Opening Bell: 12.19.13

Author:
Publish date:
Updated on

Traders Seek Edge With High-Tech Snooping (WSJ)
A helicopter lifted off recently from an airfield in this remote oil town, scudded low across the flat industrial landscape and trained a heat-sensitive camera at the huge storage tanks below. Its mission: Gather intelligence for Wall Street. The grainy, infrared reconnaissance images betrayed how much oil was in each tank. That gave Genscape Inc., the company that conducts the flights, a remarkably accurate preview of a market-moving U.S. government report on oil supplies. Traders, hungry to get a jump on the official data, are willing to pay a hefty price for that intelligence. Genscape is at the vanguard of a growing industry that employs sophisticated surveillance and data-crunching technology to supply traders with nonpublic information about topics including oil supplies, electric-power production, retail traffic and crop yields. The techniques, which are perfectly legal, represent the latest advance in the longtime Wall Street practice of searching for every possible trading advantage. But the high cost of much of the new information—Genscape's oil-supply report costs $90,000 a year—means that some forms of trading are becoming even more the province of firms with substantial resources.

Warren Buffett made $37M a day this year (NYP)
Billionaire investor Warren Buffett saw his net worth soar by an eye-popping $37 million a day this year, according to a survey out Wednesday. The Berkshire Hathaway boss benefitted from a bull market that saw shares of his conglomerate jump by more than 25 percent in 2013, boosting his net worth by $12.7 billion to $59.1 billion, according to the survey by Wealth-X. That works out to a $37 million-a-day bump in Buffett’s wealth — or an eye-popping $1.5 million an hour. While Buffet had an outstanding year, the jump in his net worth only got him to second place on the list of the world’s Top 10 richest people. Microsoft founder and Buffett bridge partner Bill Gates retained the title of world’s wealthiest person with a total net worth of $72.6 billion, up from $61.1 billion last year.

Yellen's To-Do List Shortens at Fed (WSJ)
Now that the Fed has begun to wind down its bond-buying program, it will fall to Ms. Yellen to decide if economic conditions warrant continuing to pare the purchases or not. She will also have to decide whether and how to tweak the Fed's promises to keep interest rates near zero for a long time if the economy fails to recover as the Fed now forecasts. And she will also have to decide how to respond if inflation remains stubbornly below the Fed's 2% target.

Facebook, Zuckerberg, banks must face IPO lawsuit: judge (Reuters)
Facebook Inc, Chief Executive Mark Zuckerberg and dozens of banks must face a lawsuit accusing the social media company of misleading investors about its health before its $16 billion initial public offering, a federal judge said. In a decision made public on Wednesday, U.S. District Judge Robert Sweet in Manhattan said investors could pursue claims that Facebook should have prior to its May 2012 IPO disclosed internal projections on how increased mobile usage and product decisions might reduce future revenue. "The company's purported risk warnings misleadingly represented that this revenue cut was merely possible when, in fact, it had already materialized," Sweet wrote in his 83-page decision. "Plaintiffs have sufficiently pleaded material misrepresentation(s) that could have and did mislead investors regarding the company's future and current revenues."

Steinberg conviction may ease Preet Bharara’s way to more (NYP)
Bharara has been circling Cohen and SAC for years, persuading six former SAC employees to plead guilty and wresting a plea from the firm. But Steinberg’s was the first SAC case to go to trial, and the jury conviction could help the government as it moves forward. First, Steinberg’s conviction could put pressure on another SAC money manager, Mathew Martoma, who has so far declined to cooperate with the government. The feds claim Martoma placed a 20-minute call to Cohen after receiving inside information that resulted in a $276 million profit at SAC. Martoma’s case goes to trial in less than three weeks, and the facts are widely believed to be more straightforward than the confusing circumstances surrounding Steinberg’s crimes. Unlike Martoma, who is alleged to have received illicit information from a doctor with knowledge of drug trials, Steinberg had five degrees of separation from the source of the illegal information he was convicted on.

Father films young son as he’s forced to run alongside car for ‘football training’ (NYDN)
A controversial video has surfaced showing a father forcing his young son to run alongside his car for “football training” while using expletives to encourage him go faster. The tiny tot, appearing only 5-years old, does his best to stay up to the vehicle's speed while running in Crocks, but as the video shows, it's not good enough. "We're going eight miles per hour. Come on. Pick that s--t up," the unidentified father calls. "This is how we train for football," he says. "Daddy drives while you run. Get your little a-- in shape." Once outside their destination the boy momentarily stops and complains about his hip hurting. "I don't want to hear about no excuses," the father replies. Following his father’s orders, the boy starts running again as the man’s honking vehicle trails him up a driveway from just feet behind.

Budget Deal Easing $63 Billion in Cuts Advances in Senate (Bloomberg)
The U.S. Senate cleared and sent to President Barack Obama the first bipartisan budget produced by a divided Congress in 27 years, resolving for now spending issues that had helped spur a government shutdown in October. The $1.01 trillion budget deal passed 64-36 today eases $63 billion in automatic spending cuts, raises user fees and lowers the U.S. deficit over 10 years. The plan keeps in place about half of the reductions known as sequestration for next year, and about three-quarters of the planned cuts for 2015. Nine Republicans joined all Democrats to back the measure. Neither party liked the cuts.

BlueCrest Capital Poised for Rough Close to 2013 (WSJ)
...2013 is turning into the worst ever for the firm, which has offices in London, Geneva, New York and other cities. Ms. Braga's fund, which manages about $16 billion, is down about 10%, through early December, amid a paucity of clear trends for the fund to wager on. Though rival funds with similar strategies also are meeting problems, the BlueCrest fund has done worse that many competitors. Meanwhile, Mr. Platt's BlueCrest Capital International fund, which also manages about $16 billion, is flat on the year, even as the average hedge fund was up over 11% this year through November, according to the Hennessee Group LLC.

Fidelity Plants Flag In Hedge-Fund Turf (WSJ)
Fidelity Investments launched two "event-driven" mutual funds, the latest foray by the firm into a sector traditionally dominated by hedge funds. The launch on Wednesday of the Fidelity Event Driven Opportunities Fund and Fidelity Advisor Event Driven Opportunities Fund comes as alternative funds continue to pull in a record amount of investor cash. This year through November, alternative funds have taken in $88.55 billion, according to research firm Morningstar Inc., up from $18.34 billion in all of last year.

‘Soccer mom madam’ blasts turncoat ex-partner (NYP)
“You broke my heart, Jaynie!” soccer mom-madam Anna Gristina told her former junior partner in flesh, Jaynie Mae Baker, channeling her inner Don Corleone as the younger madam sashayed out of court on black stiletto boots with a no-jail sentence for promoting prostitution...Baker had signed a cooperation agreement with the DA’s office in August 2012, even though the stand-up Gristina had gone to jail to protect Baker and their high-profile johns. Over the course of several proffer sessions, Baker gave prosecutors a detailed account of business at Gristina’s pricey escort service, which catered to millionaires and power brokers on both coasts, according to still-sealed documents. Integral to the agreement that concluded Monday with Baker’s wrist-slap sentencing was Baker’s promise to testify against Gristina had the case gone to trial. “My family was vilified in a public witch hunt while Miss Baker played private footsy with [Manhattan DA] Cy Vance,” Gristina railed to reporters as Baker slinked out of the courthouse. “Forgive me if I say the public has good reason to feel screwed by Mr. Vance,” Gristina added...Gristina and Baker were arrested after they unwittingly booked a $2,000 threesome with a brunette and a blonde for an undercover in July, 2012. The two women frolicked on a bed in Gristina’s East 78th Street brothel while the undercover watched — and taped the encounter...“Right from the beginning, Miss Baker conducted herself with dignity, with class” her lawyer, Robert Gottlieb, told reporters after court. “I think everyone should take anything that Miss Gristina says with a heavy dose of a grain of salt,” he added.

Related

Opening Bell: 12.06.12

Diamondback to Close Down as Investors Pull $520 Million (WSJ) Diamondback Capital Management LLC, among the hedge funds that was raided by the FBI about two years ago as part of the U.S. investigation of insider trading on Wall Street, is liquidating after clients pulled money. The Stamford, Connecticut-based fund received requests from investors to withdraw about $520 million, or 26 percent of its assets, co-founders Richard Schimel and Lawrence Sapanski, said today in a client letter. They said they plan to return the majority of the money next month. “We especially appreciate your patience and support during the last two difficult years during which we reached closure of the government’s investigation,” they said in the letter. SEC Probes Deutsche Bank (Bloomberg) U.S. securities regulators are investigating allegations that Deutsche Bank hid billions of dollars of paper losses during the financial crisis, according to people close to the investigation. The German bank said Wednesday that the allegations, by three former U.S.-based employees, were "wholly unfounded" and had been the subject of a "careful and thorough" review it had commissioned. The former employees have told the Securities and Exchange Commission that traders at Deutsche Bank overvalued a portfolio of derivatives to hide rapidly mounting losses when financial markets were collapsing in 2008, the people close to the investigation said. The details of the allegations were reported by the Financial Times on Wednesday. Wall Street Job Reductions Seen Persisting After Citigroup Cuts (WSJ) Wall Street’s cost cuts and dismissals, which have helped erase more than 300,000 financial- industry jobs in the past two years, are far from over. Citigroup's announcement yesterday of plans to eliminate 11,000 positions in units spanning equities trading to consumer banking is the latest sign of strain from a market slowdown, stiffer capital rules and weak economic growth. Lenders around the globe are likely to trim more jobs if revenue doesn’t rebound sharply next year, analysts and recruiters said. “The knives are sharpened and ready,” said Jason Kennedy, chief executive officer of London-based search firm Kennedy Group. “These institutions are too big for the business they are generating but they are still quite bullish that the market will return by mid-2013. Unless the markets picks up, there will be more cuts in the first half.” Broadening Tax Base and Raising Rates Key to 'Cliff' Deal: Summers (CNBC) The wiggle-room in the "fiscal cliff" negotiations comes down to a balanced approach on raising tax rates for wealthier Americans and broadening the tax base by closing loopholes and deductions, former Clinton Treasury Secretary Lawrence Summers told CNBC. "The president is not signing legislation — no way — that does not raise tax rates. The president has been clear as day," Summers said Thursday on "Squawk Box." Summers also pointed out that President Barack Obama isn't married to repealing the Bush tax cuts for the top 2 percent of wage earners all the way back to the Clinton-era tax rates of 39.6 percent. So rates might not go that high if there's sufficient revenue coming from the base-broadening side of the equation. Geithner: Ready to Go Over 'Cliff' If Taxes Don't Rise (CNBC) Treasury Secretary Timothy Geither told CNBC Wednesday that Republicans are "making a little bit of progress" in "fiscal cliff" talks but said the Obama administration was "absolutely" ready to go over the cliff if the GOP doesn't agree to raise tax rates on the wealthy. "I think they're making a little bit of progress," Geithner said. "They're clearly moving and figuring out how to try to move further." But Geithner said the White House would "absolutely" go over the fiscal cliff — triggering over $600 billion in automatic spending cuts and tax increases — unless tax rates increase on the top 2 percent of wage earners. Steinberg Is Eyed In SAC Trial (NYP) Prosecutors yesterday confirmed the worst-kept secret in the insider-trading trial unfolding in Manhattan federal court: They view former SAC Capital money manager Michael Steinberg as a co-conspirator in the case. Prosecutor Antonia Apps argued yesterday that Steinberg, a portfolio manager with SAC’s Sigma Alpha unit, should be officially labeled a co-conspirator in the case because he knew his former analyst, John Horvath, was receiving illegal tips on computer-maker Dell. The government has already alluded to Steinberg’s alleged role in earlier court documents, when it referred to four unnamed co-conspirators, including “the portfolio manager to whom Jon Horvath reported at his hedge fund.” That person is Steinberg. New Zealand Dogs Learn How to Drive (ABC) Who says you can’t teach an old dog new tricks? Not the New Zealand chapter of the Society for the Prevention of Cruelty to Animals (SPCA), which has launched a marketing campaign featuring dogs — real dogs — learning how to drive. Really. SPCA Auckland chose three abandoned dogs — Monty, Ginny and Porter — and put them behind the wheel of a car to show that rescue dogs are a first-rate choice for adoptions. “I think sometimes people think because they’re getting an animal that’s been abandoned that somehow it’s a second-class animal,” SPCA Auckland’s CEO, Christine Kalin, told the New Zealand Herald. “Driving a car actively demonstrates to potential rescue dog adopters that you can teach an old dog new tricks.” The trio of highway-ready rescue dogs was chosen by SPCA two months ago and then relocated to Animals on Q, a “premiere New Zealand animal talent agency,” according to its website, to begin their “doggy driver training process,” the Herald reported. The dogs have trained for the past eight weeks under the supervision of Animals on Q owner Mark Vette. Next week one of the dog’s skills will be put to the test in front of a live national TV audience. Porter, a 10-month-old Beardie Cross and the star among the three pups, will drive a Mini Countryman on the “Campbell Live” program on New Zealand’s 3 News, the station reported in a sneak peek that aired last night. The TV appearance will mark the first time that Porter, or any of the other pups, drives without human assistance. While training, Porter — along with Monty, an 18-month Giant Schnauzer, and, Ginny, a 1-year-old whippets cross — used a canine-modified Mini, but had human help in the form of steering wheel adjustments and verbal commands. Nasdaq drops ball on IPO — again (NYP) The electronic exchange run by CEO Robert Greifeld was forced yesterday to cancel orders on a planned $100 million initial public offering of WhiteHorse Finance due to “human error,” a Nasdaq spokesman said. A staffer in the exchange’s market-watch department “inadvertently” pressed a button to cancel trading rather than to delay the launch of the company. Standard Chartered to Pay Additional $330 Million in Iran Settlement (WSJ) Standard Chartered said Thursday it expects to pay an additional $330 million to settle with U.S. authorities over past transactions with Iranian clients that may have violated U.S. sanctions, putting its total bill at around $670 million. Madam Set To Name NFL Big (NYP) Notorious Upper East Side madam Anna Gristina is about to start naming names of high-power clients from her little black book — and an unlucky NFL executive will be the first bombshell name she lets fly, we’re told. “There is going to be a giant name dropped — actually, a couple of them,” Gristina told The Post’s Laura Italiano, speaking of her plans for an upcoming interview with TV host psychologist Dr. Phil. Asked if those names would be “giant” with a capital “G,” the Hockey Mom Madam gave a distinctly mischievous laugh that portends bad news for the bigwig client...“Everyone’s going to have to watch Dr. Phil,” she said. “I will tell you that one of the names is high-level [NFL] management. Then there’s an older [football] player who’s still very well known. Tune in to Dr. Phil!” Jobless Claims Fall (Reuters) Initial claims for state unemployment benefits dropped 25,000 to a seasonally adjusted 370,000, the Labor Department said on Thursday. The prior week's figure was revised to show 2,000 more applications than previously reported. EU Pushes Crackdown On Tax Havens (WSJ) The European Union's executive Thursday moved to step up efforts against tax havens, encouraging members to name and shame ultra-low-tax jurisdictions and crack down on cross-border tax avoidance within the 27-nation bloc. Guatemalan Police Arrest Software Guru McAfee (AP) Software company founder John McAfee was arrested by police in Guatemala on Wednesday for entering the country illegally, hours after he said he would seek asylum in the Central American country. The anti-virus guru was detained at a hotel in an upscale Guatemala City neighborhood with the help of Interpol agents and taken to an old, three-story building used to house migrants who enter the country illegally, said Interior Minister Mauricio Lopez Bonilla. It was the latest twist in a bizarre tale that has seen McAfee refuse to turn himself in to authorities in Belize, where he is a person of interest in the killing of a neighbor, then go on the lam, updating his progress on a blog and claiming to be hiding in plain sight, before secretly crossing the border into Guatemala. "He will be in danger if he is returned to Belize, where he has denounced authorities," said his lawyer in Guatemala, Telesforo Guerra. "His life is in danger." Guerra said he would ask that a judge look at McAfee's case as soon as possible. "From them moment he asked for asylum he has to have the protection of the Guatemalan government." Earlier Wednesday, McAfee said he had formally requested asylum in Guatemala after entering the country from Belize, where he says he fears for his safety because he has sensitive information about official corruption and refused to donate to local politicians. "Yes, we are presenting this, and I want it to be clear, because of the persecution, not because of the murder," he told the AP about his asylum bid.