Opening Bell: 07.09.14

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UBS Says Brazil’s 7-1 Trouncing Is Bearish for Stocks (Bloomberg)
Conventional wisdom has been that a Brazil loss at home in the World Cup would be a positive for the country’s financial markets. A defeat, the argument went, would sour the national mood and prompt voters to oust President Dilma Rousseff, who has sunk the economy into stagflation. Yesterday’s 7-1 loss to Germany, though, was so crushing that it upends that theory, according to Geoffrey Dennis, the head of emerging-market strategy at UBS AG, who’s been covering Brazil since the early 1990s. Yes, the defeat will hurt Rousseff’s chances at re-election in October, but the lopsided outcome at the same time could deal a blow to investor and consumer confidence in a country that obsesses about its national pastime, he said. “It is such a humiliating defeat that you wonder whether it will have a negative impact on Brazilians’ psyche,” Dennis said in a telephone interview from Boston yesterday. “It’s going to confirm to the people that ‘Look, our economy is struggling, we cannot get any growth, now we don’t even have a decent football team either.’”

Citigroup Nears Deal to Resolve Mortgage Probe (WSJ)
The Justice Department and Citigroup Inc are close to a deal for the bank to pay about $7 billion to settle allegations it sold shoddy mortgages in the run-up to the financial crisis, according to people familiar with the matter. The two sides, which had been far apart just weeks ago, are ironing out details of an agreement that would avert a federal lawsuit over the mortgages, these people said. A settlement could be announced as early as next week. The potential settlement marks a reversal from mid-June, when the Justice Department had warned that it planned to file a lawsuit unless Citigroup significantly raised its settlement offer.

The Magic Fades for Gowex's Jenaro García (WSJ)
When Jenaro García's tech company Let's Gowex SA won the top prize from Spain's marketing association in May, the presenter hailed him as an innovator who was making wireless Internet ubiquitous, "a magician who converted Wi-Fi into water." Mr. García, outfitted in an Indiana Jones-style jacket, appeared before the appreciative crowd alongside Wi-Fi Man, a masked, caped superhero figure. The cheering for Mr. García stopped this month as Gowex's success story abruptly unraveled. U.S. investment firmGotham City Research LLC on July 1 posted a takedown of the company, asserting that its stellar financial results were largely fabricated and its highflying stock worthless. With investors jumping ship, Mr. García gave one last defiant performance on Friday. At a meeting of employees, the 46-year-old chairman and chief executive vowed to bring "Wi-Fi to Gotham." To demonstrate his resilience, he brandished metal pins that he said had been used to set 24 broken bones he had suffered in an accident years before. The next day, though, he told Gowex's board that the financial results had been fabricated for at least four years. Gowex filed for bankruptcy, and Mr. García sent a tweet asking forgiveness from those he had harmed.

Emerging Markets' Chocolate Lovers Boost Cocoa Prices (WSJ)
More than a decade ago, Anupama Amarnath learned how to make chocolate candy for her husband, who had a hard time finding enough of the rare treat in Bangalore to satisfy his cravings. But demand for her chocolate, which is tempered and molded into various shapes, grew far beyond her household. Fifty-year-old Ms. Amarnath now operates a chain of 11 retail outlets under the Chocolate Junction brand in and around the Indian city and owns a 10,000-square-foot chocolate factory. Years of rapid growth in chocolate consumption have given India and other developing markets unprecedented sway in the global market for cocoa. These countries' share of global chocolate sales is pegged at 45% this year, according to data from market-research firm Euromonitor International. That is up from 33% a decade ago.

Uber agrees to cap NY pricing during emergencies (AP)
Uber, which uses a mobile application to connect riders with vehicles for hire, has its rates rise and fall with demand, but it has been criticized for "surge pricing" that's sometimes exponentially higher than base fares. Prices usually increase weekdays during rush hour in New York City, on Saturday nights, special occasions like New Year's Eve and during bad weather. Under the agreement signed Tuesday, Uber will set a cap during "abnormal disruptions of the market," limited to the range of prices charged in the preceding 60 days and excluding the three highest prices. Attorney General Eric Schneiderman said the agreement between his office and Uber Technologies Inc. and Uber NYC will apply to UberX, Uber Black and Uber SUV statewide.

Just how bad for you were those cupcakes? (NYDN)
Cupcakes from the now-shuttered bakery chain ranked notoriously high in calorie counts, as their massive desserts were about the size of softballs. According to New Jersey nutritionist Erin Palinski-Wade, calories for one Crumbs cupcake ran anywhere from the high 400s to a whopping 780 calories...Crumbs' delights were also serious sugar bombs, containing about 50-100 grams of sugar each.

Office Team-Building Exercises Gone Bad (NPR)
Several years ago Ben Johnson worked at a health foods store in Iowa. He remembers store management stringing up a donkey piñata to pump up the workers. "Pinned to its chest was a name tag for a rival store," Johnson says. "They explained to everyone that this was, in fact, an effigy and that we were going to work together to figuratively, literally destroy the competition." In lieu of candy, the piñata was filled with dollar coins. An overzealous middle manager with a baseball bat was first up, and he obliterated it. "So when this thing explodes, dozens of the dollar gold Sacagawea coins fly through the air everywhere," Johnson says. "Someone in the front row takes one in the face and goes down. They ricochet off the walls. And when the coins finally stop, I emerge from underneath the table, there's just a stunned silence." The coins are like blood money, and no one picks them up. Johnson thinks of the whole fiasco as an omen since the store eventually fell to the competition...Several years ago, things didn't go well for Peter Brooks when his former employer bused his division to a suburban Washington, D.C., field. They were divided into teams for a round of paintball. "We were issued safety goggles and paintball guns, one of which immediately misfired. It hit a district manager in the crotch," Brooks says. He remembers that the game quickly devolved into screaming, pleading and retaliatory rage — the paintballs left large welts. "A lot of people pointed their guns right at their supervisors, me included," Brooks says. "I shot mine right in the middle of the back, and then when he spun around with revenge in his eyes, I surrendered." The bus ride home, he says, was dead silent.

Ex-JPMorgan trader to challenge FCA over London Whale decision (Reuters)
A former JPMorgan trader charged in the United States over his alleged role in the $6.2 billion “London Whale” trading scandal has won the right to a legal challenge of the British regulator’s decision to drop its investigation into him. Lawyers said the trader, Julien Grout, might want the investigation to continue in Britain as its findings could affect the case against him in the United States. A High Court judge ruled on Tuesday that Grout could bring a so-called judicial review of the Financial Conduct Authority’s (FCA) decision to end its probe before he was able to respond to the allegations.

Hottest China App Inspired by 25-Year-Old’s Manga Passion (Bloomberg)
Erick Guo left Asia’s largest Internet company last year to build a team of artists and engineers who could create smartphone applications inspired by Japanese comics. The 25-year-old and his team ended up with China’s hottest app last month and are working on the next hit. The free app, called MYOTee, lets people design avatars, or digital images, of themselves and friends that can be used for instant messaging or on social networks. It soared to the top of the Apple Inc. and Google Inc. Android app stores in China in June, with the software downloaded 36 million times. Guo, who had previously worked at China Web giant Tencent Holdings Ltd. (700), developed the app by inviting Hong Kong T-shirt artist Peter Lee to join the team and create digital versions of his designs. With backing from venture firms such as IDG Capital Partners, Guo’s team at Lemon Tech is seeking to follow MYOTee’s success with new products such as mobile games.

SEC’s High-Speed Trader Plan Embraced by Funds, Exchanges (Bloomberg)
Chief executives from the New York Stock Exchange to institutional investors including Citadel LLC and Invesco Ltd. (IVZ) backed the commission’s call to rein in some high-frequency trading and make secretive trading venues known as dark pools disclose more about how they work. The SEC also should move forward with a plan to require that brokers provide investors with detailed maps of how their orders are filled, the executives said at a hearing of the Senate Banking Committee.

Finra Launches Probe of Retail Broker Routing Practices (WSJ)
The Financial Industry Regulatory Authority is pressing retail brokers for details about how they route customer orders amid mounting concerns some brokers might be sending orders to venues that provide the highest payments but not the best price for investors.

This dog probably has that ball you lost ages ago (MetroUK)
The Lakeland terrier has sniffed out footballs, tennis balls and beach balls from bushes and grass verges over a number of years. Bemused owner Sarah Bennett now has an entire garden full of her trophies. Sarah, of Newton Abbot, Devon, reckons the pooch has found close to 1,000 balls so far. She told Western Daily Express: ‘Right from when we first bought her as a puppy she would find a ball. Within the first week she found an old leather ball at the end of the garden. ‘She collects balls of all sizes – from tiny bouncy balls to big space hoppers. She must have collected almost a thousand since we first got her.

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Mr. Whitman "was doing what every diligent, competent fund manager and analyst should do—checking up on companies' management to make sure they are being forthright with their investors," said David Anderson, Mr. Whitman's lead defense attorney, in an email. Tiger Management Helps Next Generation Funds (NYT) In a relatively young industry where stars can quickly fade, Tiger Management — and its myriad affiliates like Falcon Edge — is the closest thing to a hedge fund dynasty. After a brief career in finance, Mr. Robertson started Tiger in 1980 with seed money from friends and family. He regularly racked up double-digit returns by taking big positions in companies with good long-term growth prospects and aggressively betting against those stocks poised to fall. Mr. Robertson trained his young protégés — the so-called Tiger cubs — in the same tradition, creating the next generation of hedge funds stars. After leaving Tiger in 1993, Lee Ainslie started Maverick Capital, which currently manages roughly $10 billion. Stephen F. Mandel Jr. began Lone Pine Capital in 1997. Two years later, Andreas Halvorsen opened Viking Global. “We really gravitated to young people, and that was a great deal of our success,” said Mr. Robertson, 80, who often hired people in their 20s. “I was just an old goat with all these young geniuses around.” As the first wave of Tiger cubs age, they are breeding new funds, too. Blue Ridge Capital, where Mr. Gerson honed his skills, has been a particularly good incubator for talent. While Blue Ridge has subscribed to the long-term strategy of Tiger, the founder, Mr. Griffin, has infused the firm with his own philosophy. As a proponent of behavioral finance, he trained analysts like Mr. Gerson to identify how ego and emotion can affect the market and stock performance. Biggest Chapter Yet For A Poison Pen (WSJ) Daniel Loeb isn't one given to half-measures. The hedge-fund manager competes in triathlons, never, ever drinks from a plastic water bottle and is unsparing at times in his criticism of corporate executives. That is exactly how his investors like him. "I didn't give him the money to have a mellow Dan Loeb," said Hugh F. Culverhouse, a Miami investor whose family once owned the Tampa Bay Buccaneers football team. "If I want a mellow Dan Loeb, let me redeem."...The Yahoo campaign signals a new phase in Mr. Loeb's career. Until now, he was perhaps best-known for his poison-pen letters, in which he has scolded executives for everything from keeping relatives on the payroll to socializing at the U.S. Open tennis tournament. Armed with a much bigger war chest—Third Point managed just $1.7 billion as of April 2009—Mr. Loeb can now aim for bigger targets. Mr. Loeb and his investors have a lot riding on a Yahoo revival. "If he makes money on his position, it will be good," said David Tepper, a fellow hedge-fund manager who has known Mr. Loeb for years. "If he doesn't make money, what is the point?" British man rescued off French Atlantic coast after being overcome with Olympic mania and trying to swim to America (DM) The unnamed 34 year old holidaymaker told his friends on the beach at Biarritz that he was off to New York to carry the Olympic spirit across the Atlantic. They thought he was joking but knowing that he was a strong swimmer decided to let him go telling him that a boat would come to rescue him if he got into difficulty. The man swam well beyond buoys 300 yards out to sea marking legal limits for bathing. Then, watched by lifeguards on the shore, he continued swimming until he was out of sight on his 3,594-mile journey. The lifeguards called out a helicopter and a diver dropped into the sea and explained to the man that it was not a good idea to swim across the Atlantic and advised him to head back towards France. He replied that he was a strong swimmer and felt up to it. At the same time lifeguards arrived in a rescue dinghy and threw the eccentric a line before towing him back to the beach. Laurent Saintespes, senior officer at Biarritz airbase told Agence France Presse, ‘He was a bit naive. But at a time when the Olympics are taking place in London you have to see the funny side of things’. Billionaire Jeff Greene On Democracy (NYM) Lately—like at a recent lunch with Steve Schwarzman, who has likened Obama to Hitler—Greene’s been trying another tactic. “Now I appeal to them selfishly,” he says. “ ‘Don’t you realize that if you don’t take care of this kid when they are 10 years old, you’ll take care of them when they are 20 and 100 instead? We just have to pay a little more taxes. It’s not going to kill us. You buy car insurance. Why not buy some democracy insurance?’ People think that Obama is this leftist, socialist guy,” he says. “But I don’t think they understand what people can go for when they are at the end of their line.” South Korean Youth Eschew Samsung Jobs For Facebook Dreams (Bloomberg) Not so long ago, South Korean students dreamed of lifetime jobs at Samsung Electronics Co. Now, many are shunning the juggernaut, intent on trying to emulate the likes of Facebook’s Mark Zuckerberg. Sim Cheol Hwan, 27, is typical of the trend. He wants to take a break from college in Seoul to set up a company rather than line up for job interviews at Asia’s biggest electronics company paying an average of 77.6 million won ($68,300) a year. So he’s set himself up in his own business making apps for Samsung and Apple phones. “I don’t want to get a job at a top 10 Korean company,” said the Hanyang University engineering student, who spent two years in the military. “Zuckerberg’s success proves that there is a lot of money to be made” in startups. Regulators Target Day-Trading Firm (WSJ) In the Romanian city of Cluj-Napoca, inside a garret up a narrow wooden staircase, four young men in T-shirts spend the day moving rapidly in and out of stocks, trying to ride their shifting momentum for profits. "It's very stressful," says one, dressed in a green T-shirt, blue shorts and Adidas sneakers. "The market is very hard to figure out." The four traders are part of a world-wide network initially set up by a Toronto-owned firm called Swift Trade Inc. Swift's founder, Peter Beck, turned it into one of the largest day-trading operations in the world over the past decade by aggressively expanding into far-flung locations, from China to Nicaragua to Romania, where he could recruit traders on the cheap. Mr. Beck also took an aggressive stance toward the law, say regulators in several countries where his firm has traded. The Financial Industry Regulatory Authority is expected on Tuesday to announce a settlement with Mr. Beck and an in-house brokerage unit for not establishing a supervisory system to prevent "a pattern of manipulative trading activity," according to a copy of the settlement reviewed by The Wall Street Journal. The Best CFOs: A Wall Street Journal Ranking (WSJ) #16: Ann Marie Petach, BlackRock. Chewbacca costume head from ‘Star Wars’ sold for $172K (NYDN) A Chewbacca headpiece used in the original "Star Wars" trilogy sold for a whopping $172,200 at a movie memorabilia auction this weekend. 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