Opening Bell: 08.14.14

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Banks Get Enforcement Letters in FX-Rigging Probe (Bloomberg)
Banks including JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Morgan Stanley (MS) have been notified regulators are preparing enforcement actions on currency rigging, people familiar with the investigation said. Talks are progressing between banks, the U.S. Federal Reserve and the Office of the Comptroller of the Currency to settle investigations into alleged manipulation of foreign-exchange markets, according to two people, who asked not to be identified because the discussions are private. Some firms have received so-called 15-day letters outlining the agencies’ findings and warning that enforcement actions are likely, the people said.

Louis Bacon and Peter Nygard Move Bahamas Feud to New York (Dealbook)
Mr. Bacon, the founder of the hedge fund Moore Capital Management, has been fighting Mr. Nygard’s attempts to expand his beachfront land holdings, asserting that he has been illegally and surreptitiously adding to the size of his compound to the detriment of the local environment. The suit argues that Mr. Nygard has also commercialized his property, turning it into a celebrity party hangout and that he has ignored a government order in 2010 to limit his building activities. Mr. Bacon, who has bought up and preserved vast tracts of land in New Mexico and Colorado, also owns a grouse-hunting estate in Scotland and an undeveloped island off the Long Island coast. Since 1993 he has owned a retreat in the Bahamas that abuts Mr. Nygard’s ever-expanding compound. Mr. Nygard, in turn, has attacked Mr. Bacon directly and indirectly in the Bahamas via articles in the news media and videos online. According to the lawsuit, Mr. Nygard has hired journalists to write articles that paint Mr. Bacon as a murderer, drug trafficker and a member of the Ku Klux Klan. A lawyer for Mr. Nygard, Richard Good, said in a statement: “Today’s lawsuit is a continuation of Louis Bacon’s malicious campaign against Peter Nygard with the objective of obtaining Mr. Nygard’s Bahamian property (Nygard Cay), through illegal means, and to wrongfully continue to damage Mr. Nygard’s businesses and reputation.” Mr. Good added that Mr. Nygard would file a countersuit in New York. Mr. Bacon’s lawsuit asserts that Mr. Nygard has hired outsiders like the Nation of Islam preacher Louis Farrakhan to support his claims in the Bahamas that Mr. Bacon is a racist.

Bank of America $17B pact still being haggled over (NYP)
The Justice Department’s mammoth $17 billion proposed settlement with Bank of America, expected to be inked last week, is still being haggled over, sources said. In recent weeks lawyers have been focusing on consumer relief and the statement of facts among other terms, three sources have said. An immense amount of paperwork and concerns about wording in the settlement are taking up much of prosecutors’ and BofA lawyers’ attention, three people said. The relief for individual states is another point that could potentially collapse, but is largely settled, two of those people said...New York, California, Illinois and Delaware are the four states that are angling for a bigger share of the relief, The Post has learned from two sources. The four states, along with the US Treasury, are looking to get a chunk of about $9 billion, with the rest going to consumer relief, two people said. The deal is now expected to be announced early next week, according to sources, roughly three weeks after the bank agreed to the broad outlines of the deal.

Four bidders vying for Barclays indexing unit (NYP)
Bloomberg, Standard & Poor’s, MSCI and financial data firm Markit are each in talks to buy the index group, sources said. The discussions are early, one source added — saying they were in the first of two expected rounds of talks. The indexing unit makes money by licensing its formula to companies looking to mimic its returns. The indexes, largely made up of bonds and currencies — collectively known as fixed income — attract billions in assets. The two largest bond exchange-traded funds, run by Vanguard and iShares, both use Barclays’ bond benchmarks as their gauges, and collectively have more than $30 billion in assets, according to data from Bloomberg News. PIMCO, the largest bond fund in the world, also uses Barclays indexes for investing.
Barclays inherited the indexing group after the bank bought the crashed Lehman Brothers in 2008.

Gift of GQ Magazine Prompts Outcry From Lands’ End Customers (NYT)
The free magazine was meant as a gift from Lands’ End — the retailer known for its conservative, sturdy clothing — to its most valued customers. But when the July issue of GQ landed in mailboxes across the country, the cover model was not wearing a monogrammed oxford or polar fleece. Instead, she was topless except for a strategically placed white flower lei. And some of the company’s shoppers were none too pleased. “My 14-year-old son brought in the mail today & was quite disturbed & fascinated by a ‘gift’ Lands’ End sent us — a copy of GQ magazine with an absolutely OBSCENE cover!!!,” wrote one mother on the company’s Facebook page, which filled up with dozens of complaints. “I am appalled that Lands’ End — which I have always thought of as a ‘wholesome,’ family-oriented company — would be the one to expose my son to pornography!” Another said: “We received your ‘Lands’ End Bonus’ of GQ magazine this weekend, and we are absolutely horrified. How can buying something as family friendly as school uniforms lead to soft porn in the mailbox? I’m thankful my son did not bring in the mail.” [...] By Wednesday, the negative reaction had grown so strong that the retailer issued a mea culpa to its shoppers. “I would like to start by extending my most sincere apologies,” Edgar Huber, the chief executive of Lands’ End, wrote in an email. “We are aware that you have received or will be receiving shortly the July issue of GQ magazine with a suggestive cover.” Mr. Huber explained that GQ, a men’s magazine, was included as part of the subscription offer “since we did not want to exclude our male customers.” He also wrote, in bold letters, “There are simply no excuses; this was a mistake.”

U.S. Jobless Claims Rise, But Remain Near Eight-Year Lows (WSJ)
Initial claims for unemployment benefits increased by 21,000 to a seasonally adjusted 311,000 in the week ended Aug. 9, the Labor Department said Thursday. That was more than the 295,000 new claims forecast by economists surveyed by The Wall Street Journal and the highest level since June.

Euro zone economy grinds to halt even before Russia sanctions bite (Reuters)
Euro zone economic growth ground to a halt in the second quarter as Germany's economy shrank and France's stagnated. The zero growth reported by statistics agency Eurostat on Thursday was cause for alarm throughout the 18-nation region, which is already bracing for the impact of sanctions imposed on and by Russia over Ukraine. Germany, Europe's largest economy, contracted by 0.2 percent in the quarter, undercutting Bundesbank forecasts that gross domestic product would be unchanged. Foreign trade and investment were notable weak spots, the German Statistics Office said on Thursday.

Kinder Morgan deal at the centre of price fixing court battle (FT)
Rich Kinder, the Kinder Morgan founder who on Sunday unveiled a $44bn consolidation of a family of companies to create the US’s third-largest energy company, owes no small part of his $10bn-plus personal fortune to a 2006 deal that is now at the centre of a courtroom battle. The one-time Enron executive who bought its physical pipeline assets to form Kinder Morgan spearheaded a management-led buyout of his company that year for $14.6bn, a deal that valued his then 18 per cent stake at $2.63bn. Less than four years later, Kinder Morgan returned to the New York Stock Exchange with a market capitalisation of more than $21bn, creating huge paper profits for Mr Kinder – who by then had amassed a 30.6 per cent stake worth $6.5bn at the IPO price – and his backers from Goldman Sachs’s private equity unit and Carlyle, the buyout group. Kinder Morgan’s 2006 take-private deal is now under scrutiny in a lengthy US court case, brought by disaffected public company shareholders that allege private equity groups conspired to fix prices on eight buyouts by agreeing not to compete against each other by “jumping” on their rivals’ deals.

Maserati Patrol Car Raises Police Suspicions (AP)
Police patrol cars are usually Fords or Chryslers, not Maseratis. So when a patrolman in Braintree, Massachusetts, spotted a Maserati resembling a police cruiser over the weekend, he pulled it over. Deputy Chief Wayne Foster tells The Patriot Ledger the luxury Italian vehicle's body was painted black and white with a police-style shield on the doors, and police-related decals. Foster said the door shield wasn't accompanied by the usual police phrase "Protect and Serve," but rather with "Decepticons punish and enslave." The driver told the officer who pulled him over that he was actually assisting police "because other drivers noticed him and slowed down, thinking it was a police vehicle." The driver, whose name was not made public, was summoned to court to face a charge of impersonating a police officer.

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Anger Over Christine Lagarde's Tax-Free Salary (Independent) Lagarde was accused of hypocrisy yesterday after it emerged that she pays no income tax – just days after blaming the Greeks for causing their financial peril by dodging their own bills. The managing director of the International Monetary Fund is paid a salary of $467,940 (£298,675), automatically increased every year according to inflation. On top of that she receives an allowance of $83,760 – payable without "justification" – and additional expenses for entertainment, making her total package worth more than the amount received by US President Barack Obama according to reports last night. Unlike Mr Obama, however, she does not have to pay any tax on this substantial income because of her diplomatic status. EU Proposes 'Banking Union' (WSJ) The 17 countries that use the euro should consider setting up a "banking union" that allows them to share the burden of bank failures, the European Union's executive arm said Wednesday in a report on the currency union's crisis-fighting efforts. To further stop expensive bank bailouts from pulling down governments' own finances, allowing the euro zone's new rescue fund to directly boost the capital of banks "might be envisaged," the European Commission said. Greeks Flock To Germany Even As They Criticize It (CNBC) Germany, Europe's economic powerhouse and a country which has been criticized by many Greeks over its harsh demands for austerity cuts in return for bailout cash, has experienced an influx of young skilled immigrants. Der Spiegel magazine noted that while Greek newspapers "printed cartoons depicting the Germans as Nazis, concentration camp guards and euro zone imperialists who allow their debtors to bleed to death," the Greeks have kept arriving — bringing an "anything is better than Athens" attitude with them. Pissarides Says Euro Exit Would Aid Rich Greeks At Cost To Poor (Bloomberg) Nobel economics laureate Christopher Pissarides said wealthy Greeks would benefit at the expense of poorer citizens were the country to exit the euro. “A lot of Greeks” have withdrawn money and deposited it with banks elswhere in the 17-nation currency zone, Pissarides said in an interview in London today. If the country returned to the drachma, the new currency would be so devalued they could buy it cheaply on international markets with the cash they’d exported, enabling them to buy more assets in Greece. While poorer Greeks are equally able to appreciate the difficulties facing their country, they’re not as able to shield their funds from an exit from the common currency, Pissarides said. They need to preserve quick access to their savings, which isn’t as easy to do if it’s held at a foreign bank, and such lenders may not always accept small deposits. Zuckerberg Drops Off Billionaires Index As Facebook Falls (Bloomberg) The 28-year-old’s fortune fell to $14.7 billion yesterday from $16.2 billion on May 25, as shares of the world’s largest social-networking company dropped 9.6 percent to $28.84. Woman's Boyfriend Took Car Without Permission Before She Slammed It Into House (NYP, earlier) Dan Sajewski, 23, arrived at his family’s Huntington estate last weekend with Anderson, 21, his on-again, off-again waitress girlfriend. While his parents vacationed on Long Island’s North Fork, the duo helped themselves to his mother’s 2003 Mercedes-Benz CLK 320, a birthday gift from Sajewski’s anesthesiologist father, a source said. They took a joyride to the Hamptons, where they had a little too much fun. A field Breathalyzer test revealed that Anderson drove home with a .30 Blood-Alcohol Content — nearly four times the legal limit and the equivalent of about 15 drinks, prosecutors said at her arraignment yesterday. They drove back to Huntington and she was speeding along Southdown Road when she failed to turn at a T-instersection — ramming through the front of Indiere’s house, obliterating her kitchen, and exiting through the back wall, prosecutors said. “We can’t believe he just let this girl drive a car he wasn’t even supposed to have in the first place,” a Sajewski family member said. “He’s done this before; he took his sister’s Jeep and just took off. “He was trying to get the car home before the family got home from their own Memorial Day weekend. He’s not exactly the model son.’’ The relative added that Sajewski didn’t call his father about the accident until two hours later. In the police report, Anderson told cops “her power steering got stuck, causing her to crash,” and that she only drank “three beers.” Housing Market Crawls Back (WSJ) Housing prices across the U.S. fell in March, but not as much as in earlier months, according to a report Tuesday that offered fresh evidence of a real-estate market on the mend. Compared with February, prices fell just 0.03% in March, and after adjusting for seasonal factors, they rose 0.09%, according to the S&P/Case-Shiller 20-city home-price index. "This is the first flat report we've had in quite some time," said David M. Blitzer, chairman of the Index Committee at S&P Indices. Still, "while there has been improvement in some regions, housing prices have not turned" everywhere, he said. Bankers Hired By Blackberry Maker (NYP) Research In Motion said yesterday it hired investment banks JPMorgan and RBC to review its “options,” which most investors took to mean a potential sale, and warned of another quarterly loss. Gold Investors Rush For The Exits (WSJ) Investors in SPDR Gold Shares and iShares Gold Trust, two high-profile exchange-traded funds that hold physical bullion, also have pulled back recently. Through Friday, the two funds had reduced the number of tons of gold they're holding this month. As of May 15, hedge funds, pension funds and other money managers also had slashed their bets that gold prices will rise in the futures market, to the lowest level since January 20, 2009, according to weekly data released by the U.S. Commodity Futures Trading Commission. The bullish bets rose slightly last week, but remain near the low for the year. Police Find Another Human Body Part In Package In Ottawa (OC) Police found a human hand at the Ottawa Postal Terminal Tuesday night, hours after a bloody foot was delivered to the Conservative party's Ottawa headquarters just blocks from Parliament Hill. Ottawa police were still trying to understand what they were dealing with even as detectives in Montreal combed through a crime scene where a torso was found in a suitcase in that city's Snowdon district. Police discovered the second package, sent from the same place as the package sent to Tory headquarters, Tuesday evening. Officers carried it from the huge Riverside Drive terminal in a brown paper bag, which they X-rayed before they opened it to find the hand. The gruesome events began shortly before noon when access to the Conservative party's headquarters was restricted after the fire department's Hazmat team was called in to investigate a suspicious package. A party staffer had started to open a blood-stained box sent to the office at 130 Albert St. before police were called to investigate. At first, it was thought there was a human heart inside, but after the box was X-rayed, police confirmed that it contained a foot.