Opening Bell: 09.13.13

Author:
Updated:
Original:

Twitter Files To Go Public (WSJ)
In fewer than 140 characters, Twitter Inc. broke the news Thursday on its own short-message service that it has filed confidential paperwork to begin the process for its highly anticipated public offering. An IPO would mark a business milestone for seven-year-old Twitter, which is used by more than 200 million people and created a global online communication culture, but has yet to prove itself as a big and lasting business in the mold of Google and Facebook. Since Twitter's filing was submitted to the Securities and Exchange Commission under a new law that allows small companies to keep their IPO documents private, Twitter didn't reveal how fast it is growing or whether it is profitable. Goldman Sachs is the lead underwriter on the planned initial stock sale, people familiar with the matter said. One person familiar with the matter said other banks are expected to join Goldman in managing what is likely to be one of the highest-profile IPOs since Facebook went public in the spring of last year. A Twitter spokesman declined to comment.

Embattled JP Morgan Bulks Up Oversight (WSJ)
JP Morgan Chase facing a host of regulatory and legal woes, plans to spend an additional $4 billion and commit 5,000 extra employees this year to clean up its risk and compliance problems, according to people close to the bank. As part of a companywide effort, the bank is spending an additional $1.5 billion on managing risk and complying with regulations, including a 30% increase in risk-control staffing, these people said. In addition, it expects to add $2.5 billion to its litigation reserves in the second half of the year, these people said.

Hedge Funds Are Among the Winners of the Lehman Spoils (WSJ)
Paulson, which made a fortune on a well-timed housing-market bet in the early stages of the financial crisis, is up more than $1 billion on its investments in Lehman claims, while Elliott is ahead by more than $700 million, according to the people familiar with the matter.

Michael Lewis On The Next Crisis (BusinessWeek)
BusinessWeek: Has Silicon Valley replaced Wall Street as the place for bright young people to make their millions? Michael Lewis: My sense is that even though the financial crisis has lessened the appeal of the big Wall Street firm, it’s still appealing to kids in school, for the simple reason that unlike Silicon Valley, where you do have to know something to break in, the barriers to entry on Wall Street are quite low once you have the [Ivy League] credentials. If you’re a certain kind of kid who doesn’t actually know anything about anything, Wall Street is still a great place to go.

Subprime lending execs back in business 5 years after crash (CFIR)
Five years after the financial crisis crested with the bankruptcy of Lehman Bros. Holdings Inc., top executives from the biggest subprime lenders are back in the game. Many are developing new loans that target borrowers with low credit scores and small down payments, pushing the limits of tighter lending standards that have prevailed since the crisis. Some experts fear they won’t know where to stop. The Center for Public Integrity in 2009 identified the top 25 lenders by subprime loan production from 2005 to 2007. Today, senior executives from all 25 of those companies ‒ or companies they swallowed up before the crash ‒ are back in the mortgage business. Most of these newer “nonbank” lenders are making or collecting on loans that might be too risky to qualify for backing by the U.S. government. As the industry regains its footing, these specialty lenders represent a small but growing portion of the market.

David Hasselhoff Returns To Berlin (dm)
...he may be somewhat of a joke in the English speaking world, but his reputation in Germany is far more serious...in 1989 the former Baywatch star played a bizarre part in one of the most defining moments of the 20th century, the fall of the Berlin Wall. During the summer of that pivotal year, his hit Looking For Freedom topped the German charts and is said to have helped inspire the resistance and spirit that eventually lead to the wall being toppled. On New Year's Eve 1989 he performed the song a top of the rubble of the wall to a newly unified Germany. And this week the 61-year-old paid a visit to the sight of that iconic performance. The Britain's Got Talent judge tweeted a picture of himself standing by his hotel window with The Brandenberg Gate in the background...After posting the imagine, the star later tweeted: 'I love Berlin! My heart is here!'

Hank Paulson to Tom Keene: Ben Bernanke has been a hero (BloombergTV)
" I believe that Ben Bernanke has been a hero. To be where we are today, where you have growth of 2% since late 2009 while we have been undergoing this necessary and massive deleveraging of consumers, it’s important. There is bound to be volatility. The next Fed Chairman, again, which is a huge, very important decision for President Obama, the key qualities are, first of all, fierce, independence, great ability, and to be someone who you want to see a return to and Ben Bernanke. And then someone who is a good communicator."

Japan finance minister: will mull economy stimulus without resorting to government debt (Reuters)
Japanese Finance Minister Taro Aso said on Friday that the government will consider offering a stimulus package for the economy without issuing new bonds to finance it. Aso made the comment in a news conference after a cabinet meeting.

Hello Kitty Billionaire Found as Plush Toy Sales Surge (Bloomberg)
Loyal fans like Stanich have helped make Shintaro Tsuji, the 85-year-old founder of Tokyo-based Sanrio, a billionaire. Since introducing Hello Kitty in 1974, Tsuji has captured the hearts and wallets of girls, women and celebrities such as Lady Gaga by licensing the character, which appears as stuffed toys, as well as on airplanes, golf bags and even vibrators.

Republicans Holding Next Fed Chairman’s Fate Stay Quiet (Bloomberg)
U.S. Senate Republicans, whose votes President Barack Obama will need to approve his pick for Federal Reserve chairman, have adopted an unofficial strategy: stand on the sidelines and watch the Democrats feud. “No party enjoys anything more than watching the other party go at each other,” said Mark Calabria, a former top aide on the Senate Banking Committee. “There really is very little incentive right now for Republicans to get involved.”

Beauty queen: Miss America ‘fat as [bleep]‘ (NYP)
There’s drama behind the scenes of the Miss America beauty pageant after Miss New York, Nina Davuluri, was allegedly tape-recorded blasting Miss America Mallory Hagan as “fat as [bleep].” Sources tell The Post’s Michael Riedel that Davuluri allegedly made the comments in her hotel room after she was crowned Miss New York on July 16 on Staten Island...a fellow beauty queen was in the next room and recorded the comments, along with other allegedly offensive remarks made by others.

Related

Opening Bell: 05.14.12

JPMorgan Loss Claims Official Who Oversaw Trading Unit (NYTimes) The $2 billion trading loss at JPMorgan Chase will claim its first casualty among top officials at the bank as early as Monday, with chief executive Jamie Dimon set to accept the resignation of the executive who oversaw the trade, Ina R. Drew. Ms. Drew, a 55-year-old banker who has worked at the company for three decades and serves as chief investment officer, had repeatedly offered to resign since the scale of the loss became apparent in late April, but Mr. Dimon had held off until now on accepting it, several JPMorgan Chase executives said. Two traders who worked for Ms. Drew also planned to resign, JPMorgan Chase officials said. Her exit would mark a stunning fall from grace for one of the most powerful women on Wall Street, as well as a trusted lieutenant of Mr. Dimon...Former senior-level executives at JPMorgan said it was a shame that Ms. Drew has ended up suffering much of the fallout from the soured trade. They said that Thursday’s announcement of the $2 billion loss was the first real misstep that Ms. Drew has had and said that the position was not meant to drum up bigger profits for the bank, but rather to ensure that JPMorgan could continue to hold lending positions in Europe. “This is killing her,” a former JP Morgan executive said, adding “in banking there are very large knives.” Jamie Dimon: Trading Losses Are Not Life-Threatening (CNBC) “This is a stupid thing that we should never have done but we’re still going to earn a lot of money this quarter so it isn’t like the company is jeopardized,” he said in an interview with NBC’s “Meet with Press.” “We hurt ourselves and our credibility, yes — and that you’ve got to fully expect and pay the price for that.” Yahoo’s Thompson Out Amid Inquiry; Levinsohn Is Interim CEO (Bloomberg, earlier) Thompson, 54, was brought on to orchestrate a turnaround after Google Inc. and Facebook Inc. lured users and advertising dollars. Thompson’s undoing stems from erroneous biographical references to him as holding a bachelor’s degree in computer science from Stonehill College. A former EBay Inc. (EBAY) executive, he earned a degree in accounting from the Easton, Massachusetts- based school, and the information is correctly listed in EBay regulatory filings and some Yahoo press releases. The incorrect degree showed up in Yahoo’s April 27 10-K filing, as well as on the company’s website. As part of the board changes, Daniel Loeb, chief executive officer of Third Point, joins as a director along with Harry Wilson and Michael Wolf. A fourth nominee, Jeffrey Zucker, said in today’s statement that he withdrew his nomination to allow a quick transition. Euro Officials Begin to Weigh Greek Exit (Bloomberg) Greek withdrawal “is not necessarily fatal, but it is not attractive,” European Central Bank Governing Council member Patrick Honohan said in Tallinn on May 12. An exit was “technically” possible yet would damage the euro, he said. German Finance Minister Wolfgang Schaeuble reiterated in an interview in Sueddeutsche Zeitung that member states seeking to hold the line on austerity for Greece could not force the country to stay. LightSquared Moves Toward Bankruptcy Filing (WSJ) Hedge-fund manager Philip Falcone's LightSquared Inc. venture was preparing Sunday to file for bankruptcy protection after negotiations with lenders to avoid a potential debt default faltered, said people familiar with the matter. LightSquared and its lenders still have until 5 p.m. Monday to reach a deal that would keep the wireless-networking company out of bankruptcy court, and there were some indications over the weekend that a final decision hadn't yet been reached on its fate. Still, the two sides remained far apart, and people involved in the negotiations expected LightSquared to begin making bankruptcy preparations in earnest. Facebook cofounder living large in Singapore as he stiffs US for a possible $600M in taxes (NYP) Saverin is renouncing his US citizenship in favor of Singapore, the Southeast Asian city-state that has no capital-gains tax, where he has lived like royalty since 2009. The move already has saved him about $288 million in taxes, and will save him much more if he chooses to sell his $4 billion personal stake in Facebook, which goes public next week. “This pisses me off,” fellow tech-industry billionaire Mark Cuban spat on Twitter Friday upon hearing news of Saverin’s decision. Saverin’s spokesman has defended the move, claiming he has investments in the Far East, and Europe and the permanent move makes perfect sense. “Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Saverin’s spokesman told Bloomberg. JPMorgan Unit's London Staff May Go as Loss Prompts Exits (Bloomberg) The entire London staff of JPMorgan Chase’s chief investment office is at risk of dismissal as a $2 billion trading loss prompts the first executive departures as soon as this week, a person familiar with the situation said. The firm is examining whether anyone in the unit, which employs a few dozen people in London, sought to hide risks, said the person, who requested anonymity because the deliberations are private. In Wake Of JPMorgan Loss, Rivals Fret About New Rules, Downgrades (WSJ) Over the weekend, rival banks scurried to explain why they believe a similar trading loss couldn't happen at their firm. Some companies pointed to moves already taken to reduce risk and sell off volatile and opaque assets such as derivatives on credit indexes. In a statement, Citigroup "has a small amount of straight-forward economic hedges managed at the corporate center to mitigate our credit exposure, principally relating to consumer loans." About half of that total is in cash, with most of the rest in U.S. Treasury bonds and other conservative investments. At Morgan Stanley, the portfolio most similar to J.P. Morgan's investment office is a $32 billion "available for sale" portfolio. The portfolio primarily consists of easily traded U.S. Treasury and government agency securities. It doesn't hold any derivatives instruments, a person familiar with Morgan Stanley's operations said. Goldman Sachs has no similar unit to the one at J.P. Morgan that suffered the loss. Apple Founder Wozniak to Buy Facebook Regardless of Price (Bloomberg) “I would invest in Facebook,” he said in an interview yesterday on Bloomberg Television. “I don’t care what the opening price is.” Missing: Stats on Crisis Convictions (WSJ) It is a question that has been asked time and again since the financial crisis: How many executives have been convicted of criminal wrongdoing related to the tumultuous events of 2008-2009? The Justice Department doesn't know the answer. That is because the department doesn't keep count of the numbers of board-level prosecutions. In a response earlier this month to a March request from Sen. Charles Grassley (R.,Iowa), the Justice Department said it doesn't hold information on defendants' business titles. "Consequently, we are unable to generate the [requested] comprehensive list" of Wall Street convictions stemming from the 2008 meltdown, the letter from the Department of Justice to Mr. Grassley said. Man Charged in Death Offers Victim's Foot for Deal (AP) A homeless man charged with killing and dismembering his friend says he can't remember much about the crime. But in a jailhouse interview, Leslie Sandoval told the Anderson Independent-Mail he remembers where he put the victim's missing left foot and is willing to tell a prosecutor if she will make him a deal. Sandoval says he went on a January drinking binge with Seth Foster. Foster's torso was found under an Anderson home, and his head, hands and right foot were found different places. Sandoval says he is confused about exactly what happened. But he disagrees with a coroner's finding he beat Foster and denies a claim from investigators that he confessed and gave them the knife used to dismember Foster.

By kloniwotski (Flickr) [CC BY-SA 2.0], via Wikimedia Commons

Opening Bell: 9.11.17

Goldman wants to conquer U.K. retail; China is done tolerating bitcoin; Jamie Dimon's fondness for D.C. grows; don't shoot guns at the hurricane; and more.

Opening Bell: 01.17.13

Charges Weigh On Bank Of America's Profit (WSJ) Overall, Bank of America reported a profit of $732 million versus a profit of $1.99 billion a year earlier. On a per-share basis, which includes the payment of preferred dividends, the bank reported earnings of three cents versus 15 cents a year earlier. The most recent period included a per-share impact of 16 cents from the Fannie Mae settlement, a six cent impact from the foreclosure review and litigation expense of five cents a share, among other items. Revenue dropped 25% to $18.66 billion as noninterest income fell 41%. Excluding $700 million of debit valuation and fair value option adjustments, and $3 billion for the cost of $3 billion, revenue was $22.6 billion. Citigroup Earnings Miss Analysts’ Estimates on Litigation (Bloomberg) Net income climbed 25 percent to $1.2 billion in the fourth quarter, or 38 cents a share, from $956 million, or 31 cents, a year earlier, the New York-based lender said today in a statement. Earnings adjusted for one-time items including restructuring costs were 69 cents a share. Twenty-one analysts surveyed by Bloomberg estimated 96 cents on average, with some items Citigroup didn’t include. Chief Executive Officer Michael Corbat, 52, took over in October and last month announced plans to eliminate about 11,000 employees and pull back from some emerging markets, undoing part of the expansion strategy of his predecessor, Vikram Pandit. Litigation costs included $305 million from a settlement between U.S. banks and federal regulators, who were probing claims that lenders improperly seized homes. Goldman Profits By Going On Offensive (WSJ) The value of Goldman Sachs's investment portfolio doubled last year. Bond underwriting hit a five-year high. The firm's workforce shrank and remaining employees were paid a smaller chunk of overall revenue. Those were just some of the ingredients in a bigger-than-expected profit jump by the New York company, which said net income almost tripled to $2.83 billion in the fourth quarter from $1.01 billion a year earlier. Wednesday's results were packed with evidence of Goldman's discipline in cutting costs, taking less risk with its own money and riding out financial crises in the U.S. and then Europe. Goldman Agonized Over Pay Cuts as Profits Suffered (Reuters) Top executives at Goldman Sachs have been considering deep cuts to staffing levels and pay for at least two years, but feared too many layoffs would leave the firm unprepared for an eventual pickup in business, people familiar with the bank said. They instead chipped away at staff levels and focused on non-personnel expenses that are less painful to cut. But investors pressured the bank to cut costs further, the sources said, and on Wednesday, Goldman gave in. The largest standalone investment bank said in the fourth quarter it cut the percentage of revenues it pays to employees in half to 21 percent. That brings the ratio for the entire year to its second-lowest level since the bank went public in 1999. Fed Concerned About Overheated Markets Amid Record Bond-Buying (Bloomberg) Now, as central bankers boost their stimulus with additional bond purchases, policy makers from Chairman Ben S. Bernanke to Kansas City Fed President Esther George are on the lookout for financial distortions that may reverse abruptly when the Fed stops adding to its portfolio and eventually shrinks it. “Prices of assets such as bonds, agricultural land, and high-yield and leveraged loans are at historically high levels,” George said in a speech last week. “We must not ignore the possibility that the low-interest rate policy may be creating incentives that lead to future financial imbalances.” Estonian president’s Twitter fight with Paul Krugman becomes an opera (RS) A Twitter feud in June between the Estonian president and New York Times columnist Paul Krugman who questioned the impact of Estonia’s austerity measures, is being turned into an opera, US composer Eugene Birman told AFP on Wednesday. “Our short opera will be first performed by Iris Oja and the Tallinn Chamber Orchestra conducted by Risto Joost during Tallinn Music Week on April 7,” Birman, who moved from Riga to the US at age of six, told AFP. The piece, in two movements, uses two voices, those of Krugman and Estonian President Toomas Hendrik Ilves, reflecting their exchanges on the Twitter social network...The bow-tie loving Ilves went on a tweet-rant after Krugman, the winner of the 2008 Nobel Prize for Economics, argued in a short article entitled “Estonian Rhapsody” that while Estonia had been globally praised for its austerity measures, its recovery was in fact lukewarm. “Let’s write about something we know nothing about & be smug, overbearing & patronizing…Guess a Nobel in trade means you can pontificate on fiscal matters & declare my country a ‘wasteland,’” Ilves responded on his page on the on the micro-blogging site Twitter. “But yes, what do we know? We’re just dumb and silly East Europeans,” he added, before writing in his final tweet, “Let’s sh*t on East Europeans.” Deutsche Bank Derivative Helped Monte Paschi Mask Losses (Bloomberg) Deutsche Bank designed a derivative for Banca Monte dei Paschi di Siena SpA at the height of the financial crisis that obscured losses at the world’s oldest lender before it sought a taxpayer bailout. Germany’s largest bank loaned Monte Paschi about 1.5 billion euros ($2 billion) in December 2008 through the transaction, dubbed Project Santorini, according to more than 70 pages of documents outlining the deal and obtained by Bloomberg News. The trade helped Monte Paschi mitigate a 367 million-euro loss from an older derivative contract with Deutsche Bank. As part of the arrangement, the Italian lender made a losing bet on the value of the country’s government bonds, said six derivatives specialists who reviewed the files. BlackRock Net Jumps 24% (WSJ) The company said net inflows in long-term products totaled $47 billion at the year's end, reflecting equity, fixed income and multiasset class product net inflows of $31.2 billion, $12.4 billion and $4.1 billion, respectively. The net inflows were partially offset by alternatives net outflows of $700 million. Total assets under management were $3.792 trillion as of the end of the fourth quarter, versus $3.513 trillion a year earlier and $3.673 trillion in the third quarter. Jobless Claims Drop To 5-Year Low (Reuters) Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said on Thursday. It was the largest weekly drop since February 2010. Khuzami defends corp. settlements (NYP) Robert Khuzami, the Securities and Exchange Commission’s enforcement chief, is on his way out the door — but he says in an interview with The Post that the agency’s much-maligned practice of settling cases is here to stay. Khuzami, 56, defended the SEC’s policy of allowing targets to settle cases — usually without an admission of wrongdoing — despite recent criticism. “There are certain myths about SEC practices, including how ‘neither admit nor deny’ works and why we use it,” said Khuzami, who is leaving his post after heading the agency’s crackdown on big banks following the financial crisis. “I speak out against these myths in the hope of reducing the level of cynicism felt by the public, which are often fueled by mischaracterizations or misunderstandings of how we operate.” Commissioners approve regulations governing sexy coffee stands (Kitsap Sun) Owners of adult-themed coffee stands in unincorporated Kitsap County will have to post signs warning would-be customers about their scantily-clad baristas, and they'll have to do more to protect passers-by from seeing into their businesses. That's according to an ordinance passed Monday in a unanimous vote of the Kitsap County commissioners. The stands have 60 days to comply with the changes, which include a site visit by county planning staff to check the signs are posted and additional screening is added...The ordinance requires adult espresso stands — the three existing stands and any new ones — to install an 8-foot-high fence or landscape buffer, approved by the county Department of Community Development, in front of windows that face the street or other businesses, blocking views by the public. Businesses also must receive a one-time certification from DCD to guarantee the regulations are met. A boiling point was hit more than a year ago when five stands — three of them within a half-mile stretch of Highway 303 — advertised employees in pasties and lingerie. Unhappy parents demanded commissioners regulate the businesses. The health department doesn't require clothing, instead it looks at whether employees have food handler permits, said Department of Community Development associate planner Heather Adams. The state Department of Labor and Industries also has no rules dictating required clothing at coffee stands, Adams said.