Holiday Bell: 12.31.13

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Winners of 2013: Boring Investors (WSJ)
In the best year for U.S. stocks since 1995, the smart way to play the markets has been to follow the dumb money. So-called dumb-money strategies, which involve buying and holding a plain-vanilla portfolio of U.S. stocks, did much better than the more complex approaches employed by hedge funds and other professional investors. Fueled by easy money from the Federal Reserve and signs of improvement in the economy, the Dow Jones Industrial Average goes into the final day of 2013 with a gain of 29% once dividends are included, while the S&P 500 index has climbed 32% with dividends. Those gains far outpace the rally predicted by even the most bullish Wall Street strategists. Many hedge funds were left in the dust, alongside investors who use "tactical" timing of the markets' ups and downs and those who spread their bets among a wide variety of assets such as commodities, emerging markets and exchanged-traded funds.

Private Equity Enjoys A Record Year (WSJ)
Private-equity firms are set to return a record amount of cash to their investors for 2013, after taking advantage of buoyant markets to sell hundreds of billions of dollars of investments. From initial public offerings to company debt deals that pay private-equity investors hefty dividends—this year will be remembered for the gains earned by firms that specialize in buying and selling companies, and by the pension funds, university endowments and wealthy individuals that invest in them. Investors in private-equity funds are expected to receive more than $120 billion for 2013, topping last year's record of $115 billion, according to estimates by Cambridge Associates LLC, which gets a glimpse of firms' finances as an adviser to private-equity investors. In the first half of 2013, private-equity firms returned $60.8 billion to investors.

Pot Shops in Denver Open Door to $578 Million in Sales (Bloomberg)
Toni Fox plans to open the doors of her Denver marijuana shop at 8 a.m. tomorrow to a line of customers including some who camped overnight to be the first in the U.S. to legally buy pot for recreational use. Fox has arranged for canopy tents, heaters and a food truck to offer donuts and pastries to patrons waiting for the state-appointed hour. She expects sales at her 3D Cannabis Center, operating since 2010 as a medical-marijuana dispensary near the Denver Coliseum, to surge to at least $250,000 a month from $30,000, she said. “We’ll have people out the door,” Fox, 42, a Salida resident, said by telephone. “It’s going to be a very festive atmosphere. We all feel like we’re walking on sunshine right now.” Fox’s shop is among 14 in Denver that got state and local licenses in time to sell marijuana to anyone 21 or older starting Jan. 1, just over a year after Colorado and Washington voters made their states the first to legalize recreational use. Washington’s shops are expected to open later in the year. Colorado projects $578.1 million a year in combined wholesale and retail marijuana sales to yield $67 million in tax revenue, according to the Legislative Council of the Colorado General Assembly. Wholesale transactions taxed at 15 percent will finance school construction, while the retail levy of 10 percent will fund regulation of the industry.

'Sell' Report Fails To Chill Herbalife (NYP)
Herbalife shares look to be wrapped in Kevlar. The controversial diet-shake seller’s stock, one of the hottest this year with a gain of 136 percent, barely budged Monday after getting hit with its first sell recommendation. Shares in the Los Angeles company slipped 0.5 percent, to $77.92.

My ‘Wolf of Wall Street’ Review (TRB/Josh Brown)
I’ve known ten or twelve guys who worked at the Lake Success headquarters of Stratton during its heyday; all the stories are true and there’s very little embellishment in the movie. It all happened and then some. I’ve been hearing these stories for fifteen years. There was a diaspora of sorts that happened after that firm went down, a thousand others had opened up shop as the brokers were scattered like seeds in the wind. Boiler room brokerages had sprung up from Westchester to New Jersey to Staten Island to the Financial District in Manhattan to Boca Raton, Florida. But nowhere was there as heavy a concentration as there was on Long Island. At one point, there was a nickel broker-dealer in every glass office tower in Suffolk and Nassau Counties (and many big buildings had several firms housed on different floors, imagine the stairwells). The scripts used in the movie were the exact same ones taught to every NY metro area broker in the late 1990′s. I printed the entire Belfort pitch (which itself had been stolen from the Madison Avenue office of Lehman Brothers) in my book Backstage Wall Street, I’m fairly certain the producers got their hands on it for the film. I doubt Jordan had a copy lying around from twenty years ago. They also used the term “Wildebeest” which is something I use on TV a lot to describe runaway stocks. My friend Paul and I made it up in a finance context five years ago, so I’m flattered, I guess.

$375-per-person New Year’s feast – at Applebee’s? (MarketWatch)
Sure, you may think of Applebee’s as an affordable casual-dining chain, famed for its whiskey-flavored steaks and two-for-$20 dinner specials...But once a year, Applebee’s goes high-end. The chain’s franchise-owned restaurant in the heart of New York’s Times Square offers a $375-a-person New Year’s Eve bash that’s billed as “a night to remember.” (Those under 12 can get in for $250.) But this isn’t your standard Applebee’s bill of fare, the franchisee notes. The party, which starts at 8 p.m. and wraps up at midnight, features an extensive buffet, a “premium” open bar, a house DJ, a dance floor, plus party favors galore. And for those eager to see the ball drop, the restaurant lets patrons “make their way to the streets of Times Square.” As for the vittles themselves, be prepared for “a ton of food” (steak and shrimp included) prepared by “some fairly sophisticated culinary people,” says Zane Tankel, who heads up all 38 Applebee’s restaurants in the New York metro area. Add in the décor and “you wouldn’t know you were at an Applebee’s for that one night,” Tankel says.

From Taxes to Executive Pay, New Rules for 2014 (WSJ)
Regulators are set to unleash new business rules in 2014 that will push companies to re-examine issues ranging from their taxes and suppliers to auditor relationships and interest-rate hedges. Dozens of corporate tax breaks expire Tuesday, and some new rules kick in Wednesday, as the new year begins. Among the biggest changes will be the way companies can write off repair costs for fixed assets, such as windows or factory generators, and new accounting standards for leases on an array of property—from buildings to airplanes. Multinational companies, meanwhile, will face new tax laws overseas.

French 'Millionaire' Tax Cleared (Reuters)
France’s Constitutional Council gave the go-ahead on Sunday to the government’s so-called millionaire tax, to be levied on companies that pay salaries of more than 1 million euros a year. The measure, introduced in line with a pledge by President François Hollande to make the rich do more to pull France out of its financial crisis, has infuriated business leaders and soccer teams, which at one point threatened to go on strike. It was originally intended as a 75 percent tax to be paid by high earners on the portion of annual income exceeding €1 million, or roughly $1.37 million, but the council rejected it last year, saying it was unfair. France’s top administrative court later said that 66 percent was the legal maximum for individuals. The Socialist government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs.

Berkshire Hathaway to buy Phillips 66 unit for around $1.4 billion (Retuers)
Warren Buffett's Berkshire Hathaway Inc struck a deal to buy a Phillips 66 business that makes chemicals to improve the flow potential of pipelines for around $1.4 billion of stock. Phillips 66 said on Monday that Berkshire will pay for the unit, Phillips Specialty Products Inc, using about 19 million shares of Phillips 66 stock that it currently owns.

Drunk Driver Failing "Walk And Turn" Sobriety Test Explains To Cops, "I Can’t Dance Like Britney Spears." (TSG)
Responding to a phone tip about a drunk driver, two sheriff’s deputies approached Jeffrey MacDonald, 43, as he pulled his Nissan Versa into the driveway of his Vero Beach residence late yesterday afternoon. MacDonald smelled of alcohol, had “slow and slurred speech,” and was unsteady on his feet, according to an Indian River County Sheriff’s Office report. Subsequent Breathalyzer tests recorded MacDonald’s blood alcohol content at nearly three time times the legal .08 limit. When MacDonald sought to do the “Walk and Turn” exercise--which required him to walk a straight line heel-to-toe--he failed miserably. The wobbly Floridian told deputies, “I can’t pass,” “I can’t do that,” and “I can’t dance like Britney Spears.”

Programming Note: Have a great New Year's, whether it takes you to the Time Square Applebee's or not and we'll see you back here on Thursday!

Related

Holiday Bell: 12.31.12

Cliff's Edge Draws Close (WSJ) What happens Monday could go some way to determining the short-term fate of the U.S. economy and the reputation of the government, both of which have been dinged by the spectacle of endless seemingly circular negotiations. Carrying the baton late into Sunday evening were Senate Minority Leader Mitch McConnell (R., Ky) and Vice President Joe Biden. A spokesman for Mr. McConnell said Monday morning that the two men "will continue to work toward a solution." In the past two weeks, at least three different sets of negotiation teams have sought a way out...Still, some remained hopeful elements of a deal were on the table and could be brought into alignment at the last minute. "We're very close," said Sen. Barbara Mikulski (D., Md.). "It is like a kaleidoscope," meaning there are many moving parts that can look beautiful or ugly depending how they're arrayed. Experts Forecast The Cost Of Failure To Compromise (NYT) In the event no compromise is found, however,the Congressional Budget Office and many private economists warn that the sudden pullback in spending and the rise in taxes would push the economy into recession in the first half of the year. Under this outcome, Mr. Gault said, the economy could shrink by 0.5 percent over all of 2013. With the clock ticking, some observers bolstered their criticism of Washington. "If we have a recession, it's unforgivable," said Bernard Baumohl, chief global economist at the Economic Outlook Group. "For the first time in modern history, we will have a self-inflicted recession in the U.S." New Year's Countdown To Higher US Taxes Starts (Bloomberg) The IRS has said it will issue guidance by today on paycheck withholding for 2013, which depends on the income-tax rates Congress is debating. Higher rates would mean less take- home pay for workers starting as early as the first paycheck in January. Both Democrats and Republicans support extending current rates for families making less than $250,000. They disagree on whether to raise levies for top earners. Rates are scheduled to increase for all income levels Jan. 1 if Congress doesn’t act. Parties Pivot To Blame (WSJ) If Congress and the White House fail to strike a deal to avert the so-called fiscal cliff, Republicans are under few illusions as to who will get much of the blame—even if past polls suggest there will be plenty to go around. "The poor Republicans will get the brunt of it, which may be unfair, but such is life," said Republican Indiana Gov. Mitch Daniels, a former White House budget chief under George W. Bush. "The Republicans are seen as the obstinate ones, where at the very least, the president and his side are equally so." Polls since the November election have found Americans more ready to blame the GOP than President Barack Obama and congressional Democrats if the two sides fail to reach a deal to avoid the wave of tax increases and spending cuts coming Jan. 1. A Wall Street Journal/NBC poll earlier this month showed 24% would blame Republicans while 19% would blame Democrats. Merkel Says Euro Zone Crisis Far From Over (Reuters) FYI. Mario Batali wins biz feud over UK chef Gordon Ramsay (NYP, related, related) Batali says the prickly Brit star has agreed to give up on using the name The Spotted Pig for a London eatery — amid outcry that he had swiped it from Batali and his partners. “It didn’t make him look great,” Batali said of Ramsay’s recent trademarking of the name in the UK. “I don’t think it was an intentional shot across the bow by Gordon,” Batali told the Eater Vegas blog. “His team is just [trying] to build businesses. There’s got to be a thousand other animals they could have chosen besides The Spotted Pig. A striped minx, for example.” Experts Back Deutsche Whistleblowers (FT) Accounting experts say Deutsche Bank appears to have improperly accounted for billions of dollars of credit derivatives trades by failing to value adequately the risk that its trading counterparties could walk away. Jersey woman charged at boyfriend with hammer after he refuses to pay for laundry, reports say (NJ) Jazmin Duran, 24, was arrested and charged with aggravated assault, terroristic threats, criminal mischief, domestic violence, possession of weapon, unlawful possession of a weapon, resisting arrest police reports said. Police were called to Garfield Avenue near Armstrong Avenue at 2:52 p.m. on a report that a man was locked in the bathroom and his girlfriend was hitting the door with a hammer, reports said. When police arrived, the 49-year-old boyfriend, was still locked in the bathroom, reports said. After a brief struggle, police were able to detain Duran, reports said. When he came out he told police that Duran was mad at him and attacked him with a hammer, reports said. The victim said that he was undressing to get in the shower while talking to his girlfriend about getting her eyebrows done, when she asked for him to pay for doing her laundry, reports said. He responded that he didn't have money to pay for her laundry, reports said. He said she became irate and began to scream, reports said. BofA Settlement Hits Snags (WSJ) A big legal settlement usually marks the end of the bulk of the work for the Justice Department. But a year after a $335 million deal with Bank of America Corp. to compensate minority borrowers for alleged discrimination, much remains to be done. The department's settlement administrator just began notifying affected borrowers in November, about five months later than originally planned. Then, weeks after letters went out to more than 233,000 presumed victims, about 10% of those letters have been returned as undeliverable, according to Justice Department officials. U.S. officials had warned that it might take two years for eligible borrowers to receive money from the settlement, but they also expressed hope that checks could be mailed out sooner. Those hopes have dimmed. Facebook Analysts Stick To Script (WSJ) Facebook Inc. FB +1.03% has gotten a thumbs-down from investors since its initial public offering. But securities analysts who work at the investment banks that did the deal have never wavered in their enthusiasm. Since the social-networking company went public in May, analysts at Morgan Stanley, J.P. Morgan Chase & Co. and Goldman Sachs—Facebook's three biggest underwriters—have issued 40 reports on the stock. Every report has urged investors to buy. Skin In The Game (NYP) West Village cosmetic doctor Yelena Yeretsky usually works to make the power women of Wall Street look flawless. But now men are asking for her services. Yeretsky says, “The men usually want chemical peels so they look glowy. I remove lesions and skin tags and non-cancerous growths from years of playing golf in the sun.” French Court Says 75% Tax Rate on Rich Is Unconstitutional (Bloomberg) President Francois Hollande’s 75 percent millionaire-tax is unconstitutional because it fails to guarantee taxpayer equality, France’s top court ruled today. The tax, one of Hollande’s campaign promises, had become a focal point of discontent among entrepreneurs and other wealth creators, some of whom have quit French shores as a result. The ruling comes as the president seeks to cut France’s public deficit to 3 percent of gross domestic product next year from a projected 4.5 percent this year. For Euro, All Eyes On ECB's Playbook (WSJ) "Global central banks are engaged in a race to the bottom. It's difficult to call which major currency will be the ugliest," said Munich-based Thomas Kressin, who heads currency strategy for Pacific Investment Management Co., one of the world's biggest bond-fund managers. Expert: Champagne cork can put an eye out (UPI) The pressure inside a champagne bottle can launch a cork at 50 miles per hour as it leaves the bottle, fast enough to shatter glass, U.S. eye experts say. Dr. Monica L. Monica, an ophthalmologist and spokeswoman for the American Academy of Ophthalmology, said the speed at which a cork can be unleashed is fast enough to permanently damage vision, including rupture of the eye wall, acute glaucoma, retinal detachment, ocular bleeding, dislocation of the lens and damage to the eye's bone structure. These injuries sometimes require urgent eye surgeries, Monica said. "When a champagne cork flies, you really have no time to react and protect your delicate eyes," Monica said in a statement. Programming Note: We're on an abbreviated, vacation-esque schedule. Opening wraps and brief updates should anything happen that people need to know about (fiscal cliff deal is struck, Raj Rajaratnam leads his fellow inmates in a NYE flashmob set to 'Thriller,' etc). Happy New Year and we'll see you in 2013!

Holiday Bell: 3.25.16

Microsoft might finance Yahoo bid; Investors says Valeant is overcharging for female viagra; Cruz calls Trump a 'sniveling coward' re: wife; Suspected komodo dragon found wandering in New York; and more.

Holiday Bell: 11.27.15

China; Russia; Brazil HF star says economy will get much worse before it gets better; "Sumner Redstone can barely speak, but wants steak and sex every day"; Bacon-scented underwear; and more.