ECB Urgency Fades as Draghi Savors Euro-Area Sentiment Boost (Bloomberg)
Mario Draghi will probably reassure investors today that the longest recession in the euro region’s history isn’t enough to justify another interest rate cut and a recovery will emerge later this year, economists said. ... “The expected modest recovery in the second half of this year is likely to remain in place,” said Anders Svendsen, an economist at Nordea in Copenhagen. “Sentiment remains fairly solid and key figures have improved. The sense of urgency that had built up ahead of last month’s meeting is replaced by a sense of calm this time.”
Dimon Sees ‘Scary’ World as Interest Rates Return to Normal (Bloomberg)
“We should all hope for a normalization of interest rates -- that’s a good thing,” Dimon said today during a panel discussion at the Fortune Global Forum in Chengdu, China. “As we go back to normal, its going to be scary, and its going to be kind of volatile.”
Quant hedge funds hit by US bonds sell-off (FT)
Some of the world’s biggest quant hedge funds have suffered steep losses in the past two weeks following the sell-off in global bond markets. So-called “CTAs”, which use computer models to automatically spot and ride market trends, were caught out as investors anticipated an end to the Federal Reserve’s measures to stimulate the US economy, triggering a global rout in fixed income investments. ... “Since mid-May it has been a perfect storm of some of the biggest trends in markets reversing all at once,” said a senior manager at one large quant fund. “It has been particularly brutal.”
'Dark Pools' Face Scrutiny (WSJ)
The Financial Industry Regulatory Authority, Wall Street's self-regulatory body, last month sent 15 examination letters to operators of "dark pools"—lightly regulated, off-exchange trading venues that have been a rising concern for regulators and some investors as more activity shifts away from exchanges. Finra is seeking details about how the increasingly popular venues operate, what they disclose to clients and whether they adequately police trades. It could bring enforcement action against dark-pool operators or issue recommendations for tighter oversight, depending on the answers it receives and additional examinations, said John Malitzis, executive vice president of market regulation at Finra.
Debt Deal in Alabama Will Cost JPMorgan (DealBook)
Under the deal to settle the bankruptcy of Jefferson County, Ala., firms that invested in its distressed debt will have the most to gain, JPMorgan Chase will face a big loss, and residents will be wondering whether there will be any relief for them. ... When the dust finally settles, JPMorgan Chase, which many in the county hold responsible for the financial collapse in the first place, will have given up nearly $1.6 billion as a result of its dealings with the county and its ill-fated effort to finance sewer repairs. The new deal calls for the bank to forfeit $842 million on the $1.22 billion of sewer debt that it holds, which comes on top of $647 million it forgave in termination fees on derivatives contracts with the county and a $75 million penalty it paid to settle a complaint by the Securities and Exchange Commission. The county, for its part, will drop a lawsuit against JPMorgan if the new agreement goes through.
Street 'Elmo' in trouble for alleged $2 million extortion plot vs. Girl Scouts (NYP)
A Times Square Elmo with a history of terrorizing tourists with his anti-Semitic rants was hauled back into a Manhattan courtroom yesterday for allegedly trying to extort $2 million — from the Girl Scouts. Transient loon Dan Sandler, who also uses the name Adam Sandler, threatened to spread false rumors that the Girl Scouts of America arranged sexual encounters between underage girls and adult men, prosecutors allege in a bizarre new extortion and harassment case.
Dodd-Frank Reforms May Take Years to Implement (FBN)
Daniel M. Gallagher, a commissioner at the Securities and Exchange Commission, said regulators at both the SEC and the Federal Reserve are still at odds over several important provisions of the law, including a rule that bars banks from engaging in so-called proprietary trading, known as the Volcker Rule. The infighting has delayed the law’s full implementation indefinitely, Gallagher said. “The SEC has roughly 100 pieces of Dodd-Frank regulations to go through, and we are only a third of the way through,” Gallagher told FOX Business. “The lack of implementation is a major problem. We have years worth of work ahead of us.”
NSA is collecting phone records of Verizon customers (Reuters)
The U.S. National Security Agency is collecting telephone records of millions of Verizon Communications customers, according to a secret court order obtained and published by the Guardian newspaper's website. The order marked "Top Secret" and issued by the U.S. Foreign Intelligence Surveillance Court directs Verizon's Business Network Services Inc and Verizon Business Services units to hand over electronic data including all calling records on an "ongoing, daily basis" until the order expires on July 19, 2013. ... "That's not the society we've built in the United States," said Kurt Opsahl, an attorney at the Electronic Frontier Foundation, which is suing the NSA over surveillance inside the country. "It's not the society we set forth in the Constitution, and it's not the society we should have."
Rising Rates Hit REITs Hard (CNBC)
"REITs are highly sensitive to the interest rate environment, they're effectively bond substitutes on the equity side. They are enormous users of capital," says David Toti, a REIT analyst at Cantor Fitzgerald. "A change in rates impacts their cost of capital, and it impacts their ability to acquire aggressively."
Private Equity Bracing for Higher Rates (CNBC)
John Eydenberg, Deutche Bank's global head of financial sponsors ... told CNBC that higher rates should not have a big impact on the private equity market for a number of reasons. First, Eydenberg expects the surge in initial public offerings to continue through the year. That should allow PE firms to cash in on investments they have made over the past few years. If rates tick higher, he said, the appetite for new offerings should remain robust. Second, even if rates rise a few percentage points, they will still be below average on a historical basis, Eydenberg said. So leveraged buyouts, or takeovers funded by high-yield debt, should make sense for a number of companies even if investors hit the pause button to assess rates' impact on the markets.
Paris threatens EU-US talks as China trade war looms (FT)
Paris is threatening to block EU-US trade talks that Britain wants to launch at this month’s G8 summit in Northern Ireland if French demands to exclude cultural industries such as music and film are not met. ... France has mounted a fierce campaign to defend “l’exception culturelle” – an internationally-agreed system that allows subsidies, tax breaks and quotas to protect local film, television and music industries from being swamped by mainly American, English-language products. President François Hollande has made preserving the system a “red line” for agreeing to talks.
Petition Demands 'Obnoxious' LES Adult Kickball League Be Booted (DNAinfo)
"I have lived in the neighborhood when there were gangs running around, heroin, but this is one of the most annoying, obnoxious things,” said Gehres, a Lower East Side resident for more than 30 years. "It is a very frat-house behavior. I don't want to insult children and say it is childish — these are adults screaming, trying to relive their youth or something."