Opening Bell: 08.22.14

Author:
Publish date:
Updated on

Argentina slams U.S. Judge Griesa for 'imperialist' attitude (Reuters)
Argentina on Friday accused the U.S. judge who called the country's new debt restructuring plan illegal of making "imperialist" comments against the South American nation. Latin America's No. 3 economy tipped into its second default in 12 years in July after U.S. District Judge Thomas Griesa blocked payments to holders of debt issued under U.S. law that was restructured following its record default in 2002. Griesa ruled that measures announced by Argentina's president this week to make debt payments locally and push bondholders to bring their debt under Argentine law violated past court rulings. But he stopped short of holding the country in contempt. Argentine Cabinet Chief Jorge Capitanich said U.S. District Judge Thomas Griesa's choice of words were "unfortunate, incorrect and even, I would say, imperialist expressions". The government has pulled no punches in its stinging criticism of Griesa. It has accused the judge of abusing Argentina's national sovereignty and of siding with the U.S. investment funds who rejected large writedowns in the wake of 2002 and are suing the country for full payment on their bonds.

RBC Weighs Opening Itself to More Risk (WSJ)
The bank's capital-markets business, after fighting for years to become a global player, threatens to become a victim of its own success. Earnings from capital markets, which the company on Friday said contributed nearly 27% to its overall profit, are bumping up against a self-imposed limit that is key to the risk control on which Canada's banks built their recent reputation. When David McKay, the new chief executive of the bank, met with the board of directors for their annual offsite strategy session last month, they spent hours wrestling with the dilemma: how and whether to adhere to a pledge by RBC's previous CEO to limit capital markets' contribution to approximately 25% of total earnings, according to two people familiar with the discussions.

Citigroup Faces Curbs on Hedge-Fund Sales (WSJ)
The curbs, which haven't previously been reported, result from the Aug. 5 approval of a settlement between Citigroup and the Securities and Exchange Commission of claims related to the bank's earlier sale of certain debt products. The setback for Citigroup is partly due to timing. Other banks with similar settlements have been able to escape the restrictions because they came before a change in the law last year. Over the past two weeks, Citigroup has been sending letters to hedge-fund firms informing them that the bank is no longer able to steer investors to their funds. In the letter, Citigroup said it is working to resolve the issue with the SEC. Under the rules, the SEC has to issue a waiver to allow Citigroup to resume hedge-fund sales to clients.

Ackman gets needed Allergan votes (NYP)
Activist Bill Ackman has the votes to call a special shareholders meeting of Allergan shareholders, and a federal trial isn’t going to stop him, a California federal judge said Thursday. Judge David Carter mentioned the votes in a order denying the botox maker’s motion to expedite its case against Ackman, his Pershing Square hedge fund and Valeant, a Canadian drug company. Allergan claims the trio broke insider trading rules by taking “substantial steps” to engage in a hostile takeover before Ackman revealed Pershing Square owned 9.7 percent of Allergan shares. Allergan requested an expedited trial, saying a verdict was necessary before calling the special shareholders’ meeting Ackman has been organizing to oust six of the company’s directors. The ousters would pave the way for acceptance of Valeant’s $53 billion offer. Allergan has to call a special shareholders’ meeting within 120 days after at least 25 percent of shareholders request the meeting in a Delaware court.

"I Ate Taco Bell's Entire New Dollar Menu in One Sitting, and Here's What I Learned" (AW)
They rang me up for the 11 items. I handed over $12.99. And a short drive later, I arrived home with two satisfyingly hefty sacks of warm, damp, processed food. It was time to get started...Beefy Mini Quesadilla: It's more like a melted beef and cheese soft taco than a quesadilla, but it's actually pretty good. Surprisingly spicy thanks to its creamy chipotle sauce, it's one of the few Taco Bell items I can think of in recent memory that didn't require Fire Sauce. Is it worth $1? Definitely, though without the spicy sauce it would be a 75-center at best...Cheese Roll-Up: This is literally just half-melted cheese on a tortilla. It's the kind of thing my 2-year-old would order, unroll out of curiosity and then slowly push toward the center of the table. Is it worth $1? No way. This is the toast sandwich of Taco Bell cuisine...Spicy Tostada: I'm officially full, and at any other point in my life, this is where I would stop. But this is legitimate journalism here, so I soldier on to the one item I've been most looking forward to: the Spicy Tostada. It's basically a one-layer Mexican Pizza, which I've been a fan of since forever. In true Taco Bell to-go style, the tostada and its toppings have been slammed into the corner of the box, making the whole sloppy mess impossible to pick up with your hands. But I've got two whole napkins at the ready, so I do it anway. After getting through the gloppiest portion, I fold the rest into a sort of overstuffed hard taco, which really highlights how much more food you're getting than with the rest of the menu. It's earnestly good, but I'm officially in pain. Is it worth $1? Oh, hell yeah. Maybe $2.

BofA Credited in U.S. Deal for Other Firms’ Consumer Aid (Bloomberg)
Bank of America Corp. (BAC) can get credit toward its record $16.7 billion settlement of U.S. mortgage probes without doing a thing. The lender, which jumped the most in 15 months in New York trading yesterday after agreeing to resolve government claims, pledged $7 billion in consumer relief in the deal. Some of that may be satisfied as borrowers get mortgage help from firms that bought their loans or servicing rights from the bank, according to terms on the Justice Department’s website. That can even apply to assets the bank already sold.

Buffett’s Lapses Highlight Growing Pains With Compliance (Bloomberg)
In the past two weeks, Warren Buffett’s Berkshire Hathaway Inc. said it missed filing deadlines for investments in Dow Chemical Co. and wallboard maker USG Corp. The latter resulted in an $896,000 penalty. Buffett, 83, has boasted for years about running Berkshire with a shoestring staff and delegating responsibilities to the heads of operating units like Geico and railroad BNSF. Yet the mistakes raise questions about whether his management approach is suited to an era of increased reporting requirements. “These are some of the growing pains that come from having a trust-based culture in a world that requires compliance procedures,” Brian Tayan, a researcher at Stanford Graduate School of Business who has studied Berkshire’s governance, wrote in an e-mail. “Shareholders have to make the assessment of whether these filing violations matter to them.”

Yellen Still Sees ‘Significant’ Under-Use of Labor Resources (Bloomberg)
“The economy has made considerable progress in recovering from the largest and most sustained loss of employment” since the Great Depression, Yellen said today in a speech at the Kansas City Fed’s annual economics conference in Jackson Hole, Wyoming. Even so, she underscored the Federal Open Market Committee statement last month that “underutilization of labor resources still remains significant.”

Lexington Deputy Coroner Arrested For DUI, Open Container (WLTX)
In questioning on the scene, Wright allegedly told Officers he had one beer, and purchased the Icehouse 24oz container on his way home, but "didn't know how it was opened." Wright was asked to take a field sobriety test, which he declined after a short discussion with the Officers, who then placed him under arrest for Driving Under The Influence. When Officers placed him in one of the Police vehicles, Wright allegedly stated that the Icehouse beer(s) did not need to be thrown away because they were "from a death scene yesterday." However, following a search of Wright's vehicle he consented to, Officers located two receipts for two Icehouse beers each, both dated Tuesday, August 19th, one from 2:13PM and one from 3:55PM. West Columbia Police subsequently acquired video allegedly of Wright making those purchases. Wright was transported to the Lexington County Detention Center, where he was released on Wednesday after posting bail totaling $1,259. He has since resigned from the coroner's office.

Related

Opening Bell: 11.18.15

Yellen no fan of Fed oversight bill; Barclays faces (another) big forex fine; "Throughout the four to five hour trip, Taco Bell is encouraging fans to follow the historic relocation via a live webcam"; and more.

Opening Bell: 07.20.12

Eurogroup approves Spanish banking sector bailout (Reuters) Euro zone finance ministers approved an agreement on Friday to lend up to 100 billion euros ($123 billion) to Spain so it can recapitalize its banks, but the exact size of the loan will probably only be determined in September. Yahoo To Pay Mayer $100 Million Over 5 Years (WSJ) Ms. Mayer is expected to receive around $5.4 million from Yahoo for the remainder of this year and around $20 million a year after that, though some of that amount is tied to performance targets set by the board...The Yahoo pay package includes restricted stock units valued at $14 million in order to "partially compensate" Ms. Mayer for forfeiting her compensation from Google. It also includes a one-time retention award that is valued at $15 million and will vest over five years. Morgan Stanley Joins Citigroup In Job-Cut Push Amid Slump (Bloomberg) Headcount at Morgan Stanley will decline by about 700 in the second half, bringing total 2012 staff reductions to 4,000, Chief Financial Officer Ruth Porat, 54, said yesterday in an interview. Deutsche Bank, Europe’s biggest lender by assets, is considering about 1,000 job cuts at its investment bank, while Citigroup plans to chop about 350, people with knowledge of the decisions said this week. London Fund-Raisers Put Romney in a Scandal’s Glare (NYT) The former chief executive and a top lobbyist for Barclays, the bank at the center of the scandal, helped organize a Romney fund-raiser. The former chief executive, Robert E. Diamond Jr., has since withdrawn his name as the event’s co-host. The bank’s lobbyist, Patrick J. Durkin, remains a co-chairman: he has bundled $1.1 million for Mr. Romney from friends and business associates, more than any other lobbyist, according to federal records. Nasdaq to Release Compensation Plan for Investors Hurt by Facebook IPO Mess (FBN) Nasdaq is looking to release next week the compensation plan for investors who lost out on the bungled IPO of Facebook...Sources say the deal being discussed will be all in cash, and likely above the $40 million originally proposed...Nadsaq had proposed a $40 million deal in which $27 million of it involved trading credits--a move that outraged investors and market makers who may have lost a combined $200 million or more on the botched IPO. Because of that one source says the new Nasdaq proposal could be as high a $100 million and all of it in cash. Insider Traders Face Longer Sentences As Judges Get Tough (Bloomberg) Since Jan. 1, 2011, the judges have sent the average violator to prison for more than 22 months, according to an analysis of sentencing data by Bloomberg News. That was a 20 percent increase from the average term of 18.4 months during the previous eight years. Boxer’s Bloody Nose Leads to Bank Robbery Charges (AP) Martin Tucker won his latest boxing match, but a bloody nose in the ring could send him to prison for bank robbery. The FBI said it obtained a swab used to stop the bleeding and found that DNA matched Tucker's DNA on other evidence from a 2009 robbery at Monroe County Community Credit Union in Temperance, near the Michigan-Ohio border. In a court filing, agent Robert Schmitz said he was aware of Tucker's bout in April in Toledo, Ohio, and obtained the "discarded" Q-tips swab. Tucker's DNA matched DNA from a mask believed to have been used in the robbery and from the steering wheel of the getaway car, the FBI said...Detroit FBI spokesman Simon Shaykhet declined to discuss how Schmitz got the bloody swab. Defense attorney Haytham Faraj said there seems nothing illegal about acquiring it. "We leave our fingerprints, bits of hair and skin all over the place. If you're a boxer, sometimes you leave your blood around," Faraj said in an interview Thursday. Bank of England Says New York Fed Gave No Warning on Rate-Rigging (Dealbook) The call for a review into Libor in 2008 came after Mr. King and Mr. Geithner had talked about potential problems with the rate during a meeting in Basel, Switzerland, in early May 2008. This discussion was followed by a flurry of e-mails a month later in which Mr. Geithner, who is now the Treasury secretary, recommended changes to the rate, which is used as a benchmark for more than $360 trillion financial products worldwide. The suggestions included ‘‘strengthen governance and establish a credible reporting procedure’’ and ‘‘eliminate incentive to misreport,’’ according to documents released by the New York Fed. Mr. King told Mr. Geithner that he supported the suggestions. Yet the New York Fed did not make any allegations of wrongful behavior connected to Libor, according to documents released on Friday. Mr. King told a British parliamentary committee on Tuesday that Mr. Geithner’s suggestions did not represent a warning about the potential manipulation of Libor. Geithner-Led Fed Didn’t Do Enough in Libor Scandal: Sheila Bair (CNBC) "Looking at those emails, it looks like they had pretty explicit notification of some very bad behavior, and I don't understand why they didn't investigate," Bair said today. Banks in Libor probe consider group settlement (Reuters) A group of banks being investigated in an interest-rate rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays-style backlash by going it alone, people familiar with the banks' thinking said...Barclays Plc was the first to settle with U.S. and British regulators, paying a $453 million penalty and admitting to its role in a deal announced June 27. Its chief executive, Bob Diamond, abruptly quit the next week, bowing to public pressure and erosion of the bank's reputation. The sources told Reuters that none of the banks involved now want to be second in line for fear that they will get similarly hostile treatment from politicians and the public. Rex Ryan's Biggest Loss (NYP) “My surgeon told me one time, ‘How many tacos do you eat?’ because I told him how much I love Mexican food,” Ryan recalled. “I said, ‘I probably can eat about 12 tacos.’ He’s like, ‘OK.’ Never flinched. He said by the time this is really working, you’ll eat about a half or three-quarters of a taco and that’s it. I was like, ‘Why would I want to do that?’ And he said, no, you’ll be satisfied. That’s exactly where I’m at now...I have no clothes that fit. Socks are the only things that fit. Even a hat, underwear, I’ve got to change everything.”