Opening Bell: 10.02.14

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Gross Exit Gets Tongues Wagging Around Pimco’s Hometown (Bloomberg)
In Newport Beach, a town of 87,000 where the median household income of $109,677 is almost 80 percent above the state’s, the Bill Gross story is dominating conversations at hairdressers, restaurants and golf courses even as Pimco forbade employees to discuss the matter. Gross, who managed about $373 billion at Pimco, is a familiar sight to many in the seaside town, in a suit or carrying his yoga mat and gym bag. “He’s going to manage a $13 million, million with an ‘m,’ global unconstrained bond fund after building an almost $300 billion, with a ‘b,’ fund,” said Mark Moehlman, a managing director at Beacon Pointe Wealth Advisors, who was sipping tea at the Starbucks at Fashion Island, near Pimco’s offices. “It’s a little bit like Pavarotti singing at the community fair.”

As PIMCO bleeds assets, Gross shows risk of star culture (Reuters)
Gross's new employer, Janus Capital, saw its shares soar nearly 40 percent as investors bet Gross would act as a magnet for investor funds. But those who stay put may have played the better hand. Lipper data shows that the heir to the throne of the "Bond King", Dan Ivascyn, has been a more successful manager in recent years, making nearly three times the gains recorded by Gross over three and five years, and was on the way to beating him again in 2014, although at a much lower asset base.

Fannie, Freddie Shares Plunge After Investor Lawsuit Is Dismissed (WSJ)
Shares of Fannie Mae and Freddie Mac plunged on Wednesday, following a federal-court decision that dealt a blow to big stockholders such as money managers Fairholme Capital Management LLC and Perry Capital LLC. A U.S. District Judge on Tuesday threw out lawsuits brought by Fairholme, Perry and other shareholders that challenged the U.S. government's 2012 decision to sweep nearly all of Fannie and Freddie's profits to the U.S. Treasury rather than collect set dividend payments. Fannie Mae's common stock declined 37% to $1.70 on Wednesday, while shares of Freddie Mac were down 38% to $1.65. Some classes of the companies' preferred shares fell by more than 50%. The single-day declines in the market capitalizations of the companies were the steepest in dollar terms since March 11. For the year, shares of Fannie Mae common stock are down 44%. Freddie Mac has suffered similarly steep declines.

Bank of America Board Gives Chairman Job to Brian Moynihan (WSJ)
The move had been informally discussed among board members at least as early as early 2013, said people familiar with the matter. Some board members who had argued against it have since left.

Corporate U.S. Healthiest in Decades Under Obama With Lower Debt (Bloomberg)
Steve Wynn, founder of the Wynn Resorts Ltd. (WYNN) casino empire, once called President Barack Obama’s administration “the greatest wet blanket to business and progress and job creation in my lifetime.” Barry Sternlicht, chief executive officer of Starwood Property Trust Inc. (STWD), said Obamacare was driving down wage growth and “affecting spending and the desire to buy houses and everything else.” They are among a chorus of corporate executives and lobbying groups that regularly assail Obama for policies that they say are stifling investment and hurting companies. Corporate and economic statistics almost six years into his administration paint a different picture. Companies in the Standard & Poor’s 500 (SPX) Index are the healthiest in decades, with the lowest net debt to earnings ratio in at least 24 years, $3.59 trillion in cash and marketable securities, and record earnings per share. They are headed this year toward the fastest average monthly job creation since 1999, manufacturing is recovering and the U.S. has returned as an engine for global growth. The recovery, which stands in contrast to weak growth in Europe and Asia, has underpinned an almost threefold gain in the Standard & Poor’s 500 Index since March 2009. Wynn has been part of that recovery. Since Obama first took the oath on Jan. 21, 2009, the shares of his luxury hotel company have surged fivefold while the S&P 500 Index more than doubled.

Woman Strips Naked In Corporate Box At Australian League Football Game (HP)
The stadium luxury suite wasn't supposed to be clothing-optional. But a Scottish woman still stripped naked in a corporate box at an Australian Football League game in Melbourne Saturday, giving fans an eyeful. Heather McCartney apparently pulled the stunt on a dare as she watched Hawthorn play Sydney in the Grand Final. “I said ‘If Hawthorn win I’m getting naked,’" McCartney told the Herald Sun. "They won and I got naked. It was great.” But not everybody appreciated the view. Police at the Melbourne Cricket Ground arrived to arrest McCartney, and she was accused of trying to hit and bite officers. On Sunday the 26-year-old pleaded guilty to indecency and other charges and was fined $300 Australian (about $262 U.S.), according to reports. Both McCartney and the building firm that owns the corporate box have denied allegations that McCartney was hired to strip.

Jobless Claims in U.S. Unexpectedly Decreased Last Week (Bloomberg)
Jobless claims dropped by 8,000 to 287,000 in the week ended Sept. 27, from a revised 295,000 in the prior period, a Labor Department report showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg called for 297,000. Continuing claims decreased to an eight-year low.

‘Fat finger’ orders $617 billion in Japanese stock by mistake (NYP)
Share orders worth more than Sweden’s entire economy had to be canceled after the biggest “fat finger” trade ever. The 40 trades, worth 67.78 trillion yen ($617 billion), were canceled in Tokyo before they could be executed, Bloomberg News reports. The largest order was for 1.96 billion shares of Toyota, which would have been almost 60 percent of the company. Other shares ordered in the trade included Honda, Canon, Sony and financial group Nomura.

Pork Wounds Heal as Hog Farmers Gain From U.S. Corn Bust (Bloomberg)
The U.S. hog herd, at an eight-year low on March 1, rose in the three months ended Sept. 1 by the most since 1991, government data show. After two years of losing money, hog producers are getting a boost from record corn and soybean harvests just as tight meat supplies send pork and bacon prices to all-time highs and erode profit for buyers including Hormel Foods Corp. and Cracker Barrel Old Country Store Inc.

Virgin Money Planning London I.P.O. in October (Dealbook)
Virgin Money, the British financial services company partly owned by the billionaire Richard Branson, said on Thursday that it planned to carry out an initial public offering in London this month. Virgin Money is one of several so-called challenger banks — challengers to the larger, more traditional lenders that dominate the banking landscape here — planning I.P.O.s in London. The bank expects to raise about 150 million pounds, or $243 million, in the offering and to sell shares equivalent to about 25 percent of its capital. It said it expected to be listed on the London Stock Exchange this month.

Jamaica drafts pot decriminalization bill (CBS)
Mark Golding told reporters that lawmakers should make possession of 2 ounces or less a petty offense before the end of 2014. He also expects decriminalization for religious purposes to be authorized by then, allowing adherents of the homegrown Rastafarian spiritual movement to ritually smoke marijuana, which they consider a "holy herb," without fear of arrest.

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Opening Bell: 04.25.13

Apple Readies Its First Bond Offering (WSJ) Apple's announcement Tuesday that it plans to borrow for the first time could be as well received as its smartphone launches. Investors are desperate to take cash off the sidelines, even on high-quality securities that will yield relatively little. Despite its huge cash stockpile, Apple plans to issue debt to help fund dividend payments and stock buybacks in part because much of its cash is overseas. Raising money in the debt market would help Apple avoid the big tax bill that would come from bringing the cash back to the U.S. "We would likely buy the deal," said Matt Brill, a portfolio manager overseeing $40 billion of investment-grade bondholdings at ING Investment Management. Twitter Said To Bolster Security After AP Hack (Bloomberg) Two-step authentication will be introduced to make it harder for outsiders to gain access to an account, said the person, who declined to be identified because the information isn’t public. In addition to a password, the security measure usually requires a code sent as a text message to a user’s mobile phone, or generated on a device or software. Twitter’s defense against hacks involving the theft of passwords came under scrutiny this week after a hacker sent a false post about explosions at the White House, triggering a drop in the Standard & Poor’s 500 Index that wiped out $136 billion in market value. The attack came the same month the U.S. Securities and Exchange Commission said companies can use social-media sites to share market-sensitive news. It also threatened to complicate efforts by Chief Executive Officer Dick Costolo to establish the service as a viable business ahead of a possible initial public offering. Hoax Won't Deter Tweeting (WSJ) The Twitter hoax won't affect the company's disclosure plans or those of companies like Dell and Exxon Mobil, which have indicated they will use social media to communicate corporate news, according to company officials...Banks say they consider sites like Twitter an increasingly important news source and expect them to become essential outlets given the SEC's recent blessing of social media as a way for companies to disclose market-moving information. Virgin America Wants Fliers to 'Get Lucky' at 35,000 Feet (CNBC) The carrier on Monday introduced a cheeky new seat-to-seat ordering system. Without the assistance of an attendant, you can discreetly order a drink, snack or meal delivered to a fellow passenger onboard your flight. Your flirting begins on the airline's touch-screen personal entertainment system, located on the back of headrests. Call up the flight's digital seat map and send a cocktail, snack or meal to a fellow traveler onboard. After selecting items and paying with a credit card, a flight attendant delivers the goodies directly to the passenger's seat. After the delivery, you can follow up and chat with your object of affection with Virgin America's existing seat-to-seat chat platform via its Red in-flight entertainment system. The chat platform allows travelers to send text messages to other fliers. "I'm not a betting man, but I say your chance of deplaning with a plus-one are at least 50 percent," Branson said in the Get Lucky on Virgin America video posted on the airline's Facebook page. PIMCO's Rising Stars Pull In Money For Future After Gross (Bloomberg) Pacific Investment Management Co. is becoming less dependent on Bill Gross, preparing for an eventual future without the world’s best-known bond investor and adding pressure on its rising stars to live up to his legacy. Gross is overseeing a smaller share of Pimco’s mutual-fund assets and pulling in less of its cash. His $289 billion Pimco Total Return Fund got 19 percent of Pimco’s new mutual-fund deposits in the two years ended March 31, down from 42 percent in the prior period and 79 percent before that, Morningstar estimates. The portion of mutual-fund assets run by Gross fell to 63 percent as of March 31 from 84 percent a decade ago. ECB Says Ditching Austerity Would Not Help Euro Zone (Reuters) European Central Bank Vice-President Vitor Constancio said that seeking to stimulate economies by stopping measures aimed at cutting government debt could merely increase countries' borrowing costs rather than triggering growth. Deutsche Bank can't shake L.A. claims over foreclosure blight (Reuters) A judge has denied Deutsche Bank AG's bid to dismiss a lawsuit by the city of Los Angeles accusing it of letting hundreds of foreclosed properties fall into disrepair and illegally evicting low-income tenants, a representative for the city's attorney said on Wednesday. Los Angeles Superior Court Judge Elihu Berle allowed the 2011 civil enforcement action to proceed, according to the city attorney's office. The ruling was made during an April 8 hearing and a written decision was issued late on Tuesday, the city said. Traders Bet On A Sugar Rush (WSJ) Even as prices plumb nearly three-year lows, investors are betting that they will drop even more. Positions that profit when sugar prices fall hit an all-time high of 212,419 contracts—worth about $4.5 billion—on April 9. The number of these "short" contracts held by investors is up 65% from the start of the year. The wager is that Brazil, the world's biggest sugar producer, will report a record crop this year, leading to a huge global surplus. The harvest began in early April, and the weather has been ideal—dry and sunny. If growers' luck holds, prices could keep falling into late summer, when the total size of the crop begins to take shape, analysts say. 'The Rent is Too Damn High' guy is running for mayor, has an anthem to prove it (NYP, AnimalNY) McMillan has thrown his hat into the ring for the 2013 New York City mayoral race with a musicalanthem and accompanying YouTube video. "Jimmy McMillan, the political candidate whose slogan represents the one issue that all New Yorkers can agree on–that the rent is too damn high–is running for mayor," says Animal New York in the introduction to the video. "It's been two long years since I been on the scene, now I'm back in the game looking mean and lean," McMillan sings in the video. "The race may be different but the message is the same, R.I.T.D.H. is going to change the game!" "My mustache and haircut are too damn fly!"

Opening Bell: 04.22.13

Bill Gross Attacks UK and Euro Zone Austerity (FT) Bill Gross, manager of the world's largest bond fund for Pimco, has launched a stinging attack on efforts by Britain and much of the euro zone to cut debt rapidly with severe austerity measures, warning that such action risks stifling recovery. "The U.K. and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not," Mr Gross told the Financial Times. "You've got to spend money." Argentina's New Debt Offer Rejected by Holdout Creditors (WSJ) Holdout creditors on Friday rejected Argentina's proposal to pay them about 20 cents on every U.S. dollar of bonds they own, leaving a U.S. appeals court to decide how to enforce a ruling that may push Argentina into a new default. "Not only are the details of Argentina's proposal unacceptable and unresponsive; Argentina fails even to provide this court with meaningful 'assurances' that it will actually comply with its own proposal," said Theodore Olson, a lawyer for the holdouts, in a brief filed Friday. Argentina's own math values the offer at $210 million, less than 15% of the $1.47 billion that holdouts were owed on their defaulted bonds as of March 1, according to the brief. Hedge Fund Stars Suit Up At Yankee Stadium To Attract Investors (NYP) Hedge-fund mogul Stevie Cohen will be pitching at Yankee Stadium tomorrow. No, the 56-year-old billionaire is not suiting up for the Bronx Bombers — but he will be hoping the magic of the House that Ruth Built will yield some investment cash. Cohen, whose SAC Capital faces a loss of $1.7 billion from investors who want out of his $15 billion hedge fund, is one of about 70 hedge fund managers who’ll be at the Stadium tomorrow making a pitch to prospective new investors at a day-long event sponsored by Goldman Sachs. Singapore Will Replace Switzerland As Wealth Capital (CNBC) Switzerland has $2.8 trillion in assets under management, with $2.1 trillion of that coming from offshore wealth. Switzerland accounts for 34 percent of the $8.15 trillion in total global wealth. Yet the report said Singapore could overtake Switzerland in offshore assets under management by 2020. It said Swiss offshore assets could fall below $2 trillion by 2016, while Singapore's assets could more than quadruple by then. Somali Banking Starts From Ground Up (WSJ) Abdusalam Omer is a central bank governor without much to govern. The Central Bank of Somalia doesn't hold reserves in the country's currency, the shilling. There are no functioning commercial banks in the strife-torn country for it to regulate. The 75-strong staff that still turns up for work after two decades of civil war is a motley crew of money men and handymen. "I don't know why the central bank employs painters," says the 58-year-old who was named the country's top banker in January. Eventbrite Funding Slows Its IPO Chase (WSJ) Eventbrite Inc., an event ticketing company, has raised $60 million from two investors, making it the latest example of a startup to raise significant private late-stage funding that puts off an initial public offering. San Francisco-based Eventbrite had sparked expectations of an imminent IPO when it said earlier this month that it hired a chief financial officer, Mark Rubash, who previously worked at Yahoo Inc. and eBay Inc. Instead, it joins a growing number of companies that have found plentiful funding in the private markets rather than going public at an early stage. The company has raised the new cash from mutual-fund firm T. Rowe Price Group Inc. and Tiger Global Management LLC, an investment-management firm, said Kevin Hartz, co-founder and chief executive. That brings its total private fundraising to some $135 million since its inception in 2006. "This gives us flexibility in setting the timeline for a later IPO, on our schedule," said Mr. Hartz. Deutsche Bank Margin Call on Vik Sparks $2.5 Billion Dispute (Bloomberg) Alexander Vik went to Deutsche Bank AG’s London office in October 2008 to meet account managers who congratulated the Norwegian entrepreneur on how well his Sebastian Holdings Inc. investment fund was doing. Within a month, as global markets tumbled into crisis, the same bankers demanded about $530 million against the fund’s currency bets and began to liquidate its positions. Vik, 58, will argue at a 12-week trial starting in London today that the bank’s actions resulted in losses and missed profits totaling about $2.5 billion. A judge will have to decide whether Sebastian’s calculation of lost trading gains is accurate, said John Day, a lawyer at London-based litigation firm DaySparkes. Zimbabwe Prepares Law to Seize Company Stakes Without Paying (Bloomberg) Zimbabwe’s government is preparing a law that would allow it to seize controlling stakes in companies without compensation, according to a draft of the legislation obtained by Bloomberg News. The law would be an amendment to a 2007 act that compels foreign and white-owned companies such as Rio Tinto Group, Sinosteel Corp. and Impala Platinum Holding Ltd. to sell or cede 51 percent of their shares to black nationalsor state-approved agencies.