Opening Bell: 10.22.14

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Yahoo Delivers Message to Activist Starboard: Back Off (Bloomberg)
Yahoo! Chief Executive Officer Marissa Mayer delivered a message yesterday to activist shareholder Starboard Value LP: I’ve got this. Mayer began a defense of her leadership yesterday with a third-quarter earnings report that included sales that topped analysts’ estimates. She followed up with a conference call where she talked up her stewardship of the company, ticking off a list of points to show that her turnaround effort is making progress. Mayer argued she has a clear acquisition strategy for growth and said she is focused on maximizing value for shareholders. The shares jumped as much 5.8 percent today, for the biggest intraday increase in more than six months.

Russian Economy Stops Growing (WSJ)
Russia’s economy, hit by Western sanctions, stopped growing in September, data from the economy ministry showed Wednesday. Russia this year is on track to post its lowest growth since 2009. Russia’s standoff with the West over the Ukrainian crisis adds downside pressure on the economy as sanctions and geopolitical uncertainty fuel capital flight and kill investment activity. Alexei Ulyukayev, Russia’s economy minister, said that in the first nine months of 2014 the economy grew by 0.8%, Interfax news agency reported.

Goldman Sachs Shows Investors Path Out of Economic ‘Wonderland’ (Bloomberg)
Just as Alice was confused by the strange world she found herself in, Peter Oppenheimer said in a report published yesterday that investors face the unfamiliar in an environment of zero interest rates and low economic growth. Further complicating matters is that some old relationships have also broken down since the financial crisis. “Curiouser and curiouser,” he writes, quoting from Alice, in noting equities and bonds have often both performed well at the same time. Some of the strongest market performances have also been in the weakest economies.

‘Cannibal Cop’ interested in attending law school (NYP)
Notorious “Cannibal Cop” Gilberto Valle is “interested in attending law school,” his younger brother revealed in a letter to Manhattan federal Judge Paul Gardephe. “I even bought him a number of LSAT books which he completed, and he did very well on the practice tests at the end of the books,” wrote Daniel Valle The younger Valle was one of more than a dozen people who wrote letters on the ex-cop’s behalf before he is sentenced Nov. 4 for illegally using a police database. Gardephe overturned Valle’s conviction for conspiracy to murder in July.

Tepper's not 'too frickin' long' again (NetNet)
David Tepper, manager of the $20 billion hedge-fund company Appaloosa Management, has returned to his cautious stance from late spring after a period of feeling more optimistic about global markets. Speaking late Tuesday afternoon at an investor conference sponsored by the Robin Hood charitable organization and closed to the media, Tepper gave a market outlook that was measured, if not bearish, according to someone who attended the gathering. An end-of-year rally of the type of that money managers like BlackRock's Larry Fink and Dan Loeb have been expecting was possible, but not guaranteed, Tepper reportedly said. Now was the time to tread carefully and not be overextended with stock holdings, he added...In what are now infamous words of warning, Tepper said at the SALT conference in Las Vegas that it was "nervous time" for him in the markets, adding, "I'm not saying go short, but don't be too frickin' long."

Cop’s Daughter Tuned to ESPN on Road to Becoming Bank CEO (Bloomberg)
Margaret Keane often drives to work with her radio tuned to ESPN. While she doesn’t follow any team, it ensures she’s never left out of a conversation. “A lot of times I’m the only woman in the room,” said Keane, who leads Synchrony Financial (SYF), the General Electric Co. unit that was spun off in July and is now the most valuable U.S. bank run by a woman. “If the Yankees won last night, you should know because it’s going to come up. You need to be able to banter with your male colleagues -- you can fight that or you can get in the middle.”

Big Tech winning battle with 'patent trolls' (Reuters)
For two decades, companies that buy software patents to sue technology giants have been the scourge of Silicon Valley. Reviled as patent trolls, they have attacked everything from Google's online ads to Apple's iPhone features, sometimes winning hundreds of millions of dollars. But now the trolls are in retreat from the tech titans, interviews and data reviewed by Reuters show. In the wake of several changes in U.S. law, which make it easier to challenge software patents, patent prices are plummeting, the number of court fights is down, and stock prices of many patent-holding companies have fallen. Some tech firms say they are punching up research budgets as legal costs shrink, while support for major patent reform is under fire as trolls get trounced.

When analysts marry MDs (eFinancial)
...how common is it for bankers at the bottom of the corporate hierarchy to be betrothed to those at the top? We ask, because it’s been pointed out that Nell Diamond, the daughter of ex-Barclays CEO Bob Diamond, just married a Deutsche Bank managing director having herself spent 15 months at Deutsche Bank as an analyst. Diamond’s spouse, Ted Wasserman, is head of equity derivative flow sales for North America at Deutsche. Diamond was an analyst in Deutsche’s institutional rates sales business.

Air Force Member Arrested After Giving Minnesota Cop A "Wet Willy" (TSG)
As a Mankato Department of Public Safety officer was speaking with a municipal bus driver around 2:20 AM, the cop “felt two fingertips that were obvious to him as wet with saliva being pushed into his right and left ear canals,” according to a probable cause statement. The officer turned around and saw a tall white male walking away. “I just gave the cop a wet Willie,” the suspect said as he joined a group of his friends. The officer confronted the man, later identified as Riley Swearingen, a 23-year-old who was home on leave from his post at North Carolina’s Seymour-Johnson Air Force Base. Swearingen told the cop that the “wet Willy” was a joke for which he was sorry. Swearingen, who smelled of booze and appeared drunk, was then arrested. When asked what would happen if he gave a “wet Willy” to a military superior, Swearingen “admitted it would be a very big deal.”

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Former UBS Trader Found Guilty (WSJ) Former trader Kweku Adoboli was found guilty on one count of fraud in connection with a $2.3 billion loss the Swiss bank suffered last year, as the juryin the alleged rogue-trading case continued to deliberate on five other counts he was charged with. The partial verdict comes nearly a week after the jury began deliberating following a roughly eight-week trial. It is unclear when the jury might reach verdicts on the other five counts or when sentencing might take place. Mr. Adoboli pleaded not guilty to all six counts. Shakeup At Credit Suisse (WSJ) Credit Suisse said Tuesday that it will combine the Swiss bank's asset management unit with its private bank, but stopped short of announcing the more drastic revamp analysts expected after crosstown rival UBS decided to fire 10,000 bankers. Robert Shafir, who currently heads the U.S. business of Credit Suisse, will take the helm of a new private banking and wealth management division jointly with Hans-Ulrich Meister, who has run the private banking business, the bank said. At the investment bank, Gael deBoissard is being promoted to co-head of the division, jointly with incumbent Eric Varvel. Following the revamp, Credit Suisse will have only two units—wealth management and investment banking--which are distinctly separate from each other, a move that is "in alignment with the new regulatory reality," Chairman Urs Rohner said. Greece Waits Nervously For Vital Bailout Funds (Reuters) Officials familiar with preparations for the finance ministers' meeting expect a "political endorsement in principle" on unfreezing loans to Athens, after Greece completed almost all the reforms that were required of it in exchange for funding. The final go-ahead from the ministers is likely to come only once the remaining few Greek reforms are in place and once there is agreement in the euro zone on how to reduce the country's huge debt and secure extra financing while it is being done. French Downgrade Widens Gulf With Germany as Talks Loom (Bloomberg) France’s loss of the top credit rating at Moody’s Investors Service may weaken President Francois Hollande’s leverage in European budget talks and deepen concern in Germany over its neighbor’s lagging competitiveness. The downgrade late yesterday of Europe’s second-biggest economy underscores the concern expressed by allies of German Chancellor Angela Merkel that the Socialist Hollande’s failure to recognize the urgency of France’s woes risks a deepening of Europe’s slump. “This downgrade will certainly increase pressure on France big-time,” Jan Techau, director of the Carnegie Endowment for International Peace office in Brussels, said today in a phone interview. “It gives Germany more of an edge over France.” ‘Tide Turning’ Against France, Say Economists (CNBC) “The tide is turning for France. Although the country's bond market is likely to remain resilient — the yield on 10-year paper is little changed [Tuesday] morning and still stands a whisker above its record low of 2.06 percent on July 19 — French debt looks more and more overvalued relative to fundamentals,” Nicholas Spiro, Managing Director of Spiro Sovereign Strategy, said in a note on Tuesday. France has enjoyed low borrowing costs as investors have viewed the country as a safe haven in comparison with its southern European cousins. The downgrade of France to AA1 with a negative outlook by Moody’s has thrown its “deteriorating fundamentals….into sharp relief” Spiro said. China’s Richest Woman Divorces Husband, Fortune Declines (Bloomberg) Longfor Properties Co. Chairwoman Wu Yajun is no longer China’s richest woman after divorcing Cai Kui and transferring about 40 percent of the developer’s shares the couple used to own to her ex-husband. Her stake in Longfor, which Wu co-founded with Cai, dropped from a combined 72 percent to 43 percent, while Cai retains 29 percent, according to filings from Hong Kong’s stock exchange. Wu’s net worth is estimated at $4.2 billion, down from $7.3 billion as of 5:30 p.m. New York time yesterday, according to the Bloomberg Billionaires Index. New York Prepares Lawsuit Against Credit Suisse (Reuters) The New York attorney-general is preparing to file a civil lawsuit against Credit Suisse for misleading investors who lost billions of dollars on mortgage-backed securities, according to a source familiar with the matter. The lawsuit, which is expected to be filed on Wednesday, will allege that Credit Suisse misrepresented the quality of loans packaged in securities, according to the source. Petraeus Mistress Paula Broadwell To Jill Kelley: 'I can make you go away' (NYDN) The notes Paula Broadwell sent to Jill Kelley were far more sinister than previously reported and seemed like the rantings of someone “clearly unhinged,” a close friend of Kelley said Monday. “This wasn’t just a catfight. Any normal person who got emails like that would have immediately called the police,” said the friend. She said Kelley read her the emails when she called, panic-stricken and seeking advice in the days before the scandal became a stunning public spectacle and led to Petraeus’ resignation as CIA director. The friend, who did not want to be identified, said Kelley saw the emails as death threats, specifically one in which Broadwell vowed to “make you go away.” [Meanwhile,] Broadwell...bloodied a female news photographer’s forehead Monday in a confrontation outside the biographer’s Charlotte, N.C., home. Broadwell smacked the photographer with the driver’s-side door of her Nissan Pathfinder SUV. “I had my camera and in all the chaos the door slammed and I got hit in the head with the flash,” said Nell Redmond, a freelancer for The Associated Press. Redmond suffered a small cut and is not pressing charges. Morgan Stanley’s Doom Scenario: Major Recession in 2013 (CNBC) The bank’s economics team forecasts a full-blown recession next year, under a pessimistic scenario, with global gross domestic product (GDP) likely to plunge 2 percent. “More than ever, the economic outlook hinges upon the actions taken or not taken by governments and central banks,” Morgan Stanley said in a report. Under the bank’s more gloomy scenario, the U.S. would go over the “fiscal cliff” leading to a contraction in U.S. GDP for the first three quarters of 2013. In Europe, the bank’s pessimistic scenario assumes a failure of the European Central Bank (ECB) in cutting rates and a delay of its bond-buying program. Judge Tosses Suit Over AIG (WSJ) A federal judge in Manhattan dismissed a $25 billion lawsuit by Starr International Co., which Mr. Greenberg runs, against the New York Federal Reserve Bank over claims the Fed breached its fiduciary duty to AIG's shareholders in the rescue during the U.S. financial crisis. It is one of two lawsuits Starr, AIG's largest shareholder at the time of the government takeover, is pursuing over the bailout. Mark Cuban Throws A Tantrum On Facebook Fee (NYP) Facebook used to be a “time suck” — now it just sucks. That’s the view of Dallas Mavericks owner Mark Cuban, who is urging marketers to take their business elsewhere after the social network started charging the tech billionaire to send messages to all the team’s fans. “In the past we put FB first, Twitter second,” Cuban wrote in a roughly 1,700-word blog post calling out the social network. “FB has been moved to the bottom of a longer list.” He added: “FB doesn’t seem to want to accept that its best purpose in life is as a huge time suck.” At issue is Facebook’s filtering of posts that appear in users’ news feeds. The site says it is trying to present users with content that they have shown an interest in while cutting down on spam. But Cuban says it is a pay-to-play move. He argues that Facebook is making it harder for marketers to reach their fans without paying for so-called “promoted posts.” And making the site more targeted and efficient is actually a mistake, according to Cuban. He claims most people go to the site because it’s a “time suck” that they enjoy. Cannibal Cop Pleads Not Guilty (NYDN) “cannibal cop,” accused of conspiring with an online buddy to kidnap, rape and slow-cook women, pleaded “not guilty” Monday to two federal charges. Gilberto Valle, 28, was arraigned in Manhattan Federal Court on charges of conspiracy to commit kidnapping and accessing the federal National Crime Information Center database without authorization. Valle’s public defender, Julia Gatto, made a third attempt at getting bail for her now-infamous client. "You have a hard row to hoe," said Judge Paul Gardephe...Valle — who was suspended after being arrested last month in a joint NYPD and FBI investigation — is accused of chatting last July with a sick online buddy about “kidnapping, cooking and eating body parts” of a woman identified as Victim 1, according to the indictment released Friday.

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