Opening Bell: 01.07.14

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Yellen Confirmed As Fed Chief (WSJ)
Janet Yellen will join the ranks of the most powerful economic policy makers in the world next month, taking the helm of the Federal Reserve at a time when the central bank is assessing its unprecedented steps to buoy the U.S. economy. The 67-year-old Ms. Yellen, currently the vice chairwoman of the Fed's board of governors, will become the first woman to lead the central bank in its 100-year history after the Senate voted to confirm her Monday night in a 56-26 vote. Eleven Republicans joined 45 Democrats to support her; no Democrats opposed her. Weather-related travel problems caused some lawmakers to miss the vote.

Trial to Begin for Martoma, Ex-SAC Trader Who Cut No Deal (Dealbook)
In at least three meetings since, people briefed on the case said, when prosecutors subtly raised the subject of Mr. Martoma striking a cooperation deal, his lawyers insisted he would not play ball. And finally, when prosecutors set a deadline last year for him to cooperate, the people said, the date came and went without Mr. Martoma budging. Prosecutors had long hoped Mr. Martoma would provide the missing link in their pursuit of Mr. Cohen, an inquiry that has hit one dead end after another. But now Mr. Martoma is heading to trial. On Tuesday, jury selection will begin in Federal District Court in Lower Manhattan, where prosecutors have built an undefeated record in insider trading trials under the United States attorney in Manhattan, Preet Bharara. Mr. Martoma’s resistance, the people briefed on the matter say, has baffled officials at the F.B.I., the United States attorney’s office and the Securities and Exchange Commission. Some authorities have grown suspicious about his motives, the people say, noting that Mr. Cohen is paying for Mr. Martoma’s defense.

Card Conundrum Develops in Colorado Over Marijuana Sales (WSJ)
Buying marijuana for recreational use now is legal in Colorado—and paying for it with plastic is getting easier. The official rules of Visa Inc. and MasterCard Inc. prohibit the use of their debit and credit cards for marijuana purchases, but some Colorado merchants are allowing customers to use them anyway. That is because the card giants, owners of the processing networks that handle electronic payments, have quietly decided not to enforce their rules, according to people familiar with their strategies. Instead, the people said, the companies are following the lead of the federal government, which has said it won't challenge state laws that decriminalize the drug. Visa said in a statement that it follows federal law and tries to prevent the network from being used unlawfully. But it added that "given the federal government's position and recognizing this is an evolving legal matter with different standards applicable in different states, our local merchant acquirers are best suited to make any determination about potential illegality."

Slump in Trading Threatens a Wall Street Profit Engine (WSJ)
Executives have warned that lackluster markets could lead to year-over-year declines in fixed-income, commodities and currency trading revenue when banks begin reporting fourth-quarter results next week. That would mark the fourth consecutive drop and the 11th in the past 16 quarters. Few corners of banks' trading operations have escaped the slump. A 10-year commodities rally has fizzled, while foreign-exchange trading volume has fallen sharply from its 2008 peak. Since the financial crisis, investors have eschewed exotic fixed-income securities in favor of low-risk government bonds, which are less profitable for banks, and overall trading volumes have dipped. A rash of new regulations, meanwhile, have prompted Wall Street firms to exit from once-lucrative businesses such as energy trading and storing and transporting physical commodities. The slump has gone on so long that some observers are beginning to question whether it is part of an ordinary down cycle or a more permanent shift. "I think it is worrying," said Oppenheimer analyst Chris Kotowski, who expected trading revenue to have hit bottom and stabilized by now. "You can't turn around a fundamental trend…if that's what this is."

Co-op Bank execs face BoE investigation (Telegraph)
Former senior managers of the Co-op Bank are to be investigated by Britain’s two financial regulators over their role in the near failure of the troubled lender that last year discovered a £1.5bn capital shortfall...The Reverend Paul Flowers, the former chairman of the Co-op Bank, is already the subject of a police investigation into his alleged drug-taking, but will now face a probe into his professional conduct while at the bank, along with other former directors and executives.

Olive oil used to grease up and free naked man hiding in washing machine (ABC)
Emergency workers say they had to use olive oil to grease up and free a naked man who got stuck in a washing machine during a game of hide and seek. Mooroopna police, in northern Victoria, say the man was attempting to hide from his partner when he climbed into the top loader. It took emergency crews about 20 minutes to free him using the oil to lubricate his skin. First Constable Luke Ingram says it was lucky the man was naked. "I guess if he's going to get into a washing machine it's best if he has no clothes on to be able to get him out like that," he said. "I guess the clothes can provide a bit of resistance to try to get him out. My advice would be for people not to climb into appliances."

Goldman to JPMorgan Say Sell Emerging Markets After Slide (Bloomberg)
Goldman Sachs Group Inc. recommends investors cut allocations in developing nations by a third, forecasting “significant underperformance” for stocks, bonds and currencies over the next 10 years. JPMorgan Chase & Co. expects local-currency bonds to post 10 percent of their average returns since 2004 in the coming year, while Morgan Stanley projects the Brazilian real, Turkish lira and Russian ruble will extend declines after tumbling as much as 17 percent in 2013.

Video of Steve Cohen’s deposition set to air (NYP)
A “Frontline” documentary to air Tuesday night about the government’s thus-far elusive efforts to nail SAC Capital Advisors founder Steve Cohen on insider trading charges promises some exclusive video on a deposition given by the billionaire investor that was obtained in a cloak-and-dagger method reminiscent of Watergate. The video was given to Nick Verbitsky, the director of the documentary, by an anonymous tipster who contacted him via text. After some back and forth, a copy of Cohen’s two-day deposition loaded onto a USB drive was left across the street from Frontline’s New York City office, cradled between two bars of scaffolding. Verbitsky told The Post he wasn’t “exactly sure” how the person with the video got wind of his interest, but said he had called the person who shot the video and the transcription company, but “no one had it.” Those people, in addition to the plaintiff and defendants’ lawyers, knew he wanted it.

U.S. judge orders RBS unit in Japan to pay $50 million over Libor (Reuters)
A Japanese investment banking unit of Royal Bank of Scotland Group Plc was ordered on Monday to pay a $50 million criminal fine after pleading guilty to wire fraud over its role in manipulating the benchmark interest rate Libor. RBS Securities Japan Ltd had entered its plea last April 12, as part of its parent's $612 million settlement to resolve criminal and civil probes by authorities in the United States, the United Kingdom and Japan into rate manipulation.

Action star Steven Seagal considers running for Arizona governor (AP)
The "Marked for Death" actor told KNXV-TV that he is considering a shot at the state's highest office and has had a talk about the bid with the self-proclaimed toughest sheriff in America. The 61-year-old made the comments while talking about his newly released reality series "Steven Seagal - Lawman: Maricopa County." Seagal teamed up with Maricopa County Sheriff Joe Arpaio for the show that was shot in Arizona and airs on cable TV's Reelz Channel. "Joe Arpaio and I were talking about me running for governor of Arizona. I would remotely consider it, but I have a lot of other responsibilities that may be more important to address" he told the station.

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Opening Bell: 01.31.13

Deutsche Bank Swings To A $2.9 Billion Loss (WSJ) In the fourth quarter alone, the bank took €2.9 billion in charges, €1 billion of which was for "litigation-related charges." Mr. Jain said the charges "relate to developments in regulatory investigations and adverse court rulings which you are all familiar with," but didn't elaborate further. Deutsche Bank is currently embroiled in a number of legal disputes on both sides of the Atlantic, including the decade-long legal battle in the 2002 bankruptcy of Germany's Kirch Media Group. It is also among the banks that are under official investigation for allegedly rigging interbank benchmark rates, including the London Interbank Offered Rate. The rest of the quarter's charges were mainly related to losses from businesses bought before 2003, such as Bankers Trust and Scudder in the U.S., and impairments related to its investment in the Cosmopolitan Resort in Las Vegas and Maher Terminals in North America, which it put into an internal bad bank. The quarter's net loss of €2.17 billion compares with a profit of €147 million a year earlier. For the full year, net profit was €611 million, down from €4.13 billion. Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (Bloomberg) “We’ve galvanized Deutsche Bank around the achievement of our capital targets,” Jain, 50, said on a conference call with analysts. The loss “reflects a number of decisions we took to position Deutsche Bank,” he said. Barclays, RBS May Pay Billions Over Improper Derivatives Sales (Bloomberg) The lenders, including Lloyds Banking Group Plc and HSBC Holdings Plc, have set aside around 740 million pounds to cover the claims. Analysts say the total charges for the industry may be much higher than that after the Financial Services Authority said it found “serious failings” in reviews of product sales. SAC And Elan Blasted By Investor Who Lost Nest Egg (NYP) Ronald Weiland realized he’d made a bad bet in 2008, when he lost his $1 million nest egg trading shares of drug company Elan. What he didn’t know then was that the cards were stacked against him. Weiland now believes that he and other investors were played by Steve Cohen’s SAC Capital Advisors when the hedge fund giant — acting on information from a former trader accused of insider trading — abruptly dumped its huge long position in Elan and Wyeth and started shorting both stocks. “They had information that I didn’t have access to,” said Weiland, a 53-year-old former consultant for Arthur Andersen. “It’s totally a matter of seeing very wealthy people being able to game the system.” The big trading swing that netted $276 million for SAC and led to the arrest of former trader Mathew Martoma has also landed the firm in hot water. Elan investors have filed at least two lawsuits against SAC, accusing the firm of costing them millions, and several class-action law firms are looking to tee up more. US Targeting Tax Evasion (WSJ) On Monday, a federal judge in New York approved an Internal Revenue Service summons demanding still more records from UBS. According to court filings, the government now is focusing on U.S. taxpayers with accounts at smaller Swiss banks that didn't have U.S. branches but served customers through a UBS account in Stamford, Conn. Interactive Map: What NYC Neighborhoods Have The Most Public Drinking Complaints? (Gothamist) Greenpoint, Williamsburg, the Lower East Side, Hamilton Heights, East Harlem and Washington Heights are the worst offenders—on the other hand, almost no one is getting in trouble in Midtown, the Financial District, Red Hook, Dumbo, and the Upper East and West Sides. Since we already know there can be a a historical correlation between public drinking and public urinating (and sometimes only the urinating part is public), we decided to look at public urination complaints too...Some conclusions from this comparison: Midtown East and Chelsea have way more urination complaints than drinking ones. Union Square, Greenpoint and Randalls Island are also urinary offenders. It seems like nobody on Staten Island cares about people urinating on their lawns, and same goes for anywhere west of East Flushing. Blackstone Swings To Fourth Quarter Profit (WSJ) As of the quarter's end, total assets under management reached a record $210.22 billion, up 26% from the year earlier, as all of Blackstone's investment businesses continued to see net inflows and carrying-value appreciation...Blackstone posted a profit of $106.4 million, or 19 cents a unit, compared with a year-earlier loss of $22.7 million, or five cents a unit. On the basis of so-called economic net income, the firm reported a profit of 59 cents a unit, versus a profit of 42 cents a unit a year earlier. Analysts surveyed by Thomson Reuters recently expected a per-share profit of 47 cents. Ackman Ahead In Herbalife Bet (NYP) Ackman has scored a gross profit of about $260 million on his $1 billion short bet against the nutritional supplements company, based on an estimated 20 million shares shorted at an average price of $50. Loeb, who bought 8.9 million shares at an average price of $32, is up $44.5 million. Ackman has widened his lead considerably. Just two weeks ago, his gross gain stood closer to $120 million while Loeb had made an estimated $108 million. Threats Cloud Euro's Flight (WSJ) The euro, once on death's door, is on a monthslong tear, rising Wednesday to its highest level since November 2011. But even some investors who helped propel the currency above $1.3560 Wednesday say it can't fly much further. Europe's economy is still in the doldrums, they say, and a stronger euro could make the situation worse. And with central banks elsewhere racing to push down their own currencies, boosting the relative value of the euro, the European Central Bank eventually could be compelled to join them. Jobless Claims in U.S. Rose 38,000 Last Week to 368,000 (Bloomberg) Economists forecast 350,000 filings, according to the Bloomberg survey median. The increase followed a combined 45,000 drop in the prior two weeks. Guy Inadvertently Posts Public YouTube Video Inviting His Fiancée’s Best Friend Over for a Threeway (Gawker) We've all been there. You're super excited after getting the go ahead from your fiancée Cynthia to invite her best friend Zoey over for a threeway, so you hastily record a video introducing yourself to Zoey and letting her know that you're totally open to having a threeway this week, next week, the week after that, whenever, anytime, today, or maybe tomorrow, whenever possible, and you're just really excited to show her things that she's never seen and do things that were never done before in a threeway. Then you hastily upload the video to your public YouTube account that 300 people are subscribed to, and await your threeway.