Opening Bell: 08.09.13


Investor William Ackman Targets J.C. Penney's CEO (WSJ)
J.C. Penney Co.'s largest shareholder is pressing the board to quickly replace its chief executive, as the battered department-store chain struggles to turn around a deep slide in sales. The move to unseat interim CEO Myron "Mike" Ullman sets up a standoff between hedge fund manager William Ackman, who owns nearly 18% of the company's stock, and a board that was badly burned the last time it went along with his wishes. It was Mr. Ackman who, as a director, lobbied successfully to bring in former Apple Inc. executive Ron Johnson as chief executive in 2011, a choice that set off a disastrous year of plunging sales, diminishing cash reserves and deep job cuts.

SAC to Keep Managing Money While Facing Indictment (DealBook)
Federal prosecutors and the investment firm SAC Capital Advisors agreed on Thursday to a protective order that requires the firm to keep most of its money in its fund while operating under a criminal indictment, according to a person briefed on the case. The order serves a dual purpose, preserving the government’s interest in any money that it might seize from SAC in a forfeiture action, while also allowing the firm to continue running its money management business.

U.S. steps up probe of JPMorgan over Bear mortgage bonds (Reuters)
The U.S. Department of Justice has stepped up a probe in recent weeks into Bear Stearns & Co's mortgage dealings in the run-up to the financial crisis, according to two sources familiar with the situation, raising the possibility that JPMorgan Chase & Co may face yet another case over mortgage bonds. Justice Department lawyers in Washington have been interviewing people linked to Bear Stearns' mortgage securitization business, EMC Mortgage Corp, over sales of mortgage bonds going into the housing crisis, the sources said.

'London Whale' Unlikely to Face Charges (WSJ)
Bruno Iksil, the former trader known as the "London whale," is unlikely to face charges related to bets that backfired into losses of more than $6 billion for J.P. Morgan Chase & Co., according to people close to the matter. ... Mr. Iksil is no longer a focus of investigators, people familiar with the situation said. Investigators still could decide to reverse course and pursue charges against him, but that is seen as unlikely unless new evidence emerges.

What a pizza $#+! Preposterous poll ranks NY 4th (NYP)
New York pizza-lovers got a black eye from users of the travel megasite TripAdvisor, who rated the city’s slices a paltry fourth in the country behind outposts like San Diego and Las Vegas. Perhaps most offensive was the third-place choice of Boston, where reviewers gushed about pies with oddball toppings like shrimp scampi. “Get out of here, that’s crazy! Boston is No. 3?” said Jackson Heights resident Andrew Silverstein, 31, while enjoying lunch at famed Patsy Grimaldi’s new Brooklyn joint, Juliana’s. “I’ve had pizza in Boston, and it was a horrible experience.”

Carlos Slim Makes KPN Move (WSJ)
Mexican telecommunications firm America Movil SAB Friday increased its efforts to build up a long-term presence in Europe, announcing an offer for Royal KPN NV that values the Dutch company at about €10.25 billion ($13.72 billion). America Movil, controlled by Mexican billionaire Carlos Slim, said it aims to acquire a majority stake in KPN, after buying a 29.77% stake in the embattled firm last year. It also bought a minority stake in Telekom Austria AG. Having exhausted its possibilities for acquisitions in Latin America where it is the largest mobile phone operator, America Movil built up stakes in KPN and Telekom Austria to serve as a beachhead into Europe and take on long-time-rival Telefonica in its own backyard.

BlackBerry open to going private, sources say (Reuters)
Chief Executive Thorsten Heins and the company's board is increasingly coming around to the idea that taking BlackBerry private would give them breathing room to fix its problems out of the public eye, the sources said. "There is a change of tone on the board," one of the sources said on Thursday. No deal is imminent, however, and BlackBerry has not launched any kind of a sale process, the sources said.

Chinese bank takes early step towards IPO (FT)
One of China’s top investment banks has taken a step towards going public with China International Capital Corporation preparing the early ground work for an initial public offering to raise capital. Levin Zhu, chief executive of the brokerage, has commissioned an internal study to look into the possibility of listing, said people familiar with the matter. Mr Zhu, the ‘princeling’ son of a powerful former premier, had long rebuffed suggestions that it list, wary of the disclosure requirements. But with the brokerage struggling to keep up with its rivals over the past few years, some in the firm now believe it needs to raise capital to remain in China’s first tier.

Woes of Detroit Hurt Borrowing by Its Neighbors (DealBook)
Two weeks after Detroit declared bankruptcy, cities, counties and other local governments in Michigan are getting a cold shoulder in the municipal bond market. The judgment has been swift and brutal. Borrowing costs are up around the state, in some cases drastically. On Thursday, Saginaw County became the latest casualty when it said it was delaying a $60 million bond sale planned for Friday. It had hoped to put the proceeds into its pension fund. It was the third postponed bond sale in Michigan since Detroit dropped its bombshell on July 18.

German Regulators Said to Review Off-Balance-Sheet Loans (Bloomberg)
The inquiry, led by the Bundesbank and Bafin, will focus on whether banks properly applied accounting rules when making the loans, said one of the people, who asked not to be identified because the investigation hasn’t been made public. The review is likely to take several months, the person added. Regulators are scrutinizing the practice after Bloomberg News reported that Deutsche Bank AG, the country’s biggest financial firm, extended billions of dollars to banks since 2008 and made the loans disappear from its balance sheet even though it is still owed the money. Borrowers included Banca Monte dei Paschi di Siena SpA, which is being bailed out by the Italian government, and state-controlled Banco do Brasil SA.

Wall Street Banks Win Market Share as Europeans Struggle (Bloomberg)
Wall Street banks have gained market share in investment banking and trading from European lenders that are still grappling with a stagnant economy and pressure from regulators to bolster capital. Total revenue posted by the securities units of the top U.S. investment banks rose by 24 percent in the second quarter over the year-earlier period, more than twice the 11 percent gain logged by Europe’s biggest firms, among them Deutsche Bank AG and Barclays Plc, according to data compiled by Bloomberg.

Brazil calls for IMF eurozone rescue programmes revision (FT)
Brazil has called for the IMF-backed rescue programmes for Greece and other southern eurozone countries to be reviewed to make them more economically sustainable. The call from finance minister Guido Mantega came as he sought to explain Brazil’s stance on Greece’s rescue programme after its IMF representative, Paulo Nogueira Batista, abstained from a vote to approve the latest tranche of help for Athens.

Muscle man who couldn't open water bottle at Mets game says security guard asked him for help before cameras started rolling
After becoming the target of ridicule by Mets announcers for his inability to open a water bottle during last weekend’s game against the Kansas City Royals, the muscleman whose battle was captured on video has come forward to set the record straight. “First of all, it was not my water bottle,” Christopher, a 38-year-old lawyer in White Plains, NY, told the Daily News. “It was handed to me by a security guard in the dugout area who was having trouble with it. The guy was much bigger than me, by the way.” Chris, who did not want to share his last name out of privacy concerns expressed by his fiancée, said that neither he, nor the security guard, managed to make the cap so much as budge. ... “I tried as hard as I could,” Chris said. ... “I don’t blame anybody. It is pretty funny,” Chris said. “But a lot of things were presented incorrectly.”


Opening Bell: 02.27.13

Bernanke Affirms Bond Buying (WSJ) In his semiannual report to Congress Tuesday, Mr. Bernanke said the bond buying is helping the economy by holding down long-term interest rates and ought to be sustained. "Keeping long-term interest rates low has helped spark a recovery in the housing market and has led to increased sales and production of automobiles and other durable goods," he said. The Fed has accumulated $2.8 trillion of Treasury and mortgage securities. Mr. Bernanke's remarks signaled little change in the central bank's plans to purchase $85 billion a month of long-term Treasury and mortgage debt. The Fed's next policy meeting is March 19-20. Regulators Hope For Libor Pacts (WSJ) Regulators investigating alleged interest-rate manipulation are hoping to reach settlements with at least three major financial institutions by the end of summer, according to a person familiar with the probes. It isn't clear if the companies will go along with any proposed settlements, and previous agreements with banks were delayed before being completed. So far, regulators have settled rate-rigging charges with Barclays, RBS, and UBS collecting about $2.5 billion in penalties. All three banks admitted that employees sought to rig rates. Barclays to Unveil Numbers Earning 1 Million (FT) Barclays is set to reveal the number of staff who earned above 1 million pounds ($1.5 million) last year, in a push for transparency that could turn the bank into a trailblazer for the sector. In its annual report next week, the British retail and investment bank will for the first time give an outline of the various pay brackets among its 140,000 staff, people close to the situation said. Analysts estimate that between 600 and 700 employees – mostly in the investment bank – will be revealed as having taken home more than 1 million pounds last year. JPMorgan To Cut 17,000 Jobs (WSJ) The move announced Tuesday by the New York company, the nation's most profitable bank in 2012 and the biggest U.S. lender by assets, will reduce its staff by 6.5% in one of the most aggressive reductions to date amid widespread financial-industry cutbacks. Bond brawl: Singer v. Argentina today (NYP) Lawyers Ted Olsen and David Boies will appear before a Manhattan US appeals court to argue over how $1.44 billion in Argentina debt should be paid. Olsen represents billionaire hedge fund magnate Paul Singer, who claims he and other bondholder holdouts should be paid alongside those holders who agreed to a steep haircut during a debt restructuring. Argentina President Cristina Kirchner has long insisted she will never pay “one dollar” to the Singer holdouts. Boies represents the bondholders who agreed to the restructuring — and they oppose Singer, believing that Argentina will never go along with a pro-holdout ruling, thus putting their bonds at risk of default. Cops: Florida Man, 36, Assaulted Teen Relative With Taco Bell Burrito (TSG) The victim told cops that he was having a “verbal altercation” with his mother and Brown, his brother-in-law, when Brown “asked his mother to bring him the burrito,” according to an arrest affidavit. Brown then allegedly threw the burrito “with force” at the victim, striking the boy in the face with the fast food item. While interviewing the teen, cops noted that he had “burrito cheese, sauce and meat all over his clothing and face.” Brown told police that the victim was disrespectful to his mother and had cursed at the woman. He also acknowledged that he had “delivered” the burrito. After being booked into the county jail, Brown warned that he would “take care” of the teen upon his release from custody, adding that the victim “was going to get knocked out.” Best Buy Takeover Attempt by Founder in Jeopardy (Reuters) Best Buy founder Richard Schulze's effort to take the company private is in trouble after attempts to secure financing faltered while an alternative strategy to line up minority investors may not pan out either, five sources familiar with the matter said. No longer pursuing a full takeover bid for the troubled electronics retailer, Schulze has focused discussions in recent weeks on a potential deal in which private equity firms would buy a non-controlling stake, the sources, who declined to be named because the discussions are private, said. 'Penta-Millionaires' Happier Than Merely Rich: Study (CNBC) Breaking: A survey from Spectrem Group found that individuals worth $5 million or more are far more satisfied with their jobs, relationships and work than those worth $100,000 or less. Dimon Says Banks Have More Capital Than They Can Use (Bloomberg) The biggest U.S. banks are lending the smallest portion of their deposits in five years as cash floods in from savers, a slow economy damps demand from borrowers and regulators push financial firms to bolster themselves against any future credit crisis. The average loan-to-deposit ratio for the top eight commercial banks fell to 84 percent in the fourth quarter from 87 percent a year earlier and 101 percent in 2007, according to data compiled by Credit Suisse Group AG. JPMorgan had the lowest ratio in the group at 61 percent. “I don’t want to say it’s anti-American” to be held to international standards, Dimon said, adding that the bank’s assets include highly rated securities. “That balance sheet is almost as liquid as you can get.” Budweiser Has Been Sued 3 Times for Watering Down All Those Watery Beers (Atlantic Wire) The plaintiffs — including one guy who bought a case of Michelob Ultra a month, for some reason — allege that the public doesn't know what all the beers under the Budweiser umbrella really taste like, and that they're not getting their money's worth. There is no science backing up the defendants' claims, and AB InBev has yet to respond in court. The krux of the evidence comes from "information from former workers" of Anheuser-Busch breweries who claim watering down the beer in post-production is a company policy.