Opening Bell: 06.07.13

‘This Will be the Most Important Payroll Release in Years’ (WSJ MoneyBeat) Every payrolls day is a hype-fest, but particularly today. Today’s release will be the “most important payroll release in years”, wrote Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch. It follows “the seventh-worst month of returns for fixed income since ’85 and the largest week of bond fund redemptions since Oct ’08,” the bank says. So, no pressure. The consensus forecast gathered by Dow Jones Newswires is for a rise of 169,000 in the reading for May, with an unchanged employment rate of 7.5%. Draghi lauds ‘most successful’ ECB action (FT) A combative Mario Draghi, president of the European Central Bank, strongly defended one of his bank’s most unorthodox and controversial moves of the eurozone crisis as “probably the most successful monetary policy measure undertaken in recent times”. Pressure in Britain Over What to Do With Bailed-Out Banks (DealBook) “As we move closer to an election, the share prices of R.B.S. and Lloyds will become more scrutinized,” said Peter Hahn, a banking professor at the Cass Business School in London. “Whoever is in government, selling shares in these banks will be a top priority.” ... The British government’s quandary over the banks stands in contrast with the experience of the United States Treasury Department, which reduced the government’s stakes in the big banks more quickly. Criminal Cases Loom in Rate Rigging (WSJ) U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays for their alleged roles trying to manipulate benchmark interest rates, according to people familiar with the plans, marking an escalation of a global investigation now entering its sixth year. The charges are likely to be filed this summer, these people said, roughly a year after the big British bank became the first institution to settle over allegations that it attempted to rig the London interbank offered rate, or Libor, and other widely used financial benchmarks. NSA taps in to user data of Facebook, Apple, Google and others, secret files reveal (Guardian) The files also reveal terrible PowerPoint skills. ‘Hey, gals – be a ho!’: Pimps’ lawyer hails great pay, benefits (NYP) “I’m trying to find a job myself that pays me 10 grand a week,” defense lawyer Howard Greenberg said as summations began in the Manhattan Criminal Court trial of Vincent George Sr. and Jr., admitted father-and-son pimps. “One wonders in this economy if a girl can make up to 10 grand a week . . . Why more women don’t do it, I don’t know,” the lawyer said, arguing that there is no proof that the Georges’ pampered staff of five hookers was forced to do anything. The Georges admit they’re pimps. But they insist that they’re really nice pimps and that their stable of five women commuted happily, six nights a week, from their employer-provided houses in Allentown, Pa., to the bars of fancy Midtown hotels, where they’d hand out “masseuse” cards to randy male tourists. “The girls wanted for nothing. There was maternity leave — can you imagine that? In short, the benefits package was great,” Greenberg said. S&P cuts outlook on Brazil sovereign rating (FT) S&P said slow economic growth, expansionary fiscal policy that was likely to lead to an increase in the government’s debt burden, and “ambiguous policy signals” in decision-making were among the factors behind the surprise move. “The negative outlook reflects the at least one-in-three probability that a rising government debt burden and erosion of macroeconomic stability could lead to a downgrade of Brazil over the next two years,” the agency said. Japan's Pension Fund to Buy More Stocks (WSJ) The Government Pension Investment Fund, at a joint news conference with Japan's welfare ministry, said it has raised its target portfolio allocation of domestic stocks to 12% from the current 11%. The fund also said it would increase its allocation of overseas assets and cut back on low-yielding Japanese bonds. The GPIF is the world's largest public pension with ¥112 trillion yen ($1.16 trillion) in assets. It is closely watched by many investors for hints about potential portfolio rebalancing, which could have broad implications for financial markets. Record outflows from US junk bond funds (FT) US high-yield funds saw a record $4.63bn in outflows for the week ending on Wednesday, according to Lipper. Interest rate volatility has surged in recent weeks since benchmark Treasury yields have risen sharply, with selling spilling over into other key areas of the bond market. As exchange traded fund providers and mutual funds face redemptions, they are forced to sell more of their holdings, putting further pressure on prices. “We are definitely worried that the market is in a cycle where selling of bonds begets more selling,” said Steven Boyd, principal at Halyard Asset Management. Pimco Defends $8.5 Billion BofA Mortgage Accord (Bloomberg) Bank of America Corp.’s $8.5 billion mortgage-bond settlement is “outstanding” for investors, said a Pacific Investment Management Co. executive, who defended the deal against opposition. The settlement was reached after an investor group that included Pimco and BlackRock Inc. (BLK) at first demanded $12 billion, eventually coming down to a “take or leave it” offer of $8.5 billion, Kent Smith, an executive vice president at Pimco who helped negotiate the agreement, testified yesterday. “It’s an outstanding deal, and it’s in the best interest of our clients to support it,” Smith said. Smith was the first witness to testify in a trial over the agreement, which is being considered by Justice Barbara Kapnick of New York State Supreme Court in Manhattan. Forest braces for third bout with Icahn (Reuters) Forest Laboratories Inc is trying to avert yet another bitter proxy battle with billionaire investor Carl Icahn ahead of its annual investor meeting this summer, according to two sources familiar with the situation. ... Last year's proxy battle, for example, ended with just one of Icahn's four nominees being elected to the board - Pierre Legault, the former chief financial officer of OSI Pharma. Legault has since distanced himself from Icahn, telling people that he didn't know the investor well and wasn't "his guy", one of the sources said. Bono Sings to Warren Buffett (CNBC) "Home on the Range"; there is video. Russia's Vladimir Putin and wife Lyudmiladivorce (BBC) "It was a joint decision: we hardly see each other, each of us has our own life", Mr Putin said. Mrs Putin had rarely been seen in public in recent months, prompting much speculation in Russian media. She is known to dislike publicity, and told the TV reporter that flying was difficult for her. "Vladimir Vladimirovich is completely drowned in work," she said.
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‘This Will be the Most Important Payroll Release in Years’ (WSJ MoneyBeat)
Every payrolls day is a hype-fest, but particularly today. Today’s release will be the “most important payroll release in years”, wrote Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch. It follows “the seventh-worst month of returns for fixed income since ’85 and the largest week of bond fund redemptions since Oct ’08,” the bank says. So, no pressure. The consensus forecast gathered by Dow Jones Newswires is for a rise of 169,000 in the reading for May, with an unchanged employment rate of 7.5%.

Draghi lauds ‘most successful’ ECB action (FT)
A combative Mario Draghi, president of the European Central Bank, strongly defended one of his bank’s most unorthodox and controversial moves of the eurozone crisis as “probably the most successful monetary policy measure undertaken in recent times”.

Pressure in Britain Over What to Do With Bailed-Out Banks (DealBook)
“As we move closer to an election, the share prices of R.B.S. and Lloyds will become more scrutinized,” said Peter Hahn, a banking professor at the Cass Business School in London. “Whoever is in government, selling shares in these banks will be a top priority.” ... The British government’s quandary over the banks stands in contrast with the experience of the United States Treasury Department, which reduced the government’s stakes in the big banks more quickly.

Criminal Cases Loom in Rate Rigging (WSJ)
U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays for their alleged roles trying to manipulate benchmark interest rates, according to people familiar with the plans, marking an escalation of a global investigation now entering its sixth year. The charges are likely to be filed this summer, these people said, roughly a year after the big British bank became the first institution to settle over allegations that it attempted to rig the London interbank offered rate, or Libor, and other widely used financial benchmarks.

NSA taps in to user data of Facebook, Apple, Google and others, secret files reveal (Guardian)
The files also reveal terrible PowerPoint skills.

‘Hey, gals – be a ho!’: Pimps’ lawyer hails great pay, benefits (NYP)
“I’m trying to find a job myself that pays me 10 grand a week,” defense lawyer Howard Greenberg said as summations began in the Manhattan Criminal Court trial of Vincent George Sr. and Jr., admitted father-and-son pimps. “One wonders in this economy if a girl can make up to 10 grand a week . . . Why more women don’t do it, I don’t know,” the lawyer said, arguing that there is no proof that the Georges’ pampered staff of five hookers was forced to do anything. The Georges admit they’re pimps. But they insist that they’re really nice pimps and that their stable of five women commuted happily, six nights a week, from their employer-provided houses in Allentown, Pa., to the bars of fancy Midtown hotels, where they’d hand out “masseuse” cards to randy male tourists. “The girls wanted for nothing. There was maternity leave — can you imagine that? In short, the benefits package was great,” Greenberg said.

S&P cuts outlook on Brazil sovereign rating (FT)
S&P said slow economic growth, expansionary fiscal policy that was likely to lead to an increase in the government’s debt burden, and “ambiguous policy signals” in decision-making were among the factors behind the surprise move. “The negative outlook reflects the at least one-in-three probability that a rising government debt burden and erosion of macroeconomic stability could lead to a downgrade of Brazil over the next two years,” the agency said.

Japan's Pension Fund to Buy More Stocks (WSJ)
The Government Pension Investment Fund, at a joint news conference with Japan's welfare ministry, said it has raised its target portfolio allocation of domestic stocks to 12% from the current 11%. The fund also said it would increase its allocation of overseas assets and cut back on low-yielding Japanese bonds. The GPIF is the world's largest public pension with ¥112 trillion yen ($1.16 trillion) in assets. It is closely watched by many investors for hints about potential portfolio rebalancing, which could have broad implications for financial markets.

Record outflows from US junk bond funds (FT)
US high-yield funds saw a record $4.63bn in outflows for the week ending on Wednesday, according to Lipper. Interest rate volatility has surged in recent weeks since benchmark Treasury yields have risen sharply, with selling spilling over into other key areas of the bond market. As exchange traded fund providers and mutual funds face redemptions, they are forced to sell more of their holdings, putting further pressure on prices. “We are definitely worried that the market is in a cycle where selling of bonds begets more selling,” said Steven Boyd, principal at Halyard Asset Management.

Pimco Defends $8.5 Billion BofA Mortgage Accord (Bloomberg)
Bank of America Corp.’s $8.5 billion mortgage-bond settlement is “outstanding” for investors, said a Pacific Investment Management Co. executive, who defended the deal against opposition. The settlement was reached after an investor group that included Pimco and BlackRock Inc. (BLK) at first demanded $12 billion, eventually coming down to a “take or leave it” offer of $8.5 billion, Kent Smith, an executive vice president at Pimco who helped negotiate the agreement, testified yesterday. “It’s an outstanding deal, and it’s in the best interest of our clients to support it,” Smith said. Smith was the first witness to testify in a trial over the agreement, which is being considered by Justice Barbara Kapnick of New York State Supreme Court in Manhattan.

Forest braces for third bout with Icahn (Reuters)
Forest Laboratories Inc is trying to avert yet another bitter proxy battle with billionaire investor Carl Icahn ahead of its annual investor meeting this summer, according to two sources familiar with the situation. ... Last year's proxy battle, for example, ended with just one of Icahn's four nominees being elected to the board - Pierre Legault, the former chief financial officer of OSI Pharma. Legault has since distanced himself from Icahn, telling people that he didn't know the investor well and wasn't "his guy", one of the sources said.

Bono Sings to Warren Buffett (CNBC)
"Home on the Range"; there is video.

Russia's Vladimir Putin and wife Lyudmila divorce (BBC)
"It was a joint decision: we hardly see each other, each of us has our own life", Mr Putin said. Mrs Putin had rarely been seen in public in recent months, prompting much speculation in Russian media. She is known to dislike publicity, and told the TV reporter that flying was difficult for her. "Vladimir Vladimirovich is completely drowned in work," she said.

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Opening Bell: 03.28.13

Cyprus's Banks Open After Two Weeks (Bloomberg) Cyprus’s banks opened for the first time in almost two weeks, with new rules curbing access to cash preventing an initial panic to withdraw deposits. “We expected much more people,” said Argyros Eraclides, manager of a Bank of Cyprus branch in the Stavrou area of Nicosia. “Fortunately there are only some people who needed cash for the day, but customers reacted fantastically. We expected some people to be more aggravated.” Banks opened at midday local time today, with lines of about 15 to 20 people waiting to enter branches in the Cypriot capital. The Central Bank of Cyprus’s money controls include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country. Italy Minister Knows Nothing About Possible Downgrade (Reuters) Italian Economy Minister Vittorio Grilli said on Thursday he had no knowledge of any imminent decision by Moody's to cut Italy's sovereign debt rating. Fitch cut Italy's rating this month and market rumours have been swirling for days that fellow agency Moody's, which has a negative outlook on Italy, is poised to follow suit. "I have no news about that," Grilli told reporters in parliament. BofA Said to Ask Mortgage-Bond Buyers to Take Debt in Packages (Bloomberg) Investors seeking to buy higher yielding, riskier slices of home-loan bonds sold yesterday by EverBank Financial Corp. were told they’d have a better shot if they also purchased some of the AAA rated classes, showing weaker demand for the top-ranked debt. Bank of America Corp. and Barclays Plc, the underwriters of the deal, pushed investors to purchase the debt in a package as relative yields widen on AAA portions of securities tied to new mortgages without government backing, according to two people familiar with the discussions who asked not to be identified because the negotiations were private. Matthew 25 Fund Inspired By Scripture Returns 27% (Bloomberg) When the Matthew 25 Fund fell 40 percent in 2008, it kept Mark Mulholland awake at night. Mulholland, the founder and sole manager of the mutual fund -- named after a Bible passage -- says he would lie in bed thinking about the damage he had done to his investors, particularly the elderly whose nest eggs might not recover before they died. The assets he managed dwindled to $22 million from $115 million, Bloomberg Markets will report in its May issue. What Mulholland didn’t worry about were the stocks in his portfolio. “The companies we owned were so cheap that barring a total collapse of the economic system, I knew at some point we were going to make a lot of money,” he says. That time has come. Florida couple says they live next to 'neighbor from hell' (WTSP) A dispute over an alligator has ignited a feud between two neighbors that appears to be spiraling out of control. Drew and Nicole Carver say their neighbor, John McDonough, has consistently harassed them since last October. "We had a security system installed not because of the neighborhood that we live in, but because of the neighbor we live next to," said Nicole Carver. It started after the Carvers called out wildlife officials to remove an alligator from a retention pond they share with McDonough. The move apparently angered McDonough so much that he began to put up yard signs insulting Drew Carver, a trainer with the military at MacDill Air Force Base. One sign read, "In memory of Chris Kyle," an army sniper who was murdered by a fellow veteran back in February. "He removed Chris Kyle's name from the sign and he said, 'Your name will be in there next,'" said Nicole Carver. S&P Seeks to Merge State Suits Into One (WSJ) Seventeen lawsuits have piled up against Standard & Poor's Ratings Services by state attorneys general who claim the firm churned out shoddy ratings before or after the financial crisis. S&P wants to yank the cases into a federal court—and shrink the total to one. The moves are an important skirmish in a legal battle that could wind up costing S&P billions of dollars if the firm loses the cases or settles them to cut its losses. Funds Reshape Investment Mold (WSJ) Hedge funds that specialize in bonds are bulking up on stocks, in the latest sign of investor concern over the health of the long bull market in debt prices. Fund managers that have made winning bets in corporate loans, mortgage bonds and distressed debt are altering course after a flood of cash has pushed up the prices of all sorts of debt investments, raising risks and depressing expected returns. Ratings Relief For JPM (NYP) JPMorgan Chase had its credit outlook raised to stable from negative by Standard & Poor’s as doubts about last year’s record trading loss eased. Wells Fargo distances itself from 'Harlem Shake' video filmed in Atlanta bank (AP) Wells Fargo bank officials say a viral video filmed inside an Atlanta bank branch was not approved or produced by the company, and employees participated on their own time. The video, one of many depicting the "Harlem Shake," features characters dancing in the lobby of a Wells Fargo branch. One wears a diaper and has a pacifier, and another is dressed as a bottle of Colt 45.

Opening Bell: 03.19.13

BlackRock To Layoff Nearly 300 Employees (Reuters) BlackRock President Rob Kapito told employees on Monday that despite the layoffs the firm, which oversees almost $4 trillion, would continue hiring and expected to end 2013 with more employees than it currently had. "These moves will give high potential employees greater responsibility and additional career opportunities, and will make us a more agile organization better positioned to respond to changing client and market needs," Kapito said in the memo. Blackstone Said to Mull Outbidding Silver Lake for Dell LBO (Bloomberg) Blackstone is weighing a bid for Dell, the computer maker seeking offers to rival the proposed $24.4 billion buyout by its founder and Silver Lake Management LLC, said people with knowledge of the matter. Blackstone may bid as part of a group including other investors, said one of the people, who asked not to be named because the process is confidential. The New York-based private- equity firm hasn’t made a decision, another person said. Under the go-shop provision of the Silver Lake merger agreement, Dell’s board has through March 22 to seek superior proposals, and can negotiate beyond that date if it receives an offer it deems serious. Fannie Sees A Way To Repay Billions (WSJ) The rebounding housing market has helped return Fannie Mae to profitability and now might allow the government-controlled mortgage-finance company to do the once unthinkable: repay as much as $61.5 billion in rescue funds to the U.S. Treasury. The potential payment would be the upshot of an accounting move that Fannie Mae's senior executives are looking to make whereby the company would reclaim certain tax benefits that were written down shortly after the company was placed under federal control in 2008. The potential move was disclosed last week in a regulatory filing in which the company said it would delay the release of its annual report, due by Monday, as it tries to reach resolution with its accountants and regulator over the timing of the accounting move. UBS becomes latest bank to quit Euribor rates panel (Reuters) UBS said it would pull out of money market rate Euribor, one of the most prominent banks to do so after a global benchmark rate-setting scandal, in a move that renews questions about the rate's future. "We have decided to withdraw from the Euribor panel and to focus on our core funding markets Swiss franc and U.S. dollar," a UBS spokesman said, adding the decision was linked to an October decision to shut down vast parts of its investment bank. Lululemon Pulls Yoga Pants From Stores (WSJ) The yoga-apparel retailer's shares tumbled late Monday after saying it has pulled some of its popular pants from stores, after a mistake by a supplier left the pants too see-through. Lululemon Athletica said the glitch involved pants using its signature fabric, known as Luon, that arrived in stores March 1. The retailer is offering refunds to customers. Citigroup to Pay $730 Million in Bond-Lawsuit Settlement (Bloomberg) The deal would resolve a lawsuit by investors who bought Citigroup bonds and preferred stock from May 2006 through November 2008, the New York-based lender said yesterday in a statement. The accord requires court approval and would be covered by existing litigation reserves, the bank said. Ex-Calpers CEO Buenrostro Indicted Over Apollo Investment (Bloomberg) Federico Buenrostro, former chief executive officer of the California Public Employees’ Retirement System, was charged with conspiring to trick the pension fund into paying millions of dollars in fees for a $3 billion investment into funds managed by Apollo Global Management. Buenrostro, 64, who led the state’s public pension fund from 2002 to 2008, was accused along with Alfred Villalobos, 69, of conspiracy to defraud the U.S., engaging in a false scheme against the U.S. and conspiracy to commit mail fraud and wire fraud in a grand jury indictment announced yesterday by U.S. Attorney Melinda Haag in San Francisco. Bernanke Tightens Hold on Fed Message Against Hawks (Bloomberg) The Fed chairman, starting tomorrow, will cut the time between the release of post-meeting statements by the Federal Open Market Committee and his news briefings, giving investors less opportunity to misperceive the Fed’s intent. In recent presentations, he has pledged to sustain easing, defending $85 billion in monthly bond purchases during congressional testimony last month and warning that “premature removal of accommodation” may weaken the expansion. Deli Workers Have Some Choice Words for Mayor Bloomberg’s New Cigarette Proposal (Daily Intel) "It's stupid. He needs to f*ck off," Fernando, the manager at M&M Market Deli on Broome Street, said. "You want to smoke, you're going to smoke no matter what. And especially at that young age, you're curious about everything." It was the principle of the thing that so irritated Fernando more than any potential loss of business. "You don't make money on cigarettes," he said. "I mean, our profit on cigarettes is 75 cents, a dollar? The whole purpose of cigarettes is to get people in — you want to buy cigarettes, then you also pick up a sandwich."

Opening Bell: 05.29.12

Greece Pours $22.6 Billion Into Four Biggest Banks (Reuters) The long-awaited injection—via bonds from the European Financial Stability Facility rescue fund—will boost the nearly depleted capital base of National Bank, Alpha, Eurobank and Piraeus Bank. "The funds have been disbursed," an official at the Hellenic Financial Stability Facility, who declined to be named, told Reuters. The HFSF was set up to funnel funds from Greece's bailout programme to recapitalise its tottering banks. The HFSF allocated 6.9 billion euros to National Bank, 1.9 billion to Alpha, 4.2 billion to Eurobank and 5 billion to Piraeus. All four are scheduled to report first-quarter earnings this week. The news came as two government officials told Reuters that near-bankrupt Greece could access 3 billion euros, left from its first bailout programme, to cover basic state payments if efforts to revive falling tax revenue fail. U.S. Ready for Europe Fallout, Says Fed Official (WSJ) "There's absolutely no reason for people in the United States to get all in a dither," Federal Reserve Bank of Philadelphia President Charles Plosser said in an interview with The Wall Street Journal. Mr. Plosser said that in the short run, uncertainty in Europe might even work in the U.S. economy's favor, via lower U.S. interest rates and energy prices. Greece to Leave Euro Zone on June 18, Says Guy (CNBC) Greece will leave the euro zone on June 18 if the populist government wins the country’s elections on the 17 as the rest of the euro zone rounds on "cheaters," Nick Dewhirst, director at wealth management firm Integral Asset Management, told CNBC Monday. “The euro zone is a club but you get cheaters who get away with it until everyone finds out and at that point you need to remove them otherwise everyone will cheat. It’s better for Greece to leave,” Dewhirst said. He added that Greek society was built on cheating and scheming, saying “everyone does it” but that voters elsewhere in the euro zone were now calling Greece to account. “The basic question is that a German has to increase working from 65 to 67 and that is to pay for Greeks retiring at 50. The 17th of June is the perfect opportunity to say either 'we’ll behave' or 'we’ll carry on cheating,'" he said. Facebook Debacle Turns High Hopes Into Potentially Mood-Souring Skepticism (WSJ) It is impossible to measure the impact of Facebook's flubbed deal on overall investor confidence. But there is at least one sign of possible fallout: More than $3 billion was yanked from U.S. stock mutual funds by small investors in the week ended Wednesday, according to EPFR Global Inc. in Cambridge, Mass. That was the worst week for withdrawals since March. In the previous week, investors added $311 million to U.S. stock mutual funds. David Guthrie, a 30-year-old actor in Toronto, bought 15 shares of Facebook on its opening day. Before then, he had bought just one stock, yet saw the market as a place to make his savings rise in the long run. Now he feels burned. "If Facebook had made a lot of money, I'd try it again," Mr. Guthrie says. After the stock's disappointing slide, "I would never put big money into the stock market." Zoos' Bitter Choice: To Save Some Species, Letting Others Die (NYT) ...Ozzie, a lion-tailed macaque, will never father children. Lion-tails once flourished in the tops of rain forests in India, using their naturally dark coloring to disappear into the height of the jungle. Though there are only about 4,000 remaining in the wild, not one among Ozzie’s group here in St. Louis will be bred. American zoos are on the verge of giving up on trying to save them. As the number of species at risk of extinction soars, zoos are increasingly being called upon to rescue and sustain animals, and not just for marquee breeds like pandas and rhinos but also for all manner of mammals, frogs, birds and insects whose populations are suddenly crashing. To conserve animals effectively, however, zoo officials have concluded that they must winnow species in their care and devote more resources to a chosen few. The result is that zookeepers, usually animal lovers to the core, are increasingly being pressed into making cold calculations about which animals are the most crucial to save. Some days, the burden feels less like Noah building an ark and more like Schindler making a list. Icahn Takes Chesapeake Energy Stake (WSJ) Carl Icahn skewered Chesapeake Energy Corp.'s CHK board for corporate governance controversies and "irresponsible actions" while disclosing he acquired a sizeable new stake in the company. Euro Likely Worthless as Collector's Item (Bloomberg) FYI. JPMorgan Beefs Up China Unit With $400 Million Injection (Reuters) "The additional capital will better position the bank in the evolving regulatory environment and cement our commitment to clients in China," Zili Shao, Chairman and chief executive of J.P. Morgan China, said in a statement on Monday. "The capital will be used to expand the bank's branch network, develop products, increase corporate lending, and recruit employees," Shao added. Europe Turns To US For Loans (WSJ) In the latest symptom of Europe's financial turmoil, the region's riskier companies are bypassing banks and investors at home and turning to the U.S. for loans. European companies borrowed some €14.4 billion (about $18 billion at current rates) in the U.S. leveraged-loan market this year through Friday, more than double the €6.7 billion for all of 2011, according to data from S&P Capital IQ LCD. That is the highest amount since at least 2007, the height of the last boom in leveraged lending, when full-year loan volume was €12.2 billion, according to S&P. How Boaz Weinstein And Hedge Funds Outsmarted JPMorgan (NYT) By May, when fears over Europe’s debt crisis again came to the fore, the trade reversed. The London Whale was losing. And Mr. Weinstein began to make back all of his losses — and then some — in a matter of weeks. Other hedge funds were also big winners. Blue Mountain Capital and BlueCrest Capital, both created by former JPMorgan traders, were among those winners. Lucidus Capital Partners, CQS and a fund called III came out ahead, too. Inside the hedge fund world, some joked that Mr. Weinstein had been able to spot the London Whale because he himself had been a whale once, too. Drunk Brooklyn woman crashes car through Long Island home (NYDN) A drunken Brooklyn woman crashed her Mercedes into a Long Island home Monday, smashing through the house and landing in the backyard, cops said. Sophia Anderson, 21, failed to turn left or right when the road she was driving on in Huntington deadended at a T-intersection with another street, officials said. She left a train of wreckage as she smashed through the modest house on Southdown Rd., missing the 90-year-old homeowner and her caretaker. Anderson, treated and released at Huntington Hospital, was arrested and charged with driving while intoxicated, police said.

Opening Bell: 04.16.12

Downgrades Loom For European Banks (WSJ) Under pressure from banks, Moody's Investors Service said Friday that it is delaying until early May its highly anticipated decision on whether to downgrade the credit ratings of 114 banks in 16 European countries. Moody's announced the review in February, saying it was needed in light of the banks' weak conditions and the tough environment in which they're operating. It had planned to start unveiling the decisions this week. Obama Bid to End Too-Big-to Fail Undercut as Banks Grow (Bloomberg) Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the credit crisis. Five banks-- JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs-- held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve. Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did during the 2008 crunch. “Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis. Carlyle Takes Cautious Approach in IPO Price (WSJ) Carlyle Group plans to sell 30.5 million shares priced between $23 and $25 in its initial public offering, which could come before the end of the month, according to people familiar with the matter. Those shares would represent about 10% of the Washington, D.C., private-equity firm, in a deal that would value Carlyle at more than $7 billion, these people said. That value is toward the lower end of what earlier had been expected...Carlyle is putting less emphasis on pricing shares high at the IPO, instead hoping they rise in value once they are traded, according to people familiar with the matter. Bond Recipes Use Fresh Ingredients (WSJ) With risk-taking in vogue again, Wall Street is betting on the revival of a market for bonds made out of everything from "The English Patient" to fried chicken. The amount of so-called esoteric bonds backed by unusual assets has nearly doubled this year compared with the same period a year ago, according to Credit Suisse. Thus far this year, there have been $5.6 billion in deals done, more than twice the $2 billion in the same period last year. Over the past several months investors have bought bonds backed by revenue from Domino's Pizza DPZ +0.34% franchises, Miramax films, patents for drugs like Clarinex and Flumist and loans to buyers of Wyndham vacation time-shares. The deals show investors are becoming comfortable again with Wall Street's engineering skills, after many were hammered during the financial crisis by losses on bonds backed by subprime home loans and complex debt pools known as collateralized-debt obligations. The esoteric sales also mark a rare growth area for giant banks that have been hit hard by a slowdown in deal-making and trading. Four-year-old Heidi Hankins joins Mensa with 159 IQ (BBC) A four-year-old girl from Hampshire has been accepted into Mensa with an IQ just one point below Albert Einstein and Stephen Hawking. Heidi Hankins from Winchester has a 159 IQ. She taught herself to read and was able to count to 40 at two years old. British Mensa chief executive John Stevenage said Heidi's parents "correctly identified that she shows great potential." According to Mensa, the average adult IQ score is 100. Geithner Rebuts Romney on Women and Jobs (WSJ) As the fight for women voters intensified in recent days, Mr. Romney took a swipe at Mr. Obama by saying women had borne the vast majority of job losses over the past three years. Labor Department data show women do account for 92.3% of the workers who have lost jobs since Mr. Obama took office in January 2009. But men suffered deeper job losses than women in the year before Mr. Obama's inauguration and men have gained more jobs than women since the recovery began in 2009. "It's a ridiculous way to look at the problem," Mr. Geithner said of Mr. Romney's criticism. Mr. Geithner on Sunday also defended the Obama administration's efforts to reduce the federal budget deficit, and said there was "no risk" that the U.S. would go through a debt crisis in the next two years like the one Greece is experiencing. But he had a warning for Congress, when asked on NBC's "Meet the Press" about whether Congress would act to raise the government's debt ceiling again at the end of this year. "This is Congress's obligation to do as they have always done in the past," he said. "It would be good for the country this time if they did it with less drama." Barclays' Tax Deal Faces US Scrutiny (FT) Barclays’ controversial tax planning business will come under fresh scrutiny in a U.S. court this week over whether a transaction designed by the bank cost the U.S. government more than $1 billion in lost tax receipts. The U.S. Internal Revenue Service claims that complex, cross-border deals Barclays structured for several mid-tier banks in the last decade were an abusive tax shelter that exploited loopholes between U.S. and U.K. tax laws. Prime Brokerages Consolidate After 'Big Bang' (Reuters) Hedge funds are cutting back on the brokerage accounts they hold as the prime brokerage industry begins to consolidate more than four years after the Lehman Brothers bankruptcy blew the sector wide open. Goldman Sachs Said to Raise $2.5 Billion in ICBC Sale (Bloomberg) The Wall Street firm is selling $2.5 billion of shares at HK$5.05 each, according to two people with knowledge of the matter. It sold 3.55 billion shares, or 4 percent of ICBC’s Hong Kong-traded shares, to Temasek, the Singapore state-owned investment group said. Temasek, which is increasing stakes in China’s biggest banks, paid $2.3 billion for the stock, based on the per-share price and stake size. 'Hug Me' Coke Machine Asks for Hugs, Delivers Free Coke (MFDC) Coca-Cola's global marketing campaign dubbed "Open Happiness" takes on a new twist with a Coke vending machine that asks passers by to give it a hug. The big red and white machine, located at the National University in Singapore, has "Hug Me" written across its front side. And people are actually hugging it...and given free Cokes.

Opening Bell: 05.10.12

Greek Socialist Make Last-Ditch Attempt At Government (Reuters) With new elections likely in three or four weeks and Athens, due to run out of cash in June, needing to impose new austerity measures in exchange for funds, the financial daily Kerdos to warn on its front page: "Time is running out." Bernanke Gets 75% Approval From Investors (Bloomberg) Bernanke, whom Republican presidential candidate Mitt Romney said he wouldn’t reappoint for running too lax a monetary policy, receives a favorable assessment from three of four of those surveyed in the latest Bloomberg Global Poll. Respondents to the survey of investors, analysts and traders who are Bloomberg subscribers also rate U.S. financial markets highly: 46 percent say they will be among the best performers over the next year, double the percentage that select China, in second place. Goldman Had One Day Of Losses In First Quarter (WSJ) The loss was up to $25 million, the firm said. In contrast, Goldman reported 24 days of trading gains of $100 million or more. US Jobless Claims Decline (Bloomberg) Jobless claims dropped by 1,000 to 367,000 in the period ended May 5, in line with the median forecast in a Bloomberg News survey and the lowest since the end of March, the Labor Department said today in Washington. The number of people on unemployment benefit rolls was the smallest since July 2008. Goldman Redeems $250 Million Hedge-Fund Stakes on Volcker (Bloomberg) Under the Volcker rule provision of the Dodd-Frank financial-reform law, federally backed banks are required to limit their investments in private equity and hedge funds to no more than 3 percent of the fund or 3 percent of the bank’s Tier 1 capital. Goldman Sachs’s fund stakes were worth $17.2 billion at the end of March and the firm was committed to providing an additional $7.77 billion to the funds, the filing showed. “We currently expect to redeem up to approximately 10 percent of certain hedge funds’ total redeemable units per quarter over 10 consecutive quarters, beginning March 2012 and ending June 2014,” Goldman Sachs said in the filing. “In addition, we have limited the firm’s initial investment to 3 percent for certain new funds.” John Manning, a Bloods gang member, told police outside City Hall he wanted to fight Mayor Michael Bloomberg (NYDN) John Manning, 27, of Newark, a gang member with 12 arrests in the Garden State, showed up at the security entrance of the government building while the mayor held an outdoor press conference on the city’s new bike share program on Monday. “I want to take on the mayor in a fight. Man vs. man, and knock him out,” he told cops at the Broadway and Murray St. entrance around 11:30 and to attend the event. When he was asked to leave, Manning refused, saying, “I'll wait as long as it takes.” He was arrested and charged with trespassing and obstruction of government administration. Five Arrested At Bank of America Protest (AP) Five people have been arrested as they tried to force their way into the annual Bank of America shareholders' meeting in Charlotte, and police used a new ordinance to declare the gathering an extraordinary event subject to special restrictions. Hundreds gathered on the streets Wednesday morning as dozens of police officers worked to contain the protest. Johnny Rosa of Framingham, Mass., was one of those arrested. Before being taken into custody, Rosa said his home had been foreclosed. He wanted to tell shareholders the foreclosure was wrong because he wanted to make payments. By law, if a gathering in Charlotte is deemed an extraordinary event, authorities can designate areas where people aren't allowed to carry backpacks, magic markers and other items. Brian Gets Broiled At BofA Meeting (NYP) “Let Bank of America take care of America,” one attendee yelled at Moynihan. “This is America. Listen to the people in this room.” One shareholder even called the bank “a felon.” “We abide by the law every day,” Moynihan shot back. Citi’s Buiter: Time for 'Helicopter Money Drops' (CNBC) “We think central banks in the U.S., euro area, Japan, and the U.K. could and should do much more” to stimulate growth, said the firm’s economists, led by Willem Buiter. Yes, these institutions, which have already pushed their respective interest rates to historic lows and made unprecedented efforts to buy government bonds and other securities, are not being aggressive enough, the firm argues. Extremely rare calico-colored lobster found at Massachusetts restaurant (NYDN) The unusually colored “calico” lobster is marked by bright orange and yellow spots. But the extraordinary find could have easily ended up in someone's belly at Jasper White's Summer Shack restaurant in Cambridge. “We happened to be cleaning the tank and I happened to be there," White said. "One of my guys said, 'Chef, look at this lobster,' and from across the room I knew it was special." The lobster is destined for the Biomes Marine Biology Center in Rhode Island, with a stopover at Boston's New England Aquarium, which released a photo on Wednesday. White named the lobster Calvin.

Opening Bell: 10.23.12

Barney Frank cries foul in government's lawsuit against JPMorgan (Reuters) Democratic Congressman Barney Frank defended the largest U.S. bank on Monday, saying in a statement that the government was wrong to go after JPMorgan Chase & Co for the alleged misdeeds of Bear Stearns. Frank, who served as chairman of the House Financial Services Committee during the Bear Stearns acquisition, said federal and state officials should reconsider holding financial firms liable for the wrongdoing of institutions they absorbed at the government's urging. "The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished," said Frank, who was also the co-author of the 2010 Dodd-Frank financial reform law. New York Attorney General Eric Schneiderman sued JPMorgan, the nation's largest bank by assets, on October 1 over mortgage-backed securities packaged and sold by Bear Stearns. Hedge Funds Hot For Ailing Greece's Debt (WSJ) Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Billionaire Wilbur Ross Interested In Buying Spanish Bank Assets (Bloomberg) Ross’s WL Ross & Co., which holds about 10 percent of Bank of Ireland and teamed up with Richard Branson to buy part of Northern Rock Plc, is in talks “almost every week” with representatives of the large Spanish banks, he said in an interview in Abu Dhabi, without naming potential targets. “Maybe next year will be the year for Spain,” he said. “We’ve been doing a lot of work in Spain. We’ve put a lot of time and effort into Spain but haven’t put any money in yet.” Doom Heralded at Hayman by Widening Trade Deficit (Bloomberg) Japan’s worsening trade gap will make it harder to service the world’s largest debt, fulfilling part of the doomsday scenario that Hayman Capital Management LP is betting on. The nation’s 10-year note yield may rise toward 10 percent from the world’s third-lowest of 0.79 percent, while the yen weakens, said Richard Howard, who oversees Dallas, Texas-based Hayman’s Japan-focused fund with J. Kyle Bass. That would represent the developed world’s second-highest borrowing costs after Greece, and a surge to that level by the end of 2013 would cause losses of 42 percent for investors purchasing the securities now, data compiled by Bloomberg show. Regulators Crash Over Volcker Definitions (WSJ) The SEC and a trio of banking regulators are butting heads over how to define the buying and selling of securities on behalf of clients, known as market-making, as well as over banks' ability to invest in outside investment vehicles such as hedge funds, according to officials close to the discussions. Since brokers, which are overseen by the SEC, conduct market-making activities, the SEC is pushing for more influence over the issue, these people said. Police: Woman fakes her own kidnapping to get day off work (WOAI) An officer on patrol went to check out a car parked near Ray Ellison and Five Palms around 6:30 p.m. on October 10th. When the officer looked inside the car, he spotted 48-year-old Sheila Bailey Eubank bound with rope. An arrest warrant affidavit states Eubank told police a man jumped into her car around 6:15 a.m. while she was at a Security Service Federal Credit Union ATM near Loop 1604 and Bandera Road. Eubank said the man held her an knife point and forced her to drive him to various locations for what she believed were drug deals. She told officers he then assaulted her, tried to choke her with a rope, and then tied her up and left her in her car. However, officers discovered a lottery ticket in Eubank's purse that was purchased that day during the hours she claimed she was being held. Investigators reviewed surveillance video from the store where the lottery ticket was purchased and found out she had entered the store by herself and appeared "healthy, unhurried, and pleasant with the clerk." Investigators then reviewed video from the Security Service Federal Credit Union where Eubank claimed she was abducted. The video showed withdrawing money from the motor ATM, but there were no signs that anyone else was with her. Police say when Eubank was confronted by investigators, she eventually admitted her story was false and that she simply wanted a day off from work and wanted attention. BofA CEO Moynihan Declares Victory Over Capital Doubters (Bloomberg) Bank of America now has the “top capital” among peers and is capable of paying a bigger dividend, said Chief Executive Officer Brian T. Moynihan. The bank has fulfilled a goal Moynihan drilled into subordinates since his first day on the job: building a “fortress balance sheet,” he said in an Oct. 17 staff meeting at the company’s Charlotte, North Carolina headquarters. “We’re going to officially declare victory on one of those operating principles,” Moynihan said in the town-hall style meeting. “The reason why is, we have the top capital in the industry, the top liquidity in the industry.” People have stopped asking if the bank needs more funds to absorb losses and now want to know when investors will get the excess, he said. Word-Smith: Greg's Book Has 0 Sachs Appeal (NYP) Among the mistakes in the book, sources noted, was Smith’s description of a town-hall meeting last year hosted by Goldman’s co-heads of investment banking — South African Richard Gnodde and Michael “Woody” Sherwood...Smith said one question from a Goldman employee during the 2011 meeting was: “What is the firm doing to address the fact that the culture is dying and our reputation is deteriorating?” According to Goldman, a female referenced in Smith’s book as a “power-hungry” managing director — identified as “Georgette” — was the individual who posed the question about culture. Georgette presented the question as: How is the firm addressing “the perception of the deteriorating culture,” according to a recording of the event, reviewed yesterday by The Post. Smith also writes about a follow-up question demanding “what specifically” the bank was doing — and that it was followed with uncomfortable laughter before some fumbling about over which executive should field the query. There was no follow-up question in the recording of the meeting. Smith embellished that aspect of the book and omitted that “Georgette” — a woman whom Smith worked with and dubbed the “Black Widow” for her cutthroat manner — was the source of the question about values because it undermined his narrative, a source inside the company said. Low Rates Pummel Bank Profits (WSJ) "The longer the Fed stays down at these levels the more it will hurt banks," said Scott Lied, the chief financial officer of ENB Financial Corp, an Ephrata, Pa., institution that has eight branches and 225 employees. "It's painful." Gupta Sentencing Set For Tomorrow (NYP) Prosecutors say Gupta, convicted by a jury in June, deserves as long as 10 years in prison. Gupta seeks probation. Gary Naftalis, a lawyer for Gupta, argued his client’s crime was an “aberrational” event in a “lifetime of good works” that merited a punishment for a man who has suffered an extraordinary fall from grace. He asked Rakoff to impose a term of community service, suggesting Gupta work with troubled youth in New York or with the poor in Rwanda. Theater Thief Costs Movie-Goers Tens of Thousands In Credit Card Fraud (Courant) A man who may have stolen as much as $70,000 a week by slithering beneath theater seats while movies were playing and lifting credit cards from women's' pocketbooks was convicted Monday of fraud and identity theft crimes. Anthony Johnson, 49, and a string of accomplices used the stolen cards to collect thousands of dollars in cash advances from Connecticut's gambling casinos and to make tens of thousands of dollars more in retail purchases in Connecticut and elsewhere, authorities said. On a "good" weekend, Johnson collected $50,000 to $70,000 from the scheme, one of his accomplices testified last week at his trial at U.S. District Court in Hartford. He had to settle for $30,000 or $40,000 on a bad weekend, the accomplice said. The accomplice, who agreed to cooperate with authorities, said Johnson, of Philadelphia, typically worked with women accomplices. They bought tickets to motion pictures likely to be popular with female audiences and chose seats from which they could watch how women in the audience stored their pocketbooks. "Once the movie started, Johnson crawled on the floor, removed credit cards from the stored purses, and returned the wallet to the purses," according to an FBI affidavit. "Johnson crawled in this manner around the theater until he was done…"

Opening Bell: 06.21.12

SEC Said To Depose SAC’s Cohen In Insider-Trading Probe (Bloomberg) Cohen, 56, was recently deposed by Securities and Exchange Commission investigators in New York about trades made close to news such as mergers and earnings that generated profits at his hedge fund, said one of the people, who asked not to be identified because the investigation isn’t public. Neither Cohen nor SAC Capital, which oversees about $14 billion, has been accused of wrongdoing. Four-Week Jobless Claims Average Reaches 2012 High (Reuters) Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week's figure was revised up to 389,000 from the previously reported 386,000. Lawmakers Call For IPO Overhaul (WSJ) A bipartisan group of lawmakers called on regulators to overhaul the way initial public offerings are conducted, concerned that last month's flubbed stock sale by Facebook shows the current system unfairly punishes small investors. In a letter to Securities and Exchange Commission Chairman Mary Schapiro, Rep. Darrell Issa (R., Calif.) prodded the agency to revamp rules for pricing and disclosure in IPOs. Mr. Issa, who wrote the letter on behalf of the House Oversight and Government Reform Committee, said the social-networking company's steep share-price decline since its May 18 offering is a sign that investment banks are able to "dictate pricing while only indirectly considering market supply-and-demand." Separately, the Democratic chairman of a subcommittee of the Senate Banking Committee said regulatory changes are needed to bolster investor confidence sapped by Facebook's botched debut. Facebook’s 22% Rally Helps Stock Avoid Worst IPO Return In U.S. (Bloomberg) So that's something! Riskier Bets Pitched To Asia's Rising Rich (WSJ) In Japan, brokers are dangling what they claim is a tasty product in front of wealthy investors: a "triple-decker" that uses options to squeeze higher returns from stocks, "junk" bonds or other assets. If a triple-decker doesn't suit an investor's fancy, there is the increasingly popular—and slightly less complex—"double-decker." Elsewhere in Asia, so-called hybrid bonds and other high-yield varieties can be had. Investors in Singapore recently could buy so-called perpetual bonds through ATMs. Across Asia, brokers are pushing to sell increasingly complex products to the region's expanding ranks of investors, especially wealthy ones. These types of products appeal to those hungry for yield who normally focus on stocks and real estate but are worried about falling equity markets and the sudden shortage of initial public offerings. BlueMountain Said To Help Unwind JPMorgan’s Whale Trades (Bloomberg) A hedge fund run by a former JPMorgan Chase executive who helped create the credit- derivatives market is aiding the lender as it unwinds trades in an index at the heart of a loss of more than $2 billion. BlueMountain Capital Management LLC, co-founded by Andrew Feldstein, has been compiling trades in Series 9 of the Markit CDX North America Investment Grade Index in recent weeks, then selling the positions to the New York-based bank, according to three people outside the firms who are familiar with the strategy. JPMorgan tapped BlueMountain as a middleman after trades in its London chief investment office grew so large that the bank was creating price distortions that hedge funds sought to exploit, said the market participants, who asked not to be identified because they weren’t authorized to discuss the trades. BlueMountain was one of the funds that benefited from the price dislocations, the people said. US Olympic committee send cease and desist letter to knitting Olympics (TNT) The US Olympic committee has sent a cease and desist letter to the social networking group Ravelry, who had organised a Ravelympics in which contestants would compete in events such as ‘scarf hockey’ while watching the actual Games on TV...The US Olympic Committee has said that “the athletes of Team USA have spent the better part of the entire lives training for the opportunity to compete at the Olympic Games and represent their country in a sport that means everything to them” and that “using the name ‘Ravelympics’ for a competition that involves an afghan marathon and sweater triathlon tends to denigrate the true nature of the Olympic Games”. Romney Campaign Said To Ask Scott To Downplay Job Gains (Bloomberg) Mitt Romney’s presidential campaign asked Florida Governor Rick Scott to tone down his statements heralding improvements in the state’s economy because they clash with the presumptive Republican nominee’s message that the nation is suffering under President Barack Obama, according to two people familiar with the matter. Scott, a Republican, was asked to say that the state’s jobless rate could improve faster under a Romney presidency, according to the people, who asked not to be named. Lonely Hedge Fund Bullish On Greece Tries To Woo Investors (Bloomberg) In March, Elliott met with the investment chief of a family office in London who said within seconds of sitting down that the firm had no interest in giving money to a hedge fund wagering on Greece. The executive merely wanted to hear his story, Elliott, the founder of Naftilia Asset Management Ltd., said in a telephone interview from his office in Athens. Elliott, 39, responded by asking a few questions of his own, including whether the executive had invested in Russia after its 1998 currency crisis, in Argentina 10 years ago after the nation defaulted on its debt or in the Standard & Poor’s 500 Index (SPX) in March 2009, when the benchmark plunged to its lowest point in 13 years. Finally, Elliott questioned whether the family office’s investment chief had ever bought shares of Apple. In all cases, the answer was no. “Then you are not qualified to be discussing Greece with me because you have missed the best investment opportunities over the past 20 years,” Elliott retorted. National Bank Of Greece To Sell Luxury Resort As Slump Bites (Bloomberg) If you know anyone who's interested: The 3.3 million-square-foot (307,000 square-meter) Astir Palace complex has already drawn investors’ interest, according to Aristotelis Karytinos, general manager of real estate at the lender. The Athens-based bank and Greece’s privatization fund, which owns part of the property, will put out a public tender in coming months, he said. Fed Warns Of Risk To Economy (WSJ) Fed Chairman Ben Bernanke made clear in a news conference after the policy makers' meeting that he is prepared to take further action if he doesn't see progress on bringing down unemployment, which was 8.2% in May. "I wouldn't accept the proposition though that the Fed has no more ammunition," Mr. Bernanke said. He added, "if we don't see continued improvement in the labor market we'll be prepared to take additional steps." Australian mega-brothel gets go-ahead (AP) A Sydney brothel has received the green light for a multi-million-dollar expansion which will see it become Australia's largest sex premises, with rooms featuring multiple beds and pool tables. Plans to double the number of rooms at inner Sydney's "Stiletto" into a mega-brothel complex were knocked back late last year by the city council on the grounds that it was too big. But the owners won an appeal to the Land and Environment Court this week, with Commissioner Susan O'Neill ruling the Aus$12 million ($12.2 million) development, including a wing for group bookings, should go ahead...Stiletto promotes itself as "the world's finest short-stay boutique hotel and Sydney brothel". Its standard hourly rate of Aus$370 includes room, lady of choice and beverages.

Opening Bell: 12.07.12

SEC Warns Netflix CEO Over Facebook Post (WSJ) Mr. Hastings boasted on his Facebook page in July that Netflix exceeded 1 billion hours of video streaming in a month for the first time. The post may have violated rules of fair disclosure, the SEC said. The SEC said it may also issue a cease-and-desist proceeding against Netflix and Mr. Hastings. Mr. Hastings responded in another Facebook post Thursday. He said further disclosure at the time wasn't necessary because he has more than 200,000 subscribers to his Facebook page, which makes it a "very public" forum. Netflix had also disclosed on its blog in June that it was nearing the 1 billion streaming hours milestone, he said. Mr. Hastings, who is also on the board of Facebook, added that, at any rate, such information isn't a "material" event to investors. Germany's Central Bank Cuts Forecasts (WSJ) "The cyclical outlook for the German economy has dimmed [and] there are even indications that economic activity may fall in the final quarter of 2012 and the first quarter of 2013," the Bundesbank said in its monthly report. In its semiannual economic projections, the central bank slashed its forecast for German growth next year to 0.4% from its previous estimate of 1.6% in June. It also lowered its forecast for 2012 growth to 0.7% from 1.0%. Moody's: It's Deal Or Die (NYP) The American economy will fall into “severe recession by the spring” unless Congress lessens the tax increases and spending cuts that are set to begin in January, said Mark Zandi, chief economist at Moody’s Analytics. “We’ve got to nail this down; uncertainty is killing us,” Zandi told lawmakers yesterday at a Joint Economic Committee hearing in Washington...If Congress were to “kick the can down the road” by extending the current tax-and-spend policies, Zandi predicted the US would lose its Aaa rating because “it would signal that the political will is lacking to put the nation on a sustainable fiscal path.” Fiscal Cliff? France Has ‘Fiscal Mountain’: PPR CEO (CNBC) The head of one of France's biggest companies has warned that France's problems dwarf those of the U.S. in an interview with CNBC. Francois-Henri Pinault, chief executive of luxury goods company PPR, said: "When we talk about the fiscal cliff in France it's a mountain, it's much higher than a cliff. And when it comes to France the only solution that has been put on the table is tax raises, nothing about cutting expenses. So it's a completely different situation." Greece sticks to buyback plan, says will shield banks (Reuters) Greece says it is sticking to plans to close its offer to buy back its own bonds from investors on Friday in a deal that should meet a debt writedown target set by its international lenders. The government said it would shield the country's banks from any lawsuits over losses booked if they take part in the buyback. The buyback, part of a broader debt relief package worth 40 billion euros ($52 billion) agreed by Greece's euro zone and International Monetary Fund lenders last month, is central to efforts to bring its debt to manageable levels. Judge: Ganek, Steinberg conspirators (NYP) Manhattan federal judge Richard Sullivan yesterday ruled that SAC Capital money manager Michael Steinberg and Level Global co-founder David Ganek can be named co-conspirators in the current insider trading case unfolding downtown. Neither Steinberg nor Ganek has been charged in the case, but the ruling lets prosecutors submit their e-mails and instant messages as evidence in their case against Todd Newman, a former portfolio manager at Diamondback, and Anthony Chiasson, Ganek’s former Level Global partner. The feds have accused Chiasson and Newman of improperly profiting off insider tips on Dell and Nvidia. Chiasson lawyer Greg Morvillo objected, saying that Chiasson’s former analyst Sam Adondakis, who pleaded guilty, testified that he never told Ganek he had an inside source at Dell. Judge Sullivan said the evidence is “certainly circumstantial” but sufficient enough for the government’s request to be granted. Sullivan cited the “precise information” Ganek had received leading up to Dell’s earnings as well as the “large trading positions” he authorized on the computer maker. The judge relied on three e-mail communications to implicate Steinberg, one of which he said made “clear references to keeping things on the down-low and being extra sensitive.” Burglary suspect calls 911 after Springtown homeowner holds him at gunpoint (DN) In a strange flip of events, a burglary suspect called 911 early Tuesday to report that he was being held at gunpoint by a Springtown homeowner and his son. The homeowner called 911, too, but by then he was in control, holding him at gunpoint and demanding to know what he was doing in his home. “Just unlucky, I guess,” the man responded, according to a release from the Parker County Sheriff’s Department. The incident happened around 12:30 a.m. when the homeowner and his wife woke up to find an intruder in the bedroom of their home in the 100 block of Lelon Lane. The suspect, identified as 41-year-old Christopher Lance Moore of Bedford, left the home and sat in his GMC pickup, parked in the family’s driveway. The homeowner followed him with a pistol, took the suspect’s keys and blocked his getaway with his own vehicle, while his stepson trained a shotgun on Moore, Fox 4 News reports. “If he gets out of the truck, shoot him in the legs,” James Gerow told his son. “You ain’t gotta kill him; just shoot him in the legs. … If he’d got out, I’d have expected him to shoot him.” When deputies arrived, both men were on the phone with 911. Deputies asked Moore why he had broken into the home, to which he merely said he had “bad intentions.” Morgan Stanley Alters Broker Pay Plan as Revenue Bonus Takes Hit (Bloomberg) Morgan Stanley, the brokerage with the biggest corps of financial advisers, changed its wealth- management compensation plan to encourage brokers to increase revenue and allow them to buy discounted stock. The 2013 program pays a bonus of 2 to 5 percentage points of revenue for advisers who bring in new assets and are in the top 40 percent in revenue growth, according to terms outlined in a summary obtained yesterday by Bloomberg News. That comes at the expense of a 2 percentage-point reduction in the revenue bonus paid to all brokers who generate at least $750,000. JPM Bonus Bummer (Bloomberg) JPMorgan Chase’s bonus pool for the corporate and investment bank may shrink as much as 2 percent this year as the firm completes performance reviews, three executives with direct knowledge of the process said. Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion (Bloomberg) A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. Danger Lurks Inside The Bond Boom (WSJ) Amid the rush of bond deals, which already have topped $1 trillion in value, these managers—from BlackRock to Federated Investment Management Co.—are pointing to unusual wrinkles suggesting that now could be one of the most dangerous times in decades to lend to investment-grade companies. Interest rates are so low and bond prices so high, they warn, that there is little room left for gains. Some worry that even a small increase in interest rates—a traditional enemy of bond returns—could eat away at bond prices. College Student Poisons Roommate's Iced Tea With Bleach Following Argument (DM) A college student faces 15 years in jail after she allegedly sprayed bleach into her roommate's iced tea. Kayla Ashlyn Bonkowski, 19, was charged with felony poisoning and appeared in court on Wednesday. She reportedly told police that she had put chemicals in the drink following an argument about cleaning the dishes with her 20-year-old roommate Emily Joseph. The poisoning occurred on November 7 at the students' apartment in Union Township, located near the Mount Pleasant school of Central Michigan University, authorities said. Miss Joseph was taken to hospital for treatment but later released. After she filed a complaint, Bonkowski was arrested. The 19-year-old 'verbally admitted' to police that she put bleach in the drink because 'Joseph is mean', according to ABC. She was arraigned on Wednesday at 2pm before posting $2,000 bond. She entered a plea of not guilty to the charge of poisoning a food, drink, medicine or water supply. The college student faces up to 15 years in prison. Reached by e-mail, Bonkowski said on Wednesday morning that she needed to consult with a lawyer before commenting.