Opening Bell: 06.06.13

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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."

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Witness Adds Thread To SAC Probe (WSJ) A government informant has implicated a prominent former trader at SAC Capital Advisors, telling federal investigators the two swapped confidential stock tips for years, according to people briefed on the matter. The connection between ex-SAC portfolio manager Dipak Patel and the undercover mole, a California-based former portfolio manager at an investment fund, hasn't previously been disclosed. Mr. Patel and his lawyer didn't respond to requests for comment...Mr. Patel, who hasn't been charged with any wrongdoing, was a technology-stock manager who worked under Mr. Cohen for years before leaving in 2010. Obama To Name White As SEC Chief (WSJ) President Barack Obama on Thursday will name Mary Jo White, a former star prosecutor who pursued terrorists and mobsters in New York, to lead the Securities and Exchange Commission, a White House official said. Barclays CEO Says Bank Was Too Aggressive, Too Self-Serving (CNBC) The bank which paid a fine of 290 million pounds for manipulating Libor and was caught up in the payment protection insurance scandal, has been trying to turn a new leaf. Jenkins, who took over as CEO in August, said the company was addressing its past mistakes. "We were too aggressive, we were too short-term focused and too self-serving," Jenkins told CNBC at the World Economic Forum in Davos. "The industry, and Barclays, got it wrong on occasions," he added. Merkel Says Europe Must Persist With Reforms (CNBC) German Chancellor Angela Merkel urged European nations to continue the economic reforms they have begun and argued that the debt crisis offered an opportunity for the bloc to become more competitive. "The political experience is that often you need pressure for political structural reforms," she told delegates at the World Economic Forum in Davos, Switzerland. "If Europe is in a difficult situation today we need to implement structural reforms now so that we may live better tomorrow," she said. Knight Capital's Profit Slides 84% (WSJ) Profit in the quarter to Dec. 31 fell to $6.5 million from $40.2 million a year earlier, with per-share earnings sliding to a penny from 43 cents, below the three-cent consensus among analysts polled by Thomson Reuters. Revenue fell 16% to $287.7 million. Jobless Claims Fall To 5-Year Low (WSJ) Initial jobless claims, a measure of layoffs, fell by 5,000 to a seasonally adjusted 330,000 in the week ended Jan. 19, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires expected 360,000 new applications for jobless benefits last week. Two men charged with robbery, assault and battery after stealing $400 from Girl Scouts selling cookies (NYDN) Two men are being held on charges they stole nearly $400 from a group of Girl Scouts selling cookies at a store in Massachussetts. An adult supervising the Scouts suffered a broken nose and arm injuries trying to stop the men. Authorities say 22-year-old Nicholas Taverna of Greenfield and 25-year-old Cassidy Michalski of Deerfield were held on $5,000 bail each at their arraignment Tuesday on charges of unarmed robbery, assault and battery with a dangerous weapon and shoplifting. Police say the suspects stole two cellphones from the Walmart in Northampton on Saturday and tried to trade them for drugs in Holyoke. When that failed, they returned to Northampton where they had seen the 11- and 12-year-old Scouts earlier, and stole their cash box. US Lawmaker Set to Unveil Financial Revamp (Reuters) The proposal, expected as early as this week, will come from House Ways and Means Committee Chairman Dave Camp, whose panel has been exploring a broad tax code overhaul for more than a year. Camp wants to slash the top corporate tax rate to 25 percent from 35 percent and simplify the code.Critics of the current corporate tax system note that the United States has one of the steepest corporate tax rates in the world. Commerzbank to Cut 6,000 Jobs (WSJ) The cuts, representing up to 12% of the bank's 49,215 full-time staff, will affect all group levels and units, in Germany and abroad, although online bank Comdirect AG and Polish unit BRE Bank will be excluded, according to an internal memo to staff. Japan Posts Record Trade Deficit (WSJ) Japan's trade deficit nearly tripled to a record ¥6.927 trillion ($78.3 billion) last year and few expect a drastic improvement anytime soon, leaving Tokyo no choice but to carry on with efforts to boost the economy. Citigroup’s Corbat Says Environment to Stay ‘Challenging’ (Bloomberg) “People recognize the times we are in, these are challenging times,” Corbat, 52, said in an interview with with Bloomberg Television’s Erik Schatzker at the World Economic Forum in Davos today. “Things will remain challenging going forward for a period of time. Our people recognize that.” Corbat replaced the ousted Vikram Pandit as CEO at the third-biggest U.S. bank in October. He has since announced plans to fire about 11,000 employees and pull back from certain markets as he seeks to cut Citigroup’s costs and boost rewards for shareholders. Profit at the lender’s ongoing businesses slid 8 percent last year while costs rose. Citigroup cut investment bankers’ bonuses by 10 percent to 20 percent globally after a revenue slump, people with knowledge of the matter said last week. Corbat said the firm can still be “absolutely competitive,” on banker pay. “I think morale is good,” he said, without saying whether the company plans to cut more jobs. “Our employees are very confident around the strategy if you think about what’s going on in the world today.” N.J. men sue Subway, claim they've been shorted on footlong sandwiches (AP) The suit, filed Tuesday in Superior Court in Mount Holly, may be the first legal filing aimed at the sandwich shops after an embarrassment went viral last week when someone posted a photo of a footlong and a ruler on the company's Facebook page to show that the sandwich was not as long as advertised. At the time, the company issued a statement saying that the sandwich length can vary a bit when franchises do not bake to the exact corporate standards. Stephen DeNittis, the lawyer for the plaintiffs in the New Jersey suit, said he's seeking class-action status and is also preparing to file a similar suit in Pennsylvania state court in Philadelphia. He said he's had sandwiches from 17 shops measured — and every one came up short. "The case is about holding companies to deliver what they've promised," he said.

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