Opening Bell: 09.18.14

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Alibaba IPO Gives Insiders Rare Chance to Sell Early (WSJ)
A swath of early investors in Alibaba Group Holding Ltd. will be able to sell more than $8 billion worth of shares on the day the Chinese e-commerce company goes public, an unusual arrangement that is influencing how bankers price the offering. Insiders and other investors in companies staging initial public offerings are generally required to hold on to shares for several months, in "lockup" arrangements banks design to help protect the stock's price in its early days. But with Alibaba, a number of shares equal to about a third of what could be sold in the deal aren't covered by such restrictions, according to the company's public filings. In contrast, no pre-IPO shares of Facebook Inc. were allowed to be traded when the social-media company made its market debut.

London Finance Empire Seen Dominating After Scots Vote (Bloomberg)
The Scottish nationalists’ narrative is that of London as disinterested overseer, having shrunk from what Salman Rushdie in the “Satanic Verses” described as the “capital of vilayat” (foreign) for the once-colonized, to the capital of the shriveled Great Britain. At stake is London’s relationship to what remains: Wales, Scotland, Northern Ireland and those scattered appendages of past glory, the 14 British Overseas Territories, which replicated and improved on the financial secrecy of the City to become outposts of London’s empire of money. Bloated with the talented young and the moneyed old, London, at least in the measurable currency of investment and capital, is impervious to the departure of Scotland. “London’s power is also from other metrics, like the concentration of state-funded institutions, or the diversity of its population,” said Richard Bell, a professor at the University of Maryland in College Park who teaches a course on London and the British Empire. “London will continue to hold a special place in the global imagination, even though it may be modestly diminished economically.”

Charlie Gasparino Weighs In On Hedge Fund Manager AssGate (Twitter, earlier)

Jobless Claims in U.S. Decline to Two-Month Low of 280,000 (Bloomberg)
The number of Americans filing applications for unemployment benefits plunged last week to a two-month low, a sign the labor market continues to strengthen. Jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a decline to 305,000. Those already collecting unemployment benefits fell to a more than seven-year low.

Fed Plots Cautious Course on Rate Rises (WSJ)
The Federal Reserve took two steps toward winding down the historic easy-money policies that have defined its response to the financial crisis, but stopped short of the move markets are awaiting most: signaling when interest rates will start to rise. With the economy gradually improving, U.S. central-bank officials plan to end the bond-buying program known as quantitative easing after October, hoping to finally stop expanding a six-year experiment in monetary policy that has left the Fed holding more than $4 trillion of Treasury and mortgage bonds. The Fed on Wednesday also detailed a new technical plan for how it will raise short-term interest rates, something most officials currently don't intend to do until next year. The central bank has kept the federal-funds rate near zero since December 2008 and offered assurances along the way about rates remaining low, another part of its varied efforts to boost the post-financial-crisis economy.

Man Says Stripper Chocolate Chambers Robbed Him Outside Club Boom Boom (TSG)
A South Carolina man told cops that a stripper known as Chocolate Chambers robbed him early yesterday after he refused to buy her an expensive drink inside Club Boom Boom. Derrick Lashawn Sinclair, 31, told police that he was attacked by Chambers late Monday night when he exited the Spartanburg nightspot. The woman, Sinclair said, pounced and “next thing I know I’m on the floor, she knocked me down and took my money.” Sinclair said that his cash was inside a “crown bag,” an apparent reference to the velvet bag in which Crown Royal whiskey is packaged. Police noted that Sinclair smelled of booze and “spoke with a slurred speech” when reporting the attack by Chambers, whom he described as a black female. Sinclair acknowledged that he was still “timpsy” from the prior night’s revelry.

Hedge funds going strong despite Calpers’ choice (NYP)
The departure is viewed as a bad omen for the industry, which has underperformed the broader market indexes for the past five years. However, investors appear to be coming out of the woodwork looking for the next market rock stars. New hedge funds raised $15.6 billion in the first half of the year — the most since just before the financial crash of 2008. That high-water mark of $19.5 billion occurred during the first six months of 2008. Six of the 47 new funds raised more than $1 billion — a stark contrast to last year when only one new fund managed to raise $1 billion, according to a survey by Absolute Return, a hedgie news and data provider.

Russian Billionaires Stung by Ukraine Bristle Over Arrest (Bloomberg)
The arrest of one of Russia’s oldest billionaires is sending shivers down the backs of business owners already reeling from U.S. and European sanctions over President Vladimir Putin’s policies in Ukraine. A decade after Mikhail Khodorkovsky’s imprisonment led to Russia’s largest nationalization since the Soviet era, the prosecution of Vladimir Evtushenkov, 65, may prod businesses to pull even more money out of an economy on the verge of recession and relocate abroad, Alexander Shokhin, who lobbies on behalf of the country’s largest companies as head of the Russian Union of Industrialists & Entrepreneurs, said yesterday. Evtushenkov was charged with money-laundering and placed under house arrest two days ago, triggering a sell-off in shares of his companies, including AFK Sistema, and slicing his net worth by a third, to $4.5 billion, according to the Bloomberg Billionaires Index. Evtushenkov denies the charges.

How to Buy Islands, Gold Mines and Villas With Bitcoin (Bloomberg)
Bringing the two groups together is BitPremier, Bloomberg Pursuits will report in its Autumn 2014 issue. The site is the brainchild of 41-year-old Alan Silbert, whose day job is vice president of biotechnology lending at General Electric Capital Corp. (GE) in Washington. Silbert started buying bitcoins in February 2013, when the price was about $22, at the urging of his younger brother Barry, chairman of SecondMarket Inc., a New York–based brokerage specializing in hard-to-trade assets. The brothers realized there was nothing in the bitcoin universe dealing in luxury goods and services and so established BitPremier in May 2013. “At that point, you could only use bitcoins to buy T-shirts, coffee mugs and alpaca socks,” Alan says. “We saw a big void in the market that we wanted to fill. If you want to diversify into bitcoins, we’re the place to do it.” Indeed, BitPremier helped broker one of the biggest transactions ever conducted in bitcoins: the February sale of a two-bedroom villa with a pool in Seminyak, Bali, for $650,000, or about 950 bitcoins. (Items are listed in dollars or euros and converted into bitcoins every 60 seconds.)

As growth stalls, G20 seeks closure on regulations (Reuters)
Treasurer Joe Hockey this week said he and his G20 colleagues are focused on delivering jobs and growth more than ever before. "The changes in the economy over the last few months have made the job harder but it has not diminished our collective resolve," he said. He acknowledged the challenges in attaining the target of bettering the global growth trajectory by 2 percent by 2018, a goal set earlier this year at a similar meeting in Sydney. "Whether we reach the 2 percent or not – the G20 is committed to promoting further growth and to creating more jobs," said Hockey, perhaps suggesting he had already conceded the target was too ambitious. Complicating the growth agenda, Western nations recently slapped sanctions on some of Russia's biggest firms as punishment over Moscow's role in the Ukraine crisis. Slowing growth in China is also fueling anxiety.

Man Apologizes For Tossing Drug-filled Football Into Prison (AP)
Christen D. Moore on Wednesday called the June attempt "a thoughtless and immature decision." The Jackson Citizen Patriot reports the 22-year-old's comments came during his sentencing hearing, where he got 17 to 60 months on two counts of furnishing contraband to a prisoner. Jackson County Circuit Judge Susan Beebe says Moore, who was on probation at the time for home invasion, knows "all about the type of havoc this type of contraband can have on the prison system." Investigators say the throw at G. Robert Cotton Correctional Facility fell short, with the football landing between two fences. Police say the ball contained marijuana, suspected heroin and three cellphones.

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Opening Bell: 04.17.13

BofA Misses Estimates as Mortgage Banking Weighs on Results (Bloomberg) Net income advanced to $2.62 billion, or 20 cents a share, from $653 million, or 3 cents, a year earlier, according to a statement today from the Charlotte, North Carolina-based company. The consensus of 25 analysts surveyed by Bloomberg had predicted 23 cents a share. Chief Executive Officer Brian T. Moynihan, 53, has sold more than $60 billion in assets, settled more than $40 billion in mortgage claims and repaired the bank’s balance sheet since taking over in 2010. He’s now focused on trimming $8 billion in annual expenses and adding revenue, which dropped 8.4 percent on an adjusted basis to $23.9 billion. BNY Mellon Has Net Loss of $266 Million on Tax Expense (Bloomberg) BNY Mellon had a net loss of $266 million, or 23 cents a share, compared with a profit of $619 million, or 52 cents, a year earlier, the New York-based bank said today in a statement. Earnings were cut by $854 million, or 73 cents, because it wasn’t allowed to take foreign tax credits. Excluding the item, BNY Mellon earned $588 million, or 50 cents a share. Analysts had expected BNY Mellon to report an adjusted profit of 52 cents a share, the average of 22 estimates in a Bloomberg survey. IMF Renews Call To Ease Austerity (WSJ) Seeking to keep a fragile global recovery on track, the International Monetary Fund on Tuesday called on countries that can afford it—including the U.S. and Britain—to slow the pace of their austerity measures. The fund warned that "overly strong" belt-tightening in the U.S. will slow growth this year. Across-the-board government spending cuts, known as the sequester, were the "wrong way" to shrink the budgetdeficit, it said in its semiannual report on economic growth. Bitcoin Investors Hang On For The Ride (WSJ) Norman Vialle, a 53-year-old car dealer in Kansas, invested in his share of winners and losers during the Internet bubble of the 1990s. Now he is clinging to a stash of Bitcoin, even though the fledgling virtual currency has lost about 70% of its value in the past week. "It's volatile because it's new, but it's still a lot higher than it was a month ago," Mr. Vialle says. In addition to investing in the currency, Mr. Vialle recently began accepting bitcoins for payment at Overland Park Jeep Dodge Ram Chrysler. One of his customers is planning to pay for a $40,000 Jeep with the currency next month. Grantham man explains why he has Margaret Thatcher tattooed on his leg (ITV) The unusual design features Baroness Thatcher's head sitting on an ice cream cone. Louis Maier, aged 32, wanted to have the six-inch work of art on his right calf to honour her. Cyprus Finance Minister Sees Gold Sale Within Next Months (Bloomberg) The Cypriot government plans to sell part of its gold reserves within the next months, a decision that needs to be approved by the country’s central bank, Finance Minister Haris Georgiades said. “The exact details of it will be formulated in due course primarily by the board of the central bank,” Georgiades, 41, told Bloomberg TV’s Ryan Chilcote in an interview in Nicosia. “Obviously it’s a big decision.” Gold's Fall Costs Paulson $1.5 Billion This Year (FT) The estimated losses for Mr. Paulson, who has made and lost more money on gold than almost any other hedge fund manager, reflect a bold all-in bet on the precious metal While many investors hold some gold in case of financial calamity or a return of the rampant inflation of the 1970s, since 2009 Mr. Paulson has allowed clients of Paulson & Co to denominate their holdings in gold, rather than US dollars. Mr. Paulson enthusiastically embraced the option, according to people familiar with the situation, and has about 85 percent of his personal capital in the firm linked to the gold price. Gold's Great Unraveling Had a Few Harbingers (WSJ) The gold-price rout began taking shape in the early morning hours Monday, after a sharp Friday selloff in a market that had risen steadily for a decade left traders girding for a downdraft. Some in London began arriving at work Sunday night ahead of the market's Asia opening to prepare for the onslaught, while others arrived as early as 4 a.m. Monday, even though a paucity of traders at this time limits most trading options until about 8 a.m. Forget Gold, the Gourmet-Cupcake Market Is Crashing (WSJ) The craze hit a high mark in June 2011, when Crumbs Bake Shop, a New York-based chain, debuted on the Nasdaq Stock Market under the ticker symbol CRMB. Its creations—4" tall, with fillings such as vanilla custard, caps of butter cream cheese, and decorative flourishes like a whole cookie—can cost $4.50 each. After trading at more than $13 a share in mid-2011, Crumbs has sunk to $1.70. It dropped 34% last Friday, in the wake of Crumbs saying that sales for the full year would be down by 22% from earlier projections, and the stock slipped further this week. Crumbs in part blamed store closures from Hurricane Sandy, but others say the chain is suffering from a larger problem: gourmet-cupcake burnout. "The novelty has worn off," says Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm that often works in the restaurant industry. Crumbs now has 67 locations, nearly double the number it had less than two years ago. "These are singularly focused concepts," says Darren Tristano, executive vice president at Technomic Inc., a Chicago research and consulting firm that specializes in the food industry. "You're not going to Crumbs every day." "It's a short-term trend and we're starting to see a real saturation," he adds. "Demand is flat. And quite frankly, people can bake cupcakes."