Opening Bell: 11.19.13

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JPMorgan Said to Agree to Details of $13 Billion Accord (Bloomberg)
JPMorgan Chase & Co. has resolved the last obstacles to a record $13 billion settlement of civil state and U.S. probes over the sale of mortgage bonds, clearing the way for a deal today after months of negotiations, two people briefed on the matter said. The accord includes a previously disclosed $4 billion settlement to end a 2011 Federal Housing Finance Agency lawsuit, said one of the people, who asked not to be identified because the discussions are private. While the deal would mark the largest amount paid by a financial firm in a settlement with the U.S., the Justice Department is still probing JPMorgan’s recruiting practices in Asia, energy trading and its relationship with Ponzi scheme operator Bernard Madoff. The New York-based bank has tapped $8 billion of $28 billion in reserves set aside since 2010 to cover legal costs.

Yellen Nomination for Fed Chairman to Get Vote This Week (Bloomberg)
Janet Yellen’s nomination to be chairman of the Federal Reserve is scheduled for a Senate Banking Committee vote this week, advancing her confirmation. The banking panel vote will be Nov. 21, setting the stage for a full Senate confirmation vote later this year. Democrats hold a two-vote lead on the 22-member committee and no Democrat has opposed her nomination. If confirmed, Yellen, the Fed’s current vice chairman, will become the first woman to lead the U.S. central bank.

Ex-SAC exec’s defense probes jurors’ social media postings (NYP)
“As long as it’s public information, it’s fair game,” Barry Berke, Steinberg’s lawyer, told The Post. “The world has changed. Today people have a social-media footprint that is 100 percent public, and lawyers should be looking at it.” Steinberg’s defense team has hired DOAR Litigation Consulting, one of the top jury consultants in the country, and last week DOAR received permission to bring three laptops into the courtroom. Berke told Judge Richard Sullivan in last week’s pretrial hearing that DOAR may be doing an extra level of due diligence on prospective jurors by Googling their names, checking out their social-media profiles and looking into public sites for asset searches. Berke told The Post that the searches of prospective jurors won’t happen in the courtroom, suggesting that DOAR would set up a war room of sorts to vet the panel. Jury selection in the highly anticipated trial could last two days. Steinberg is the seventh money manager at Steve Cohen’s SAC Capital Advisors to face charges of insider trading — and the highest-ranking executive at the $14 billion hedge fund to do so. Each of the previous six has been convicted — part of US Attorney Preet Bharara’s dragnet that has bagged 75 guilty verdicts since 2009. The extra level of juror scrutiny speaks to Steinberg’s fear that pretrial publicity will make it hard for him to get a fair trial. Sullivan denied a request by Team Steinberg to either move or postpone the trial. A more-detailed-than-usual juror questionnaire will be used in the case, however. Prospective jurors will be asked extensively about their knowledge of hedge funds and SAC. Those with any knowledge of SAC’s recent guilty plea on insider trading will be pulled into the judge’s chambers for more detailed, private questioning. The juror questionnaire will identify Steinberg as “an employee of a fund called SAC Capital.” But “hedge fund” was considered a “loaded term,” the judge decided.

OECD Warns of U.S. Threat to Global Recovery (WSJ)
The uncertain future of U.S. fiscal and central bank policies poses a growing risk to a global economic recovery that has already been weakened by a slowdown in growth in many developing countries, the Organization for Economic Co-operation and Development said Tuesday. In its twice-yearly Economic Outlook, the Paris-based research body said the U.S. debt ceiling should be abolished, and replaced by "a credible long-term budgetary consolidation plan with solid political support." The report marks a significant shift in the OECD's focus of concern, which in recent years has been centered on the euro zone's attempts to tackle its fiscal and banking crises. While the OECD remains worried about the euro zone's frailties, the most immediate threats to the global recovery now appear to come from the U.S, it said.

Toronto’s Mayor Rampages On, to City’s Shame (NYT)
The end did not come for Rob Ford, the mayor of this city, when he proclaimed his proclivity for oral sex on live television. It did not come when the police confirmed that they had a video of him smoking crack, something he had repeatedly denied, nor when he showed up drunk at a local festival, careened equally plastered on a dance floor, or when the local Santa parade told him to please stay away. It did not even come Monday, during a City Council meeting at which members voted to take away most of his budget and staff while he cantered around the chamber, heckling voters and knocking a City Council member to the floor. It seems that Mr. Ford, absent a decision to quit, will remain at the helm of Canada’s largest and most affluent city at least until his term ends next year. He says he has far too many phone calls left to make. “Are you aware that 2,200 people call me?” Mr. Ford repeatedly said Monday, adding that he also gets 138,000 emails a year that require a response, by way of explaining why he ought to keep his budget and staff. “I’m still doing the job!”

German Economic Expectations Hit Four-Year High (WSJ)
German economic expectations hit their highest level in four years in November, buoyed by an improving euro-zone outlook and the European Central Bank's surprise interest-rate cut earlier this month, according to a survey of analysts and institutional investors released Tuesday. The ZEW sentiment survey showed that the economic expectations indicator rose further above its long-term average in November, to 54.6 from 52.8 in October, and signaled that the economic recovery of the euro zone's largest economy is gradually broadening.

Eurozone recovery fragile but no deflation risk: ECB's Praet (Reuters)
The ECB cut interest rates to a record low earlier this month and said it could take them lower still to prevent the euro zone's recovery from stalling after inflation tumbled to 0.7 percent - well below its target of just under 2 percent. Praet, who last week raised the prospect of the ECB starting to buy assets to bring inflation closer to the target, said inflation in the euro zone is low but inflation expectations solidly anchored. A cyclical upswing in the euro area "is confirmed", he added.

Banks That Adapt to New Global Rules Will Fare Best, Study Says (Bloomberg)
Banks that best adapt to “relentless waves” of new rules from global regulators have the greatest chance of remaining competitive, according to Boston Consulting Group Inc. Regulatory reform has added a multitude of complex and costly rules since the financial crisis, creating barriers banks must break to remain profitable, BCG said in a report released today. Lenders that are able to “categorize, prioritize and execute” against the rules, which include higher capital requirements and leverage ratios, will have the advantage, according to the report.

Tom Brady drops F-Bomb on national television after Patriots loss to Panthers (NYDN)
Tom Brady was not a happy camper after Monday night's loss to the Carolina Panthers. Following the 24-20 loss, Brady dropped an F-bomb on national TV as ESPN cameras picked up his audio while he furiously chased and complained to referee Clete Blakeman about a controversial call which ended the game. "That is f----ing brutal," Brady is heard screaming. ESPN immediately muted the on-field audio.

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Opening Bell: 03.22.13

Clock Ticks On Cyprus (WSJ) Cyprus, in an 11th-hour bid to unlock international aid, reopen the nation's banking system and preserve membership in the euro, readied a plan that would restructure its second-largest lender and enforce unprecedented restrictions on financial transactions. The proposals, if they take effect, would allow authorities to restrict noncash transactions, curtail check cashing, limit withdrawals and even convert checking accounts into fixed-term deposits when banks reopen. They have been closed since March 16. Parliament is set to debate the measures on Friday. If Cyprus can't pass them, it could find itself with little choice but to leave the euro zone—opening a Pandora's box that could threaten Spain and Italy. Time is short: The European Central Bank on Thursday threatened to cut off a financial lifeline if Cyprus's banks aren't stabilized by Monday. Credit Suisse Chief Gets 34% Raise (WSJ) Credit Suisse rewarded Chief Executive Brady Dougan for repositioning the bank in 2012 with a 34% pay rise, despite a fall in net profit for the year and a backdrop of growing criticism of executive remuneration. Mr. Dougan earned 7.77 million Swiss francs ($8.21 million), up from 5.8 million francs in 2011, when he took a pay cut as Switzerland's No. 2 bank by assets slogged through a difficult year in which its stock price fell 41%. Europe’s Bonus Clampdown Hits Two-Thirds of Fund Managers (Bloomberg) The European Parliament’s vote to cap bonuses in the asset-management industry could affect two- thirds of senior fund managers in the U.K., U.S. funds in Europe and hedge funds open to small investors. Bonuses should not exceed base salaries for managers of mutual funds regulated by the European Union, known as UCITS, European lawmakers in the economic and monetary affairs committee voted yesterday. The rules would cover 5 trillion euros ($6.5 trillion) of assets in UCITS, which include funds managed outside Europe and some linked to hedge-fund strategies such as John Paulson’s New York-based Paulson & Co. and Och-Ziff Capital Management Group. “If the final rules are even close to what has been agreed today, then this will fundamentally change the way asset managers are paid,” said Jon Terry, a partner at PricewaterhouseCoopers LLC. Asset managers “are now facing the toughest pay rules across the whole of the financial-services sector.” Boaz Says Dimon Should Have Known (NYP) The buck stops with Jamie Dimon. That’s the view of Boaz Weinstein, the hedge-fund manager who first speared the “London Whale” that led to $6.2 billion in trading losses for Dimon’s JPMorgan. Despite making a bundle by taking the other side of the bank’s bad bet, Boaz says that requiring bank CEOs to sign off on such trades is the only way to prevent debacles. As the “ultimate boss” of JPMorgan, Dimon should have had to approve the complicated trade, he said. “If you had a rule that anytime, anyone wants to make an investment in any one thing greater than $10 billion or $20 billion, the boss has to sign off on it,” then those types of disasters wouldn’t happen, Boaz said yesterday at the Absolute Return Symposium in Manhattan. Long Island Man Accepts Plea Deal in Fake Drowning (AP) The man, Raymond Roth, 48, of Massapequa, pleaded guilty to fourth-degree conspiracy. “The restitution Mr. Roth is ordered to pay ensures that the taxpayers won’t foot the bill for this scam,” said Kathleen M. Rice, the Nassau County district attorney. Prosecutors said Mr. Roth and his son, Jonathan Roth, 22, had plotted to collect about $400,000 in life insurance. The younger man’s case is pending. On July 28, Jonathan Roth told the authorities that his father had gone for a swim at Jones Beach and never came back. Responders searched for Raymond Roth for several days, while he was actually on his way to Orlando, Fla., prosecutors said. Raymond Roth’s wife found e-mails discussing the plot, and the authorities were alerted. Raymond Roth’s lawyer, Brian Davis, said on Thursday that he believed the plea bargain was fair, adding, “At this point, he wants to put it behind him.” Mood Sours In Northern Europe (WSJ) A worsening mood among businesses largely predated fraught negotiations over a Cypriot bailout, which economists say could stoke tensions surrounding the euro zone's debt crisis. Poorer sentiment among businesses lessens the chances of a rise in corporate investment, crucial for an economic recovery in the bloc at a time when most of its member states are cutting spending to control their debts. Economists See No Crisis With U.S. Debt as Economy Gains (Bloomberg) Three years after a government spending surge in response to the recession drove the U.S. past that red line -- the nation’s $16.7 trillion total debt is now 106 percent of the $15.8 trillion economy -- key indicators reflect gathering strength. Businesses have increased spending by 27 percent since the end of 2009. The annual rate of new home construction jumped about 60 percent. Employers have created almost 6 million jobs. And with borrowing costs near record lows, the cost of paying off the debt is lower now than in the year Ronald Reagan left the White House, as a percentage of the economy. BP to return $8 billion to shareholders from TNK-BP sale (Reuters) BP, which completed the sale of the half-owned TNK-BP to Russian state oil firm Rosneft on Thursday, said the move, designed to increase the value of remaining shares, was an amount equivalent to the value of the company's original investment in TNK-BP in 2003. Man finds knife blade in his back three years after stabbing (TS) A Northwest Territories man was just scratching what he thought was an annoying old itch earlier this week when it turned out to be a knife blade that had been buried in his flesh for almost three years. “I jumped in a cab and went straight to emergency,” said Billy McNeely, 32. The story goes back to an April 2010 birthday party in McNeely’s home town of Fort Good Hope, N.W.T. McNeely said a fight broke out between himself and another man over an arm-wrestling contest that ended up with McNeely being stabbed five times. “They stitched me up and bandaged me up,” said McNeely. “They never took X-rays.” Ever since, McNeely has had a lump in his back where the knife went in. Doctors and nurses told him nerves had been damaged in the stabbing. But the old wound never stopped nagging. “I always had back pains. There was always a burning feeling with it.” The injury was constantly itchy and irritated. It set off metal detectors. That was explained away as a metal fragment that had lodged in his bone. On Monday, while McNeely and his girlfriend were asleep in bed, the pain came back. “I sat up, I tried to rub it and scratch it the way I always did, and then the tip of my nail caught a piece of something solid, something sharp. “My girlfriend got up and she started playing around with it and she manoeuvred my back in a certain way and the tip of a blade poked out of my skin.” Doctors dug out a blade measuring about seven centimetres long.

Opening Bell: 12.07.12

SEC Warns Netflix CEO Over Facebook Post (WSJ) Mr. Hastings boasted on his Facebook page in July that Netflix exceeded 1 billion hours of video streaming in a month for the first time. The post may have violated rules of fair disclosure, the SEC said. The SEC said it may also issue a cease-and-desist proceeding against Netflix and Mr. Hastings. Mr. Hastings responded in another Facebook post Thursday. He said further disclosure at the time wasn't necessary because he has more than 200,000 subscribers to his Facebook page, which makes it a "very public" forum. Netflix had also disclosed on its blog in June that it was nearing the 1 billion streaming hours milestone, he said. Mr. Hastings, who is also on the board of Facebook, added that, at any rate, such information isn't a "material" event to investors. Germany's Central Bank Cuts Forecasts (WSJ) "The cyclical outlook for the German economy has dimmed [and] there are even indications that economic activity may fall in the final quarter of 2012 and the first quarter of 2013," the Bundesbank said in its monthly report. In its semiannual economic projections, the central bank slashed its forecast for German growth next year to 0.4% from its previous estimate of 1.6% in June. It also lowered its forecast for 2012 growth to 0.7% from 1.0%. Moody's: It's Deal Or Die (NYP) The American economy will fall into “severe recession by the spring” unless Congress lessens the tax increases and spending cuts that are set to begin in January, said Mark Zandi, chief economist at Moody’s Analytics. “We’ve got to nail this down; uncertainty is killing us,” Zandi told lawmakers yesterday at a Joint Economic Committee hearing in Washington...If Congress were to “kick the can down the road” by extending the current tax-and-spend policies, Zandi predicted the US would lose its Aaa rating because “it would signal that the political will is lacking to put the nation on a sustainable fiscal path.” Fiscal Cliff? France Has ‘Fiscal Mountain’: PPR CEO (CNBC) The head of one of France's biggest companies has warned that France's problems dwarf those of the U.S. in an interview with CNBC. Francois-Henri Pinault, chief executive of luxury goods company PPR, said: "When we talk about the fiscal cliff in France it's a mountain, it's much higher than a cliff. And when it comes to France the only solution that has been put on the table is tax raises, nothing about cutting expenses. So it's a completely different situation." Greece sticks to buyback plan, says will shield banks (Reuters) Greece says it is sticking to plans to close its offer to buy back its own bonds from investors on Friday in a deal that should meet a debt writedown target set by its international lenders. The government said it would shield the country's banks from any lawsuits over losses booked if they take part in the buyback. The buyback, part of a broader debt relief package worth 40 billion euros ($52 billion) agreed by Greece's euro zone and International Monetary Fund lenders last month, is central to efforts to bring its debt to manageable levels. Judge: Ganek, Steinberg conspirators (NYP) Manhattan federal judge Richard Sullivan yesterday ruled that SAC Capital money manager Michael Steinberg and Level Global co-founder David Ganek can be named co-conspirators in the current insider trading case unfolding downtown. Neither Steinberg nor Ganek has been charged in the case, but the ruling lets prosecutors submit their e-mails and instant messages as evidence in their case against Todd Newman, a former portfolio manager at Diamondback, and Anthony Chiasson, Ganek’s former Level Global partner. The feds have accused Chiasson and Newman of improperly profiting off insider tips on Dell and Nvidia. Chiasson lawyer Greg Morvillo objected, saying that Chiasson’s former analyst Sam Adondakis, who pleaded guilty, testified that he never told Ganek he had an inside source at Dell. Judge Sullivan said the evidence is “certainly circumstantial” but sufficient enough for the government’s request to be granted. Sullivan cited the “precise information” Ganek had received leading up to Dell’s earnings as well as the “large trading positions” he authorized on the computer maker. The judge relied on three e-mail communications to implicate Steinberg, one of which he said made “clear references to keeping things on the down-low and being extra sensitive.” Burglary suspect calls 911 after Springtown homeowner holds him at gunpoint (DN) In a strange flip of events, a burglary suspect called 911 early Tuesday to report that he was being held at gunpoint by a Springtown homeowner and his son. The homeowner called 911, too, but by then he was in control, holding him at gunpoint and demanding to know what he was doing in his home. “Just unlucky, I guess,” the man responded, according to a release from the Parker County Sheriff’s Department. The incident happened around 12:30 a.m. when the homeowner and his wife woke up to find an intruder in the bedroom of their home in the 100 block of Lelon Lane. The suspect, identified as 41-year-old Christopher Lance Moore of Bedford, left the home and sat in his GMC pickup, parked in the family’s driveway. The homeowner followed him with a pistol, took the suspect’s keys and blocked his getaway with his own vehicle, while his stepson trained a shotgun on Moore, Fox 4 News reports. “If he gets out of the truck, shoot him in the legs,” James Gerow told his son. “You ain’t gotta kill him; just shoot him in the legs. … If he’d got out, I’d have expected him to shoot him.” When deputies arrived, both men were on the phone with 911. Deputies asked Moore why he had broken into the home, to which he merely said he had “bad intentions.” Morgan Stanley Alters Broker Pay Plan as Revenue Bonus Takes Hit (Bloomberg) Morgan Stanley, the brokerage with the biggest corps of financial advisers, changed its wealth- management compensation plan to encourage brokers to increase revenue and allow them to buy discounted stock. The 2013 program pays a bonus of 2 to 5 percentage points of revenue for advisers who bring in new assets and are in the top 40 percent in revenue growth, according to terms outlined in a summary obtained yesterday by Bloomberg News. That comes at the expense of a 2 percentage-point reduction in the revenue bonus paid to all brokers who generate at least $750,000. JPM Bonus Bummer (Bloomberg) JPMorgan Chase’s bonus pool for the corporate and investment bank may shrink as much as 2 percent this year as the firm completes performance reviews, three executives with direct knowledge of the process said. Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion (Bloomberg) A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. Danger Lurks Inside The Bond Boom (WSJ) Amid the rush of bond deals, which already have topped $1 trillion in value, these managers—from BlackRock to Federated Investment Management Co.—are pointing to unusual wrinkles suggesting that now could be one of the most dangerous times in decades to lend to investment-grade companies. Interest rates are so low and bond prices so high, they warn, that there is little room left for gains. Some worry that even a small increase in interest rates—a traditional enemy of bond returns—could eat away at bond prices. College Student Poisons Roommate's Iced Tea With Bleach Following Argument (DM) A college student faces 15 years in jail after she allegedly sprayed bleach into her roommate's iced tea. Kayla Ashlyn Bonkowski, 19, was charged with felony poisoning and appeared in court on Wednesday. She reportedly told police that she had put chemicals in the drink following an argument about cleaning the dishes with her 20-year-old roommate Emily Joseph. The poisoning occurred on November 7 at the students' apartment in Union Township, located near the Mount Pleasant school of Central Michigan University, authorities said. Miss Joseph was taken to hospital for treatment but later released. After she filed a complaint, Bonkowski was arrested. The 19-year-old 'verbally admitted' to police that she put bleach in the drink because 'Joseph is mean', according to ABC. She was arraigned on Wednesday at 2pm before posting $2,000 bond. She entered a plea of not guilty to the charge of poisoning a food, drink, medicine or water supply. The college student faces up to 15 years in prison. Reached by e-mail, Bonkowski said on Wednesday morning that she needed to consult with a lawyer before commenting.