Opening Bell: 10.10.14 - Dealbreaker

Opening Bell: 10.10.14

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Trading Activity Likely to Buoy Banks (WSJ)
The pickup in action was driven by signs of an improving U.S. economy, the European Central Bank’s push to stimulate growth and Scotland’s bid for independence. Choppier markets helped lift trading revenue for banks that had previously been leaning more heavily on lending and investment-banking deals to increase profits. Banks face an easy comparison from a year ago when trading volumes slumped amid uncertainty about when the Federal Reserve could move to raise rates. But trading “hasn’t been the albatross it had been in past quarters,” said Devin Ryan, an analyst with JMP Securities, referring specifically to the long slump in trading revenue in bonds, currencies and commodities.

Johnson Controls Fires Consultant After Affair With CEO (Bloomberg)
Johnson Controls Inc. (JCI) fired a consulting firm after learning that one of its principals had an extramarital affair with Chief Executive Officer Alex Molinaroli. Molinaroli, 55, told his family about his affair with Kristin Ihle, a 45-year-old psychologist, in late May, according to the transcript of a court hearing at which Ihle unsuccessfully sought a restraining order against the CEO’s estranged wife. Ihle’s Milwaukee company, which helps businesses with leader development and succession planning, had been working with auto supplier Johnson Controls for years, according the consulting firm’s website...On May 29, Molinaroli’s wife of 28 years, Patsy, 59, sent an e-mail to Ihle: “I will destroy you, your family, and business just as you have done to me,” according to the transcript of the hearing. Later that day, while her husband was absent, Patsy Molinaroli fired a .38 caliber pistol at least four times in their Brookfield, Wisconsin, home, according to the criminal complaint. She also smashed window panes, a Pac Man arcade game and a china cabinet, leaving holes consistent with an aluminum baseball bat found in the kitchen, according to the complaint.

Fuld Advises on Deal to Buy National Stock Exchange (WSJ)
A little-known company called OpenMatch Holdings LLC agreed to buy the 130-year-old National Stock Exchange in a deal in that was advised by former Lehman Brothers Holdings Inc. CEO Richard Fuld, according to people familiar with the plans. The Jersey City, N.J.-based NSX, which is part-owned by the CBOE Stock Exchange, closed down at the end of May amid low trading activity. It handled roughly 13 million shares on its last day of operations, or about 0.2% of all U.S. stocks traded...Mr. Fuld, who was chief executive of Lehman Brothers when it collapsed in 2008, has played a role in the acquisition talks, the people said. Mr. Fuld’s firm, Matrix Advisors LLC, is advising OpenMatch on the deal.

Bill Ackman adds to Fannie, Freddie stakes (NYP)
Ackman has added to his Fannie Mae and Freddie Mac bets since the stocks got clobbered by a federal court ruling last week, The Post has learned. Ackman’s Pershing Square hedge fund said it added to its 10 percent stakes in the two mortgage giants. Pershing Square quit reporting its Fannie and Freddie holdings earlier this year, so it’s unclear how big the stake has become. Uncle Sam owns 80 percent of both companies.

Noah's Ark Theme Park Plans To Only Hire People Who Believe Biblical Flood Actually Happened (Reuters)
The developer of a Noah's Ark-based theme park in Kentucky said on Wednesday he would fight for his religious rights after state officials warned he could lose millions in potential tax credits if he hires only people who believe in the biblical flood. Ark Encounter, which is slated to open in 2016 in Williamston, Kentucky, is not hiring anyone yet, but its parent company Answers in Genesis asks employees to sign a faith statement including a belief in creationism and the flood. State officials and Ark Encounter lawyers have exchanged letters in which the state threatened not to proceed with tax incentives for the park if there was discriminatory hiring practices, a state official confirmed on Wednesday. The letters between the parties came to light after the Louisville Courier-Journal and the Lexington Herald-Leader obtained them through open records requests. "We're hoping the state takes a hard look at their position, and changes their position so it doesn't go further than this," Ark Encounter's Executive President Mike Zovath told Reuters.

Nomura’s Credit Rating Raised by Moody’s on Profitability (Bloomberg)
The company’s long-term rating was increased by two levels to Baa1 from the lowest investment grade of Baa3, Moody’s said in a statement yesterday. Nomura’s capitalization had benefited from a cost-reduction program and lower holdings of illiquid assets, the agency said.

Pimco Total Return Cut U.S. Government-Related Holdings in September (WSJ)
U.S. government-related holdings accounted for 38% of the $201.6 billion bond fund at the end of last month, compared with 41% at the end of August, according to data available late Thursday on Pacific Investment Management Co.’s website.

Former Fed Chairman Bernanke takes stand in AIG bailout trial (Reuters)
On Thursday afternoon, Bernanke distinguished between the $85 billion loan package provided to AIG, which came with an interest rate of more than 12 percent and a nearly 80 percent stake in the company, and loans the government provided to banks at the height of the 2007-2009 financial crisis through broad lending facilities at the New York Fed. While officials designed the AIG rescue to "minimize windfall" for shareholders, they considered countervailing factors when designing the other programs, including the need to get the funds into the financial system and avoid any stigma associated with taking advantage of the loans, Bernanke said.

Wife-carrying contest offers wife's weight in beer (UPI)
Organizers of the North American Wife Carrying Championship in Maine said the winner will receive their wife's weight in beer and five times her weight in cash. The organizers announced the Oct. 11 competition at the Sunday River Resort in Newry will feature a 278-yard obstacle course and the fastest finisher will receive their wife's weight in beer and five times the woman's weight in cash as a prize. The event will also offer prizes for the team with the greatest combined weight and the spousal pairing with the greatest combined age.

Related

Opening Bell: 02.28.13

EU Bonus Rules Meet Anger (WSJ) The new rules would prevent banks from promising bonuses that exceed an employee's salary—though, with shareholder approval, bonus payments could rise to double the salary. The rules, which are supposed to kick in at the beginning of next year and appear to be the world's toughest, still need to be approved by EU member states and the full European Parliament. European banking executives and trade groups say the rules—which are likely to apply to all European bank's employees around the world—will put the industry at a severe disadvantage relative to U.S. and Asian banks, and that it will provoke unintended consequences. Banks early Thursday weren't yet publicly commenting as they digested the news. But executives privately didn't hold back. "It's a disaster," said a senior investment-banking executive at a top European bank. "It's a crazy policy" that could jeopardize European banks' abilities to hire employees in the U.S. or Asia. Jockeying Stalls Deal On Spending Cuts (WSJ) With mandatory across-the-board spending cuts set to begin Friday, the White House and congressional Republicans are poised to let the deadline pass, each calculating that their hand in negotiations only grows stronger if they scorn a quick compromise. The first face-to-face meeting on the issue between President Barack Obama and congressional leaders won't happen until Friday—the deadline for Mr. Obama to set in motion $85 billion in broad spending cuts. None of the participants expect the morning meeting at the White House to produce a breakthrough. In the run-up, with no serious talks under way, each side is maneuvering to ensure the other catches the blame if the cuts kick in. Cuts Unlike To Deliver Promised US Budget Savings (Reuters) The $85 billion cut to budget authority amounts to about 2.4 percent of the $3.6 trillion the U.S. government is expected to spend in the fiscal year that ends on Sept. 30. The actual amount of savings is much less - $43 billion in the current fiscal year, according to the Congressional Budget Office. That's because federal agencies don't spend all of the money they are allocated in any given fiscal year. A $1 billion aircraft carrier, for example, may take years to build. Even at that lower level, the effects are likely to ripple across the world's largest economy in a way that will work against deficit-reduction efforts. Scrutiny Of Heinz Trades Grows (WSJ) The Financial Industry Regulatory Authority, a Wall Street self-regulator, and the Federal Bureau of Investigation are reviewing numerous trades in Heinz stock shortly before the buyout announcement sent the share price soaring Feb. 14, the people said. The inquiries add to an investigation the Securities and Exchange Commission disclosed Feb. 15 into what it called a "highly suspicious" $90,000 purchase of stock options the day before the deal, a position with a potential profit of $1.7 million. The FBI also has said it launched a criminal investigation into options activity ahead of the deal. Flowers Foods Set To Buy Wonderbread From Hostess (NYP) After no other bidders emerged to challenge it, Flowers Foods is set to snare Wonder and a slew of other bread brands being sold by bankrupt Hostess Brands for $360 million. How The Pope's Retirement Package Compares To Yours (CNBC) Let's start with the basics: The pope emeritus will receive a monthly pension of 2,500 euros, according to Italian newspaper La Stampa. That translates to almost $3,300, or close to the monthly maximum of $3,350 that Social Security will pay to an American who retires this year. Few people will actually qualify for that amount. For starters, you would have to wait until 70 to retire. You would also have to spend most of your working life earning Social Security's taxable maximum pay, which is set at $113,700 this year. "That's quite rare," said Richard Johnson, director of the program on retirement policy at the Urban Institute. He pointed out that the average Social Security check is about $1,200 a month — not enough to pay for the typical American retiree's expenses. "For most people, if you look at the median, Social Security counts for about 40 percent of their income. So it's important, but people rely a lot on other savings, like pensions or 401(k) savings," Johnson said. A big nest egg is not something the pope emeritus has to worry about. The Roman Catholic Church will cover his living expenses, provide him with a spacious home inside the Vatican and pay for everything from cooked meals to housekeepers, according to The Telegraph. Such services are not available to the typical American senior, unless he or she pays for an assisted living facility or resides in a nursing home, Johnson said...Health care costs are one of the big risks that older Americans face, and while Medicare pays for the bulk of their expenses, many things are left uncovered, Johnson said. Meanwhile, the pope emeritus will continue to be a member of the Vatican's generous private health care policy, the BBC reported. Blackstone Profits From Regulation With Citigroup Deal (Bloomberg) Blackstone has devised a way to profit from regulation: It’s helping banks meet tougher capital rules without the pain of selling assets or raising equity. The firm last year insured Citigroup against any initial losses on a $1.2 billion pool of shipping loans, said two people with knowledge of the transaction, who asked not to be identified because the matter is private. The regulatory capital trade, Blackstone’s first, will let Citigroup cut how much it setsaside to cover defaults by as much as 96 percent, while keeping the loans on its balance sheet, the people said. RBS Moves To Appease UK (WSJ) The 81%-state-owned bank unveiled a series of moves to ease government and regulatory pressure on the bank to become more U.K. focused and better capitalized. Chief Executive Stephen Hester confirmed that it would list around 25% of the U.S.-based RBS Citizens bank in the next two years "to highlight the valuable nature of the business." RBS also said it would further pare back its investment bank, shedding jobs and cutting risk-weighted assets to £80 billion ($121.3 billion), from £101.3 billion at the end of 2012. Unemployment aid claims fall by 22,000 last week (AP) The number of Americans seeking unemployment aid fell 22,000 last week to a seasonally adjusted 344,000, evidence that the job market may be picking up. The four-week average of applications dropped 6,750 to 355,000, the Labor Department said Thursday. That was the first drop in three weeks. Too Big To Fail Hurting Too Small To Compete Banks (Bloomberg) Investors such as Joshua Siegel, founder and managing principal at New York-based StoneCastle Partners LLC, see bigger changes at the other end of the spectrum. Small banks will seek mergers because their management teams are aging and new regulations are too costly to bear, he says. “If you need one major overriding theme of the industry in the next three, five, seven, 10 years: massive consolidation, thousands of banks,” says Siegel, whose firm managed $5.1 billion as of the end of last year and invests in small banks. In the U.S., “I do see probably anywhere from 2,000 to 4,000 banks being swallowed up, and what you’ll see then is a more- concentrated system.” Dennis Rodman Tells Kim Jong Un: You Have A Friend For Life (NYP) Rodman and Kim sat side by side at an exhibition game in Pyongyang on Thursday, chatting as they watched players from North Korea and the US play in mixed teams, Alex Detrick, a spokesman for the New York-based VICE media company, told The Associated Press. Rodman later addressed Kim before a crowd of thousands, telling him, "You have a friend for life," Detrick said. The encounter makes Rodman the most high-profile American to meet with the young North Korean leader, said to be a diehard basketball fan.

ElonGatsby

Opening Bell: 9.28.18

Elon ready to fight; Bar Association turns on Kavanaugh; Macro picture stay sunny; Gay penguins aggressively looking to adopt; and more!

Not the victim in question By Niels de Wit from Lunteren, The Netherlands (1981 MOWAG B 300) [CC BY 2.0], via Wikimedia Commons

Opening Bell: 8.19.16

Credit Suisse CEO vs Credit Suisse bankers; Washington insider is subject of trading probe; Police say Ohio man tried to have sex with a red van; and more.

Opening Bell: 12.10.12

U.S. authorities probe SAC for Weight Watchers (Reuters) U.S. authorities are investigating Steven A. Cohen's SAC Capital Advisors hedge fund for possible insider trading in the shares of the popular diet company Weight Watchers International Inc, according to people familiar with the matter. The investigation focuses on trading in Weight Watchers shares in the first half of 2011, when SAC Capital had taken a sizeable position in the stock, and potentially could implicate the billionaire hedge fund manager, the sources said on Friday. Regulatory filings show that Cohen's $14 billion fund briefly held 2.1 million shares in Weight Watchers during the period under scrutiny by authorities - at which time the diet company's stock price roughly doubled. The inquiry is in its early stages and it is not clear whether anything improper was done either by SAC Capital or Cohen himself, said the people familiar with the matter, who requested anonymity. The trading in Weight Watchers would be permissible as long as it was based on fundamental research or derived from individuals who did not have access to non-public corporate information. Big Money Bets On Housing Rebound (NYT) A flurry of private-equity giants and hedge funds have spent billions of dollars to buy thousands of foreclosed single-family homes. They are purchasing them on the cheap through bank auctions, multiple listing services, short sales and bulk purchases from local investors in need of cash, with plans to fix up the properties, rent them out and watch their values soar as the industry rebounds. They have raised as much as $8 billion to invest, according to Jade Rahmani, an analyst at Keefe Bruyette & Woods. The Blackstone Group, the New York private-equity firm run by Stephen A. Schwarzman, has spent more than $1 billion to buy 6,500 single-family homes so far this year. The Colony Capital Group, headed by the Los Angeles billionaire Thomas J. Barrack Jr., has bought 4,000. Wall Street workers expecting worst bonus season since 2008 (NYP) State Comptroller Thomas DiNapoli estimates that the average bonus this year will be $101,000 — a 16.5 percent decline from last year and almost a 50 percent decline since 2006, when the average was $191,360. ‘‘I don’t think this year’s bonuses are going to be very good,’’ said Dan Shaffer, CEO of Shaffer Asset Management. ‘‘I don’t believe the typical bonuses, as we used to know them, exist anymore.’’ Obama Meets with Boehner Privately at White House (Bloomberg) The meeting was the first known face-to-face conversation between the two leaders since Nov. 16, when Boehner and other congressional leaders sat down with Obama at the White House. They have talked on the telephone since then. Obama met with Nancy Pelosi, the House Democratic minority leader, on Dec. 7. Investors offer about $38.8 billion in Greek debt buyback (Reuters) Greece is set to purchase back about half of its debt owned by private investors, broadly succeeding in a bond buyback that is key to the country's international bailout, a Greek government official said on Saturday. Hefner Husband Takes Insider Trading Into Playboy Bedroom (Bloomberg) Christie Hefner, [daughter of Hugh and] former chief executive officer of Playboy Enterprises Inc., said she was shocked as her husband of 15 years, William Marovitz, confessed to her that he was being investigated for suspicious trading in Playboy shares. They were in their apartment atop a 42-story Lincoln Park tower overlooking the glittering Chicago skyline and Lake Michigan on a March evening in 2010. “He told me he had been contacted by the SEC,” Hefner said later in testimony before the U.S. Securities and Exchange Commission, which didn’t accuse her of any wrongdoing. “And when did you learn your husband owned shares of Playboy?” she was asked. “In that conversation,” she replied. Hefner's husband is just one of more than 400 persons the SEC and the U.S. Department of Justice have accused of insider trading in a crackdown in the last five years, according to data compiled by Bloomberg. All involved betrayal -- of clients, employers, relatives or friends. The Hefner episode and a handful of cases like it include an especially cruel breach of trust: betrayal of a wife by a husband. Tennis star Novak buys up world's supply of donkey cheese at £400 a pound for new restaurant chain (DM) The cheese, known as pule, will be one of the key attractions at a chain of restaurants the Wimbledon champion and world number one is opening in his Serbian homeland...The Zasavica farm, which lies 50 miles west of the Serbian capital Belgrade, boasts a herd of 130 and is said to be the only place in the world where donkeys are milked for cheese. Banking Industry Squirms Over European Rate Probe (WSJ) The scandal over banks' attempted manipulation of interest rates has mostly centered on the London interbank offered rate. But Libor's lesser known cousin, the euro interbank offered rate, or Euribor, is facing mounting attacks. The European Union is expected soon to accuse multiple banks of attempted collusion in the setting of Euribor, according to people briefed on the probe. Barclays has already acknowledged trying to rig the rate, and other banks are likely to be pressed by regulators in the U.S., U.K. and elsewhere into similar admissions, according to industry and regulatory officials. Mortgage Crisis Presents a New Reckoning to Banks (NYT) Regulators, prosecutors, investors and insurers have filed dozens of new claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and others, related to more than $1 trillion worth of securities backed by residential mortgages. Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life. Crisis Measure Nears End (WSJ) Barring action by Congress, the FDIC on Dec. 31 will stop providing an unlimited guarantee on zero-interest bank accounts used by businesses and municipalities for payroll and other services. The guarantee would then revert to the normal $250,000 in insurance per depositor at any given bank. If the guarantee isn't extended, FBR Capital Markets estimates as much as $250 billion in deposits could flow out of smaller banks to large banks or big money-market mutual funds. Stylish primate charms Toronto shoppers (The Star) A North York Ikea store attracted an unusual customer Sunday afternoon, when a tiny monkey dressed in a fitted faux shearling coat and diapers appeared in the store’s upper parking garage around 2 p.m. “It was just running around screaming,” said shopper Bronwyn Page...“It was really cute,” said Lisa Lin, another shopper. “It was smaller than a cat.” But if the monkey had hoped to stock up on Billy bookcases or Swedish meatballs, its plans were thwarted. The diminutive shopper never made it into the store, said manager Alvaro Carmona. No one was hurt in the incident, which lasted no more than half an hour, he added. Animal Services identified the monkey as a rhesus macaque, an Asian species that is prohibited in Ontario. The monkeys are known for their ability to live in diverse habitats – although Canadian winters obviously require a warm coat. The owner of the primate turned himself in to Animal Services just after 5 p.m. He was charged with owning a prohibited animal, an offence that carries a $200 fine. The seven-month-old monkey has somehow managed to escape his owner’s car in the Ikea parking lot, said animal control officer David Behan.

Opening Bell: 05.11.12

JPMorgan's $2 Billion Blunder (WSJ) The CEO emphasized that the bank remains profitable despite the trading loss. "While we don't give overall earnings guidance and we are not confirming current analyst estimates, if you did adjust current analyst estimates for the loss, we still earned approximately $4 billion after-tax this quarter give or take," he said on the call. The bank earned $5.38 billion in the first quarter. Drew Built 30-Year JPMorgan Career Embracing Risk (Bloomberg) JPMorgan Chief Investment Officer Ina R. Drew, head of the unit responsible for a $2 billion trading loss, built a 30-year career at the largest U.S. bank by embracing risk and avoiding the spotlight. “With everything she does, she thinks in terms of trading,” said Stephen Murray, head of CCMP Capital Advisors LLC, created from a JPMorgan private-equity unit in 2006. “There are risk-lovers, there are risk-haters, and the best traders will take the risk as long as they get paid for it.” Drew’s operation, which helps manage the bank’s risk, has been transformed under Chief Executive Officer Jamie Dimon to make bigger speculative bets with the firm’s own money, according to five former employees, Bloomberg News reported last month. Some bets were so big JPMorgan probably couldn’t unwind them without roiling markets, the former executives said. JPMorgan Holding Talks With UK Regulator (WSJ) JPMorgan has been holding discussions with U.K. regulators about the roughly $2 billion of trading losses incurred by the giant bank's investment office, according to people familiar with the matter. The talks with the Financial Services Authority don't represent a formal inquiry by the regulator, one person said, and it isn't clear whether it will result in any action by the regulatory agency. The FSA has been requesting information from J.P. Morgan about how the trading losses occurred and what steps the bank is taking to avoid such situations in the future, the people said. Volcker Rule Proponents Say JPMorgan Loss Bolsters Case (Bloomberg) Senator Carl Levin, the co-author of the so-called Volcker rule and chairman of the Permanent Subcommittee on Investigations, said the New York-based bank’s disclosure yesterday served as a “stark reminder” to regulators drafting the proprietary-trading ban required by the 2010 Dodd-Frank Act. “The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too-big-to-fail’ banks have no business making,” Levin, a Michigan Democrat, said in a statement. Wall Street's Go-To Guy Trips Up (WSJ) "I am not sure how many times I can say this: It was bad strategy, executed poorly," Mr. Dimon said of the losses the company suffered in the past six weeks. The acknowledgment is a rare blow for Mr. Dimon, 56 years old, who has been on the top of the banking heap since joining J.P. Morgan Chase in 2004. He regularly extols J.P. Morgan's "fortress balance sheet" and has repeatedly lashed out against lawmakers and regulators who have slapped more rules on the banking industry. Italian man becomes mayor by accident (BBC) Though he had not given much thought to a political platform before the vote, now he is in office he has said that he will focus on promoting tourism to the area. EU Signs Of Recovery, Risks Remain (WSJ) "A recovery is in sight, but the economic situation remains fragile, with still large disparities across member States," Olli Rehn, Commissioner for Economic and Monetary Affairs said in a statement. "Without further determined action, however, low growth in the European Union could remain." Chesapeake Deals Carry $1.4 Billion In Undisclosed Liability (WSJ) Most of these costs will hit this year and next, at a time when the company needs to raise substantial cash to cover operating expenses and its move into the more lucrative oil business. Faber Sees '87-Type Crash If U.S. Stocks Rise Without QE3 (Bloomberg) “I think the market will have difficulties to move up strongly unless we have a massive QE3,” Faber, who manages $300 million at Marc Faber Ltd., told Betty Liu on Bloomberg Television’s “In the Loop” from Zurich today, referring to a third round of large-scale asset purchases by the Fed. “If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987.” Third masseur accuses John Travolta of inappropriate behavior (NYP) Fabian Zanzi, a Chilean-born cruise worker who worked in VIP services, said Travolta offered him $12,000 for the tryst. Zanzi says he refused. Travolta was on the five-day cruise in 2009 without wife Kelly Preston and hit on Zanzi with a cheesy pickup line, the cruise worker said. “He said that I had something on my neck. I thought it was lint,” Zanzi told the Chilean news show “Primer Plano.” “When he got close to me, he took off his white robe and he was naked.”