors square off in battle over subprime mortgages (FT)
The New York state supreme court will hear arguments on whether to approve an $8.5bn settlement between investors in mortgage bonds and Countrywide, the mortgage originator bought by BofA in 2008. Investors who object to the deal, led by AIG, say BofA is paying too low a price for the defective loans underwritten by Countrywide and the real bill should be at least $20bn more.
Wells chief warns Fed over debt proposal (FT)
John Stumpf said the Fed was giving mixed messages on debt and his bank should not be punished for the fact that it is largely funded by deposits. “Sometimes they say ‘We want more debt,’ sometimes they say, ‘Geez, too much debt’s not great either’,” he told the Financial Times. Regulators are planning to impose a minimum level of long-term debt in an effort to improve the system for dealing with large financial groups on the brink of failure. Under a new “orderly liquidation authority”, unsecured debtholders would be forced to swap their debt for equity in a recapitalised group.
Emerging Market Dominoes to Fall as SocGen Sees Rout (Bloomberg)
The worst month in a year for emerging-market currencies will prove to be more than a momentary bout of weakness to strategists at firms from UBS AG to Societe Generale SA who see the Federal Reserve weaning investors off its extraordinary stimulus. South Africa’s rand led declines among the 24 developing-nation currencies tracked by Bloomberg last month, tumbling 11.3 percent. JPMorgan Chase & Co.’s Emerging Markets Currency Index fell 3.3 percent, the most since it slipped 7 percent in May 2012. Only China’s yuan gained, rising 0.51 percent. ... “The bull market is over” for developing-nation currencies, said Kit Juckes, a strategist at SocGen in London. The rand is “the first of what I suspect will be a series of dominoes to fall,” he said.
Bernanke at Princeton Offers Seniors Advice From Love to Money (Bloomberg)
Ben S. Bernanke gave Princeton University students advice on subjects from success to love, quoted St. Luke and Forrest Gump and urged graduating seniors to view money as a means, not an end, and to choose a life partner with care. ... In an often humorous speech yesterday, he had nothing to say about monetary policy, and little to offer about economics, except that it “is a highly sophisticated field of thought that is superb at explaining to policy makers precisely why the choices they made in the past were wrong. About the future, not so much.”
Mitt Romney Inc.: The White House That Never Was (Time)
"The White House staff is similar to a holding company with a large collection of offices, each of which has its own set of: Responsibilities; Constituents; Workflows."
Chinese Bid for U.S. Pork Had Links to Wall Street (NYT)
America’s biggest private equity firms already have a major presence in China, with TPG, the Carlyle Group and Blackstone seeking deals. Often they co-invest alongside Asia’s biggest investment firms. One of the best-known is CDH Investments, a private equity and venture capital firm that manages more than $7 billion in assets with operations in Beijing. Founded in 2002, the company has invested in big food makers, like Mengniu Dairy, the Yurun Food Group and Shuanghui. In 2006, CDH and Goldman Sachs led a consortium of investors who paid about $250 million to buy out the Chinese government’s stake in Shuanghui in the hopes of transforming the company into one of China’s biggest food companies.
Glencore, Blackstone Eye a Rio Tinto Ore Business (WSJ)
Commodities giant Glencore Xstrata PLC and private-equity firm Blackstone Group LP are among the suitors circling the Canadian iron ore operations that Rio Tinto PLC has put on the block, according to people familiar with the matter. The two firms and other potential buyers have been looking at Rio Tinto's 59% stake in Iron Ore Co. of Canada, which analysts at Bank of Montreal estimate is worth around $4 billion, valuing the entire business at around $7 billion. A first round of bids has been submitted for the stake, which Rio Tinto put up for sale earlier this year, according to some of the people.
ECB's Draghi says euro zone on track for "very gradual" recovery (Reuters)
The euro zone economy is on track for a recovery later this year driven by the European Central Bank's loose monetary policy and demand from abroad, the bank's President Mario Draghi said. The ECB cut interest rates to a new record low in May and said it would act again if necessary but its hand may in part be stayed this month and going forward by a rebound in inflation, which rose back to 1.4 percent in May from 1.2 percent in April. That is still way below the bank's roughly 2 percent target and unemployment in the euro zone reached a fresh high in April at 12.2 percent, fuelling further calls for policymakers to do more to help the economy.
Warning: ‘Prepare’ for Commodity Supercycle End (CNBC)
With multiple investment banks signposting the end of the commodity supercycle, a World Bank director has warned developing countries that have benefited from the surge to protect themselves against a price crash. Marcelo Giugale, the World Bank's director of economic policy and poverty reduction programs for Africa, told CNBC that states which have gained from the commodity boom should prepare for a slump. "We don't want another wasted opportunity," he said. "This time around, things should be done differently. The material bonanza has the potential to become a human bonanza – whereby the standard of living for many people across these developing countries can be raised."
‘Extreme Conservatives’ Driving Gold Lower: Roubini (CNBC)
Gold is likely to fall below $1,000 an ounce, nearly half the level it reached at its peak in 2011 according to Nouriel Roubini, the founder of Roubini Global Economics. And the man credited for calling the financial crisis believes one of the key factors that will drive prices lower is "extreme political conservatives, especially in the United States." Writing in an op-ed published by Project Syndicate, Roubini said the hyping of gold by political conservatives had become counterproductive. "For this far-right fringe, gold is the only hedge against the risk posed by the government's conspiracy to expropriate private wealth," he said.
Risk-Averse Culture Infects U.S. Workers, Entrepreneurs (WSJ)
"The U.S. has succeeded in part because of its dynamism, its high pace of job creation and destruction, and its high pace of churning of workers," said John Haltiwanger, a University of Maryland economist who has studied the decline in American entrepreneurship. "The pessimistic view is we've lost our mojo."
Cambridge University defends law exam paper containing descriptions of oral sex, male rape and naked torture (Daily Mail)
Around 200 students sitting the exam on Saturday morning were presented with a scenario involving a fictional college drinking society's initiation ceremony which went on to describe several indecent assaults. The question in the three-hour exam at the university's Faculty of Law began: 'Sandra is President of The Vizards, a College drinking society. She is organising the initiation of new members. 'After a great deal of alcohol has been drunk, the members of the society form a circle around Billy, Gilbert and Richard who are to be initiated.' The question then described three rituals in which a male student was blindfolded and given oral sex by another man, another was sexually assaulted with a bottle and a third had his pubic hair shaved off before dying from a subsequent infection. The students were asked to outline any offences which may have been committed during the scenario.