Opening Bell: 08.14.13

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JPMorgan Trading Charges Said to Be Announced Today (Bloomberg)
The U.S. may announce charges as early as today related to JPMorgan Chase & Co.’s trading losses last year, a person familiar with the matter said. ... “The penalties in the U.S. are significantly higher” than in the U.K., said Jeremy Summers, a lawyer at Slater & Gordon in London. “People faced with the possibility of being charged here or the U.S. have sought to be dealt with here because they are less draconian,” Summers said.

U.S., Filing Suit, Moves to Block Airline Merger (DealBook)
“We looked very carefully for six months at this deal, and we think it’s pretty messed up,” said William J. Baer, the assistant attorney general in charge of the department’s antitrust division. “It looks pretty bad for consumers.” He told reporters that the merger could cost consumers “hundreds and hundreds of millions of dollars.” He said regulators reached that conclusion after reviewing internal plans for the merger at US Airways and American and studying how much fares rose after the other giant mergers. Asked if some type of compromise might still be possible, Mr. Baer said, “We think a full-stop injunction is the right course for the consumer.”

Dalio Patched All Weather’s Rate Risk as U.S. Bonds Fell (Bloomberg)
As the bond market plunged in late June, Ray Dalio convened the clients of Bridgewater Associates LP, the world’s largest hedge-fund manager, to tell them that a fund designed to withstand a broad range of market scenarios was too vulnerable to changes in interest rates. Bridgewater, citing months of study, said it had underestimated the interest-rate sensitivity of various assets in its All Weather fund and was taking steps to mitigate the risk, according to clients who listened to or read a transcript of the June 24 call. By the end of the month, the Westport, Connecticut-based firm had sold off $37 billion of All Weather’s most rate-sensitive assets, Treasuries and inflation-linked bonds, according to fund documents and data provided by investors.

AOL CEO apologizes to staff for public firing (NYT)
Tim Armstrong, the chief executive of AOL, issued an unusual apology on Tuesday to his entire staff for the public manner in which he fired an employee during an internal conference call last Friday. ... "If you think what is going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave Patch today," Mr. Armstrong told the employees. But right after that statement he can be heard reprimanding Mr. Lenz, Patch's creative director, who was videotaping the meeting, then firing him. "Abel, put that camera down right now! Abel, you're fired. Out!" Five seconds later, to stunned silence, he proceeded with his message.

Russian surgeon arrested for taking heroin from patient's stomach (Reuters)
A Russian surgeon has been arrested for taking a five-gram bag of heroin he found in a patient's stomach. "The doctor was intoxicated at the time of detention," police for the Siberian region of Krasnoyarsk said in a statement on Tuesday, adding he faced up to 15 years in prison for theft and possession.

Missing Iowa Border Collie Found Stuck in a Tree (AP)
A 7-year-old border collie who was missing from his Iowa home for a few days didn't get very far - he only went up. Laddy the dog was found Sunday morning stuck up a tree two blocks from his Davenport home ... Weeks said she believes Laddy escaped Friday from an invisible electronic fencing system thanks to a non-working battery in his collar. She said his love for squirrels and chasing things probably led him up the tree.

BOE Not Unanimous on Guidance (WSJ)
Bank of England Gov. Mark Carney failed to win rate-setters' unanimous approval in August for his pledge not to raise interest rates until joblessness in the U.K. falls sharply, records showed Wednesday, adding to investor doubts about whether the central bank can stick with its promise. Minutes of this month's policy meeting showed Martin Weale, one of four rate-setters on the panel drawn from outside the central bank, voted against the introduction of "forward guidance" in August. Mr. Weale, who has long fretted about inflationary pressures in the U.K. economy, was the lone dissenter.

Eurozone’s 0.3 per cent growth beats forecasts (FT)
The 17-member area grew 0.3 per cent during the second quarter, beating economists’ forecasts for 0.2 per cent expansion and heralding a long-awaited return to growth for the first time since the end of 2011. The figures followed stronger-than-expected gross domestic product growth in Germany, which recorded the strongest economic expansion in more than a year and France confirmed that it was no longer in recession.

Inside Greece's violent new anarchist groups (Reuters)
At first glance K*Vox, started a year ago by anarchists who occupied a shuttered building, looks like any other cafe in the bohemian Athens neighborhood of Exarchia. But inside posters show gun-toting guerrilla fighters and the symbol of anarchy - a circle with an A. On a recent summer day, as the cafe was abuzz with chatter about two anarchists detained by police, a man barged in shouting that help was needed at a store attacked by far-right activists. Such extremists have been regularly blamed for the rise in street attacks during Greece's economic crisis, though they deny perpetrating such acts. "Isn't it time for a revolution?" a 34-year-old anarchist watching the cafe scene said as he rolled a cigarette. "It's now or never. If we don't do something now, nothing will ever change."

Student-Loan Load Kills Startup Dreams (WSJ)
Ms. Carney, 29 years old, and her husband, John, 31, started Thick & Thin Designs, making and selling food picks in the shapes of zombies, bikes and deer antlers after a brainstorming session while she was cooking dinner. The couple, both students at the University of Maine, where he is earning a master's degree in fine arts and she is earning her second undergraduate degree, in zoology, sell the picks for about $12 a dozen as decorative cupcake toppers. But they chose not to purchase a laser cutter, because doing so would require them to take out a business loan—and together they have $140,000 in leftover student debt. Instead, they use a university-owned laser cutter, which limits the size of the acrylic sheets they can work with. Having the student-loan debt "is preventing me from being able to take a lot of chances or risks that are usually necessary when starting a business," Ms. Carney says.

KPN foundation flags concerns over Slim bid (Reuters)
An independent foundation which has the power to block a takeover of Dutch telecoms group KPN has expressed its concern over the proposed 7.2 billion euros ($9.6 billion) offer by Mexican billionaire Carlos Slim's America Movil. America Movil (AMX) said on Friday it would make a public offer for the 70 percent of KPN that it does not already own. The proposed bid poses a challenge to its arch-rival, Spain's Telefonica, which made an $11 billion offer last month to buy KPN's crown jewel, German E-Plus. Management, however, has shown little enthusiasm for Slim's involvement since he built up an almost 30 percent stake last year and the foundation's worries could be the first signs of clear opposition from one of the involved parties.

Barclays C.F.O. Moves Up Departure, Citing Ill Health (DealBook)
Christopher G. Lucas, the chief financial officer of Barclays, announced on Wednesday that he was leaving the bank earlier than expected for health reasons. Mr. Lucas, 52, said in February that he planned to leave the bank, and Barclays appointed Tushar Morzaria, a JPMorgan Chase executive, to take over as chief financial officer. Mr. Lucas will now step down on Friday. Mr. Morzaria will start his new role at Barclays on Oct. 15, and Peter Estlin, the bank’s financial controller, will be the acting chief financial officer in the interim, according to a statement from Barclays.

The city is my playground! (NYP)
When Alexander Shlaferman was arrested early Sunday for throwing a free rager for nearly 1,000 revelers atop the Manhattan Bridge, the cops couldn’t help but tip a hat to the 19-year-old. “They said, ‘Wow, we really wish we weren’t in uniform so we could go to this party,’ ” recalls Shlaferman with a sly smile. He promotes the bashes on Facebook, typically providing the location to approved fun-seekers once they are vetted (gang members are a no-no, says Shlaferman). Instructions are detailed: “Enter discreetly like a ninja. You are going somewhere secret,” read one party missive. “I really want to inspire people to realize that they’re just human beings like everyone else,” he says. “They should do things like this. It’s cool that I do it. But do it, too. Give back.”

Big tease: Sydney Leathers is all thumbs at NYC strip club ‘hosting’ gig (NYDN)
She turned on Anthony Weiner with sexy pillow talk, but Sydney Leathers proved to be a big tease at a Hell’s Kitchen strip club Tuesday night. The 23-year-old online ingenue was supposedly “hosting” at the Headquarters Gentlemen’s Club on W. 38th St., but she appeared to be doing nothing more than texting. Billing herself as “Mrs. Danger” — a riff on Weiner’s sexting alias Carlos Danger — Leathers posed for photos wearing a black minidress and platform heels. But she refused to dish on her shenanigans with Weiner or go along with the Weiner-mocking skits the club’s owner hoped for. “She’s not the best host I’ve ever had, let’s put it that way,” said the owner, who would only give his name as Big John. “She’s over here by the stairs texting. She’s probably trying Anthony Weiner,” he said.

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Opening Bell: 07.16.12

Citigroup Profit Beats Analysts’ Estimates On Investment Bank (Bloomberg) Citi reported a 12 percent drop in second-quarter profit that beat analysts’ estimates on revenue from advising on mergers and underwriting stocks and bonds. Net income declined to $2.95 billion, or 95 cents a share, from $3.34 billion, or $1.09, a year earlier, the New York-based bank said today in a statement. Excluding accounting adjustments and a loss from the sale of a stake in a Turkish bank, earnings were $1 a share, compared with the average estimate of 89 cents in a Bloomberg survey of 18 analysts. HSBC Seeks To Evict Occupiers In Hong Kong (WSJ) HSBC said Monday it is seeking the right to evict an encampment of protesters that has been occupying the ground floor of the bank's Hong Kong headquarters since October, drawing inspiration from the Occupy Wall Street protests in New York last year. Libor Flaws Allowed Banks To Rig Rates Without Conspiracy (Bloomberg) FYI: “It is far easier to manipulate Libor than it may appear,” Andrew Verstein, a lecturer at Yale Law School, said in a paper to be published in the Winter 2013 issue of the Yale Journal on Regulation. “No conspiracy is required.” States Join Libor Probe (WSJ) Prosecutors in New York and Connecticut are investigating whether their states incurred losses as a result of interest-rate manipulation by banks, a probe that could lead to a wider multistate enforcement action, according to New York officials. The joint probe by New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen could lead to civil enforcement action, including possible breaches of antitrust and fraud laws, the officials said. Libor Probe May Yield Criminal Charges By September (Bloomberg) Barclays traders involved in allegedly manipulating Libor rates between 2005 and 2007 may be charged by U.S. prosecutors before the Labor Day holiday on Sept. 3, said a person familiar with the Justice Department investigation in Washington. Zuckerberg’s Loan Gives New Meaning To The 1% (Bloomberg) The Facebook founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. Missteps Doomed Barclays Leaders (WSJ) Mr. Diamond's downfall may have been hastened because the U.S.-born investment banker, who became chief executive at the start of 2011, had never won acceptance by Britain's political and financial establishment. When the rate-fixing scandal erupted, Mr. Diamond had few allies. It wasn't for lack of trying. Mr. Diamond enthusiastically embraced British culture and tried to overcome his reputation as a brash American. Mr. Diamond, a native of Concord, Mass., supported the Chelsea Football Club, handing out trophies himself when the team won England's premier soccer league in 2010. A month before the Libor settlement, Mr. Diamond hosted British aristocrats and Barclays' clients at the annual Chelsea Flower Show, providing Champagne and canapés as his guests inspected elaborate gardens and floral arrangements...But Mr. Diamond, age 60, was criticized for his lofty pay packages, as well as perceived risks in the investment-banking business he built. He sometimes appeared tone deaf in a country still angry about the role of banks in the financial crisis. "There was a period of remorse and apology," he told Parliament last year. "That period needs to be over." Activists Go After Big Game (WSJ) William Ackman's $2 billion bet that he can boost the value of consumer-products giant Procter & Gamble Co. reflects a new era of activist investing, in which no company is too big a target and restless institutional investors are more willing to rock the boat. Mr. Ackman's Pershing Square Capital Management LP owns a little more than 1% of P&G's shares. A few years ago, that would have been considered too small a stake in too big a company to exert much influence on management, the board or other investors. Tax Cuts Perpetuate Inequality, Should End: Summers (CNBC) The United States should not extend Bush-era tax cuts for the wealthiest Americans even as the so-called ‘fiscal cliff’ looms because it will perpetuate income inequality, says Larry Summers, former U.S. Treasury Secretary. Instead, these revenues should go towards strengthening public education and ensuring that low-income students are presented with equal opportunities as their wealthy counterparts so that they can participate in the economy. Tax breaks for the wealthy cannot continue to exist because it leads to a “perpetuation of privilege”, Summers said in the editorial in the Financial Times on Sunday. Unless steps were taken to “responsibly” increase the burden on those with high income and redistribute the proceeds, the trend toward inequality will continue, he said. Devils On The (B)rink (NYP) New Jersey Devils owner Jeff Vanderbeek is talking to private-equity firms and hedge funds about buying into his financially strapped team, according to sources close to the situation Vanderbeek is looking to sell a majority stake, but keep operating control, sources said. The talks, coming three weeks after the 55-year old former Wall Street executive seemed close to inking a deal with an investor to save the team, are leading some in the financial world to believe the deal has fallen apart. If that’s so, it would be a terrible break for Vanderbeek, who is facing an Aug. 14 deadline to get the Devils’ financing in order...Creditors are owed $80 million. Downgrade Anniversary Shows Investors Gained Buying U.S. (Bloomberg) When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened. Woman tells police man sucked her toe at Grovetown Walmart (AC) The 18-year-old said she was shopping when a man, who looked to be in his late 30s or early 40s, walked up and asked if her toenails were painted, according to a Columbia County Sheriff’s Office incident report. After replying yes and questioning why he wanted to know, the woman was asked if she’d watched America’s Funniest Home Videos. The man told her he was with the TV show and if she complied with his requests, everything she purchased that day would be free. She said she reluctantly agreed to let him take a photo of her foot. He asked if he could kiss her foot as part of the prank and she agreed. The man guided her to an area behind a clothing rack, dropped to the floor, grabbed her ankle and told her, “Don’t worry. I don’t bite.” He then started sucking on her big toe. The woman said she screamed at him to stop. Before the man ran from the store, he told her, “It tasted so good, though.”

Opening Bell: 02.12.13

Obama Address to Focus on Economy, Social Issues (WSJ) President Obama's chief spokesman, Jay Carney, said Monday the core emphasis in the president's big speeches remains the same: "The need to make the economy work for the middle class, because the middle class is the engine that drives this country forward and which will, if it's given the right tools and the right opportunities, will drive us forward in the 21st century." Republicans welcome the president's expected focus on the economy, but also say he hasn't done enough. "The White House says they're talking about jobs and the economy. I welcome that engagement," House Majority Leader Eric Cantor (R., Va.) said in an interview Sunday. "It seems as if the president is constantly trying to pivot back to jobs and the economy. The reason you see that happening is he's never pursued it." Mr. Obama will also address a series of automatic spending cuts set to kick in March 1—the so-called sequester—which could threaten economic growth, national—security preparation and the jobs of thousands of federal employees. Mr. Obama has called on Congress to pass a temporary measure of spending reductions and new taxes to replace the across-the-board cuts. Barclays to Cut 3,700 Jobs After Full-Year Loss (Bloomberg) Barclays Plc will cut 3,700 jobs to reduce annual costs by 1.7 billion pounds ($2.6 billion) as Chief Executive Officer Antony Jenkins revamps the lender following its first full-year loss in two decades. About 1,800 positions will go this year at the firm’s investment bank and 1,900 in its loss-making European consumer and business banking unit, Jenkins said in a statement today. The lender posted a net loss of 1.04 billion pounds for 2012, wider than the 307 million-pound estimate of nine analysts surveyed by Bloomberg, as it set aside an additional 1 billion pounds in the fourth quarter for compensating clients wrongly sold interest-rate swaps and loan-repayment insurance. BNY Mellon loses U.S. tax case, to take $850 million profit hit (Reuters) BNY Mellon Corp said on Monday it will take an $850 million charge against first-quarter profit after losing a high-stakes tax case to the U.S. Internal Revenue Service, a move that will also erode some of its capital. The BNY Mellon case was the first to go to trial since the IRS accused several U.S. banks of generating artificial foreign tax credits through loans with London-based Barclays. The IRS challenged a $900 million tax benefit claimed by BNY Mellon that stemmed from a $1.5 billion loan from Barclays. The funding was so cheap that at one point Barclays actually paid BNY Mellon to take Barclays' money, according to court papers. Nasdaq Steps Up Pursuit Of A Partner (WSJ) Nasdaq, long on the hunt for a partner, has ramped up its conversations about strategic options ranging from joint ventures to a sale, according to people familiar with the talks, as rival NYSE Euronext moves ahead with a merger that will form an even-bigger competitor. Twinkie Brand Heads For Sale (WSJ) Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., cleared Hostess on Monday to proceed with several of the sale processes it has unveiled during the past several weeks. Private-equity firms Apollo Global Management LLC and Metropoulos & Co. are now officially set to kick off the contest for most of the Hostess cakes business, with a $410 million offer for brands such as Twinkie, Dolly Madison, Ho Hos and Ding Dongs. That so-called "stalking horse," or lead, bid also covers five bakeries and certain equipment. McKee Foods Corp., the maker of Little Debbie snack cakes, is the stalking-horse bidder for Hostess's Drake's brand. The $27.5 million offer from McKee, based in Collegedale, Tenn., doesn't include the Drake's plant in New Jersey. Tesla CEO Clashes With New York Times Over Model S Review (Bloomberg) Elon Musk, the billionaire chief executive officer of Tesla Motors Inc. said a range test of the Model S electric sedan by the New York Times was “fake” as the reporter didn’t disclose all the details of his drive. “NYTimes article about Tesla range in cold is fake,” Musk said in a Twitter post yesterday. “Vehicle logs tell true story that he didn’t actually charge to max & took a long detour.” The Times on Feb. 8 published a story by John M. Broder on its website detailing how the Model S he drove failed to meet the electric sedan’s 300-mile (483-kilometer) range “under ideal conditions” while driving in temperatures as low as 10 degrees Fahrenheit (minus-12 Celsius). The Times also published a blog post by Broder about the test-drive on the same day, detailing his plan to use Tesla’s new “supercharger” stations. Broder followed instructions he was given in “multiple conversations with Tesla personnel,” Eileen Murphy, a spokeswoman for the Times, said in an e-mail message. The story was “completely factual, describing the trip in detail exactly as it occurred,” Murphy said. “Any suggestion that the account was ‘fake’ is, of course, flatly untrue.” Dispute over mashed potatoes turns dangerous (TBN) A disagreement over mashed potatoes turned dangerous over the weekend when a victim said tempers escalated and a woman came at her with box cutters. Shaquina S. Hill, 23, of Fourth Street was charged with second-degree menacing and second-degree harassment as a result, city police said. An 18-year-old woman told police she and Hill argued about mashed potatoes just before 9 p.m. Sunday at a Fourth Street address, and things escalated from there. The younger woman told police Hill grabbed box cutters and waved them at her, then dropped the knife and started throwing things at her, including a heavy ceramic vase and coffee table. She told police Hill also punched her in the chest. U.K. Regulator to Investigate Autonomy (WSJ) The Financial Reporting Council, the regulator tasked with promoting good corporate governance and financial reporting in the U.K., announced the investigation Monday on its website. It said the probe will look at Autonomy accounts published between Jan. 1, 2009, and June 30, 2011. New York fund manager arrested on Ponzi scheme charges (Reuters) Federal prosecutors charged Jason Konior, 39, with defrauding investors by promising to match their investments in his fund, Absolute Fund LP, many times over. Prosecutors said he used $2 million of the money he collected from three hedge funds to pay his own expenses and cover redemption requests from prior investors, according to the criminal complaint dated February 7. Treasury’s Brainard Says G-20 Must Refrain From Devaluation (Bloomberg) “The G-20 needs to deliver on the commitment to move to market-determined exchange rates and refrain from competitive devaluation,” Lael Brainard, the Treasury’s undersecretary for international affairs, said at a news conference in Washington today. Brainard said “global growth is weak and vulnerable to the downside,” and strengthening demand must be a top priority for G-20 finance ministers and central bankers meeting in Moscow Feb. 15-16. Ex-Fund Manager Avoids Jail Time (WSJ) The cooperation of Ali Far, co-founder of Spherix Capital LLC, led to the convictions of at least five people, including Galleon Group founder Raj Rajaratnam, prosecutors said. Mr. Rajaratnam, who was convicted on conspiracy and securities-fraud charges, is serving an 11-year prison sentence, one of the longest terms ever imposed for insider trading. Mr. Far secretly agreed to cooperate with the government's probe shortly after he was approached by federal agents in April 2009, prosecutors said. Mr. Far, a former Galleon employee, recorded about 244 calls, including calls with Mr. Rajaratnam, prosecutors said. He also was prepared to testify at Mr. Rajaratnam's trial as a government witness in 2011 but was never called, they said. "I am truly sorry for my mistakes and I am ashamed," Mr. Far said at a hearing in Manhattan federal court Monday. U.S. District Judge Robert Patterson sentenced Mr. Far to one year's probation. He also imposed a $100,000 fine. The Perils of Being A Dog Show Judge (WSJ) Cindy Vogels had a litter of options for Best in Show at last year's Westminster Kennel Club Dog Show. As the final judge, she could have chosen a German Shepherd, a Doberman pinscher or even a Dalmatian. Instead she picked a Pekingese named Malachy—and everyone else judged her. One person, Vogels said, called the Pekingese "that awful dog." Vogels recalled another saying: "Why would you give Best in Show to the dog that couldn't walk?" "The American public was horrified," Vogels said. "The public has no appreciation for a Pekingese." It is the ultimate honor for a show judge to name the Best in Show winner at Westminster, the year's glitziest dog show, which concludes Tuesday at Madison Square Garden. But it also can bring out the worst in people. The math behind this logic is basic: There are 187 breeds, only seven will win their groups and just one will win the opinion of Michael Dougherty, the Best in Show judge on Tuesday. "You go in there alone," said Elliott Weiss, the 2010 Best in Show judge, "and you come out alone."