Opening Bell: 07.18.13

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Morgan Stanley profit rises as all main businesses grow (Reuters)
Morgan Stanley reported a stronger-than-expected adjusted quarterly profit as revenue grew in all of its major businesses, particularly trading and underwriting. Net income attributable to common shareholders rose to $802 million, or 41 cents per share, in the second quarter from $564 million, or 29 cents per share, a year earlier, the Wall Street bank said on Thursday. Excluding special items, Morgan Stanley earned 45 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.

J.P. Morgan Staring at Record Fine Over Energy (WSJ)
J.P. Morgan Chase & Co. is in discussions with U.S. electricity regulators about paying what would be a record fine to settle allegations that the bank manipulated electricity markets in California and the Midwest, according to people familiar with the talks. The Federal Energy Regulatory Commission and the New York bank are exchanging drafts of an agreement that would result in J.P. Morgan paying hundreds of millions of dollars, these people said. The fine, they said, likely will be larger than the record $435 million fine levied by FERC on Tuesday against British bank Barclays PLC for its alleged manipulation of the California energy markets from 2006 to 2008. Barclays said on Wednesday that it intends to fight the matter in court.

Bank of America's interest-rate exposure may be worse than rivals' (Reuters)
Bank of America Corp's balance sheet suffered from rising bond yields in the second quarter, suggesting that the second-largest U.S. bank may be more exposed to interest-rate risk than some of its major rivals. The bank posted a profit for shareholders of $3.57 billion in the second quarter, but on its balance sheet the picture was not as good - its net worth fell by $6.26 billion as a result of investment losses. Rivals JPMorgan Chase & Co and Citigroup Inc both managed to increase their net worth as measured by their book value.

Dell Buyout Pushed to Brink (WSJ)
Dell Inc.'s $24.4 billion buyout plan was foundering late Wednesday evening, as a group of big investors signaled their intent to vote against a deal that would remove the technology icon from the public markets. The new opposition from Vanguard Group Inc., State Street Corp. and BlackRock Inc. pushed the deal to a new level of brinkmanship, forcing Michael Dell and his backers to either sweeten the transaction or risk seeing the deal fail. Late into the night Wednesday, Mr. Dell and his namesake company and their advisers were weighing how to respond to the latest developments. People involved in the transaction said they were expecting to delay a scheduled July 18 shareholder vote on a plan that would award Dell holders $13.65 a share.

PayPal Apologizes for Giving Pennsylvania Man $92 Quadrillion (Gawker)
When Chris Reynolds opened his monthly PayPal statement this month, he was pleasantly surprised to find slightly more in his account than he was expecting. According to the statement, he was suddenly worth $92,233,720,368,547,800. “Well, initially I was a little jolted because I saw a negative number in front of a lot of digits and I just decided to have a little fun with it,” Reynolds told ABC News, adding that his friends liked the picture of the statement he posted to Facebook. PayPal quickly recognized their mistake and removed the money from the account. “PayPal was really good by the way,” Reynolds said. “They apologized for any inconvenience.”

Peltz needs support for PepsiCo restructuring deals (FT)
The plan that Mr Peltz laid out is for Pepsi to buy Mondelez, a sweet snacks and coffee business that he said would complement Pepsi’s Frito-Lay food brands. Mr Peltz had a hand in creating Mondelez, pushing for UK confectioner Cadbury to spin out its drinks business, and then sell out what remained to Kraft. The chocolate maker then formed the core of Mondelez when Kraft undertook its own split last year. Trian wants Pepsi to buy the group with stock, in a deal worth around $65bn.

Fed’s Messages Raise Volatility in Threat to Profits (Bloomberg)
The Federal Reserve’s mixed messages on monetary policy are stoking volatility in the $4 trillion-a-day currency market, raising the odds that companies will have a harder time setting up exchange-rate hedges designed to protect overseas earnings. “A low-volatility environment certainly is better,” Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt, said in a July 16 telephone interview. “It would create problems if a high-volatility environment would be something permanent. This would certainly end up causing problems when people have to roll their hedge positions.”

Fifa questions Brazil as 2014 World Cup host (FT)
Commenting on the protests that erupted during June’s Confederations Cup – the dress rehearsal for the World Cup – Sepp Blatter, the president of Fifa which organises the tournament, said Brazil needed to prevent the unrest from recurring. “If this happens again in 2014, then we might have to question whether we made the wrong decision awarding the hosting rights to Brazil,” he said. “However, this will not happen. I am confident that Brazil will deliver a great Fifa World Cup.”

Hear That? It’s Your Financial Adviser Tweeting. (DealBook)
Raymond James plans to announce on Thursday that it will use software from Hearsay Social, a start-up company based in San Francisco, to help its thousands of financial advisers use Facebook, LinkedIn and Twitter. The effort is among the more extensive efforts by a financial firm to mine the benefits of social media. The Hearsay software will be available to Raymond James’s more than 5,400 financial advisers in the United States. It will let them post from a library of prewritten material, as well as compose their own messages, which will be vetted before publication.

92nd Street Y exec — once nabbed in Mafia stock fraud — is kickback probe’s focus (NYDN)
An ex-con busted for his role in a Mafia-run Wall Street scam is a central figure in an unfolding scandal at the 92nd Street Y, the Daily News has learned. Salvatore Taddeo, who for years ran the Y’s contracting operations, is the focus of a kickback investigation by the prestigious upper East Side cultural institution, according to three sources familiar with the matter. ... In 1997 Taddeo, then a stockbroker, was busted along with members of the Genovese and Bonanno crime families. They were all charged with participating in a pump and dump scheme in which the mob would pay off corrupt brokers to hype stock in phantom companies in which gangsters secretly held stock.

Col. Sanders fading out as KFC goes upmarket? (ABC)
The fried chicken chain says it's opening a location called "KFC eleven" next month near its headquarters in Louisville, Ky., that will serve flatbread sandwiches, rice bowls, salads and only boneless pieces of its Original Recipe chicken. The name of the test restaurant is a reference to the 11 herbs and spices Sanders used in the "secret" Original Recipe. But the big news is that the restaurant's exterior won't feature Sanders, the avuncular, silver-goateed southern gentleman in a white suit and string tie, whose likeness has long been front-and-center at traditional KFC locations.

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Opening Bell: 01.09.13

UBS Says Cleaning Up Its Act After Libor 'Shocker' (Reuters) UBS has yet to fully purge itself of a global interest rate scandal that has cost the Swiss bank its reputation and put it at risk of a wave of costly civil suits, its investment banking chief said on Wednesday. The once-venerable institution was fined a record $1.5 billion last month for manipulating Libor interest rates, the latest in a string of scandals including a $2.3 billion rogue trading loss and a damaging tax avoidance row with the United States. "We are very focused on recovering the honor and standing the organisation had in the past," Andrea Orcel told Britain's Parliamentary Commission on Banking Standards, set up in the aftermath of the Libor scandal. "I am convinced that we have made a lot of progress. I am also convinced that we still need to do more." [...] Committee member Justin Welby, the incoming Archbishop of Canterbury, asked Orcel if he was the right man to turn UBS around. "I feel I have a high level of integrity," the banker said. Orcel said that UBS was working at simplifying the investment banking business to make it less risky and prone to scandal. The committee, a cross-party panel of lawmakers headed by Conservative MP Andrew Tyrie, is switching its focus to standards and culture after spending most of the past three months assessing structural reform. Tyrie on Wednesday described the Libor rigging as "a shocker of enormous proportions". Button-Down Central Bank Bets It All (WSJ) Switzerland, for decades a paragon of safety in finance, is engaged in a high-risk strategy to protect its export-driven economy, literally betting the bank in a fight to contain the prices of Swiss products sold abroad. The nation's central bank is printing and selling as many Swiss francs as needed to keep its currency from climbing against the euro, wagering an amount approaching Switzerland's total national output, and, in the process, turning from button-down conservative to the globe's biggest risk-taker. JPMorgan Overhaul Widens (WSJ) The shift of Mr. Maclin and the departure of Mr. Staley, who once was seen as a top candidate to succeed James Dimon as chief executive, are the latest steps in a drastic reshaping of J.P. Morgan's executive suite. Many of the new leaders—a group that includes corporate and investment-bank co-heads Mike Cavanagh and Daniel Pinto, co-chief operating officer Matthew Zames and Chief Financial Officer Marianne Lake—are in their 40s. Mr. Cavanagh and Mr. Zames, who were asked last May to unwind a series of botched bets placed by a trader in the bank's Chief Investment Office known as the "London whale," are viewed as front runners for the top job, said people close to the bank. Ackman Braces for Legal Battle Over Herbalife (FBN) If filed, the lawsuit could involve alleged “tortuous interference,” implying Ackman intentionally damaged Herbalife’s business relationships, people close to Ackman said. On Tuesday, a large Herbalife distributor said he was leaving the company and called on other distributors to join him amid the controversy. In a sign of the importance of its distribution channels, Herbalife says in regulatory filings its relationship with and ability to influence distributors are items that can “materially” affect its financial condition. As of late Tuesday, people with knowledge of the matter said no decision on timing or even if a lawsuit will actually be filed had been made. The company has told FOX Business it is weighing legal action against Ackman. Ackman declined to comment on the matter. Herbalife has hired famed attorney David Boies to launch possible litigation against Ackman as well as the investment bank Moelis & Co., as its financial adviser. Goldman Will Report Fund Values Each Day (WSJ) In a reversal of industry practice, Goldman Sachs Group will begin disclosing the values of its money-market mutual funds daily rather than monthly, according to people familiar with the company's plans. Some of the changes will take effect as early as Wednesday...According to people familiar with Goldman's thinking, the company is beefing up its disclosures to satisfy investors' calls for greater transparency on fluctuations in the price of their investments. Brazil prostitutes to learn English ahead of World Cup (AP) Prostitutes in one of Brazil's biggest cities are beginning to sign up for free English classes ahead of this year's Confederations Cup and the 2014 World Cup. The president of the Association of Prostitutes of the city of Belo Horizonte says by telephone that 20 have already signed up for the courses and she expects at least 300 of the group's 4,000 members to follow suit. The association is organizing the classes and seeking volunteer teachers. Prostitution is legal in Brazil. Belo Horizonte will host six World Cup matches and Vieira said Tuesday "it will be important for the girls will be able to use English to let their clients know what they are charging and learn about what turns them on." AIG Cites Duty to Weigh Suing U.S. as Lawmaker Criticism Mounts (Bloomberg, related) American International Group said it has a duty to weigh joining a suit by former Chief Executive Officer Maurice “Hank” Greenberg that claims the insurer’s 2008 U.S. bailout was unconstitutional. “The board of directors has fiduciary and legal obligations to the company and its shareholders to consider the demand served on us,” CEO Robert Benmosche said yesterday in a statement. The board is scheduled to meet today to hear arguments from representatives of Greenberg and the U.S. Lawmakers including Senators Elizabeth Warren and Robert Menendez and Representative Peter Welch said New York-based AIG shouldn’t join the suit. “Taxpayers are still furious that they rescued a company whose own conduct brought it down,” Welch said in a letter to AIG Chairman Steve Miller. “Don’t rub salt in the wounds with yet another reckless decision.” Vow of New Light For 'Dark' Trades (WSJ) Richard Ketchum, chief executive of the Financial Industry Regulatory Authority, said in an interview Tuesday that the regulator is expanding its oversight of the dark-trading venues, with an eye on whether orders placed in public exchanges are "trying to move prices or encourage sellers that may advance their trading in the dark market." The regulator also is boosting its surveillance of high-speed trading and is increasingly looking at rapid-fire trading across exchanges, he said. "You're going to see more [focus] in those areas in 2013," Mr. Ketchum said. Goldman, Morgan Stanley to Settle on Foreclosures (Reuters) Goldman Sachs and Morgan Stanley are among a group of banks expected to agree as soon as this week to a $1.5 billion settlement with federal regulators over botched foreclosure claims, two sources familiar with the matter said on Tuesday. The accord would come on the heels of a separate $8.5 billion settlement announced on Monday with 10 bigger mortgage servicers, including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo...Goldman and Morgan Stanley's respective roles in the settlement stems from mortgage-servicing businesses that the two investment banks purchased in the run-up to the subprime mortgage crisis, and have since sold. Goldman had owned Litton Loan Servicing and Morgan Stanley owned Saxon Capital. Taco Bell responds to teen's request for a custom Speedo (LI) The week before Christmas, 15-year-old Ryan Klarner posted on Taco Bell’s Facebook page, introducing himself with a rundown of his swimming and diving achievements before making an offbeat request. “[I]s there any way you guys could make me a customized Speedo that says think outside the buns on the back of it? If you did, that would mean the world to me,” the Illinois teen asked...Klarner said he first came up with the idea a couple of years earlier and decided last month to go ahead and ask, even though he never had asked a company on Facebook for anything before. “I did not expect it to blow up as much as it has. I didn’t really expect to get the Speedo out of it, either,” he said. But last Wednesday, the social media team at Taco Bell wrote back. “What size do you wear? And what’s your address?” “He really wanted something and he went after it,” Tressie Lieberman, director of digital and social engagement, said. When we think people are really extraordinary...then we want to reward them.”

(Getty Images)

Opening Bell: 6.13.17

Inside Gary Cohn's unenviable White House job; Tim Cook dishes on Apple's autonomous car project; a thing called "potcoin" sent Dennis Rodman to North Korea; and more.