Opening Bell: 03.03.14

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Losses Mobilize The Bitcoin Police (WSJ)
So far, U.S. financial regulators have avoided stepping into the fray. But they are trying to determine whether their oversight extends to bitcoin, according to government officials. Some, like the Federal Reserve, have indicated they can't oversee bitcoin without legislative action. Fed Chairwoman Janet Yellen said at a Senate hearing last week that the central bank doesn't have the authority to regulate bitcoin as long as the currency remains separate from the banking system the Fed oversees. Other regulators, including the Federal Trade Commission, appear more inclined to act. "Consumer protections with virtual currencies, to the extent they exist at all, are in no way comparable to the protections" for credit cards or other traditional payment methods, said Lois C. Greisman, associate director of the Federal Trade Commission's division of marketing practices, in an interview.

Britain to scrap VAT on Bitcoin trades (FT)
Britain’s tax authority plans to ditch value added tax on Bitcoin trading only days after the collapse of Mt Gox, one of the virtual currency’s leading exchanges, losing almost $500m of customer deposits. The UK’s welcoming approach to Bitcoin contrasts with the approach of other countries, amid concerns about its use for tax evasion and money laundering as well as its notoriety for wide fluctuations in value.

Mexican Police Question Citigroup Employee Over Alleged Fraud (WSJ)
Mexican police questioned a Citigroup Inc. C -0.12% employee suspected of participating in the alleged theft of $400 million from the bank, according to a person familiar with the matter. The employee, described by the person familiar with the matter as junior at the company, worked for the bank's Mexico unit, Banco Nacional de Mexico, or Banamex. The employee isn't currently in police custody, the person added. It wasn't clear whether the person is still working for Citigroup or when the questioning occurred.

Buffett Sets Fresh Goal as Berkshire Misses Five-Year Target (Bloomberg)
Warren Buffett said his performance at Berkshire Hathaway Inc. should be measured over the course of stock market cycles after missing a five-year target for the first time. Berkshire’s net worth failed to rise as much as the Standard & Poor’s 500 Index from the end of 2008 through 2013, the company’s annual report showed yesterday. It was the only five-year period that happened since Buffett took control in 1965. Still, the billionaire Berkshire chairman and chief executive officer said he can beat the index over equity market cycles, like he did in the six-year period that ended Dec. 31. “Through full cycles in future years, we expect to do that again,” Buffett wrote in the report. “If we fail to do so, we will not have earned our pay.”

Warren Buffett admits to $873 million mistake (CNBC)
Unlike the contents of its stock portfolio that must be filed with the SEC four times a year, Berkshire doesn't have to publicly disclose its debt holdings. In his letter to shareholders released Saturday, however, Buffett admitted to a money-losing bond buy involving Energy Future Holdings. "Most of you have never heard" of the company, he wrote. "Consider yourselves lucky; I certainly wish I hadn't." Buffett said he decided to buy about $2 billion of EFH's debt when it was created in 2007 as part of a leveraged buyout of Texas electric utility assets. He made that decision "without consulting with (business partner) Charlie (Munger). That was a big mistake." Buffett wrote that unless there's a big increase in natural gas prices, the company will "almost certainly" file for bankruptcy protection this year. Last year, Berkshire sold the bonds for $259 million. Adding back the $837 million received in cash interest, Buffett's decision produced a pre-tax loss of $873 million. "Next time," Buffett promised, "I'll call Charlie."

‘Flushable’ wipes clogging up drains citywide (NYP)
Sales of wipes have soared to $6 billion a year, with advertisers claiming the products are the best way to get clean — and safe to toss in the toilet. But the messy truth, say consumers like Dr. Joseph Kurtz of Flatbush, who is suing the makers of Cottonelle and Costco-brand wipes in Brooklyn federal court, is that “flushable” wipes aren’t really flushable. “They do not break down as manufacturers advertise,” according to the class-action suit filed by Kurtz. The 35-year-old, who used the products in his Brooklyn and New Jersey homes last summer, was forced to spend $600 on plumbers to clear his backed-up pipes, lawyer Mark Reich said.

Schwarzman of Blackstone Made $375 Million in 2013 (Dealbook)
Mr. Schwarzman, 67, earned a salary of $350,000 and did not take a bonus, the filing showed. He earned carried interest — his share of Blackstone’s investment profits — of $21.6 million. But he made most of his money from his partnership units, collecting $352.5 million. Separately from that compensation, Mr. Schwarzman received $78.2 million from his personal investments in Blackstone’s funds. Including that would bring his total earnings to $452.7 million. The second in command at Blackstone, Hamilton E. James, who is known as Tony, made $99 million, the filing shows. That includes dividends on his partnership units and common units, as well as his salary, bonus and share of carried interest. Mr. James got $15.7 million from his investments in Blackstone’s funds.

Goldman Sachs Head Hunts in Australia to Meet Fixed-Income Surge (Bloomberg)
Goldman Sachs is in hiring talks with about 10 people as it seeks to expand Australian businesses from trading to capital markets with global banking regulation forcing some competitors to dial back. Australian fixed-income trading is the firm’s biggest growth area after moving its rates and credit derivatives businesses to Sydney from Hong Kong, said Simon Rothery, chief executive officer for Australia and New Zealand at Goldman. Rothery sees opportunities to arrange debt offerings as competition eases, and also wants to gain the top spot in Australian equity capital markets after naming Sean Walsh to head the unit and adding UBS AG’s Sarah Rennie and Bank of America Merrill Lynch’s Belinda Sara in the past 1 1/2 years.

GrubHub’s Official IPO Filing Suggests a Company With an Appetite (BusinessWeek)
GrubHub, which operates the online delivery software for restaurants, is by far the largest in its cohort of delivery middlemen. The company works with about 29,000 restaurants and brought in $137 million in revenue on $1.3 billion in gross food sales last year. But as it’s grown, GrubHub has become less profitable. In 2013 its profit was less than half what it was two years earlier, and its technology and operational costs are growing faster than its revenue.

Artists create ice cream that plays a melody when licked (NYDN)
The brainchild of food designer Emilie Baltz and smart object designer Carla Diana, the interactive food is placed in a cup that sits inside a plastic cone featuring capacitive sensors embedded within it. The sensors can perceive when ice cream in the cup is touched. When a tongue makes contact with the ice cream, a signal is sent to an electronic board and then to a computer with stored sound loops of melodies and beats. Licking the ice cream in different ways produces different sounds.

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