Opening Bell: 10.31.13

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Wall Street Firms Poised to Disappoint Bankers on Bonuses (Bloomberg)
Goldman Sachs, along with the investment-banking divisions of six of its biggest U.S. and European rivals, allocated a collective 39 percent of revenue for compensation in the first nine months, down from 42 percent a year earlier and the 50 percent some firms earmarked before the financial crisis. Goldman Sachs’s 41 percent ratio so far this year is its lowest nine-month figure as a public company. Rising revenue at many banks is stoking employees’ hopes for larger bonuses, after year-end payouts were cut in the wake of the financial crisis and packed with restricted stock, which vests over time. Firms instead are preparing to shrink compensation for individuals amid investor pressure to improve return on equity. The measure of profitability stands at 10 percent or lower at each of the five biggest Wall Street banks - - less than half the levels that preceded the credit crisis. “Someone’s going to be disappointed,” said Joe Jolson, co-founder and chief executive officer of JMP Group Inc. (JMP), the San Francisco-based investment bank. It will be “bankers that haven’t really been paid any real cash bonuses for five years, or the shareholders of these companies.”

Germany Hits Back At US Over Economy (WSJ)
Germany hit back Thursday at U.S. criticism of its export-led economic policies, describing it as "incomprehensible." [...] "The U.S. government should critically analyze its own economic situation," said Michael Meister, a senior lawmaker and close ally of Chancellor Angela Merkel, criticizing the high debt level in the U.S., which "doesn't just unsettle [the U.S.], but has negative effects on the global economy."

Greek Recovery Makes Stocks World’s Best as Paulson Buys (Bloomberg)
Since June 5, 2012, two weeks before MSCI Inc. gave notice it may reclassify Greece as an emerging market, the country’s ASE Index (ASE) has surged 146 percent, trimming the decline from its 2007 peak to 79 percent. The gains topped all 94 national benchmarks globally in the period, except Venezuela, according to data compiled by Bloomberg. Yields on Greece’s 10-year government bonds have dropped to 8.31 percent from a peak of 33.7 percent in March 2012. Paulson & Co. and JPMorgan Chase & Co. have bought shares as emerging-market funds including Renaissance Capital Holdings Ltd. and Templeton Emerging Markets Group expressed interest.

Euro-Zone Inflation Near Four-Year Low (WSJ)
The euro zone's inflation rate fell to its lowest in almost four years in October, raising pressure on the European Central Bank to ease the money supply and support the region's fragile economy at its rate decision next week. The annual rate of consumer price rises fell to 0.7% in October, the lowest rate since November 2009, from 1.1% in September, according to preliminary figures from Eurostat, the European Union's statistics agency. Data from individual countries this week have shown falls in inflation rates across the region. Price growth slowed in Germany, Italy and Belgium, as well as in Spain, where annual inflation in October was just 0.1%.

Gross Says America's Privileged 1% Should Pay Higher Taxes (Bloomberg)
“If you’re in the privileged 1 percent, you should be paddling right alongside and willing to support higher taxes on carried interest, and certainly capital gains readjusted to existing marginal income tax rates,” Gross wrote in his monthly investment outlook posted on Newport Beach, California-based Pimco’s website today. “Stanley Druckenmiller and Warren Buffett have recently advocated similar proposals. The era of taxing ’capital’ at lower rates than ‘labor’ should now end.”

Woman says she'll hand out 'fat letters' to kids instead of Halloween candy (NYDN)
A North Dakota woman is taking it upon herself to school the parents of trick-or-treaters by denying Halloween candy to kids she feels are too chubby. Instead, she says, she’ll give them a note informing parents their “obese” child should lay off the sugar. As public schools in some states debate sending home "fat letters" to kids with high body mass indexes, “Cheryl,” of Fargo, N.D., sees nothing wrong with taking the controversial practice into her own hands, she told local radio station Y-94. By passing out candy on Halloween, "I'm contributing to their health problems, and really their kids are everybody's kids. It's a whole village," Cheryl, whose last name was not given, told the station on Tuesday, according to Valley News Live. The letter, adorned with a smiling pumpkin graphic, begins "Happy Halloween and Happy Holidays Neighbor!" and goes on to say: "Your child is, in my opinion, moderately obese and should not be consuming sugar and treats to the extent of some children this Halloween season. "My hope is that you will step up as a parent and ration candy this Halloween and not allow your child to continue these unhealthy eating habits." Cheryl called the radio station "out of the blue" because she "really wanted to voice her opinion about obesity," the station's program and music director told Valley News Live.

Caesars casino owners in hot water with IRS (NYP)
The company, America’s largest casino chain, owned by the investors’ PE firms, has revealed that it is the subject of a money-laundering probe by the IRS. News of the tax agency investigation comes days after Caesars revealed federal and state regulations have drawn a bead on its Las Vegas casino for possible violation of the Bank Secrecy Act and after state regulators in Massachusetts rejected the company’s application for a casino license in the Bay State.

France investigates chairman of Swiss bank Reyl: source (Reuters)
France's prosecutor has opened a tax-evasion probe into Dominique Reyl, chairman of Swiss private bank Reyl, as part of a broader investigation into a former French budget minister's undeclared Swiss bank account, a judicial source told Reuters.

Buffett’s $40 Billion Cash Pile Provides Acquisition Fuel (Bloomberg)
Even in a year in which the company has struck some of its largest deals and accelerated capital spending, Buffett still needs to find acquisitions. Omaha, Nebraska-based Berkshire has already invested $12.3 billion on a takeover of HJ Heinz Co., committed $5.6 billion to buy a Nevada electric utility and made smaller purchases through subsidiaries since Dec. 31. “It’s a high-class problem,” said Cliff Gallant, an analyst at Nomura Holdings Inc. “The year’s not up. I wouldn’t be surprised to see another deal of some sort.”

Suspect Cooks Bacon After Breaking Into Home (kxnet)
A Bismarck woman says someone broke into her home and cooked bacon and drank some beer. Police say a 30 year old woman came home after work Monday to find that someone broke in through a bedroom window. She told police she smelled bacon and could see that it had been cooked. She is also missing three cans of Bud Light. The burglary happened at a home in Tatley Meadows.

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