Opening Bell: 10.07.14

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Wall Street Moles Go to New York’s Top Cop, Spurning SEC Cash (Bloomberg)
A tip that helped spur New York Attorney General Eric Schneiderman’s June lawsuit against Barclays Plc was first shopped to the SEC, as was another that triggered his investigation into a controversial trading practice at BlackRock Inc., said people with direct knowledge of the matter. By going to Schneiderman, informants risk hurting their chances of collecting as much money as possible from the SEC. The SEC, responding to its failures to police Wall Street before the 2008 credit crunch, tried to improve its bounty program with input from the Internal Revenue Service and other government agencies that have long paid whistle-blowers. While the overhaul benefited from congressional approval to offer bigger rewards in a wider swath of cases, informants say they’re frustrated by the SEC’s slow process.

U.S. Prosecutor Masterminded $37 Billion Bank Penalty Win (Bloomberg)
Geoffrey Graber, the 41-year-old Justice Department attorney tasked with holding Wall Street accountable for the financial crisis, has a message for his prosecutors: Always be closing. In the past year, Graber has won almost $37 billion in penalties from some of the world’s largest banks, a record haul for prosecutors. To colleagues, he compares his job to that of Blake, the notorious motivational speaker played by Alec Baldwin in David Mamet’s 1992 film Glengarry Glen Ross, who chastises real estate salesmen for failing to lock in deals. “My role was to identify the most promising cases and accelerate those,” Graber said in an interview. “We’ve done our best to put a short fuse on this.”

Pimco's outflow headaches only just beginning (Reuters)
Pimco hasn't said how much money has been withdrawn since fund manager Bill Gross quit on Sept. 26 to join Janus Capital. Pimco said its Total Return fund, which Gross had personally managed for 27 years, saw $23.5 billion in withdrawals in September. Morningstar, which analyzes mutual funds and other investments, estimated net outflow from Total Return at $17.9 billion in September, part of $25.5 billion of net outflows across all of Pimco's U.S. open-ended funds in September...Outflows "will tend to be elevated over the next few months" said Jeff Tjornehoj, head of Americas research at Lipper, a Thomson Reuters company, who said Gross's exit is "the last straw" for some institutional investors. Those "investors are going from the wait-and-see when Bill was there to 'let's accelerate this'" outflow, he said.

What, Me Retire? Bill Gross Speaks on Life After Pimco (BusinessWeek)
Bill Gross, co-founder of Pacific Investment Management Co., didn’t consider retirement a serious option, even after he realized recently that he’d be leaving the company he spent decades building. That’s what Gross, 70, told InvestmentNews, a trade magazine for financial advisers, in an interview published on Monday morning. “You know those adages about smelling the roses and chasing butterflies?” he said. “The markets are my butterflies and my roses. When I go to work Monday, I’ll be smelling the roses.”

Hot air balloon dips into Pacific Ocean, 3 rescued (AP)
KNSD-TV reports a man was proposing to his girlfriend during their sunset ride Sunday when the balloon drifted off course and hovered over the water off Cardiff by the Sea. Many people watched as the balloon drifted toward the beach in northern San Diego county and dipped into the water. Eric Barretto told the station he and his fiancee threw a rope to the water below and several surfers pulled the balloon back to shore. A witness told U-T San Diego the pilot stayed with the balloon and kept it inflated while it was tugged onto the beach.

Hank Paulson: AIG bailout terms were warranted (NYP)
The US government imposed harsh terms for a bailout of AIG during the 2008 financial crisis in order to prevent the “moral hazard” of other companies seeking taxpayer-backed loans, former Treasury Secretary Henry “Hank” Paulson said on Monday. Shareholders, led by former AIG chief executive officer Maurice “Hank” Greenberg, are seeking as much as $40 billion from the government in a trial here, arguing that their bailout had conditions that were too onerous, and that the firm was singled out for a government takeover.

J.P. Morgan Hackers Attempted to Infiltrate Other Financial Institutions (WSJ)
Federal officials asked a group of large banks and other financial institutions last month to check if they had seen indicators associated with the cyberattack that resulted in the theft of account information for millions of J.P. Morgan customers this summer, these people said. A number of financial institutions responded that they had seen traffic from the suspect computer addresses linked to the hackers, but that they didn’t believe they had been breached, the people said. Rather, the hackers, whose identity remains unknown, appeared to be “probing,” or searching for weaknesses on the firms’ digital perimeters.

IMF Cuts 2015 Global Growth Forecast to 3.8% (WSJ)
The IMF said it expects the global economy to grow by 3.8% next year, down from its July forecast of 4%, though still better than this year’s estimated pace of 3.3%. The IMF marked down prospects in the eurozone’s three largest economies, Germany, France and Italy, which the fund says is headed into its third consecutive year of recession. It also sees disappointing output in Japan and a lower growth trajectory for several major developing economies, including Brazil and Russia. Those setbacks more than offset signs of a strengthening recovery in the U.S., the world’s largest economy, as well as small gains in Spain, Canada and Mexico.

Former FTC big jumps on board Herbalife (NYP)
Pamela Jones Harbour, an FTC commissioner from 2003 to 2010, joined Herbalife Monday in a newly created role of senior vice president, global member compliance and privacy.

Cops Mistake Okra For Marijuana, Send The Big Guns To Man's House (AP)
A Georgia man says drug suppression officers mistook his okra plants for marijuana. Dwayne Perry of Cartersville tells WSB-TV that he was awakened by a helicopter flying low over his house Wednesday and then some heavily-armed deputies and a K-9 unit showed up at his door. They were from the Governor's Task Force for drug suppression and they were out looking for marijuana plants. What they had seen, apparently, were Perry's okra plants and a shrub at the end of his house. Perry says the officers ended up apologizing to him. Patrol Capt. Kermit Stokes says the plants did have characteristics similar to marijuana.

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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!"