Opening Bell: 12.05.13

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Grant Hill’s Wall Street Whirlpool Chats Pave Way to John Mack (Bloomberg)
Grant Hill spent much of his tenure with the Orlando Magic in the trainer’s room, where to the chagrin of him and teammate Pat Garrity, control of the television remote was governed by majority rule. “Most of the guys wanted to watch SportsCenter or the Cartoon Network,” said Garrity, a former players’ union treasurer who earned a Master of Business Administration from the Fuqua School of Business at Duke University, Hill’s alma mater, after retiring from the National Basketball Association in 2008. “Everyone would leave the room and then we could switch to CNBC.” Hill, whose 18-year injury-saddled career ended after last season, had an insatiable appetite for learning, particularly about finance, Garrity said in a telephone interview. Their whirlpool chit-chat often focused on hedge funds and private equity.

Volcker Rule Won't Allow Banks to Use 'Portfolio Hedging' (WSJ)
In a defeat for Wall Street, the "Volcker rule" won't allow banks to enter trades designed to protect against losses held in a broad portfolio of assets, according to people familiar with the rule. The practice, known as portfolio hedging, has become a focal point of regulators drafting the rule, a controversial plank of the 2010 Dodd-Frank financial law that seeks to prevent banks from putting their own capital at risk in pursuit of trading profits. The rule, named after former Federal Reserve Chairman Paul Volcker, is expected to be approved next week, ending a three-year period of regulatory uncertainty for some of the securities industry's most-profitable businesses. But it won't contain language permitting portfolio hedging, which has been "expunged" from earlier drafts of the rule, according to a person familiar with the matter. Regulators decided to remove portfolio hedging from the rule after J.P. Morgan Chase disclosed billions of dollars in losses from its so-called London whale trades in 2012.

Lew Says Reforms Making Financial System Safer (WSJ)
Mr. Lew, in prepared remarks for a speech Thursday morning at the Pew Charitable Trusts, said while efforts to implement the 2010 Dodd-Frank law have "taken longer than we hoped" the rules are largely falling into place and helping to bolster the financial system. He said more needs to be done, including ensuring that U.S. regulators have resources to enforce the rules and the adoption of robust protections by global counterparts to fortify the international financial system.

Memory Fails Top Witness In SAC Case (NYP)
Confessed inside trader Jon Horvath couldn’t remember which of his recommendations at hedge fund SAC Capital Advisors were based on illegal information — and which were not. In fact, some of Horvath’s best calls came “the old fashioned way” — by doing “legitimate, proper research analyst work,” defense lawyer Barry Berke told jurors Wednesday, as he continued to hammer away at Horvath in a second day of brutal cross-examination...The crux of Horvath’s testimony is that his illegal stock tips from another hedge fund analyst, Jesse Tortora, were fed to Steinberg, who knew they weren’t kosher. But on Wednesday, even Horvath didn’t seem to recall when Tortora’s information crossed the line into criminality. Berke honed in on information Horvath got from Tortora toward the end of 2007. “Do you believe you were getting illegal inside information in December of 2007?” Berke asked, rephrasing the question and repeating it at least a half-dozen times — eliciting different responses each time. “I don’t know exactly when it started,” Horvath said once. “I don’t remember how I viewed it at the time,” he said another.

Landmark Custody Battle Over Dog In Divorce (NYP)
A pair of divorcing women are about to fight it out in court over a miniature dachshund named Joey in what will be New York’s first matrimonial pet-custody case. “People who love their dogs almost always love them forever,” Manhattan Justice Matthew Cooper opines in his ruling granting the women oral arguments. “But with divorce rates at record highs, the same cannot always be said for those who marry.” That’s the case with Washington Heights residents Shannon Louise Travis, 32, and her soon-to-be ex-wife Trisha Bridget Murray. The only bone of contention in their divorce is who will get sole custody of their 2-year-old pet. Travis bought Joey as a 10-week-old puppy from a pet store and gave him to her then-girlfriend as a gift and “a consolation for her having to give away her cat at Travis’ insistence,” according to court papers. Murray is fighting to keep her best friend, who always slept on her side of the bed. “I consider this puppy, my little angel Joey, the love of my life,” Murray told The Post. “He is my little soul mate, and there was no way in this lifetime I could ever live without him.” Judge Cooper says it’s surprising that, in a “canine-centric city where dogs play an ever more important role in our emotional lives,” he is in uncharted territory. He notes that New York law lags behind other states’ legal standing of their pets, and that “most pet owners would not trade their pets for even $1 million in cash.” Instead of regarding Joey like a piece of property, the judge — who gives the full disclosure that he owns a 12-year-old rescued pit bull mix named Peaches — will schedule a hearing to determine his fate.

Deutsche Bank To Quit Commodities Trading (Reuters)
Deutsche Bank said on Thursday it is exiting the majority of its global commodity business due to rising regulatory pressures, becoming the latest bank to sell or scale back its operations in the once lucrative sector. Deutsche Bank will exit energy, agriculture, base metals and dry bulk trading, it said on its website, retaining only precious metals and a limited number of financial derivatives traders.

Economy in U.S. Grows at 3.6% Rate on Bigger Inventories (Bloomberg)
The U.S. economy expanded in the third quarter at a faster pace than initially reported, led by the biggest increase in inventories since early 1998. Consumer spending slowed. Gross domestic product climbed at a 3.6 percent annualized rate, up from an initial estimate of 2.8 percent and the strongest since the first quarter of 2012, Commerce department figures showed today in Washington. The median forecast of 77 economists surveyed by Bloomberg predicted a 3.1 percent gain.

ECB Stands Pat On Interest Rates (WSJ)
The central bank left its key interest rate, the one that it charges commercial banks for its regular loans, at a record low of 0.25%. It also left the rate it pays on overnight deposits at zero for a 17th straight month, refraining from a decision to charge banks for briefly parking funds at the central bank.

Texas deli owner fed up with lazy staff closes doors to teach employees lesson (NYDN)
John Herod, who runs a Schlotzsky's Deli and Cinnabon in Abilene, said his workers never smiled at each other or customers and always performed tasks way too slowly. So he suspended business and put up a "CLOSED FOR ATTITUDE ADJUSTMENT" sign outside. After firing some of the worst employees, he is now "re-educating" the others on how to interact with clients and better prepare food. The marquee initially suggested he would reopen Dec. 4. but ABC 13 reports that's now been pushed back to Dec. 9.

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Opening Bell: 04.01.13

Central Bank Details Losses at Bank of Cyprus (WSJ) Cyprus's central bank spelled out the financial damage to big deposit holders at Bank of Cyprus PCL, the country's biggest lender, saying they will lose almost 40% of their deposits as a result of a sweeping restructuring of the lender. Losses could grow even steeper in the months ahead. In a statement Saturday, Cyprus's central bank said that 37.5% of all deposits over €100,000 ($128,700) will immediately be converted into a special class of shares at the lender as part of its recapitalization plan. As Banks in Cyprus Falter, Other Tax Havens Step In (NYT) Bloodied by a harsh bailout deal that drives a stake through the heart of this Mediterranean country's oversize financial industry, Cyprus now faces a further blow to its role as an offshore tax haven: the vultures from competing countries are circling. With a flood of e-mails and phone calls in recent days to lawyers and accountants here who make a living from helping wealthy Russians and others avoid taxes, competitors in alternative financial centers across Europe and beyond are promoting their own skills at keeping money hidden and safe. In Herbalife Fight, Both Sides Prevail (WSJ) But for the time being, all three investors are in the black, showing that for all the bluster and bravado, timing is everything in financial markets. Mr. Loeb has cashed out the most, whereas the others have made only paper profits. Mr. Loeb's hedge-fund firm, Third Point LLC, has made at least $50 million on its estimated bet of more than $200 million, according to a person familiar with the firm. As of several weeks ago, the firm had largely exited its Herbalife stake, according to people familiar with Third Point. Mr. Icahn has made roughly $25 million in unrealized gains on his about $590 million bet. Mr. Ackman's Pershing Square Capital Management LP has notched more than $200 million, also in paper profits, on a bet of more than $1 billion. Insider Case Against SAC Manager May Be Tough to Prove (Reuters) On Friday, U.S. authorities arrested and charged Michael Steinberg, a 16-year veteran of Cohen's $15 billion SAC Capital Advisors, with insider trading in shares of the technology stocks Dell and Nvidia. The case against Steinberg, 40, is built heavily on the testimony of one of his former colleagues, Jon Horvath, who has admitted to insider trading and is now cooperating with the government. "What they're going to need to prove is that Steinberg got inside information that he knew came from an insider and that he then traded on it," said Marc Greenwald, a former U.S. prosecutor in New York who is now a partner at Quinn Emanuel in New York, and not involved in the case. "It all depends on what Horvath said he said and whether everybody believes him." Princeton alumna, who told female students to get married, defends provocative advice: ‘Find a husband!' (NYDN) "Here's what nobody is telling you," Patton wrote. "Find a husband on campus before you graduate. Yes, I went there." This controversial column, which she described as "little more than honest advice from a Jewish mother," outraged countless readers when it appeared in The Daily Princetonian on Friday and then went viral. "I sincerely feel that too much focus has been placed on encouraging young women only to achieve professionally," Patton told the Daily News. "I think in the back of their heads they all know this but nobody is saying it." Patton decided to write the open letter after speaking at a Women and Leadership conference on campus a few weeks ago. Many said Patton was scolding women for not marrying her youngest son, a junior at Princeton. ("I am the mother of two sons who are both Princetonians," she said. "My older son had the good judgment and great fortune to marry a classmate of his, but he could have married anyone. My younger son is a junior and the universe of women he can marry is limitless. Men regularly marry women who are younger, less intelligent, less educated. It’s amazing how forgiving men can be about a woman’s lack of erudition, if she is exceptionally pretty. Smart women can’t (shouldn’t) marry men who aren’t at least their intellectual equal. As Princeton women, we have almost priced ourselves out of the market. Simply put, there is a very limited population of men who are as smart or smarter than we are. And I say again — you will never again be surrounded by this concentration of men who are worthy of you.") Libor Suits by Bondholders Tossed Over Lack of Damages (Bloomberg) While potential damages were estimated to be in the billions of dollars, the judge ruled the cases must be dismissed because of the inability of litigants that included brokerage Charles Schwab, pension funds and other bondholders to show they were harmed. Buchwald, whose March 29 ruling allowed some commodities-manipulations claims to proceed to a trial, said that, while private plaintiffs must show actual harm, her ruling didn’t impede governments from pursuing antitrust claims tied to attempts to manipulate Libor. Michael Dell Said to Consider Blackstone LBO Only With CEO Guarantee (Bloomberg) In several recent meetings in Austin, Texas, with Chinh Chu and David Johnson -- the Blackstone executives overseeing the firm’s bid -- Michael Dell said he would be more likely to support their proposal if he retained an influential role, a second person familiar with the talks said. Negotiations are ongoing and the two sides may not reach an understanding. Argentina sticks to its guns on debt payout (NYP) The country, in a filing late Friday, refused to follow a court order that mandated it give equal treatment to a group of holdout bondholders led by billionaire hedge fund manager Paul Singer and his Elliott Management. Instead, Kirchner offered the group, owed $1.44 billion, the same deal it offered exchange bondholders in 2010. Pregnant woman's leg amputated after being hit with car (KHOU) The incident happened in the 9600 block of Ravensworth Drive, where Kelly, 21, lives with her boyfriend, Christopher Chaney. Chaney said his ex-girlfriend, 26-year-old Shareyll Hunter, showed up at the house Thursday morning and started arguing with Kelly. "I was in my house asleep, and then one of my kids’ mothers came," Chaney said. "I mean, they been texting and talking over the phone saying they want to fight each other and meet up right here and do it." All of the commotion outside roused Chaney from bed. "When I came outside, I seen my kids’ mother punching on the window and she wanted to fight the other one," Chaney said. He said Hunter jumped into his car and gunned it, pinning her 21-year-old rival between the car and the house, police said. Kelly was rushed to the hospital with two broken legs. Doctors had to amputate one leg. The baby is expected to be OK. Hunter drove off in her ex-boyfriend’s four-door Lincoln LS. She remained on the loose at last check. Hunter is five months pregnant and the victim is four months pregnant. Chaney, 26, says he is the father in both cases. Reporter: "You think it [the hit-and-run] is because of you getting them pregnant?" Christopher Chaney: "I mean, I’m handsome."

Opening Bell: 09.26.12

Spain Prepares More Austerity, Protesters Battle Police (Reuters) Protesters clashed with police in Spain's capital on Tuesday as the government prepared a new round of unpopular austerity measures for the 2013 budget to be announced on Thursday. Thousands gathered in Neptune plaza, a few metres from El Prado museum in central Madrid, where they formed a human chain around parliament, surrounded by barricades, police trucks and more than 1,500 police in riot gear. Police fired rubber bullets and beat protesters with truncheons, first as protesters were trying to tear down barriers and later to clear the square. The police said at least 22 people had been arrested and at least 32 injured, including four policemen. Facebook's Next Fight: Suits And More Suits (WSJ) About 50 lawsuits have been filed against Facebook, Nasdaq OMX Group Inc. and underwriters of Facebook's May IPO, according to lawyers involved in the cases. In addition, securities lawyers who represent Facebook investors say they expect hundreds of arbitration claims to be launched against brokers and securities firms that pitched the company's shares. Credit Suisse Said to Consider Merging Its Asset-Management Unit (Bloomberg) The bank is considering combining its asset-management unit with the private and investment banking divisions, a person familiar with the matter said. SAC Capital Fund Manager Said To Be Uncharged Conspirator (Bloomberg) The role allegedly played by Michael Steinberg emerged in court papers filed by the U.S. in the securities-fraud case of Jon Horvath, a former technology analyst at Cohen’s $14 billion hedge fund who Steinberg supervised. Steinberg, who hasn’t been charged with a crime, is the fifth person to be tied to insider trading while employed at SAC. Horvath faces trial Oct. 29 in Manhattan federal court along with two other portfolio managers for his part in what Manhattan U.S. Attorney Preet Bharara called a “criminal club:” a conspiracy of hedge fund managers, co-workers and company insiders who reaped millions of dollars on illegal tips about Dell Inc. and Nvidia Corp. “The government added four additional co-conspirators,” prosecutors wrote in a Sept. 6 letter filed with the court, with the names blacked out. One of them, the U.S. said, is “the portfolio manager to whom Jon Horvath reported at his hedge fund.” That person was Steinberg, said the people, who declined to be identified because the matter isn’t public. UK Group To Give Up Libor Oversight (WSJ) The council of the BBA, a private trade association, voted earlier this month to give up management of Libor, according to people familiar with the matter. The move clears the way for what is likely to be the biggest change in Libor's 26-year history, and introduces the possibility that British or international regulators could be in charge of overseeing the rate, which is tied to trillions of dollars of financial contracts. Rent-a-reptile: Florida company adds alligators to kids’ pool parties (NYDN) Bob Barrett gives Florida kids pool parties they’ll never forget — because they get to swim with real live alligators. Jump houses? Pizza parties? Boring, says Barrett. “You jump for a while and that’s it, we’ve had that party before,” he told the Daily News. “Clown party, Chuck E. Cheese party, they’ve all been done.” Barrett,who runs Alligator Attractions in Madeira Beach — where visitors get to hold gators — was already bringing his reptiles around to birthday parties when he was inspired to take the next step. “We would do [an alligator demonstration] at someone’s house and they would have a pool,” he explained. “And I said, you know, ‘Hey, let’s put ‘em in the pool.’” Hedge Fund Skeptics Warn on ‘QE Infinity’ (FT) “A man’s got to know his limitations,” says “Dirty Harry” Callahan, the gun-toting, rule book-ignoring cop immortalized by Clint Eastwood in “Magnum Force.” It is a principle the U.S. Federal Reserve – which earlier this month embarked upon its own, third bout of “unorthodox” enforcement, “QE3” – could learn from, according to Stephen Jen, the former Morgan Stanley foreign-exchange guru turned hedge fund manager. “The Fed officials are some of the smartest economists around,” he wrote in his most recent note to clients. The trouble is, said Mr. Jen, “they know everything except their own limitations.” Irish Bank Offers Properties For 70% Less Than 2007 Value (Bloomberg) RBS's Irish unit offered to sell properties, including 640 apartments and a hotel, for about 70 percent less than their value at the market’s 2007 peak, according to the broker managing the sale. The Gemini portfolio, containing buildings in the Irish cities of Dublin and Cork, has an asking price of 75 million euros ($97 million), according to Domhnaill O’Sullivan, a director at Savills Plc (SVS)’s Dublin office. MIT Miscounts Its New B-School Students (WSJ) After realizing they had a student surplus, school officials emailed the incoming class on Aug. 7, offering "guaranteed admission to the class of 2015 for the first 20 admitted students who request it." The school gave them until Aug. 13 to respond, according to one student's copy of the letter, which was reviewed by The Wall Street Journal. But it didn't get enough takers. So, like an airline offering vouchers to travelers willing to hop off oversold flights, the school put money on the table, offering students who expressed an interest a $15,000 scholarship to be applied to next year's tuition. Students still balked, and on Aug. 21, a day after pre-term refresher courses began, Sloan raised the offer to $20,000 for the first 10 respondents. (Tuition for the 2012-2013 academic year is $58,200, with total expenses—including books, housing and food—estimated at just under $89,000.) NFL replacement referee who blew touchdown call in Green Bay Packers-Seattle Seahawks game is a full-time banker (NYDN) ...fans, particular those in Wisconsin, said the 52-year-old southern California banker with no previous professional or major college refereeing experience should have never left his desk to become a replacement during the NFL’s lockout of unionized refs. Even the Lingerie Football League piled on, revealing that some of the scab refs weren’t qualified to work its games. “Due to several on-field occurrences of incompetent officiating, we chose to part ways with a crew which apparently is now officiating in the NFL,” said Mitch Mortaza, commissioner of the female bra-and-panty league. “We have a lot of respect for our officials, but we felt the officiating was not in line with our expectations.”