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Opening Bell: 03.17.14

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New York Strips London of Mantle as World’s Top Financial Center (Bloomberg)
New York replaced London as the world’s leading financial center for the first time, after the City was rocked by a series of scandals and questions over the U.K.’s place in the European Union. New York holds the top spot in the latest Global Financial Centres Index with a “shaky, statistically insignificant” two-point lead, according to Michael Mainelli, chairman of Z/Yen Group Ltd., which compiles the index. Competition is heating up, with Hong Kong and Singapore, the two leading Asian centers, narrowing the gap between themselves and the top two to fewer than 30 points on a scale of 1,000, the index shows.

Alibaba Starting U.S. IPO Process as Hong Kong Bid Falters (Bloomberg)
China’s biggest e-commerce company plans to work with Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs (GS) Group Inc., JPMorgan Chase & Co., Morgan Stanley (MS) and Citigroup Inc., according to a person familiar with the matter. Investment banks value Alibaba, founded by former English teacher Jack Ma, at as much as $200 billion, which would make it the second-biggest Internet company behind Google Inc. (GOOG) based on market capitalization.

Fannie, Freddie bill leaves status of private shareholders to courts (Reuters)
The 442-page draft from the Democratic chairman of the Senate Banking Committee and the panel's top Republican would keep in place current terms of the government's bailout of the two companies that require them to sweep all their profits into the U.S. Treasury. It is silent on whether or not private shareholders should share in any proceeds when the companies are liquidated.

2 Oligarchs in $7 Billion Deal for a German Oil Company (Dealbook)
The German utility RWE said on Sunday that it had reached a preliminary agreement to sell its oil and natural gas subsidiary, RWE Dea, to the Russian billionaires Mikhail Fridman and German Khan for 5.1 billion euros, or roughly $7 billion. The RWE Dea acquisition is the first known oil and gas transaction by the LetterOne Group, the investment vehicle Mr. Fridman and Mr. Khan set up in 2013 to invest the estimated $14 billion they received for selling their shares of TNK-BP, the Russian oil affiliate of the oil giant BP.

Half of U.S. Business Schools Might Be Gone by 2020 (BusinessWeek)
Richard Lyons, the dean of University of California, Berkeley’s Haas School of Business, has a dire forecast for business education: “Half of the business schools in this country could be out of business in 10 years—or five,” he says. The threat, says Lyons, is that more top MBA programs will start to offer degrees online. That will imperil the industry’s business model. For most business schools, students pursuing part-time and executive MBAs generate crucial revenue. Those programs, geared toward working professionals, will soon have to compete with elite online alternatives for the same population.

Scrabble-Playing Robot Is a Sore Loser (WSJ)
Like many Scrabble players, Victor tends to blame bad luck when he loses. "Sometimes, I hate this game," says Victor, a Scrabble-playing robot created by students under the supervision of Reid Simmons, a robotics professor at Carnegie Mellon University here. Victor's secret is that he talks a better game than he plays. He is a champion trash talker. A typical put-down: "Since you're human, I guess you think that's a pretty good move." One recent day in a CMU student lounge, Victor took on Dorcas Alexander, one of the top-ranked (human) Scrabble players in Pennsylvania. Never before had the robot encountered such a skilled opponent. "She's pushing him into an arena I've never seen," Prof. Simmons said as Ms. Alexander went to work. Dr. Simmons began developing Victor in 2009 to test how robots could "interact in a more natural way" with people. If robots are to perform such tasks as helping older people with household chores, Dr. Simmons said, it will help if the machines are more companionable than, say, a dishwasher. He chose Scrabble as Victor's game because so many people know how to play it. Robots have been trained to deal blackjack and play games including basketball, pool and chess. Scrabble is a new frontier. Though serious players have long honed their Scrabble skills against faceless computer programs, it isn't clear how much demand there might be for wisecracking robots that play the game. "He was very insulting in a funny way," said Brynn Flynn, a CMU graduate student who recently played a few moves against Victor to try it out.

Federal Reserve Officials Weighing How to Retool Rate Guidance (WSJ)
Federal Reserve officials are discussing ways to revise their guidance about the likely future path of interest rates, but it takes some detective work to pin down how they might do it. The Fed has said in its recent policy statements it won't start raising short-term interest rates from near zero until well past the time the unemployment rate falls below 6.5%. That position hasn't changed. But with joblessness at 6.7% in February, several officials have indicated in recent speeches and interviews they might want to scrap the threshold entirely or revamp their message in other ways. Fed policy makers will debate the matter at their meeting Tuesday and Wednesday, though reaching agreement on a new approach could be a challenge.

Quiznos Follows Sbarro Into Bankruptcy Court (Bloomberg)
Quiznos Corp., the Denver-based toasted-sandwich chain, filed for bankruptcy days after pizzeria company Sbarro LLC sought protection from creditors, as competition among fast-food restaurants grows in a tight market. Quiznos said it’s seeking to implement a reorganization that would cut debt by $400 million. Most of its senior lenders support the plan and the chain will keep operating during bankruptcy, according to a company statement yesterday. Competition among U.S. restaurants has been increasing as newer fast-casual chains expand quickly. Sbarro filed for bankruptcy on March 10, while the owner of Hot Dog on a Stick filed last month, as foot traffic in shopping malls dwindled and chains such as Panera Bread Co., Chipotle Mexican Grill Inc. and Subway Restaurants cut into their business.

SocGen Ex-Trader Kerviel Walks to Forget Loss as Judgment Looms (Bloomberg, earlier)
The 37-year-old is walking 1,400 kilometers from Rome to Paris after seeing Pope Francis on Feb. 19 while France’s highest appeals courts considers his bid to overturn two rulings holding him solely responsible for the 2008 trading loss, among the biggest in banking history. A rejection of his appeal by the court on March 19 will send Kerviel to prison for three years. If he wins, a new trial will be held.

Retired police chief eats paper to protect snitch (NYDN)
A retired police chief crossed a Florida judge by eating a piece of paper to protect the identity of an anonymous tipster. The judge demanded the paper containing the tip, but Richard Masten, now the executive director of the Miami-Dade Crime Stoppers, said no. Masten tore the precious notes into strips, shoved the dry bits into his mouth and chewed them with his mouth open as a television crew watched. Judge Victoria Brennan was not in the courtroom when Masten opted for the snack, but she charged him with contempt of court and fined him $500. He now faces up to two weeks in jail. He has until Thursday to turn himself in. “I’ll bring a toothbrush and some pajamas in case I do,” said Masten to an NBC Miami reporter as he left the courtroom. Masten said he understood the consequences when he gobbled up the possible evidence and had he handed over the notes like the judge asked, he would allow the court to set a new precedent for cases and slide down a slippery slope. “I make a promise to tipsters out there,” Masten said in Miami Herald reports. “It isn’t going to happen on my watch. If you want to put me in jail, fine.”


By Alex Guibord [CC BY 2.0], via Wikimedia Commons

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