Opening Bell: 06.11.14

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Bank of America Mortgage Settlement Is Said to Be Deadlocked (Dealbook)
Bank of America and the Justice Department have reached an impasse in negotiations over a multibillion-dollar settlement deal, raising the stakes in an investigation into the bank’s role at the center of the mortgage crisis. The talks stalled on Monday after the bank’s latest offer — more than $12 billion to resolve state and federal investigations into its sale of mortgage investments that later imploded — fell far short of prosecutors’ demands, according to people briefed on the matter. The Justice Department, which had imposed a Monday evening deadline for the bank to deliver its near-final offer, has sought a settlement worth roughly $17 billion, which would be the largest payout by any bank to date.

Detroit Denies Last-Minute Reprieve for Goats (Dealbook, earlier)
The hedge fund manager Mark Spitznagel has been denied a last-minute reprieve for his guerrilla urban farming project. And now, the 18 baby goats that he brought to the Brightmoor section of Detroit, to help clean up the overgrown area blighted by the city’s financial crisis, will now be sold to the butchers...The city’s decision signals the end of a campaign by Mr. Spitznagel, which began last Thursday, to bring as many as 60 goats from his farmstead in Northport, Mich., to Brightmoor to promote urban farming.The Idyll Farm Detroit plan, named after Mr. Spitznagel’s farm, was to enlist the help of local residents, paying previously unemployed adults to help herd the goats. Mr. Spitznagel and his team had not sought preapproval for the project from Mayor Mike Duggan’s office. Instead, they hoped to persuade the local government by moving ahead with their plan. The goats, however, were not well received by some local officials, and by Saturday, the goats were back on a truck heading out of Detroit.

Gross Raises Government-Related Debt to 50% of His Flagship Fund (Bloomberg)
Pacific Investment Management Co.’s Bill Gross raised his holdings of Treasuries and government-related debt in May to half his flagship fund’s total as the securities gained the most in four months. The proportion of the securities in the $229 billion Total Return Fund (PTTRX) was 50 percent last month, up from 41 percent in April, data on the company’s website showed. It was the highest since 54 percent in July 2010 for the world’s biggest bond fund. Gross, 70, is seeking to stanch 13 straight months of redemptions, saying the fund that’s trailed 62 percent of peers during the past 12 months, according to data compiled by Bloomberg, will again rank at the top by the end of the year. Pimco is betting on a “new neutral” era characterized by global growth converging toward lower, more stable speeds and interest rates that remain below their pre-crisis equilibrium.

World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start (Bloomberg)
The Washington-based lender predicts the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent. The U.S. forecast was reduced to 2.1 percent from 2.8 percent while outlooks for Brazil, Russia, India and China were also lowered. The setbacks may be temporary: the 2015 estimate for world economic growth was unchanged at 3.4 percent.

Venture capitalist guru eyes bitcoin boon (CNBC)
Saul Klein played a key role in starting up Lovefilm International, which has been dubbed the "Netflix of Europe", becoming the company's original CEO before it was acquired by Amazon in 2011 for a reported $317 million. He's also held a position at Skype, acquired by eBay, and was co-founder at startups Kano and Seedcamp. But now, Klein told CNBC, he is being increasingly drawn to the world of virtual currencies and the potential they have for disrupting the mainstream with the advent of the smartphone. "It's very, very transformational," he said of bitcoin - the virtual currency which has already received attention from central banks, policymakers and regulators from around the globe. "Bitcoin has its own ecosystem...(and) is light years ahead of the other (payment) networks."

Cops locate, ticket driver in Lamborghini crash-and-burn near GWB (NJ)
Police, unraveling the mysterious crash-and-burn of an expensive Lamborghini sports car near the George Washington Bridge early Monday, have located and charged its owner and driver in the incident. Deankarte E. Ditchfield-Agboh, a 33-year-old Palisades Park resident, has been issued summonses for abandoning a vehicle and leaving the scene of an accident, said Joe Pentangelo, an agency spokesman. Ditchfield-Agboh was interviewed by Port Authority police and is due in Fort Lee Municipal Court on Aug. 6, Pentangelo said. The Port Authority had been investigating the crash since finding the pricey, rare vehicle burning about 2 a.m. near Bridge Plaza North on the Turnpike westbound, meaning the car would have been leaving New York City, Pentangelo said. It was “burned extensively,” he said. Pentangelo initially said the car “showed evidence of a collision, but it’s unclear where the collision took place.” Efforts to reach Ditchfield-Agboh for comment at his home were to no avail. And an employee at his business, East Coast Auto Group in Lodi, said Tuesday afternoon that he was gone for the day.

EU to launch probe into Apple's Irish tax deal: report (Reuters)
The European Commission will launch a formal investigation on Wednesday into Apple Inc's (AAPL.O) tax arrangements in Ireland, Irish state broadcaster RTE reported, without naming its source. The EU's competition authority said last year that it was looking into corporate tax arrangements in several member states and had requested information from Ireland.

Volatility Traders Have More to Fear than Fear Itself (WSJ)
Exchange-traded notes that profit handsomely from market-shaking events have boomed since the financial crisis. But they have two big shortcomings: They may not work as designed in another financial crisis since their value depends on the bank backing them. And due to the way the products work, anyone holding these for the long term will inevitably see their value erode.

How to Use Tech Like a Teenager (WSJ)
Only 6% of teens exchange email daily, according to the Pew Research Center. They reserve email for official communications, or venues like school where alternatives are banned. "Email is just where all the college applications go," says Ryan Orbuch, a 17-year-old from Boulder, Colo. (The only thing he finds more laborious is email's even more antiquated cousin, voice mail.)

A Bellwether for London Realty (NYT)
When the global bank HSBC sold its London headquarters tower to a Spanish buyer in spring 2007, at the height of the credit and property boom, the deal was the single largest real estate transaction in British history. Then the boom went bust, prompting a fire-sale handover of the building back to HSBC. Next came the nadir. A new owner, this time from South Korea, bought the tower in hopes of a rebound. Now the 44-story building, still serving as HSBC’s headquarters, is for sale yet again. Because the market is teeming with international money, some analysts predict the price this time will surpass that 2007 record of 1.1 billion pounds, or $1.8 billion — a forecast that might say everything you need to know about the boom-bust-boom of London commercial real estate...As goes this building, so goes the London market.

Psychic Turtle Predicts World Cup Win For Brazil (AP)
The animal oracle predictions for the World Cup have begun, with host nation Brazil getting a vote of confidence from its chosen turtle tipster. By making a patriotic choice of food, loggerhead turtle Big Head predicted Tuesday that the host nation will beat Croatia in the opening game of the World Cup on Thursday. Big Head is Brazil's answer to Germany's Paul the Octopus, who started the psychic animal craze during the 2010 World Cup and spawned a slew of imitations around the world. At the Praia do Forte turtle sanctuary north of Salvador, the 25-year-old male sea turtle was given the choice between eating a fish hung from a Brazilian flag or a Croatian flag. After attempting to eat the fish hung from a football indicating a draw, Big Head chose the one representing Brazil. The small crowd of onlookers cheered in appreciation of Big Head's choice.

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Merkel’s First Greek Crisis Visit Seen Sending Signal to Critics (Bloomberg) German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro. Merkel’s visit to the Greek capital Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency region. “The meeting could mark the turning point to the Greek crisis,” said Constantinos Zouzoulas, an analyst at Axia Ventures Group, a brokerage in Athens. “This is a very significant development for Greece ahead of crucial decisions by the euro zone for the country.” Spain Finance Minister’s ‘No Bailout’ Remark Sparks Laughter (CNBC) “Spain doesn’t need a bailout at all,” finance minister Luis de Guindos said, straight faced and somber, as mirth spread throughout the audience (even de Guindos’ assistant interpreter couldn’t mask a smile). US Probes Credit Suisse Over Mortgages (Reuters) U.S. federal and state authorities are investigating Credit Suisse over mortgage-backed securities packaged and sold by the bank, people familiar with the probe said on Thursday. The Justice Department and the New York Attorney General are among those probing Credit Suisse's actions, according to the sources, who spoke on condition of anonymity. New Shuffle At JPMorgan (WSJ) Barry Zubrow, a trusted lieutenant of J.P. Morgan Chase Chief Executive James Dimon, is expected to give up his job as regulatory affairs chief in what would be the latest reshuffling to follow a multibillion-dollar trading blunder. The change is expected before year-end, said people close to the bank. It is possible the 59-year-old executive will remain with the company in an advisory role, these people added. More executive shifts also are possible. The chairman of the corporate and investment banking unit, Jes Staley, was recently in the running to become chief executive of British banking giant Barclays PLC, according to people close to Mr. Staley, but didn't get the job. He gave up day-to-day oversight of J.P. Morgan's investment bank in a July reorganization. J.P. Morgan declined to comment about Mr. Staley, and he couldn't be reached. Investors Back Away From 'Junk' Bonds (WSJ) The massive "junk"-bond boom is raising alarm bells among some large money managers, who warn the market is showing signs of overheating. So much money has flooded into the junk-bond market from yield-hungry investors that weaker and weaker companies are able to sell bonds, they say. Credit ratings of many borrowers are lower and debt levels are higher, making defaults more likely. And with yields near record lows, they add, investors aren't being compensated for that risk. India’s NSE Says 59 Erroneous Orders Caused Stock Plunge (Bloomberg) “India has joined the big league with this trading disaster,” A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte., which manages about $400 million, said by phone from Singapore. “It’s very surprising so many erroneous orders went through. Exchanges and regulators must be one step ahead as systems and technologies upgrade.” Halloween Horror Story: Case Of The Missing Pumpkin Lattes (WSJ) For Asher Anidjar, the arrival of fall isn't marked by turning leaves or a chilly breeze, but a steaming seasonal drink. Recently, though, when he headed to his local Starbucks for a Pumpkin Spice Latte, he left with a bitter taste in his mouth. They were out of the special sauce that gives the treat its distinctive autumnal flavor. "I just left, depressed," said Mr. Anidjar, a 26-year-old commercial real-estate analyst who lives in Manhattan. The drink crops up on the Starbucks menu annually for a limited time, and this year there has been an unusual run on the pumpkin batch. Thanks in part to a frothy dose of buzz brewed up by the Seattle-based coffee giant before the beverage's Sept. 4 debut, the craze has drained supplies at stores across the country. Baristas are hitting the street, searching for stashes of the flavored sauce at other stores. Customers denied their fix—which costs about $4 for a small cup, or "tall" in Starbucks speak—are tweeting about their dismay. "My world almost ended this morning when the local Starbucks told me they were out of Pumpkin Spice Latte," tweeted Jason Sizemore, 38 years old, of Lexington, Ky. Fed Seeks To Clarify Plans (WSJ) Since August 2011, the Fed has been saying it will keep short-term interest rates near zero until a particular date. Right now that date is mid-2015. The hope has been that these assurances would help hold down longer-term interest rates, as well as short-term ones, and thus boost spending and investment. But the Fed isn't happy with this approach. While central-bank officials believe the assurances have helped hold down long-term interest rates, they find the fixed date to be confusing, and they are looking at a new approach. The idea under consideration is to keep offering assurances of low rates, but tie those assurances to what is happening in the economy rather than a point on the calendar. Dave And Buster's IPO Plan A Bust (Bloomberg) Dave & Buster’s Entertainment, operator of 59 company-owned dining and gaming stores, withdrew its plans for a US initial public offering, citing market conditions. The company had sought to raise as much as $107.7 million. Black Swans In The Red Until Turmoil Hits (NYP) The Apocalypse has not arrived — but that hasn’t stopped some of the country’s wealthiest investors from betting on it. The investors, mostly pensions funds, hedge funds of funds and deep-pocketed individuals that were burned during the financial meltdown in 2008, are jumping into these so-called Black Swan investments that carry promised returns of up to 1,000 percent — if another financial Armageddon strikes. The Cassandras of the hedge-fund world that are offering these funds — also called tail risk funds and often with a geographic focus — would suffer terribly in the absence of disaster...The hot sector has attracted such well-known names as Saba Capital’s Boaz Weinstein, Hayman Capital’s Kyle Bass, Corriente Advisors’ Mark Hart, and Universa’s Mark Spitznagel...When markets are buoyant, of course the funds lose money. Through August, Saba Tail Hedge was down 16 percent, Pine River Tail Hedge had fallen 23 percent and Corriente Europe Divergence is down 24 percent, according to investors. Bass’s Japan short fund, which he launched two years ago, is down more than 60 percent since inception. By design, it will lose all of its investors’ money in three years if Japanese bonds don’t go into a tailspin. Bridezilla’s demanding email to potential bridesmaids: If you can’t commit, ‘you’re going to the wrong wedding’ (NYDN) One woman’s over-the-top email of demands to potential bridesmaids has gone viral since it was posted on Gawker.com. “You all have a big roll [sic] in this wedding, so before we continue I’m going to be setting some ground rules and it’s very important you read and think everything through before you accept this honor to be a bridesmaid,” the unnamed bride-to-be begins. If recipients don’t answer emails when outside the country, can’t attend every wedding-related event, or don’t have the cash for several flights and a bridesmaid’s dress, they might not make the cut. “If money is tight and you can’t afford to contribute to the bachelorette party or won’t be able to afford a dress, then [I] don’t have time to deal with that, I’m sorry,” the woman wrote. Of course, she’ll aim for what’s affordable, but, “If you think it’s going to be a $25 Forever 21 dress then you’re going to the wrong wedding.” The lucky bridesmaids must also be available — at any moment — between February and August. “If you don’t think you’ll be able to attend one party but can make the rest of them, I’m sorry, but I’ll have to take you out as a bridesmaid and put you as a guest,” the woman wrote. And please, don’t ignore phone calls. “I don’t have time to wait around for responses, everyone has their phone on them,” she wrote. “It shouldn’t take you more than a day to get back to me. Really think about everything I've said. This is really going to be the most epic wedding ever so I hope you girls can share this special day with us!"