Opening Bell: 11.12.13


Cyber attack 'war game' to test London banks (Reuters)
Thousands of staff across dozens of London's financial firms will be put through a "war game" scenario on Tuesday to test how well they can handle a major cyber attack. In one of the largest exercises of its kind in the world, the test dubbed "Waking Shark II" will bombard firms with a series of announcements and scenarios, such as a major attack on computer systems hitting stock exchanges and unfolding on social media. It will be co-ordinated from a single room housing regulators, government officials and staff from banks and other financial firms, people familiar with the matter said. Hundreds more people are expected to be involved from their own offices as the exercise plays out, they said. Simulations are likely to include how banks ensure the availability of cash from ATM machines or deal with a liquidity squeeze in the wholesale market and how well firms communicate and coordinate with authorities and each other. There will be a particular focus on investment banking operations, one of the sources said.

Financial Holdings of Some SEC Staffers in New York Probed (WSJ)
The SEC's inspector general's office and the Manhattan U.S. attorney's office have contacted a handful of New York-based employees this year as a part of an investigation involving possible improper personal financial holdings among staff, people familiar with the matter said. The new investigation appears limited to the SEC's New York regional office, and there is no indication SEC employees are suspected of flouting trading rules on a widespread basis. Investigators are looking into whether employee holdings comply with the agency's internal trading rules, which include a prohibition on trading shares of companies under investigation, people familiar with the matter said.

Dallas Fed president Richard Fisher: QE won't go on forever (CNBC)

Yellen's Challenge: Corralling Fed's Many Voices (WSJ)
Ms. Yellen seems unlikely to usher in a sharp departure from the open and consensus-oriented style of current Fed chief Ben Bernanke, who is widely admired among central-bank officials for his inclusive approach. But some former officials see her trying to get the Fed to speak with a more coherent voice.

Leonardo DiCaprio and World’s 2nd Richest Man Are Backing Instagram Rival (Bloomberg)
Mexican billionaire Carlos Slim thinks he knows something about photo-sharing apps that Mark Zuckerberg doesn’t. Slim’s America Movil was among the investors in a $60 million financing round in Mobli, an application for iPhone and Android that lets users decorate pictures and videos with colorful filters similar to Instagram. Ido Sadeh, Mobli’s chief operating officer, said the Mexican phone company’s investment was “significant,” but declined to disclose the price...Actor Leonardo DiCaprio is among the investors who had kicked in a total of $28 million in the startup’s previous financing rounds. Mobli, which was founded in 2011, is based in Tel Aviv and New York.

Morgan Stanley says internet companies overvalued, lowers view (Reuters)
Morgan Stanley lowered its industry view on internet stocks to "in-line" from "attractive," saying growth in the sector needs to accelerate to justify current valuations.

Happiness comes to Rupert Murdoch (USAT)
The trial of some of Rupert Murdoch's close associates, accused of telephone hacking, bribery, obstruction of justice and conspiracy, is now underway in London, threatening to expose ever-deeper veins of skulduggery in Murdoch's company. Surely a low point in his 60-year career. And yet, Murdoch is telling people he may never have been happier in his life...His personal life, his work life and his family life, despite the threat of hackinggate, have all come into alignment. At 82, he believes he has set the stage for another 15 years. Hackinggate rather seems to have given him the impetus, in some Godfather fashion, to settle scores and take care of business so he can get on with the next chapter of his epochal story. First, he dealt with the long-standing friction of his marriage. Try as he might, for the 15 years he's been married to Wendi Deng, 39 years his junior, he has never wholly managed to effect a rapprochement between her and his adult children, who are, for Murdoch, the tent poles of his life. At the same time, he has found it hard to admit that his marriage was in difficulty, even as he and Deng increasingly lived apart. It was Deng's telling moment in the sun — stepping between Murdoch and a pie wielder when he was called, two years ago, to testify about hacking before Parliament — that he has told friends crystallized his anger. He realized he did not want her protecting him now — making him look old, he felt, and weak — or his legacy later. With the encouragement of his children, he began to plan his exit — his resolve aided by his closer monitoring of her personal life. In June, acting on new reports about her involvement with Google's executive chairman, Eric Schmidt, he summarily ended his marriage — to no one's greater surprise than his wife's. His own hurt feelings have been soothed by a new romantic interest, a younger woman who has been traveling with him — his massage therapist — who, he has told friends, has made him very happy.

Hedge Funds Are Muscling Into Munis (WSJ)
Hedge funds are making a large bet on municipal debt, bringing aggressive tactics to a $3.7 trillion market long known as humdrum. The strategies include demanding high interest rates in return for financing local governments, buying the debt of struggling municipalities on the cheap, and trying to profit on rising volatility as many mom-and-pop investors who have dominated the municipal-bond market for decades flee amid deepening fiscal problems in many U.S. cities and states. "Hedge funds are a new phenomenon in our market," said Richard Larkin, director of credit analysis at brokerage firm H.J. Sims & Co., who has spent 38 years as a municipal-bond analyst. "And I don't think there is any good that can come of it."

Taxpayers close to breaking even on Fannie Mae, Freddie Mac bailout (Reuters)
Government-run Fannie Mae and Freddie Mac, America's biggest providers of housing finance, will send $39.0 billion to the U.S. Treasury in December, leaving them within a hair of covering the cost of their 2008 bailout...Its larger sibling and fellow state ward Fannie Mae said it would make an $8.6 billion payment.

SAC Capital hasn’t beat S&P since 2010 (NYP)
In the almost three years since then, SAC has netted very pedestrian annualized returns of 13.45 percent — trailing even the S&P 500’s 14.4 percent gain over the same period. It’s the first three-year period in SAC’s history where the S&P beat Cohen.

Sotheby's Loss Narrows As Revenue Jumps (WSJ)
Sotheby's third-quarter loss narrowed from a year earlier as the seller of fine art logged an increase in commissions from private sales and auctions. The results released on Monday are the first look at the company's performance since it became a target of activist hedge funds this fall and began considering whether to return more cash to shareholders.

Toronto Mayor Says 'I'm Not Going Anywhere' (AP)
A defiant Toronto Mayor Rob Ford declared Monday that he intends to stay in office despite immense pressure to step aside after admitting he smoked crack cocaine. "I'm not going anywhere, guaranteed," Ford told a supporter as he walked back to City Hall after giving a speech during Remembrance Day ceremonies honoring veterans. Later, Ford told reporters, "Let's get it on," in response to a question about a motion filed by a City Council member, Denzil Minnan-Wong, who wants the mayor to step aside...The mayor of Canada's largest city acknowledged last week that he smoked crack while in a "drunken stupor" about a year ago. The stunning confession came a week after police said they had a video that appears to show the mayor smoking crack. News reports of the crack video's existence first surfaced in May, but it has not been released publicly...Toronto Police Chief Bill Blair has also said police have a second tape, but he has declined to discuss its contents. There's been no indication that Ford will enter rehab since his lawyer said Friday that he was "considering" it.