Opening Bell: 03.04.14 - Dealbreaker

Opening Bell: 03.04.14

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Singapore named the world's most expensive city (BBC)
Singapore has topped 131 cities globally to become the world's most expensive city to live in 2014, according to the Economist Intelligence Unit (EIU). The city's strong currency combined with the high cost of running a car and soaring utility bills contributed to Singapore topping the list. It is also the most expensive place in the world to buy clothes. Singapore replaces Tokyo, which topped the list in 2013. Other cities making up the top five most expensive cities to live in are Paris, Oslo, Zurich and Sydney, with Tokyo falling to sixth place...However, not all Asian cities are tough on the wallet. India's major cities - including Mumbai and New Delhi - were found to be among the least expensive in the world.

Japan finance minister: Gathering facts on bitcoin, unsure whether crime involved (Reuters)
Japanese Finance Minister Taro Aso said on Tuesday that the government is still trying to figure out what has led to the collapse of the Tokyo-based bitcoin exchange Mt. Gox and is not sure whether crime is involved. "We still have not had a clear grasp of the situation," Aso said in response to a reporter's question after a cabinet meeting. "(We) don't know if it was a crime or just a bankruptcy." Mt. Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday, saying it may have lost nearly half a billion dollars worth of the virtual currency due to hacking into its faulty computer system.

Mt Gox collapse could help Bitcoin, says US regulator (Telegraph)
"It's on the one hand a setback, on the other hand it will cause further improvements in this industry and some more regulatory involvement," Benjamin Lawsky, superintendent of New York's Department of Financial Services, told Reuters. "It's part of [a] shaking out," he said on the sidelines of a banking conference in the US.

Citigroup: U.S. Sought Information From Mexico Unit (WSJ)
The New York bank said Monday it received subpoenas from the Federal Deposit Insurance Corp. and U.S. prosecutors, three days after the bank disclosed it had found allegedly fraudulent billings at its Mexico unit that cost it up to $400 million. A regulatory filing Monday disclosed that Citigroup and related parties—including the U.S. unit of its Mexico business, Banco Nacional de Mexico, or Banamex—have received grand-jury subpoenas issued by the U.S. Attorney's Office for the District of Massachusetts tied to anti-money-laundering requirements. Meanwhile, Citigroup's exposure to Russia and Ukraine came under the spotlight. The instability in the region hammered stocks and bank stocks in particular. Of major U.S. banks, Citigroup shares fell the most Monday, losing 2.1% to $47.61. So far this year, they are down 8.6%, also last among the big six U.S. banks.

Citigroup Joins JPMorgan in Seeing Trading-Revenue Drop (Bloomberg)
Citigroup finance chief John Gerspach said yesterday his firm expects trading revenue to drop by a “high mid-teens” percentage, less than a week after JPMorgan Chief Executive Officer Jamie Dimon said revenue from equities and fixed income was down about 15 percent. If trading at the nine largest firms slumps that much, it would extend the slide from 2010’s first quarter to 36 percent. “It sounds like more bloodletting on Wall Street,” said Jeff Davis, a managing director for the financial-institutions group at advisory firm Mercer Capital in Nashville, Tennessee. “What we are seeing is a function of investors being scared of bonds because the math is bad. No one I talk to wants to take a chance adding bonds to the portfolio.”

Australia: Snake eats crocodile after battle (BBC)
The incident at Lake Moondarra, near Mount Isa (Australia), was captured on camera by local residents on Sunday. The 10-ft snake, thought to be a python, coiled itself around the crocodile and the two struggled in the water. The snake later brought the dead crocodile onto land and ate it. Tiffany Corlis, a local author, saw the fight and took these pictures, which have been widely used in the Australian media. "It was amazing," she told the BBC. "We saw the snake fighting with the crocodile - it would roll the crocodile around to get a better grip, and coil its body around the crocodile's legs to hold it tight." "The fight began in the water - the crocodile was trying to hold its head out of the water at one time, and the snake was constricting it." "After the crocodile had died, the snake uncoiled itself, came around to the front, and started to eat the crocodile, face-first," she added. Ms Corlis said it appeared to take the snake around 15 minutes to eat the crocodile. The snake was "definitely very full," when it finished, she said.

As Prime Russian Trading Partner, Germany Appears Crucial to Ending Crisis (NYT)
Whether it is importing fuel from Gazprom or selling Mercedes-Benz to billionaire oligarchs, trade with Russia has played an important role in Germany’s emergence as an economic superpower over the last decade. Germany is now heavily reliant on Russia for its energy needs, importing more natural gas from Russia than any other country in Europe. But Germany’s enhanced status on the world stage — combined with the end of the commodity boom and the onset of economic stagnation in Russia — has also shifted the balance of power. Some analysts argue that it is Russia that has the most to lose if economic sanctions are ever imposed. This dynamic could offer insight into the role that the German chancellor, Angela Merkel, will play in any negotiations with the Russian president, Vladimir V. Putin.

Behind the Preplanned Oscar Selfie: Samsung's Ad Strategy (WSJ)
Samsung Electronics spent an estimated $20 million on ads to run during breaks in the Academy Awards broadcast on Sunday night. But Samsung may have got more promotional mileage from Oscars host Ellen DeGeneres during the show itself. Ms. DeGeneres toyed with a white Samsung phone during the broadcast, including when she handed a Galaxy Note 3 to actor Bradley Cooper so he could take a "selfie" photo of himself and other stars including Brad Pitt, Meryl Streep, Kevin Spacey and Jennifer Lawrence surrounding the host...the Samsung stunt didn't come off without a hitch: many people were quick to note on Twitter that the Oscar host was also tweeting during the evening with rival Apple's iPhone. Samsung declined to comment about Ms. DeGeneres' iPhone usage...Samsung wasn't the only brand that got a big plug last night. Ms DeGeneres ordered pizza for some in the audience from Big Mamma's and Pappa's Pizzeria in Los Angeles. The boxes carried a Coca-Cola logo, which didn't advertise during the program. Rival Pepsi was an Oscar advertiser. "Big Mama's and Pappa's Pizzeria getting a thank-you note tomorrow," read a tweet sent out last night from Wendy Clark, Coca-Cola's senior vice president of integrated marketing communications.

Fed Lifts Veil Slowly on Bank Oversight in Era of Transparency (Bloomberg)
With the scheduled publication of annual stress-test findings in March, the Fed will for the first time describe how rising interest rates could affect the health of the nation’s biggest banks. Last year, the Fed didn’t disclose results of a similar test, even though the U.S. Treasury’s Office of Financial Research had flagged interest-rate risk as the one code-red concern in the financial system. Almost four years after the Dodd-Frank Act gave the Fed unprecedented authority over the banking industry, Democrats and Republicans alike in Congress are demanding more communication on financial risk.

JPMorgan pays $400 million to settle with Syncora over toxic loans (Reuters)
The figure was included in a financial statement for 2013 issued by Syncora Holdings Ltd on Friday. Syncora had announced an agreement on February 24 but had not revealed the amount. Brian Marchiony, a spokesman for JPMorgan, declined on Monday to comment on the Syncora settlement. Syncora brought several cases against JPMorgan to recover losses on securities created and sold by the former Bear Stearns and Co and its EMC Mortgage affiliate. JPMorgan bought Bear Stearns in 2008. The bond insurer claimed the bank misrepresented the quality of loans underlying the securities and that it was deceived into insuring them.

New Jersey honor student sues parents for school fees after they cut her off at age 18 (NYDN)
An 18-year-old New Jersey honor student and cheerleader has been tossed from her parents’ Lincoln Park home, but demands that her mother and father continue to pay her private high school and impending college costs — as well as her mounting lawyer fees, according to her lawsuit. Rachel Canning claims she’s been out of her parents’ home since her 18th birthday, Nov. 1, after her parents vowed to cut her off “from all support both financially and emotionally.” But Sean and Elizabeth Canning say their “spoiled” college-bound daughter doesn’t live by their house rules and left the home because she didn’t like the law of the land — overseen by her father, a former Lincoln Park police chief...Canning filed suit last week and is scheduled to appear with her attorney, Tanya Helfand, at 3 p.m. Tuesday in Morristown Family Court.

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Opening Bell: 02.21.13

Feds Split Over When To Close Cash Spigot (WSJ) Minutes released Wednesday from the Fed's January policy meeting show officials concerned that the current easy-money policies could lead to excessive risk-taking and instability in financial markets. The Fed is buying $85 billion in mortgage and U.S. Treasury securities a month to drive down long-term rates and has promised to keep short-term rates near zero until unemployment improves. Citigroup Chairman Not Pressing Bank Breakup (WSJ) Michael E. O'Neill was among a small group of directors who after the financial crisis urged the company to weigh the pros and cons of splitting up the third-largest U.S. bank, said people familiar with the deliberations. Mr. O'Neill, now chairman, has overseen a management shake-up in the past year and is backing a broad cost-cutting plan. But exploring a breakup is no longer among his top priorities. Mr. O'Neill has concluded that breaking up Citigroup doesn't make sense now, given economic and regulatory uncertainty as well as a host of financial considerations, these people said. Wells Fargo ramps up private equity despite Volcker Rule (Reuters) The fine print of the Volcker Rule is expected to be finalized as soon as this year. Major banks such as Bank of America Corp and Citigroup are already pulling back from private equity investments ahead of the rules. But Wells Fargo is taking a different path. The bank invests in buyouts and venture capital deals largely on its own, with capital only from Wells Fargo itself and some employees. By avoiding equity from outside investors, the bank is considered to be engaging in "merchant banking," an activity that is likely to be exempt under the Volcker Rule, lawyers and people familiar with the matter said. Dimon Defends His Duel Leadership Roles (NYP) JPMorgan Chase CEO Jamie Dimon has no intention of relinquishing his chairmanship, insiders say, despite renewed calls from a group of shareholders to split the roles at the nation’s biggest lender. The American Federation of State, County and Municipal Employees, a granddaddy of public employee unions, as well as New York City and Connecticut pension funds, are pressuring the bank in the wake of its $6 billion “London Whale” trading blunder. The shareholders, which hold about $1 billion worth of bank shares, say the move would help to avoid a repeat of last year’s debacle, which led the board to slash Dimon’s pay in half. JPMorgan officials, though, don’t want to go as far as splitting the roles, saying their boss steered the bank successfully through the financial crisis and is well suited for both jobs. Regulator Weighs Ban For Corzine (WSJ) Two newly elected directors of the National Futures Association plan to push the agency to hold a hearing on the matter, having criticized the response of federal regulators some 16 months after the industry was shaken by the collapse of brokerage MF Global where the former New Jersey governor was chief executive. Shia LaBeouf Pulls Out Of Broadway's Orphans (NYP) Producers announced that LaBeouf parted ways with the show after just a week of rehearsals due to “creative differences,” even though the play’s scheduled to begin previews March 19. But last night LaBeouf, 26, posted e-mail exchanges on Twitter revealing divisions between him and bombastic Baldwin. In a message titled “Creative Differences” LaBeouf posted an e-mail to him from director Dan Sullivan, which reads, “I’m too old for disagreeable situations. You’re one hell of a great actor. Alec is who he is. You are who you are. You two are incompatible. I should have known it. This one will haunt me. You tried to warn me. You said you were a different breed. I didn’t get it.” Russia's Missing Billions Revealed (FT) Russia's central bank governor has lifted the lid on $49 billion in illegal capital flight - more than half of which, he says, is controlled "by one well-organized group of individuals" that he declined to name. Sergei Ignatiev, due to step down in June after 11 years in his post, is seldom outspoken about any issue other than interest rates. But he unburdened himself in an interview with the Moscow newspaper Vedomosti about money leaving the country through the back door, which he said equaled 2.5 percent of gross domestic product last year. "This might be payment for supplies of narcotics...illegal imports...bribes and kickbacks for bureaucrats...and avoiding taxes," he told the daily, which is part-owned by the Financial Times. New York Times Looks To Sell Boston Globe (CNBC) This follows the Times Company's sale of other regional papers as well as the About.com group, as it focuses in on its core asset — the New York Times brand. And with that focus, the publisher is honing in on what's really been working for the company — the New York Times subscription model. The company has retained Evercore Partners to advise on and manage the sale, but won't say who it's already talked to, or how much it thinks the assets are worth. Citi analyst Leo Kulp, who calls this a "positive move," estimates that the segment could fetch about $200 million. The segment generated $395 million in 2012 revenue, which Kulp says implies about $67 million in EBITDA in 2012. He applies a three times multiple — "on the high end of comparable large metro newspaper sales" — to give the paper a $200 million price tag. Herbalife Prez Goes On Offensive (NYP) President Des Walsh, in a conference call, said that “despite what we believe to be unprecedented, unfair and untrue attacks on this company, our business continues to do well.” Deputies: Couple started fighting over man scratching himself (WWSB) According to the Manatee County Sheriff’s Office, Shalamar Petrarca complained to her boyfriend, 30-year-old Ronald Howard, that it was rude and disgusting to be “scratching his testicles” while she was about to eat dinner. She told deputies that Howard began yelling at her, pushed her into the kitchen, causing her to get a scratch on her ankle, then threw her out of the house. Howard told deputies that she punched him in the eye for “scratching his balls”, and the he pushed her through the door in self-defense. Deputies say Howard had no visible injuries, but Petrarca did have a scratch on her ankle.

Opening Bell: 04.08.13

Portugal Seeks Budget Options (WSJ) Prime Minister Pedro Passos Coelho said he would look for fresh spending cuts to keep Portugal's €78 billion ($101 billion) international bailout program on track following a Constitutional Court decision that threw his government into crisis by striking down some of its planned austerity measures. Hedge Fund Star Gets A Hip-Check (WSJ) Jeffrey Vinik's Tampa Bay Lightning are struggling, but the performance of his National Hockey League team isn't the only worry for the veteran stock-picker. Investors have asked to pull around $1.5 billion from his hedge-fund firm after a period of poor performance, according to people briefed on the matter. The withdrawal requests amount to around 18% of the roughly $8 billion that was run by Vinik Asset Management. The redemption requests have come as Mr. Vinik, who rose to fame in the 1990s as the manager of Fidelity Investments' Magellan fund, has added a new investment team and moved from Boston to Tampa to be closer to the Lightning, the franchise he owns. The moves have raised concerns in some quarters that Mr. Vinik, 54 years old, may have become less focused on investing, according to people familiar with the firm. Lew To Press For Policy Changes (NYT) Jacob J. Lew began his first trip to Europe as Treasury secretary on Sunday, a four-city tour in which he is expected to try to persuade finance ministers to pursue a little more growth and a little less austerity to improve the economic fortunes of the Continent and the world. Rogue Trader Leeson to Advise Irish Borrowers on Bank Debts (Bloomberg) Nick Leeson, the trader whose wrong- way bets on Japanese stocks ruined Barings Plc, is joining a mediation firm to advise Irish borrowers looking to renegotiate debts in the wake of the real estate collapse. Leeson, 46, who has lived in Ireland for more than 10 years, will join GDP Partnership as a principal as it expands into Dublin, the company said in a statement posted on Twitter by Leeson. There is “a lot of fear and stress currently in the country with debt the root of the problem,” it said. Greek Bank Merger Halted (WSJ) Greece's two largest lenders are heading for state control after their merger was halted by the government over the weekend. The unexpected move came after National Bank of Greece and Eurobank came up short in their plans to raise capital and amid fears by the country's international lenders that the combined entity could become too big to be bailed out by the government. Putin Faces Down Topless Protest In Germany (Reuters) Russia urged Germany to punish a group of women who staged a bare-breasted protest against President Vladimir Putin on Monday during a visit to a trade fair in Hanover with German Chancellor Angela Merkel. Three members of the women's rights group Femen, which has staged protests against Russia's detention of the feminist punk band P*ssy Riot around Europe, disrupted a visit by Putin and Merkel to an industry fair focusing on Russian business. They stripped off to the waist and shouted slogans calling the Russian leader a "dictator" before being covered up and bundled away by security men. "This is ordinary hooliganism and unfortunately it happens all over the world, in any city. One needs to punish (them)," said Kremlin spokesman Dmitry Peskov. Investors Bankroll Lawsuits (WSJ) A new generation of investors is plunging into "litigation finance," putting up millions of dollars to fund lawsuits in hopes of collecting when verdicts come down. Established financiers are expanding into new areas, including loans to law firms, and finding clients among the biggest American companies. Meredith Whitney Blasts Critics In Debut Book (NYP) Prominent bank analyst Meredith Whitney comes out swinging at critics in her debut book, “Fate of the States.” The Wall Street financial analyst, who made headlines with her accurate 2007 prediction that Citigroup would cut its dividend amid the unfurling financial crisis, says she was “pilloried in the financial press” after she warned of looming state- and city-bond defaults resulting from budget shortfalls. Whitney, who made her forecasts on CBS’s “60 Minutes” back in December 2009, blasted critics who claim her prediction of municipal-bond defaults suggested they would all happen at once: “For the record, I never said those 50 to 100 defaults would all happen in 2011.” Hedge Funds Cut Bets Most Since ’08 as Prices Slump: Commodities (Bloomberg) Hedge funds reduced bets on a commodity rally by the most since 2008 as rising supplies of everything from copper to sugar and slowing U.S. growth drove prices to the biggest slump in six months. General Electric to Buy Lufkin Industries for $3.38 Billion Cash (Reuters) Lufkin, which sells and services oilfield pumping units and power transmission products, has operations in the U.S., Canada, Latin America, the Middle East, and Europe. Man shot with arrow at gentleman's club (KN) The incident occurred around 3:30 a.m. Sunday at The Ball Gentleman’s Club at 3005 Alcoa Highway. Police responded to a E-911 call that someone had been shot, but upon arrival they discovered it wasn’t with a gun. A member of The Ball Gentleman’s Club security personnel appeared to have been shot with an arrow Powell said. Officers conducted an immediate search of the area, but were unable to locate the suspect. The victim was treated on scene.