Opening Bell: 06.20.14

Author:
Updated:
Original:

Star-Struck Bankers Return to Hollywood to Finance Movies (Bloomberg)
When Jay Cohen sought funding for a new independent film company, Wing and a Prayer Pictures, he had bankers falling over themselves to finance it. “We had seven banks call and offer us lines of credit,” says Cohen, head of film financing and distribution at Gersh Agency in Beverly Hills, California, and an executive producer of the 1994 comedy “Swimming With Sharks.” “They had never met anyone involved in the company,” he says. From big banks like JPMorgan Chase & Co. (JPM) to billionaires like John Paulson, investors are putting their money into movies again after pulling back during the financial crisis, Bloomberg Businessweek reports in its June 23 edition. Filmmakers are able to borrow at the lowest rates since 2008, bankers say. “There is a lot more activity than I have seen in a long time,” says David Shaheen, head of JPMorgan’s entertainment industries group in Los Angeles. “There is increased comfort in the future of the business relative to a few years ago.”

Mexico's Drug Cartels Scare Oil and Gas Investors (BusinessWeek)
Lawmakers in Mexico City are preparing rules that will allow foreign companies to drill in the country for the first time since 1938. But the violence may keep wildcatters away from the area, which is rich in oil and gas deposits. “Shale will not take off in Mexico like it did in Texas in the near future,” says Dwight Dyer, a Mexico City-based senior analyst for consulting firm Control Risks. “Unless the security situation along the northeastern border improves significantly, smaller companies will probably take their time before jumping in.”

Argentina's comments put U.S. lawyers in awkward spot (Reuters)
At a hearing Wednesday afternoon in Manhattan, Argentina's lawyer, Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, informed U.S. District Judge Thomas Griesa that Argentine officials "will be in New York next week" in order to begin negotiations with the hedge funds whose bond litigation has forced the country to the brink of a sovereign debt crisis. The very next morning, at a press briefing, Argentine Cabinet Chief Jorge Capitanich appeared to contradict Cleary's representations to Griesa: "There is no delegation prepared for a possible trip to the United States," he said, according to a Reuters report from Buenos Aires.

Toppled American Apparel CEO plots to retake helm (NYP)
The board of the struggling clothing chain has hired boutique investment bank Peter J. Solomon as a financial adviser as it braces for blowback from its surprise move to oust Charney as CEO, The Post has learned. Charney is looking to corral shareholder support to seize back the reins, according to sources. While he can’t oust current directors, he’s angling to gain a voting majority by packing the seven-member board with additional seats. “Dov isn’t going down without a fight, and there’s an argument to be made that the board has overreached,” said a source close to the situation. The board blitzed Charney at a Wednesday board meeting, citing personal-conduct issues. The board offered Charney, who has weathered sex-harassment allegations from female employees for years, a four-year consulting contract that he turned down, according to insiders.

Regulatory Scrutiny Transforms Washington's Political-Intelligence Business (WSJ)
Alex Vogel spent the last decade building a Washington lobbying business with a successful practice feeding investors information about potentially market-moving changes in policy. But with federal investigators scrutinizing Washington's interactions with hedge funds and other traders, Mr. Vogel is quitting his firm. His new venture, VogelHood Research, will make all its predictions based on computer algorithms using publicly available information—without ever talking to members of Congress or other policy makers. Mr. Vogel's shift shows how Washington's political-intelligence business is going through a wrenching transformation in the face of heightened legal and regulatory scrutiny, including insider-trading probes. In recent months, a number of lobbyists have left the political-intelligence business, and several lobbying and law firms have created new internal procedures and protocols to guard against violating insider-trading rules. Some hedge funds and other Wall Street firms have, meanwhile, scaled back their own information-gathering activities in the capital, and others are conducting reviews of their Washington operations, according to people familiar with the political-intelligence industry. The Wall Street Journal profiled the political-intelligence practice at New York broker-dealer JNK Securities in 2011. It later exited the business. A company official declined to comment for this article.

Kanye West wants to 'redo' Instagram (Guardian)
Kanye West has offered to redesign Instagram, suggesting that it would be "a simple task" for him to beautify the popular photo app. Speaking at a seminar at the Cannes Lions International Festival of Creativity, West cited the success of his instagrammed wedding kiss with Kim Kardashian, which is already the most-liked photo in the history of the app. "The world as a whole is fucking ugly," West said on Tuesday, during an appearance at the festival. "The internet as a whole is fucking ugly, too." West said he asked Instagram co-founder Kevin Systrom: "Why don't you let us redo Instagram? Now, you know, Instagram is nice. It's nice looking – I'm not knocking it. But in general, everyone spends all of their time looking at their screens or their phones. And just as a simple task, we could clean that up." [...] Although he doesn't have a public account, he follows Kardashian's posts and took an active role in refining the couple's famous photo clinch. "Can you imagine telling someone [like Kim], who wants to just instagram a photo, who's then number-one person on Instagram, 'We need to work on the colour of the flower wall?'" he said. "[But] the fact that the number-one most-liked [photo] has a kind of aesthetic was a win for what the mission is, which is raising the palette." West said he worked on the photo for four days.

IMF's Lagarde urges ECB to consider QE (CNBC)
"If inflation was to remain stubbornly low, then we would certainly hope that the ECB would take quantitative easing measures by way of purchasing of sovereign bonds," Lagarde told CNBC on Thursday. She defines "stubbornly low inflation" as prices remaining well below target in spite of measures being taken to boost inflation.

Justices Deny Patent to Business Methods (NYT)
The Supreme Court unanimously ruled on Thursday that basic business methods may not be patented, even if computers are used to apply them. The case involved a method for reducing the risk that the parties to a transaction will not pay what they owe. Writing for the court, Justice Clarence Thomas said that was “a patent-ineligible abstract idea.” “Merely requiring generic computer implementation,” he added, “fails to transform that abstract idea into a patent-eligible invention.” The ruling appeared to be modest and in line with earlier decisions of the court that were wary of stifling innovation. Still, it will be carefully read in Silicon Valley for indications of how specific technical ideas need to be to become eligible for patent protection. Patent claims over the way ideas are incorporated into computers, cellphones and other devices have become a challenge for many high-tech companies. Justice Thomas indicated that the decision posed no threat to the concept of software patents. “There is no dispute,” he wrote, “that many computer-implemented claims are formally addressed to patent-eligible subject matter.”

Deutsche Bank warned on commodity trading (FT)
Germany’s financial watchdog has ordered Deutsche Bank to do more to ensure that commodity prices cannot be manipulated by its traders, in the latest sign that authorities believe some of the world’s largest financial markets are still open to abuse. Deutsche received a letter from BaFin, the German regulator, in April telling the bank it had found faults in the lender’s internal controls surrounding the reporting of commodity prices, according to people familiar with the investigation.

How to Give ‘Skipping Town’ a Whole New Meaning (NYT)
Along with 15 men and women who gathered in Madison Square Park on a recent cloudy Thursday afternoon, I took part in what the club’s founder, Michelle Joni, called “a themed fitness party in motion.” Ms. Joni, a 29-year-old event impresario who lives in Park Slope, Brooklyn, said it all started last year when she spontaneously skipped on her way to a manicure (to combat the cold) and noticed how good it felt. A quick Facebook post elicited such positive feedback that by the end of the manicure, she knew what had to be done and started Michelle Joni’s Skipping Club the following week. “I curate a different adventure for each time,” said Ms. Joni, dressed in a red cape, leopard-print stockings, fluorescent green glasses and other accouterments that matched the day’s theme — skipping to the future...On the corner of 23rd Street and Avenue of the Americas, we paused to catch our breath and then skipped south, with Ms. Joni directing us to skip sideways, facing one direction, then the other. Next, she had us link arms with a partner and skip in pairs. Later, we did it stepping lightly and also with tiny steps. She said to make the skips our own...Michelle Joni’s Skipping Club meets at 2 p.m. on Thursdays and some weekends and evenings until Aug. 7; $20 per skip, with “memberskip” options.

Related

Opening Bell: 7.15.15

Greece; Hedge Funds; American Apparel v Charney; "Hundreds of sex toys dangling from power lines in Portland, Oregon"; and more.

Opening Bell: 1.21.16

Hedge funds retreat; Goldman believes in M&A; "Capital flight from China worse than thought"; Motorist fined for using wrench to control car without steering wheel; and more.

(Getty Images)

Opening Bell: 9.28.17

Hugh Hefner headed to that playboy mansion in the sky; guy accused of stealing secrets from Google for Uber started an AI-based religion; Lyft nears IPO; killer clown mystery solved; and more.

Opening Bell: 11.13.12

Wall Street Damps Pay Expectations After 2011 Bonus Shock (Bloomberg) Almost 20 percent of employees won’t get year-end bonuses, according to Options Group, an executive-search company that advises banks on pay. Those collecting awards may see payouts unchanged from last year or boosted by as much as 10 percent, compensation consultant Johnson Associates Inc. estimates. Decisions are being made as banks cut costs and firms including UBS AG (UBSN) and Nomura Holdings Inc. (8604) fire investment-bank staff. Some employees were surprised as companies chopped average 2011 bonuses by as much as 30 percent and capped how much could be paid in cash. That experience, along with public statements from top executives, low trading volumes in the first half and a dearth of hiring has employees bracing for another lackluster year, consultants and recruiters said. “A lot of senior managers won’t have to pay up because they’re saying, ‘Where are these guys going to go?’” said Michael Karp, chief executive officer of New York-based Options Group. “We’re in an environment where a lot of people are just happy to have a job. Expectations have been managed so low that people will be happy with what they get.” Goldman Pares Back Partner Picks (WSJ) The New York company is expected to announce this week the promotion of about 70 employees to partner, said people familiar with the situation. The likely total is roughly one-third smaller than the 110 employees named partner by Goldman in 2010...As of Monday, the Goldman partnership committee hadn't finished the list of new partners, said people familiar with the matter. Greece Avoids Defaults (WSJ) Cash-strapped Greece on Tuesday raised the money it needs to avoid default when a Treasury bill matures later this week, but investor nerves are unlikely to be calmed as negotiations for the next slice of much-needed aid continue. The rift among Greece's official lenders over how to pare the country's growing debt pile spilled into the open late Monday, complicating efforts for an agreement that will free up a long-delayed aid payment to the country. The European Central Bank's reluctance to provide additional money to Greek banks poses a risk to the government, which in order to keep afloat has depended on support from local banks to sell its debt. Greece Needs Another 80 Billion Euros: Goldman Sachs (CNBC) The authors of the report, economists Themistoklis Fiotakis, Lasse Holboell Nielsen and Antoine Demongeot, note that the IMF’s target is “unlikely” without such a “drastic debt stock reduction.” “To increase the likelihood that the Greek debt-to-GDP ratio approaches its 120 percent by 2020 target under realistic assumptions, a much more drastic debt stock reduction (possibly north of 80 billion euros in total) will be required,” the report states. Japan Lawmakers Agree To Avert 'Fiscal Cliff' (Reuters) Japan's ruling and opposition parties agreed on Tuesday to quickly pass a deficit funding bill in parliament, in a move that will keep the country from falling off its version of a 'fiscal cliff' as the prime minister eyes elections as early as next month. The bill is needed to borrow some $480 billion and fund roughly 40 percent of this fiscal year's budget. Without it, the government could run out of money by the end of this month and would have to stop debt auctions next month, just as the economy teeters on the brink of a recession. Marc Faber: Prepare For A Massive Market Meltdown (CNBC) “I don’t think markets are going down because of Greece, I don’t think markets are going down because of the “fiscal cliff” – because there won’t be a “fiscal cliff,” Faber told CNBC’s “Squawk Box.” “The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20 percent, in my view.” FBI Agent in Petraeus Case Under Scrutiny (WSJ) A federal agent who launched the investigation that ultimately led to the resignation of Central Intelligence Agency chief David Petraeus was barred from taking part in the case over the summer due to superiors' concerns that he was personally involved in the case, according to officials familiar with the probe. After being blocked from the case, the agent continued to press the matter, relaying his concerns to a member of Congress, the officials said. New details about how the Federal Bureau of Investigation handled the case suggest that even as the bureau delved into Mr. Petraeus's personal life, the agency had to address conduct by its own agent—who allegedly sent shirtless photos of himself to a woman involved in the case prior to the investigation. Trial to Open in $68 Million Insider Trading Case (Dealbook) On Tuesday, Mr. Chiasson, 39, a co-founder of the now-defunct Level Global Investors, and Mr. Newman, 47, a former portfolio manager at Diamondback Capital Management, are set to stand trial in Federal District Court in Manhattan. Prosecutors say they were part of a conspiracy that made about $68 million illegally trading the computer company Dell and the chip maker Nvidia. MF Report Coming (Reuters) A US House of Representatives panel will release a long-awaited report that will dissect the collapse of failed commodities brokerage MF Global. The House Financial Services Committee said its Subcommittee on Oversight and Investigations will post the report online Thursday. A Dose of Realism for the Chief of J.C. Penney (NYT) Andrew Ross Sorkin: "You should know you have a problem when sales at your stores fall 26.1 percent in one quarter. That was the surprising decline J.C. Penney reported last week, when it disclosed that it had lost $123 million in the previous three months...Here's the good news: In the stores that have been transformed, J.C. Penney is making $269 in sales a square foot, versus $134 in sales a square foot in the older stores. So the model itself is working. And Mr. Johnson has the support of the company's largest shareholder, Pershing Square's Bill Ackman, who personally recruited Mr. Johnson. If Mr. Johnson were starting with a blank slate, it might be a great business." China Banker Sees Lower Bar for Yuan Globalization (WSJ) "Renminbi internationalization can be realized based on a partial opening of the capital-account and partial convertibility of the currency," said Mr. Li, a delegate to the 18th Communist Party Congress and longtime advocate of a greater global role for the yuan. The Eximbank is a major arm of the Chinese government for financing trade and investment overseas. Finally, a Place in Brazil Where Dogs Can Go for Discreet Sex (NYT) Heart-shaped ceiling mirror: check. Curtains drawn against the bright day: check. Red mattress: check. The establishment that opened here this year has features that demanding clients naturally expect from a love motel. Brazil, after all, is a world leader in these short-stay pleasure palaces, which beckon couples for trysts away from prying eyes with names like Swing, Absinthe and Alibi, and design motifs like medieval castles or of the American Wild West. But Belo Horizonte’s newest love motel stands apart from the crowd in one crucial aspect. It is for dogs. “I adore the romantic feel of this place,” said Andreia Kfoury, 43, a manager at a technology company who peeked inside the Motel Pet one recent morning while she and her husband were on a clothes-buying spree for their Yorkshire terrier, Harley. The couple, who are motorcycle enthusiasts, bought about $500 worth of imported Harley-Davidson brand items for their dog. “I’m definitely bringing Harley back here when it’s time for him to breed,” a smiling Ms. Kfoury said. “He is very macho, and would be a hit in this place.” Whether dogs like Harley actually need a romantic curtained-off suite to breed seems beside the point. Some dog owners simply like the concept of a love motel for their amorous pets and are willing to pay about $50 for each session, which Animalle will happily arrange.

Opening Bell: 04.18.12

IMF Says Recovery Remains Fragile (WSJ) "An uneasy calm remains," IMF chief economist Olivier Blanchard said. "One has the feeling that any moment, things could well get very bad again." Worst Yet to Come as Crisis Rescue Cash Ebbs, Deutsche Bank Says (Bloomberg) The worst may be yet to come in the global financial crisis as the central bank spending that kept defaults low runs out, according to Deutsche Bank AG. Credit-default swap prices imply that four or more European nations may suffer so-called credit events such as having to restructure their debt, strategists led by Jim Reid and Nick Burns said in a note. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments including Spain and Italy jumped 26 percent in the past month as the region’s crisis flared up. “If these implied defaults come vaguely close to being realised then the next five years of corporate and financial defaults could easily be worse than the last five relatively calm years,” the analysts in London said. “Much may eventually depend on how much money-printing can be tolerated as we are very close to being maxed out fiscally.” BNY Mellon Profit Falls as Record-Low Rates Cut Returns (Bloomberg) Net income fell to $619 million, or 52 cents a share, from $625 million or 50 cents, a year earlier, BNY Mellon said today in a statement. Analysts (BK) had expected the New York-based company to report a profit of 51 cents a share, according to the average of 15 estimates in a Bloomberg survey. Flat BlackRock Profit Tops Forecasts (WSJ) BlackRock reported a profit of $572 million, or $3.14 a share, compared with a year-earlier profit of $568 million, or $2.89 a share. Stripping out one-time items, per-share earnings rose to $3.16 from $2.96 a year ago. Revenue slipped 1.4% to $2.25 billion. Analysts expected earnings of $3.04 a share on $2.23 billion in revenue, according to a poll conducted by Thomson Reuters. Paulson Goes Short on German Bunds (FT) Paulson told investors in a call on Monday that he was betting against the creditworthiness of Germany, regarded in markets as among the safest sovereign borrowers, because he saw the problems affecting the euro zone deteriorating severely, said a person familiar with his strategy. Guy With Spreadsheet of Match.com ‘Prospects’ Says He Was Just Trying to Be Organized (Jezebel, earlier) "I work with spreadsheets a lot," he said. "It's a great additional tool. I work long days, go to the gym, go out on a couple of midweek dates or what not, get home late...how am I going to remember them? I'm not. So I made the spreadsheets. My comments aren't malicious or mean. This was an honest attempt to stay organized." He said he sent the spreadsheet to his date because "she works with spreadsheets a lot too" and she "seemed like a very sweet girl." Italy Puts Back Balanced Budget Goal by a Year (Reuters) Italy will delay by a year its plan to balance the budget in 2013 due to a weakening economic outlook, according to a draft document due to be approved by the cabinet of Prime Minister Mario Monti on Wednesday. The draft Economic and Financial document (DEF), which has been obtained by Reuters, raises the budget deficit forecasts for 2012-2014 and slashes this year's economic growth outlook. Bank of America Faces Bad Home-Equity Loans: Mortgages (Bloomberg) Bank of America, whose home- equity mortgage portfolio exceeds its stock market value, probably will say about $2 billion of junior loans are bad assets tomorrow even as some borrowers are still paying on time. That’s what Barclays Capital estimates the bank will report in its first-quarter results, following decisions by JPMorgan Chase, Wells Fargo and Citigroup to reclassify $4.1 billion of junior liens as nonperforming. In Facebook Deal For Instagram, Board Was Little Involved (WSJ) On the morning of Sunday, April 8, Facebook Inc.'s youthful chief executive, Mark Zuckerberg, alerted his board of directors that he intended to buy Instagram, the hot photo-sharing service. It was the first the board heard of what, later that day, would become Facebook's largest acquisition ever, according to several people familiar with the matter. Mr. Zuckerberg and his counterpart at Instagram, Kevin Systrom, had already been talking over the deal for three days, these people said. Negotiating mostly on his own, Mr. Zuckerberg had fielded Mr. Systrom's opening number, $2 billion, and whittled it down over several meetings at Mr. Zuckerberg's $7 million five-bedroom home in Palo Alto. Later that Sunday, the two 20-somethings would agree on a sale valued at $1 billion.