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Opening Bell: 09.09.14

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Alibaba Begins Wooing Wall Street (Dealbook)
The day formally began at 6 a.m., when Alibaba executives met with the combined sales teams from its six lead underwriters for a teach-in. Held at Citigroup’s investment banking headquarters in downtown Manhattan, the discussion focused on teaching the sales staff about the company and how to best pitch it to potential investors. But the highlight was the lunch presentation, held on the 18th floor of the Waldorf-Astoria in Midtown Manhattan. Starting midmorning, investors lined up for a half-hour or more simply to take the elevator up to the registration desk. At least one potential buyer criticized the setup — completed last week when company executives finally selected the location — which left a long line of people snaking across the cavernous Waldorf lobby and out the door.

Facebook’s Value Tops $200 Billion on Mobile-Ad OptimismFacebook shares rose 0.8 percent to $77.89 at yesterday’s close in New York, valuing the company at $201.6 billion, according to data compiled by Bloomberg. That made it the 22nd-largest company in the world, behind Verizon Communications Inc. and ahead of Toyota Motor Corp.

S&P Faces Squeeze After $1.3 Billion Countrywide Fine (Bloomberg)
Standard & Poor’s (MHFI)’ chances of settling the government’s lawsuit over mortgage-bond ratings for less than $1 billion may have slipped away after Bank of America Corp.’s Countrywide unit was socked with a $1.3 billion fine. The Countrywide ruling was the first to lay out what penalties financial institutions could face under a 1989 bank-fraud law the Obama administration is using against alleged culprits of the subprime mortgage crisis. It has boosted the government’s hand against McGraw Hill Financial Inc.’s S&P, said Peter Henning, a law professor at Wayne State University. “If the starting negotiation point for the Justice Department to settle was $1 billion before, that number has just gone up,” Henning said in a phone interview.

Dave & Buster's Files for IPO (WSJ)
Dave & Buster's Entertainment Inc., the arcade and restaurant chain that received buyout interest earlier this year, has filed for an initial public offering. Dave & Buster's will use proceeds to repay term-loan debt. The Wall Street Journal reported in May that the company, owned by Oak Hill Capital Partners, received an offer worth nearly $1.1 billion from Roark Capital Group. The Journal reported that an IPO launch after Labor Day was also possible. Wellspring Capital Management took the company private in 2006 and sold it to Oak Hill in 2010. A previous IPO plan was called off in late 2012 due to market conditions. Moody's Investors Service upgraded Dave & Buster's in July, noting improved operating performance and higher earnings, and same-store sales growth that outpaced peers. Jefferies and Piper Jaffray are joint book-running managers. Dave & Buster's plans to raise up to $100 million, but that is a placeholder amount used in deciding registration fees and will likely change.

Jimmy Choo Said Near IPO to Value Shoemaker at $1 Billion (Bloomberg)
Jimmy Choo, the luxury shoemaker owned by JAB Holdings, may begin its initial public offering in London as soon as this month amid rising demand for expensive footwear, according to people with knowledge of the situation. JAB could announce plans to sell a 25 percent stake in the maker of $1,995 Lust peep-toe sandals, said the people, who asked not to be identified because the matter is confidential. The company has hired Bank of America Corp (BAC). to manage the sale and is seeking a valuation of about $1 billion, the people said. HSBC Holdings Plc has also been hired, one of the people said. No final decision has been made and JAB may decide not to proceed with an IPO, they said.

Wall St investor who hoarded designer clothes in a filthy two-bedroom... (DM)
A Wall Street investor who hoarded designer clothes and expensive silverware in his disheveled rent-controlled upper east side apartment left behind a massive $18 million fortune when he died last year. But his widow of 10 years says she still can't find the documents that detail the fortune's whereabouts because they're buried under piles of paperwork and boxes. Lewis David Zagor, who died in December at the age of 77, made millions on Wall Street investing in cash and mutual funds but chose to live modestly in a relatively small, two-bedroom, rent-stabilized apartment on Park Avenue and 96th Street East, for which he paid $1,641 a month...While he saved on flat expenses, Zagor spent the sizable dividend checks he received from his investments going on shopping sprees at Saks Fifth Avenue and traveling around the globe, according to DNAinfo New York. 'You have no idea the amount of wealth that is in the apartment,' Valentina Phillips-Zagor, his third wife who was with him for the last 10 years of his life, told the website. 'The most important are the financial documents.'

Federal Reserve Signals Intent to Pressure Largest Banks to Slim Down (Dealbook)
Daniel K. Tarullo, the Fed governor who oversees regulatory policies, signaled the central bank’s intent in testimony that he is scheduled to give before the Senate Banking Committee on Tuesday. In particular, Mr. Tarullo said that the Fed would propose special capital requirements for the largest banks that will be even higher than those demanded under international banking regulations. “We intend to improve the resiliency of these firms,” Mr. Tarullo said. “This measure might also create incentives for them to reduce their systemic footprint and risk profile.” The speech sets out to update Congress on how much progress regulators have made with the Dodd-Frank Act, which was passed in 2010 to overhaul the financial system. The part of his remarks that could unsettle large Wall Street firms has to do with capital. When regulators increase capital requirements, it forces banks to borrow less money to finance their lending and trading. The theory is that banks that rely less on borrowing are more stable because they are getting more of their financing from shareholder funds, which do not have to be repaid at short notice when turbulence hits.

Inversions Require Congressional Action, Lew Says (WSJ)
Treasury Secretary Jacob Lew urged lawmakers of both parties to pass anti-inversion legislation, warning that many more U.S. companies across a range of industries plan to relocate their headquarters overseas to reduce their taxes. Mr. Lew also reiterated that the Obama administration is weighing regulatory action to limit the economic appeal of inversions if lawmakers don't reach an agreement. Mr. Lew promised a Treasury decision on regulatory steps in the "very near future" but warned that such action "will not be a substitute for meaningful legislation—it can only address part of the economics." "It is imperative that lawmakers get this done," Mr. Lew said in a speech Monday at a Washington think tank.

Morgan Stanley to pay $95 million in U.S. mortgage-debt settlement (Reuters)
Morgan Stanley has agreed to pay $95 million to resolve a lawsuit accusing the Wall Street bank of misleading investors in mortgage-backed securities in the run up to the 2008 financial crisis. The settlement, disclosed in court papers filed Monday in New York federal court, follows years of litigation by investors over allegedly false and misleading statements over the soured securities. The deal stemmed from a lawsuit pursued by the Public Employees' Retirement System of Mississippi (MissPERS) and the West Virginia Investment Management Board. The plaintiffs accused Morgan Stanley of violating U.S. securities law in packaging and selling mortgage backed securities in 13 offerings in 2006 and 16 offerings in 2007.

Durex denies rumors of a ‘pumpkin spice’ flavored condom (NYDN)
The arousal over a purported pumpkin spice-flavored condom made its rounds on the Internet over the weekend, but Durex confirmed that the autumnal-themed birth control product wasn't real. “Durex has heard that people are saying we launched a ‘Pumpkin Spice’ condom. We can’t claim this one, but we do love it when people spice up the bedroom,” a Durex spokesperson told BuzzFeed. Pumpkin spice finds its way into everything — coffee, cupcakes and candles — so it was no surprise that social media was abuzz when the fake photo was released. One user tweeted, "Because safe sex is important, no matter what season it is." The photo appears to be an altered image of Durex's flavored "Taste Me" selection of condoms, which come in apple, banana, strawberry and orange.


Opening Bell: 10.05.12

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 “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!"

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