Opening Bell: 08.22.13

Author:
Updated:
Original:

SEC scrutinises Goldman’s trading failure (FT)
SEC officials were preparing for internal meetings as they try to determine what went wrong with Goldman’s systems and why the bank inadvertently flooded the US options market with a large number of unintended trades in companies such as JPMorgan Chase and Kellogg. Goldman declined to comment. The SEC said it was monitoring developments. The securities watchdog has been cracking down on exchanges and brokers for systems failures out of concern that the episodes are undermining US market confidence. Regulators are worried that market participants are in a competitive race to develop speedier systems at the expense of safeguarding controls around the automated trading programmes.

SEC's JPMorgan probe threatens cozy tradition of "client hires" (Reuters)
Enlisting the relative of a top customer for a summer internship or an entry-level job is common to businesses worldwide, but it's especially rife in banking. The industry has held strong to a well-worn mechanism where clients will "pass on" CVs or resumes of their relatives or friends to coverage bankers, whose role is to visit top executives of companies in a particular industry or sector and sell them the bank's services. The bankers, in turn, make sure those CVs reach the staff in charge of that year's intern list. "It happens all the time where a coverage guy will toss over some client kid's CV," said a Hong Kong based investment banker. "Finance is about doing favors for people. It's what makes the world go round."

Bond Funds Lose $30.3 Billion in August in Big ‘Shift’ (Bloomberg)
U.S.-registered bond mutual and exchange-traded funds lost $30.3 billion to investor redemptions this month, putting them on track for their slowest year since 2004. The withdrawals for the month through Aug. 19 are already the third-highest on record, following $69.1 billion of withdrawals in June and $42 billion in October 2008, according to a report dated yesterday by TrimTabs Investment Research in Sausalito, California. Bond funds have suffered $4 billion in redemptions this year, on pace for the biggest withdrawals since investors pulled $7 billion in 2004.

SEC Is Set to Propose New Rule on CEO Pay (WSJ)
The Securities and Exchange Commission will soon thrust CEO compensation back into the spotlight when it proposes a long-delayed rule requiring companies to disclose the pay gap between chief executives and rank-and-file employees. The requirement, a mandate of the 2010 Dodd-Frank financial law, could put added pressure on corporate boards to slow pay increases for chief executives at companies with significant or growing gaps, proponents say.

At Apple, Tim Cook leads a quiet cultural revolution (Reuters)
Lisa Cooper, who went to high school with Cook in Robertsville, Alabama, and remains a friend, still laughs at memories of Cook staging prank photos for the school yearbook and crooning "The Way We Were" to her in class. In the day to day at Apple, Cook has established a methodical, no-nonsense style, one that's as different as could be from that of his predecessor. Jobs' bi-monthly iPhone software meeting, in which he would go through every planned features of the company's flagship product, is gone. "That's not Tim's style at all," said one person familiar with those meetings. "He delegates." Still, he has a tough side. In meetings, Cook is so calm as to be nearly unreadable, sitting silently with hands clasped in front of himself. Any change in the constant rocking of his chair is one sign subordinates look for: when he simply listens, they're heartened if there is no change in the pace of his rocking.

N.J. farmer cuts corn maze of Gov. Christie and Dem challenger (CBS)
A New Jersey farmer has cut the faces of Republican Gov. Chris Christie and his Democratic challenger into a corn maze to highlight the state's gubernatorial election. The corn was planted in June at the Stony Hill Farm in Chester. Owner Dale Davis tells Newark's The Star-Ledger newspaper he chose the maze to get people interested. He says everybody recognizes Christie but he doesn't know whether a lot of people would recognize gubernatorial rival Sen. Barbara Buono.

China's banks to take next step in rate reform push (Reuters)
China's top banks are expected to win approval for the issuance of tens of billions of yuan in negotiable certificates of deposit (NCD) as early as next month, in another step towards developing market-determined interest rates. NCDs would enable banks to access large amounts of funds at relatively stable costs, providing some alternative to borrowing from the inter-bank market, where the cost of funds can be volatile, as seen in June when a liquidity squeeze briefly sent short-term money market rates to nearly 30 percent. ... "The instrument could be rolled out soon, which not only opens up a liquidity channel for banks but also pushes forward interest rate reforms by gradually loosening controls on deposit rates," said a source close to the banking regulator.

China a ‘stallion’ amid emerging market turmoil (CNBC)
China stands out like a "stallion" amid the turmoil in emerging markets, according to one strategist, as a slowdown in the world's second largest economy shows increasing signs of stabilization. "China has been a stallion – in the 1997-1998 Asian financial crisis it played a very stabilizing role, 2008-2009 [global financial crisis], same thing. It is playing a similar role now," Stephen Schwartz, Asia chief economist at Spanish banking group BBVA, told CNBC on Thursday. "The situation would be much more severe if we had China continuing to slow on top of the QE [quantitative easing] tapering," he added.

Is the rupee ‘out of control’? (CNBC)
As the battered rupee slumped to yet another lifetime low of 64.54 to the dollar on Wednesday, analysts say the selling is getting out of hand and the currency could fall to 70 in the coming months. Foreign investors have yanked money out of India in recent months amid fears over the winding down of U.S. monetary stimulus and deteriorating economic conditions in the country. The rupee has been one of the world's worst performing currencies this year as a result, slumping 18.6 percent since the start of the year. Keagan York, head of currency strategy at Sydney's Compass Global Markets, said the rupee was going into free fall. "I wouldn't touch it right now," said York. "If you are an importer looking to buy Indian goods, I'd wait, as they are just going to get cheaper and cheaper."

HP’s Whitman abandons revenue growth target (FT)
Meg Whitman, chief executive of Hewlett-Packard, abandoned her forecast of a return to revenue growth next year as the US technology conglomerate stumbled in some of its core markets in the latest quarter. The HP boss also signalled a return to acquisitions for the first time since the disastrous 2011 acquisition of UK software group Autonomy, with the signs of business deterioration adding to the urgency to find new pockets of growth. ... Ms Whitman blamed “inconsistent execution” for the latest poor performance and forced through another shake-up in the company’s top ranks to try to stop the rot. Management mistakes in the enterprise group had led to the loss of 5 percentage points of market share in industry-standard servers in the quarter, Ms Whitman said.

Fed Appeals Rejection of Rule on Debit Card Fees (DealBook)
Judge Richard J. Leon of Federal District Court for the District of Columbia shocked banks and companies like Visa and MasterCard last month when he struck down a Fed regulation that governs how much retailers must pay to lenders and other companies when customers swipe their debit cards. The retailers applauded the decision because it could force the Fed, a major banking regulator, to rewrite the rule in such a way that they would pay far less to the banks in debit card fees. Lower fees, in theory, could indirectly benefit consumers, although retailers have no obligation to pass along the savings on debit card fees to customers. But at a hearing in the court on Wednesday, the Fed’s top lawyer, Scott G. Alvarez, told the judge the central bank would appeal his decision.

In the U.K., One Banker Appears Out of Thin Air (WSJ)
Every week, Royal Bank of Scotland Group RBS.LN +2.39% PLC's "flying banker," Anne Rendall, tours a handful of sparsely populated Scottish islands on an eight-seat aircraft emblazoned with the logo of a local whisky brand. At each stop, she sets up in a hut or community center and doles out cash, collects checks and opens accounts for the islanders. "She comes on a Tuesday to facilitate our banking requirements," said Mark Lawlor, who runs the main hotel on Sanday, an island with a population of about 500 sandwiched between the North Sea and the Atlantic. "There is a lot of bad publicity with Internet banking over how safe it actually is.…Some people, like myself, like to walk into a bank and speak with someone."

$350 monkey fraud reported (Battle Creek Enquirer)
A Battle Creek woman, 25, lost about $350 trying to buy a monkey from the central African country of Cameroon. The woman contacted police about 3:59 p.m. Tuesday and said she and her roommate were looking for a pet and decided on a monkey. They began looking and found a website and was sent pictures and information about monkeys. She was told the monkey would cost $350 but she could have it for $50. She sent the money but no monkey arrived. She had more contact and sent first $200 and then $100 but still had no monkey and the contact wanted more money for a cage, license and shots. Police are still trying to gather contact information but told the woman the incident is likely a scam and she probably won’t get her money or her monkey.

Related

Cohn.Trump.Puppet

Opening Bell: 7.26.17

Gary Cohn might finally get that Fed chair he always wanted; bankers are quitting in search of digital coin riches; here's one way to tip your Uber driver; and more.

Opening Bell: 9.16.15

AB InBev wants SABMiller; Kynikos gains; Bridgewater loses (and tells investors to f*ck off); Young Wall Street has no idea what a rate hike looks like; "Man Throws Brisket At Woman During Beef At BBQ Fest, Police Say"; and more.

Opening Bell: 11.27.12

Greece's Creditors Reach Aid Deal (WSJ) struck a deal in Brussels to cut Greece's debt to a level below 124% of gross domestic product by 2020, officials said. To satisfy IMF concerns that Greece's debt must fall even more to be considered "sustainable," euro-zone ministers agreed to bring the government's debt to under 110% of GDP in 2022. The deal will allow Greece to receive loan payments of about €44 billion ($57 billion) to be paid in three installments early 2013, tied to Greece's implementation of the continuing measures, said Eurogroup president Jean-Claude Juncker. The deal will lower Greece's debt through a mix of interest-rate cuts on loans to Athens, a buyback of Greek debt at sharply discounted prices and the European Central Bank returning profits linked to its holdings of Greek bonds to the Greek government. London Bankers Bracing for Leaner Bonuses Than New York (Bloomberg) nvestment bankers and traders at European banks should expect at least a 15 percent cut in pay this year, while U.S. lenders may leave compensation unchanged, three consultants surveyed by Bloomberg said. That’s because bonus pools at European banks may be reduced by as much as half, while those at U.S. firms, which can cushion the impact of falling fees in the region with earnings from home, may fall 20 percent, they said. “The real split is coming, and we will see the quantum divide this year,” said Tom Gosling, a partner at PricewaterhouseCoopers LLP in London, referring to the difference in pay between the two financial centers. “U.S. regulators don’t have the same obsession with pay structures that European regulators have.” Dimon Would Be Best to Lead Treasury in Crisis, Buffett Says (Bloomberg) “If we did run into problems in markets, I think he would actually be the best person you could have in the job,” Buffett said in response to a question about Dimon from Charlie Rose, according to the transcript of an interview that was scheduled to air yesterday on PBS. “World leaders would have confidence in him.” [...] Dimon, once dubbed Obama’s “favorite banker” by the New York Times, said in a 2011 CNBC interview that he could never work as Treasury secretary and was “not suited to politics.” Carney Abondons A Haven, Leaping Into British Storm (WSJ) Philipp Hildebrand, the former head of the Swiss National Bank, described Mr. Carney as one who "speaks bluntly and politely." The son of a professor and a teacher, Mr. Carney grew up in Edmonton, the capital of Canada's western province, Alberta. He played hockey as an undergraduate at Harvard. Mr. Carney has close links to Britain, having studied in Oxford University in the early 1990s. He worked for a time in Goldman Sachs' London office...Known as a diplomat, Mr. Carney, who supports the Edmonton Oilers NHL team, in his Ottawa office displays a mock street sign alluding to one of Canada's other pro teams, the Ottawa Senators. He cultivates an everyman image, recently discussing his musical tastes—from AC/DC to the hip-hop group Down with Webster—in local media interviews. Fiscal Cliff Compromise Elusive as Congress Returns (Bloomberg) “There’s still a great deal of ground that has to be covered before they get anywhere near a budget deal, and time is running” short, said Phil English, a former Republican congressman from Pennsylvania and now a lobbyist at Arent Fox LLP in Washington. The Secret Powers Of The Son-In-Law (WSJ) In couples where the husband initially reported being close to his wife's parents, the risk of divorce over the next 16 years was 20% lower than for the group overall. Yet when the wife reported being close to her in-laws, that seemed to have the opposite effect: The risk of divorce with these couples was 20% higher. Dr. Orbuch has a possible explanation: The wife who feels close with her husband's parents may find it difficult to set boundaries and over time may come to see their close relationship with her as meddling. "Because relationships are so important to women, their identity as a wife and mother is central to their being," says Dr. Orbuch, author of the 2012 book "Finding Love Again: 6 Simple Steps to a New and Happy Relationship." "They interpret what their in-laws say and do as interference into their identity as a spouse and parent." Men, for the most part, don't have this problem. Their identity as a father and a husband is often secondary to their identity as a provider, Dr. Orbuch says. As a result, they don't tend to take what their in-laws do so personally. Chicago, Illinois charges woman $105,761 for parking infractions she did not commit (TN) Jennifer Fitzgerald is fighting back against the city, her ex-boyfriend and United Airlines with a lawsuit filed November 2 in Cook County Circuit Court. According to the complaint, the somewhat confusing story starts when her former boyfriend Brandon Preveau, bought a 1999 Chevy Monte Carlo from Fitzgerald's uncle for $600 in 2008. Despite paying all the fees associated with owning a vehicle (registration, title and insurance) he put the vehicle's registration in Fitzgerald's name -- something the West Side Chicago resident claims was done without her knowledge...the couple broke up at the start of 2009 and Preveau took the car with him after their split. He used the Monte Carlo to drive to work at O'Hare Airport where he was employed by United Airlines. Preveau would leave the vehicle in O'Hare parking lot E, a secured outdoor lot surrounded by high chain link fencing, that is open to the flying public but also utilized by airport employees. The parking lot is owned by the city of Chicago and operated by Standard Parking Corporation, but according to the complaint, United Airlines leases spaces in the lot for use by airline employees. Unbeknownst to Fitzgerald, Preveau abandoned the vehicle. According to the complaints, "On or before November 17, 2009, Brandon drove the automobile into the parking lot and never drove it out again." While the car Preveau drove began receiving parking tickets at the O'Hare lot as early as May 23, 2009, the key date for this story is November 17, 2009. On that day the vehicle was issued seven different parking tickets including being in a hazardous and dilapidated condition, no city sticker, broken headlights, missing or cracked windows, expired plates, being an abandoned vehicle and most importantly a violation for parking a vehicle for more than 30 days in a city-owned lot. Intrade, Facing Charges, Won't Take U.S. Bets (WSJ) The online-predictions exchange Intrade—known for offbeat markets on presidential politics and the Academy Awards—said it would no longer accept bets from U.S. residents. The move came just hours after U.S. regulators filed a civil complaint against the firm over its commodities-focused markets. "We are sorry to announce that due to legal and regulatory pressures, Intrade can no longer allow U.S. residents to participate in our real-money prediction markets," the Dublin-based company said in a statement on its website. Intrade said that existing customers must exit their trades and close their accounts. In China, Hidden Risk of 'Shadow Finance' (WSJ) Shadow finance in China totals about 20 trillion yuan, according to Sanford C. Bernstein & Co., or about a third the current size of the country's bank-lending market. In 2008, such informal lending represented only 5% of total bank lending. The sector is lightly regulated and opaque, raising concerns about massive loan defaults amid a softening economy, with ancillary effects on the country's banks. Harvard Doctor Turns Felon After Lure of Insider Trading (Bloomberg) Today, Joseph F. "Chip" Skowron III, 43, is serving a five-year term for insider trading at the federal prison at Minersville, Pennsylvania. At FrontPoint, Skowron lied to his bosses and law enforcement authorities, cost more than 35 people their jobs and stooped to slipping envelopes of cash to an accomplice. FrontPoint is gone. Morgan Stanley, which once owned FrontPoint, is seeking more than $65 million from Skowron, whose net worth a year ago was $22 million. Until he’s a free man, his wife of 16 years will have to care for their four children and Rocky, their golden retriever, on her own...Health care has become America’s sweet spot for insider traders like Skowron. Among researchers, physicians, government officials and corporate executives, the lure of easy money in health-care insider trading has become epidemic. Since 2008, about 400 people were sued by regulators or charged with insider trading; of those, at least 94 passed or received tips involving pharmaceutical, biotechnology or other health-care stocks. Man Arrested For Saying He Had Dynamite in His Luggage at Miami International Airport (NBC) A man was arrested for telling a TACA ticket agent that he had dynamite in his luggage, which prompted the partial evacuation of Concourse J at Miami International Airport on Monday, Miami-Dade Police said. Alejandro Leon Hurtado, 63, a doctor from Guatemala, faces a charge of false report bomb/explosives at airport, the arrest affidavit said. It wasn't immediately known if Hurtado had an attorney. The ticket agent had just accepted Hurtado luggage, when he asked him about whether it contained hazardous materials. Hurtado answered that he had dynamite in the baggage, and the ticket agent asked him again if he had dynamite in his bag, and he replied that he did and started laughing, the affidavit said. "Once the Defendant was told that police were going to be called the Defendant stated that he was joking," the affidavit said. Hurtado admitted he did say he had dynamite in his bag, but that it was a joke. Hurtado was in custody on an immigration hold Monday night, according to online Miami-Dade Corrections records.

Opening Bell: 2.23.15

Morgan Stanley FBI informant fired; Greece reform; iCar; Tech sexual harassment trial; Guy who ate 6 lbs of bacon in 5 minutes felt fine; AND MORE.