Opening Bell: 07.08.13

Author:
Publish date:
Updated on

Greece's Economic Future 'Uncertain,' Creditors Say (WSJ)
Greece's international creditors acknowledged that all isn't well with the country's mammoth bailout program Monday as their representatives issued a statement saying the outlook for the critically ailing economy is "uncertain," even as they said progress has been made on reforms. The admission comes as talk of more money needed for the first euro-zone bailout intensifies. Euro-zone governments and the International Monetary Fund, having poured more than €200 billion ($256.64 billion) into the small economy, are set to clash in the autumn over the way to cut Greece's debt.

Larry Summers Circles as Fed Opening Looms (WSJ)
Mr. Summers, 58 years old, was a contender for the job once before. At the outset of the Obama administration, when the president picked him to run the White House's economic-policy shop rather than become his Treasury secretary, some administration officials believed Mr. Summers came away from internal discussions thinking he had been promised he would be moved to the Fed at the end of Mr. Bernanke's first term in early 2010. Ultimately, Mr. Obama appointed Mr. Bernanke to a second four-year term, which expires Jan. 31.

Many Paths Remain for a Case Against SAC Capital Advisors (DealBook)
For one, federal prosecutors are considering criminal charges against SAC related to the drug-stock trades and other activity, the people with direct knowledge of the inquiry said. The Securities and Exchange Commission is contemplating a civil lawsuit against Mr. Cohen. And the Federal Bureau of Investigation — which has agents in New York, Connecticut and Boston scrutinizing SAC — continues to examine more recent trading at the fund. The authorities, for example, have looked at SAC trading in the shares of Gymboree, the children’s clothing store, the people said. They also face an August deadline to file charges related to trading in Dell shares, a case that produced two indictments of onetime SAC employees, one of whom pleaded guilty.

Dell’s Leveraged Buyout With Silver Lake Backed by ISS (Bloomberg)
ISS, the biggest shareholder-advisory firm, cited a 25.5 percent premium to Dell’s unaffected share price, the certainty of value provided by an all-cash offer and the transfer of risk given Dell’s deteriorating PC business among reasons for supporting the bid. The chief executive officer proposed to repurchase Dell shares at $13.65 each with partner Silver Lake Management LLC. ISS’s influential recommendation could sway the final outcome because institutional investors look to ISS’s findings for guidance on how to vote their shares.

Mayor will cancel free Bloomberg Terminals for city after his term ends (NYP)
The free Bloomberg Terminals the mayor brought with him to City Hall will be leaving when he does, The Post has learned. If Mayor Bloomberg’s successor wants to use the data-rich computers, taxpayers will have to pay the going rate of $20,000 per terminal per year. With 60 terminals throughout the government — including 35 at City Hall — the tab would come to $1.2 million a year.

Former Gov. Eliot Spitzer, who resigned after prostitution scandal, to jump into race for city controller (NYDN)
Former Gov. Eliot Spitzer stunned the political establishment Sunday night by announcing he is running for city controller — joining mayoral hopeful Anthony Weiner as the latest disgraced politician looking for a comeback. In an odd twist, the ex-governor — who resigned in 2008 amid a high-priced call girl scandal — will be competing against Kristin Davis, the ex-madam who says she supplied him with hookers and who is running on the Libertarian line.

ECB drops old philosophy but is short of new options (Reuters)
The European Central Bank's vow last week to keep record-low interest rates "at present or lower levels for an extended period" is a big philosophical shift for a bank that used to insist it would not tie its hands. ... But the ECB's steer is more flimsy than the guidance offered by the Federal Reserve or even the Bank of England, which suggested last Thursday it could give more detailed guidance on monetary policy as soon as next month. ... "What they have done is very soft. We don't know what 'extended period' is," said Anders Svendsen, analyst at Nordea. RBS economist Richard Barwell agreed: "Nobody thought they were going to hike rates ... It was a statement of the obvious."

Basel Committee seeks views on complexity of bank capital rules (Reuters)
The Basel Committee of global banking supervisors on Monday sought further views on the complexity of new bank capital regulations designed to insulate the world's financial system from another crash. Basel Committee chairman Stefan Ingves said the regulators were "keenly aware" of the debate on whether the rules were too complex but had not yet decided whether they should be changed.

S&P to Argue Puffery Defense in First Courtroom Test (Bloomberg)
Standard & Poor’s, getting its first shot in open court at U.S. Justice Department claims it should pay as much as $5 billion in civil penalties, will defend itself by arguing reasonable investors wouldn’t have relied on its “puffery” about credit ratings. Lawyers for the McGraw Hill Financial Inc. unit are scheduled to argue today before U.S. District Judge David Carter in Santa Ana, California, that the government failed to adequately support allegations that the company defrauded investors, including federally insured financial institutions, by knowingly understating the credit risks of securities linked to residential mortgages.

Banks Take Different Tacks on 'Volcker' Provision (WSJ)
Typically, bank employees who meet certain wealth thresholds have been able invest in the bank's own private-equity funds, hedge funds and "feeder funds." Bank employees have enjoyed the potentially lucrative investment opportunity that offers. Meanwhile, many outside investors in the funds like financial firms to make their own significant investments so that managers have a vested interest in their performance. The current provision, as outlined, says that no directors or employees can invest unless they are "directly engaged in providing investment advisory or other services" to the fund. Banks say it isn't clear what "directly engaged" means, and regulators haven't provided much help.

Japan's Olympus to raise up to $1.17 billion in share issue (Reuters)
Japan's Olympus Corp said it will raise up to 118 billion yen ($1.17 billion) in a new share issue to expand its medical equipment business and rebuild its financial health, after an accounting scandal plunged the company into the red. The shares will be offered to overseas investors, mainly in the United States and Europe, the world's biggest endoscope maker said in a statement on Monday.

Geithner joins top table of public speakers with lucrative appearances (FT)
Tim Geithner, the former US Treasury secretary, has been elevated to the highest rank of public speakers, alongside former world leaders Bill Clinton and Tony Blair, after receiving about $400,000 for three speaking engagements. A speech at a Deutsche Bank conference last month netted him about $200,000, according to people familiar with the situation, underscoring the lucrative fees that former public officials can receive. ... Mr Geithner was also the main attraction at Blackstone’s annual meeting in April, and the following month appeared at Warburg Pincus’s annual meeting. He was paid no more than $100,000 by each of the private equity groups, according to people familiar with the matter.

Hedge Fund Sues Treasury Over Fannie, Freddie (CNBC)
A large hedge fund that invested in shares of the government-sponsored mortgage companies Fannie Mae and Freddie Mac has sued the U.S. Treasury Secretary and the head of the Federal Housing Finance Agency along with the agencies themselves, arguing that their attempts to wind down the companies violate a Congressional mandate. In a suit filed Sunday evening with a U.S. District Court in Washington, D.C., Perry Capital asserts that a 2012 amendment to the Housing and Economic Recovery Act illegally changed the rules governing Fannie and Freddie as part of their move into federal conservatorship.

A Guide to Getting a Guy to Text You the Morning After, By America’s Favorite Sorority Girl (BroBible)
Editor's Note: We're very excited to introduce a new BroBible contributor. Rebbeca Martinson is a University of Maryland student who gained Internet notoriety this past April when her e-mail to her sorority sisters went viral. In her first BroBible column, she offers some advice to our female readers. ...
Dance, stick your tongue down his throat, grab his junk for an over the pants handy, whatever, just don't go home with him. Yeah he might go home with someone else that night, but the morning after he's going to remember the girl that proudly displayed her thong on her back like the Mona Lisa at the Louvre while rubbing it on his junk, not the nice Communications major that like, is so like into like, something he doesn't remember because it didn't relate to getting his D wet. The fact that you sort of half put out shows that you're more likely TO put out at some point in the near future, which is more incentive for him to text you.

Related

Opening Bell: 01.28.13

Davos Money Men Say World Emerges From Doldrums Fretting Relapse (Bloomberg) “Optimism, but with a sober tone,” was how Bank of America Chief Executive Officer Brian T. Moynihan characterized the mood pervading the World Economic Forum’s annual meeting, even as investors were lifting the Standard & Poor’s 500 Index above 1,500 for the first time since 2007. Fed To Keep Money Spigot Open (WSJ) Federal Reserve officials are likely to continue their easy-money policies when they gather this week to weigh a mixed economic outlook and a recent run of low inflation. The Fed has said it would maintain its $85 billion bond-buying programs, aimed at boosting the economy by lowering long-term interest rates, until it sees substantial progress in labor markets. It has also said it would keep short-term interest rates near zero until the jobless rate drops to at least 6.5%, as long as inflation remains steady. Beneath the Calm, SAC Works to Contain Fallout From Inquiry (NYT) "This has always been a stressful place to work," said an SAC employee who requested anonymity because he was unauthorized to speak publicly about the fund. "Now it's just more stressful." Mr. Cohen's fund was dealt a blow last week when a Citigroup unit that manages money for wealthy families disclosed that it was withdrawing its $187 million investment. The move by the bank was the most prominent client departure since November, when the multiyear investigation into SAC's trading practices entered a more serious phase. Citigroup's withdrawal represents a tiny percentage of SAC's $14 billion in assets under management. The fund has said it expects total investor redemptions for the first quarter of up to $1 billion, a number that an SAC spokesman has said will not adversely affect its business...Still, the Citigroup decision stung, say peopleclose to SAC's business, because of the longstanding and lucrative relationship between the bank and the fund. Another concern, said these people, is that the move could influence other large SAC investors currently weighing whether to keep their money at the fund. For Citigroup, its withdrawal of money from SAC carries substantial business risk. The bank has a vast relationship with SAC, earning revenue by providing the fund with financing and trading services. SAC could exact retribution on Citigroup by terminating, or at least scaling back, its broader relationship with the bank. An SAC spokesman declined to comment. Credit Suisse Could Owe $2 Billion Over Fraud (Reuters) Credit Suisse Group faces a potential $2 billion of exposure over fraud that occurred a decade ago at National Century Financial Enterprises, a result of a federal judge's determination on how to apportion responsibility. Friday's decision by U.S. District Judge James Graham could expose the Swiss bank to hundreds of millions of dollars of added liability over the activities of Lance Poulsen, who co-founded National Century in 1990 and was its chief executive. He is now serving a 30-year prison term and is presumed insolvent. Goldman Raising $1 Billion From ICBC Share Sale (WSJ) The Wall Street company is selling the Hong Kong-listed shares in a block trade at 5.77 Hong Kong dollars (US$0.74) each, the people said, without disclosing the number of shares. The price represents a 3.0% discount to ICBC's HK$5.95 closing price Monday. A person familiar with the situation said the sale reflects prudent risk management on Goldman's part to reduce the size of its ICBC investment. MBA's Salary Enhancing Power Slashed (FT) Students on the top US MBA programs in the mid-1990s saw their salaries triple in five years, but those who graduated from the same schools in 2008 and 2009 saw that increase halved, according to data collected for the FT's annual Global MBA rankings. At the same time, MBA fees have risen by 7 percent a year. MBA students who enrolled in 2012 paid 62 percent more in fees - up 44 percent in real terms - than those who began their programs in 2005, even though the increases in post-MBA salaries remained in line with inflation. Beyonce has yet to apologize to Chuck Schumer for lip-syncing at inauguration (NYP) The New York senator angrily admitted yesterday that the pop queen has not called him to say sorry after she turned last week’s inaugural bash into an unexpected Milli Vanilli concert by lip-syncing “The Star-Spangled Banner.” “I have not heard from her before, during or after,” a testy Schumer told The Post after he was asked if Beyoncé had called him to give a musical mea culpa. “She did not talk to me at all. I didn’t say any words to her, period.” Schumer has been credited with drawing the pop diva and her hubby Jay-Z to the inauguration, where many said they stole the show from the president and first lady walking hand-in-hand on the steps of Capitol Hill. Schumer was seen beaming with pride just steps behind Beyoncé while she appeared to be belting out the National Anthem. Obama administration insiders and inauguration planners were in the dark about Beyoncé’s decision to use a prerecorded tape of her singing with the Marine Band during the swearing in. They were later left fuming over the embarrassment, according to reports. Some on Capitol Hill have even placed the blame on Schumer for the Star-Spangled sham. There’s a Twinkie in the eye of Apollo (NYP) Hostess Brands is expected to name Leon Black’s Apollo Global Management as the preferred bidder for Twinkies and its other snack brands, The Post has learned. The announcement from the bankrupt baker could come as soon as today, sources said. The selection of Apollo would give Manhattan buyout billionaire Leon Black the inside track to buying one of the country’s most well-known consumer brands. Black’s Apollo and co-bidder C. Dean Metropoulos, a veteran food exec, were vying with Grupo Bimbo, the Mexico-based baker, for the right to be the preferred, or stalking horse, bidder for Twinkies, Ho Ho’s, Ding Dongs and other Hostess snacks. Bank of America Moves $50 Billion of Derivatives to UK (FT) Bank of America has begun moving more than $50bn of derivatives business out of its Dublin-based operation and into its UK subsidiary, according to people close to the operation. The move, part of the group's global drive to rationalize its operations, has been encouraged by regulators but will also allow BofA to benefit from tax breaks stemming from the accumulated losses in its UK business. Singer Backs Off Aggressive Stance In Dealings With Buenos Aires (NYP) After a decade of aggressively pursuing $1.44 billion he claims the country owes him and a group of bondholders, including successfully pressing Ghana to seize a locally docked Argentine naval vessel to help pay down the debt, the billionaire New York hedge fund mogul is sounding like Bobby McFerrin in “Don’t Worry, Be Happy.” Singer’s Elliott Management now feels Argentina will do the right thing, according to recent court filings. It’s quite a change from last fall’s legal arguments, in which Singer urged a federal judge to hurry up and force Buenos Aires to put some of the monies owed into escrow, citing the country’s president’s plot to avoid the debt payment. Italians Have a New Tool to Unearth Tax Cheats (NYT) Despite the government's best efforts, tax evasion remains something of a pastime in Italy, where, famously, more than a few of the Ferrari-driving set claim impoverishment when it comes to declaring their incomes. So this month, not without controversy, the National Revenue Agency decided to try a new tack. Rather than attempting to ferret out how much suspected tax cheats earn, the agency began trying to infer it from how much they spend. The new tool, known as the ''redditometro,'' or income measurer, aims to minimize the wiggle room for evasion by examining a taxpayer's expenditures in dozens of categories, like household costs, car ownership, vacations, gym subscriptions, cellphone usage and clothing. If the taxpayer's spending appears to be more than 20 percent greater than the income he or she has declared, the agency will ask for an explanation. Traders Make Peace With Computers (WSJ) On a recent day on Barclays PLC's stock-trading desk in Manhattan, an electronic platform posted a notice that Barclays was selling a large block of Pfizer shares. In recent years, a computer typically would have swiftly matched such an order with a buyer, sidestepping trading floors altogether. But soft trading volume has left many traders unable to move stock as quickly as they might like. That is one reason why Barclays connected its recently launched DirectEx platform to its trading floor. The move paid off when a client who was buying 150,000 shares on the electronic network decided, after chatting with a Barclays salesman, to take an additional 150,000 shares. Woman Found with 92 Pounds of Marijuana in N. Bellmore (Patch) According to detectives, around 6 p.m., an unmarked First Precinct police car observed Mizzie Artis, 27, of Bellport, operating a 1999 Hyundai eastbound on Columbus Avenue while talking on a cell phone and not wearing a seat belt. Police then observed Artis drive to Armand Street where she met with a male subject in a minivan. As officers drove by both vehicles to further observe, the male subject fled the scene in the van, police said. Artis drove away and failed to stop at a stop sign and did not signal when turning, police said. Officers stopped Artis and, upon approaching the car, observed two large cardboard boxes in the auto. Officers also detected an odor of marijuana emanating from the vehicle. K-9 officers responded to the scene and performed a narcotic search of the vehicle. The cardboard boxes in the front seat had a positive alert for narcotics, police said. Two additional boxes were recovered from the trunk containing marijuana, bringing the total approximate weight to 92 pounds.

Opening Bell: 01.31.13

Deutsche Bank Swings To A $2.9 Billion Loss (WSJ) In the fourth quarter alone, the bank took €2.9 billion in charges, €1 billion of which was for "litigation-related charges." Mr. Jain said the charges "relate to developments in regulatory investigations and adverse court rulings which you are all familiar with," but didn't elaborate further. Deutsche Bank is currently embroiled in a number of legal disputes on both sides of the Atlantic, including the decade-long legal battle in the 2002 bankruptcy of Germany's Kirch Media Group. It is also among the banks that are under official investigation for allegedly rigging interbank benchmark rates, including the London Interbank Offered Rate. The rest of the quarter's charges were mainly related to losses from businesses bought before 2003, such as Bankers Trust and Scudder in the U.S., and impairments related to its investment in the Cosmopolitan Resort in Las Vegas and Maher Terminals in North America, which it put into an internal bad bank. The quarter's net loss of €2.17 billion compares with a profit of €147 million a year earlier. For the full year, net profit was €611 million, down from €4.13 billion. Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (Bloomberg) “We’ve galvanized Deutsche Bank around the achievement of our capital targets,” Jain, 50, said on a conference call with analysts. The loss “reflects a number of decisions we took to position Deutsche Bank,” he said. Barclays, RBS May Pay Billions Over Improper Derivatives Sales (Bloomberg) The lenders, including Lloyds Banking Group Plc and HSBC Holdings Plc, have set aside around 740 million pounds to cover the claims. Analysts say the total charges for the industry may be much higher than that after the Financial Services Authority said it found “serious failings” in reviews of product sales. SAC And Elan Blasted By Investor Who Lost Nest Egg (NYP) Ronald Weiland realized he’d made a bad bet in 2008, when he lost his $1 million nest egg trading shares of drug company Elan. What he didn’t know then was that the cards were stacked against him. Weiland now believes that he and other investors were played by Steve Cohen’s SAC Capital Advisors when the hedge fund giant — acting on information from a former trader accused of insider trading — abruptly dumped its huge long position in Elan and Wyeth and started shorting both stocks. “They had information that I didn’t have access to,” said Weiland, a 53-year-old former consultant for Arthur Andersen. “It’s totally a matter of seeing very wealthy people being able to game the system.” The big trading swing that netted $276 million for SAC and led to the arrest of former trader Mathew Martoma has also landed the firm in hot water. Elan investors have filed at least two lawsuits against SAC, accusing the firm of costing them millions, and several class-action law firms are looking to tee up more. US Targeting Tax Evasion (WSJ) On Monday, a federal judge in New York approved an Internal Revenue Service summons demanding still more records from UBS. According to court filings, the government now is focusing on U.S. taxpayers with accounts at smaller Swiss banks that didn't have U.S. branches but served customers through a UBS account in Stamford, Conn. Interactive Map: What NYC Neighborhoods Have The Most Public Drinking Complaints? (Gothamist) Greenpoint, Williamsburg, the Lower East Side, Hamilton Heights, East Harlem and Washington Heights are the worst offenders—on the other hand, almost no one is getting in trouble in Midtown, the Financial District, Red Hook, Dumbo, and the Upper East and West Sides. Since we already know there can be a a historical correlation between public drinking and public urinating (and sometimes only the urinating part is public), we decided to look at public urination complaints too...Some conclusions from this comparison: Midtown East and Chelsea have way more urination complaints than drinking ones. Union Square, Greenpoint and Randalls Island are also urinary offenders. It seems like nobody on Staten Island cares about people urinating on their lawns, and same goes for anywhere west of East Flushing. Blackstone Swings To Fourth Quarter Profit (WSJ) As of the quarter's end, total assets under management reached a record $210.22 billion, up 26% from the year earlier, as all of Blackstone's investment businesses continued to see net inflows and carrying-value appreciation...Blackstone posted a profit of $106.4 million, or 19 cents a unit, compared with a year-earlier loss of $22.7 million, or five cents a unit. On the basis of so-called economic net income, the firm reported a profit of 59 cents a unit, versus a profit of 42 cents a unit a year earlier. Analysts surveyed by Thomson Reuters recently expected a per-share profit of 47 cents. Ackman Ahead In Herbalife Bet (NYP) Ackman has scored a gross profit of about $260 million on his $1 billion short bet against the nutritional supplements company, based on an estimated 20 million shares shorted at an average price of $50. Loeb, who bought 8.9 million shares at an average price of $32, is up $44.5 million. Ackman has widened his lead considerably. Just two weeks ago, his gross gain stood closer to $120 million while Loeb had made an estimated $108 million. Threats Cloud Euro's Flight (WSJ) The euro, once on death's door, is on a monthslong tear, rising Wednesday to its highest level since November 2011. But even some investors who helped propel the currency above $1.3560 Wednesday say it can't fly much further. Europe's economy is still in the doldrums, they say, and a stronger euro could make the situation worse. And with central banks elsewhere racing to push down their own currencies, boosting the relative value of the euro, the European Central Bank eventually could be compelled to join them. Jobless Claims in U.S. Rose 38,000 Last Week to 368,000 (Bloomberg) Economists forecast 350,000 filings, according to the Bloomberg survey median. The increase followed a combined 45,000 drop in the prior two weeks. Guy Inadvertently Posts Public YouTube Video Inviting His Fiancée’s Best Friend Over for a Threeway (Gawker) We've all been there. You're super excited after getting the go ahead from your fiancée Cynthia to invite her best friend Zoey over for a threeway, so you hastily record a video introducing yourself to Zoey and letting her know that you're totally open to having a threeway this week, next week, the week after that, whenever, anytime, today, or maybe tomorrow, whenever possible, and you're just really excited to show her things that she's never seen and do things that were never done before in a threeway. Then you hastily upload the video to your public YouTube account that 300 people are subscribed to, and await your threeway.