Skip to main content

Opening Bell: 10.02.14

  • Author:
  • Updated:

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.


(Getty Images)

Opening Bell: 1.12.17

Steven Mnuchin profited Paulson's housing investments; Bill Gross is right about Dow 20,000; Peter Thiel is concerned about Silicon Valley's sex life.