Opening Bell: 11.07.14 - Dealbreaker

Opening Bell: 11.07.14

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Allianz Raises Payout, Confirms Target Amid Pimco Trouble (Bloomberg)
Allianz SE pledged to pay a higher share of profit to shareholders and confirmed its full-year profit target as the Pimco asset management unit struggles to contain outflows following the departure of Bill Gross. “Starting with the financial year 2014, the intention is to propose an increased regular payout to Allianz shareholders of 50 percent of net income,” the Munich-based company said yesterday in a statement. That compares with a pay-out ratio of 40 percent at Europe’s biggest insurer in the past.

Morgan Stanley Among First to Add Uber to Travel Policy (Bloomberg)
Morgan Stanley employees can use Uber Technologies Inc. cars for company trips, making the bank one of the first firms to make it policy to reimburse employees for the service. “Employees expressed their strong affinity for the convenience Uber offers them in their personal lives and wanted that flexibility for their business travel needs as well,” Jeff Brodsky, human resources chief at New York-based Morgan Stanley, said today in a statement.

Luxembourg vows to end banking secrecy (FT)
Luxembourg has pledged to overhaul its culture of financial secrecy, and has fought back against accusations that it helped leading multinationals avoid billions of dollars of tax. The claims could prove highly embarrassing to Jean-Claude Juncker, the new president of the European Commission, who was prime minister of Luxembourg when the corporate tax deals were allegedly struck. Officials were responding to a report that more than 340 multinationals, including such global names as Pepsi, Procter & Gamble and JPMorgan, made secret deals with the Grand Duchy between 2002 and 2010 that saved them billions of dollars in taxes. The commission is already investigating whether rulings agreed by the Luxembourg tax authority with Fiat Finance and Trade, the financial arm of the car company, and Amazon, the ecommerce company, which were also issued during Mr Juncker’s premiership, amounted to improper state aid. Pierre Gramegna, Luxembourg’s finance minister, refused to blame Mr Juncker on Thursday for past practices, but insisted that his own government was now forging a new culture of financial transparency.

Mark Zuckerberg says ‘The Social Network’ hurt his feelings (NYP)
"They just kind of made up a bunch of stuff that I found really hurtful. They made up this whole plot line about how I somehow decided to create Facebook to attract girls. The real story is a lot of hard work. If they were really making a movie [about his starting Facebook]...it would be of me sitting there coding for two hours straight."

Ex-Billionaire Insider-Trading Case an Anomaly (Bloomberg)
Less than three years after Eike Batista was dubbed by President Dilma Rousseff “the pride of Brazil,” prosecutors will try to send the former billionaire to prison for alleged insider trading in a trial set for later this month. He’d be the first. In a nation where most big deals leak, no one has ever been imprisoned for using insider information in the 13 years since such activity was made illegal. And fines are small: Of the 57 cases of insider trading ruled on by securities regulator CVM between 2006 to 2013, all but seven involved fines of less than $160,000.

Man eats 100 Olive Garden meals in 6 weeks with $100 'pasta pass' (Today)
The pass, sold in a limited quantity of 1,000 during a recent stunt by the beleaguered casual Italian dining chain, grants its bearers as much pasta, salad, soup, breadsticks and soft drinks as they can consume during the seven-week promotional period. On November 5, Martin ate his 100th meal at the Olive Garden near his home, gluten-free rigatoni with spicy meat sauce and meatballs. "I try something different every time,” said Alan Martin, who has now become something of a celebrity at the restaurant. “I tried chasing him out the door,” said Burlington Olive Garden manager Jeremy Byrnes. “I just wanted to congratulate him. Mr. Martin's like part of the family now.” So far Martin has eaten over $1,600 worth of food after paying $100 for the pass. His goal is to hit $1,800. Each meal has a value of about $16. Getting through the first week was tough, even though Martin and his family love Olive Garden. But by the second and third week, "I was craving it," said Martin. "I started getting there earlier and earlier." Now, six weeks in and with days to go before the free pass runs out, "it’s hard eating other food,” he said. Martin says he currently weighs 212, the same as when he started. To keep the pounds off his 5 foot 11 frame, he's kept up his weightlifting routine and watches the calorie count. The average Olive Garden pasta bowl with toppings is 500-600 calories, of which he usually eats half. Each breadstick is 180 calories. The salads can be another couple hundred depending on which you order. "I just eat enough to knock out my appetite," said Martin. His doctor doesn't know about the pasta diet yet, but Martin, who's been taking vitamins since beginning his campaign, isn't worried. “I'm going to let him fix me if I'm broken,” he said. Previously, Martin won free breakfast for a year at Chick-Fil-A. “That whet my appetite for this kind of contest,” he said.

Some senior Merrill brokers leave, BofA executives concerned - sources (Reuters)
A number of high-profile brokers have left Bank of America Corp's Merrill Lynch wealth management unit in recent weeks, and top executives at the company have grown concerned enough to ask business head John Thiel to explain the departures, three sources familiar with the matter told Reuters. Among those who have exited are top-producing brokers like Brian and Tim Brice, who oversaw around $4.5 billion in client assets in a suburb of Detroit, and whose father had also worked for Merrill. The brothers had been with Merrill Lynch for decades, before joining Morgan Stanley in September. Raymond George, a 23-year veteran of Merrill Lynch, has also left. George joined Morgan Stanley’s office in Garden City, New York in October. Eugene Montoya, who had been at Merrill for more than 40 years, decamped in September for Wells Fargo Advisors’ office in Miami.

New SEC Chief Accountant Weighing Switch to Global Accounting Rules (WSJ)
The Securities and Exchange Commission’s new chief accountant said Thursday he hopes to make a recommendation in the next few months on whether the SEC should move toward switching U.S. companies to using global accounting rules. In his first public comments since taking over as chief accountant a month ago, James Schnurr didn’t tip his hand over whether he favors a U.S. move toward the global rules, known as International Financial Reporting Standards, or IFRS. But “I would hope that within the next few months there would be movement on this,” Mr. Schnurr said on a panel at a Practising Law Institute securities-regulation conference in New York.

Starbucks brings back eggnog latte after customer outrage (NYP)
The coffee chain opted to scrap the flavor last month and replace it with a new praline chestnut latte — sparking freakouts from soccer-mom types and other coffee bu​​ffs in New York and ​across the country, except the Pacific Northwest, where it remained on menus. Steaming customers took to Twitter to blast Starbucks, saying the firm had stomped on their holiday spirit. “The eggnog latte was the only thing keeping me from beating people during the holidays. Please bring it back,” one customer blasted on Twitter. Other coffee fiends launched a petition Nov. 2 dubbed “Bring Back Eggnog Latte” — which garnered more than 2,500 signatures in less than a week. “The king of Red Cups, the eggnog latte, has been discontinued across the country,” it boldly proclaims. One outraged petitioner called the firm nuts for trying to sub praline for eggnog. “I was horrified at this decision with no warning … What about people with nut allergies? Chestnut Praline won’t be an option. Nice Starbucks,” one woman blasted in the petition’s comment section.

Sandy Weill: 'Banks aren't the same anymore' (CNBC)
"Most young people graduating from colleges are not going to banks anymore. They're going into hedge funds and private equity companies instead … I think that we're not attracting the people, and it's not a fun place to be," Weill said.

Shopper Attacked After Telling Mom To Calm Down Child Throwing Tantrum (CBS)
Natalie Bree Hajek-Richardson told KPIX 5 that she was in the checkout line of the Nordstrom Rack when a child between the age of 4 and 6 began throwing a loud tantrum. “It didn’t bother me that the child was throwing the tantrum, but the volume was very loud, it was hurting my ears,” Hajek-Richardson said. The shopper said she asked the child’s mother to quiet the child down, but nicely. That’s when things began going sideways. “She came to the side of me and told me not to tell her child what to do. And I told her that I didn’t ask your child what to do, I asked you very nicely to calm down your child just a little bit,” Hajek-Richardson recalled. Hajek-Richardson said she then told the mom off. “I told her to go to hell and she told me I’ll see you there,” she said. When Hajek-Richardson left the store, she said the mom followed her to her car. “Was asking me, ‘Where’d you tell me to go?’ So I repeated again what I said to her, and I told her that I told her to go to hell,” she said. Video shows a woman in a red shirt walking toward Hajek-Richardson before they both end up on the asphalt. The victim said she was punched twice in the face.

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In Facebook IPO, Frenzy, Skepticism (WSJ) Michael Belanger, a lawyer from Oklahoma City, invests his personal money in the stock market. But he will be skipping Facebook's IPO because he thinks its valuation is totally "out of whack." Scott Schermerhorn, chief investment officer of investment-management firm Granite Investment Advisors, says the hype around Facebook's IPO is going to keep his firm away. "It's a cult stock," he says. Little of that skepticism is weighing on three investors, tracked by The Wall Street Journal since Facebook announced in February that it would go public. Jim Supple was driving with his daughter Jade last autumn, when she turned to him and said, "Daddy, can I buy some of the Facebook company?" Mr. Supple, 47, had been teaching Jade about investing in the stock market for years. He started putting money for her in stocks like eBay and Disney when she was a baby. But the request still took him aback. "How do you know about buying Facebook?" he asked. "I saw in the news that they were going to be selling parts of the company," she responded. "Can we buy some?" Since then, Mr. Supple has been trying to find a way to take $25,000 he has saved for her college fund and purchase Facebook stock. "She doesn't need this money for another eight years," says Mr. Supple. "If it goes the Google route, I'll be in good shape." JPMorgan Said To Weigh Bonus Clawbacks After Loss (Bloomberg) The lender can cancel stock awards or demand they be repaid if an employee “engages in conduct that causes material financial or reputational harm,” JPMorgan said in its annual proxy statement. The company will claw back pay if it’s appropriate, said one of the executives, who asked not to be identified because no decisions have been made. The incident, which led to Drew’s retirement yesterday, may test JPMorgan’s claw-back policy amid mounting investor criticism over Wall Street pay practices and as regulators investigate the trades. JPMorgan Moves To Protect Dimon (WSJ) The board backs Mr. Dimon and the way he quickly admitted and sought to fix the bank's mistakes, according to this person. "We made errors, and we are going to take care of it," Mr. Dimon told fellow directors during a conference call last week, the person said. "This was bad thinking. This was stupid." Euro Chiefs May Offer Leniency to Greece (Bloomberg) Calling talk of a Greek pullout from the euro “nonsense” and “propaganda,” Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid. Man Spends $60,000 In Custody Battle Over Dog Knuckles (CBS) Dershowitz, 34, said he considers Knuckles to be his son, and that although he’s gone through his life savings, he said it’s worth it. In papers filed earlier this year in Manhattan state Supreme Court, Dershowitz said ex-girlfriend Sarah Brega “kidnapped” Knuckles after they broke up. Brega said Dershowitz gave her the puggle pup — half pug, half beagle. Dershowitz started the website Rescue Knux to raise money for the custody fight. For $250, contributors can play fetch with Knuckles. For $10,000, Legends of Graffiti will do a giant, personalized mural. Dershowitz made an emotional video plea and posted the following on his site: I know it might sound funny and I understand that. If it wasn’t so painful, I would be laughing too (I mean, c’mon – dognapp – really?) but this is very serious to me and I miss him a lot. Enough that I have gone into debt to retrieve him and enough that I am on here asking for your help. I need the money to keep fighting the court battle. She comes from a wealthy family that is backing her. I don’t. She keeps filing crazy, frivolous motions just knowing that I can’t afford to respond even after the judge has ruled in my favor. The courts gave me custody already but, sadly, the system is too complex and expensive to make anything that simple and easy. I need help bringing my boy home…where he belongs…for good.” Dick Bove: No Reason to Break Up Big Banks (CNBC) JPMorgan’s much ballyhooed $2 billion loss is no reason to ramp up regulations, noted bank analyst Dick Bove said Monday. “I don’t think there’s any reason to break up the big banks,” he told CNBC. “Particularly if a bank can earn $18 billion a year and $22 billion the next year, why in heaven’s name would you say it can’t be run?” Sanders Sees Conflict With Dimon on New York Fed Board (Bloomberg) Senator Bernard Sanders said he sees a conflict with JPMorgan Chase Chief Executive Officer Jamie Dimon serving on the board of directors at the Federal Reserve Bank of New York, JPMorgan’s regulator. “It is an obvious conflict of interest,” Sanders, an Independent from Vermont, said today in an e-mail response to a question from Bloomberg News. “This is a clear example of the fox guarding the henhouse.” Chesapeake Loan Jars Bond Investors (WSJ) "This loan was priced very attractively" for lenders, said Sabur Moini, manager of a $2.5 billion high-yield-bond portfolio at Payden & Rygel, adding that turmoil in Chesapeake's bonds was largely "self-inflicted." Investor confidence was shaken by the loan, he said, but it has also been dented by other factors, including controversy over CEO Aubrey McClendon's pledging his stakes in company wells as collateral to secure loans with companies that do business with Chesapeake. Rajat Gupta Opposes U.S. Request to Limit Defense at Trial (Bloomberg) Prosecutors had sought to bar Gupta from speculating before the jury about the government’s motives in bringing the case. They also said evidence of Gupta’s past charitable contributions and the purported damage the case has had on his reputation aren’t relevant. “The government attempts to hamstring the defense,” Gupta’s lawyers said in a court filing today. “Mr. Gupta’s charitable activities are a large component of his background and a critical element of who he is as a person.” Cops bust man smuggling cocaine at JFK (NYP) A drug smuggler packed his stash of cocaine inside sticks of deodorant, ink markers and hundreds of buttons — only to be busted by alert customs officers at JFK Airport who noticed a strong odor coming from his suitcase, authorities said today...The items with cocaine hidden inside included 16 markers, 17 sticks of Dove and Odorex deodorant, 24 bottles of nail polish, and about 684 buttons.

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Merkel’s First Greek Crisis Visit Seen Sending Signal to Critics (Bloomberg) German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro. 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Exchanges and regulators must be one step ahead as systems and technologies upgrade.” Halloween Horror Story: Case Of The Missing Pumpkin Lattes (WSJ) For Asher Anidjar, the arrival of fall isn't marked by turning leaves or a chilly breeze, but a steaming seasonal drink. Recently, though, when he headed to his local Starbucks for a Pumpkin Spice Latte, he left with a bitter taste in his mouth. They were out of the special sauce that gives the treat its distinctive autumnal flavor. "I just left, depressed," said Mr. Anidjar, a 26-year-old commercial real-estate analyst who lives in Manhattan. The drink crops up on the Starbucks menu annually for a limited time, and this year there has been an unusual run on the pumpkin batch. Thanks in part to a frothy dose of buzz brewed up by the Seattle-based coffee giant before the beverage's Sept. 4 debut, the craze has drained supplies at stores across the country. Baristas are hitting the street, searching for stashes of the flavored sauce at other stores. Customers denied their fix—which costs about $4 for a small cup, or "tall" in Starbucks speak—are tweeting about their dismay. "My world almost ended this morning when the local Starbucks told me they were out of Pumpkin Spice Latte," tweeted Jason Sizemore, 38 years old, of Lexington, Ky. Fed Seeks To Clarify Plans (WSJ) Since August 2011, the Fed has been saying it will keep short-term interest rates near zero until a particular date. Right now that date is mid-2015. The hope has been that these assurances would help hold down longer-term interest rates, as well as short-term ones, and thus boost spending and investment. But the Fed isn't happy with this approach. While central-bank officials believe the assurances have helped hold down long-term interest rates, they find the fixed date to be confusing, and they are looking at a new approach. The idea under consideration is to keep offering assurances of low rates, but tie those assurances to what is happening in the economy rather than a point on the calendar. Dave And Buster's IPO Plan A Bust (Bloomberg) Dave & Buster’s Entertainment, operator of 59 company-owned dining and gaming stores, withdrew its plans for a US initial public offering, citing market conditions. The company had sought to raise as much as $107.7 million. Black Swans In The Red Until Turmoil Hits (NYP) The Apocalypse has not arrived — but that hasn’t stopped some of the country’s wealthiest investors from betting on it. The investors, mostly pensions funds, hedge funds of funds and deep-pocketed individuals that were burned during the financial meltdown in 2008, are jumping into these so-called Black Swan investments that carry promised returns of up to 1,000 percent — if another financial Armageddon strikes. The Cassandras of the hedge-fund world that are offering these funds — also called tail risk funds and often with a geographic focus — would suffer terribly in the absence of disaster...The hot sector has attracted such well-known names as Saba Capital’s Boaz Weinstein, Hayman Capital’s Kyle Bass, Corriente Advisors’ Mark Hart, and Universa’s Mark Spitznagel...When markets are buoyant, of course the funds lose money. Through August, Saba Tail Hedge was down 16 percent, Pine River Tail Hedge had fallen 23 percent and Corriente Europe Divergence is down 24 percent, according to investors. Bass’s Japan short fund, which he launched two years ago, is down more than 60 percent since inception. By design, it will lose all of its investors’ money in three years if Japanese bonds don’t go into a tailspin. Bridezilla’s demanding email to potential bridesmaids: If you can’t commit, ‘you’re going to the wrong wedding’ (NYDN) One woman’s over-the-top email of demands to potential bridesmaids has gone viral since it was posted on Gawker.com. “You all have a big roll [sic] in this wedding, so before we continue I’m going to be setting some ground rules and it’s very important you read and think everything through before you accept this honor to be a bridesmaid,” the unnamed bride-to-be begins. If recipients don’t answer emails when outside the country, can’t attend every wedding-related event, or don’t have the cash for several flights and a bridesmaid’s dress, they might not make the cut. “If money is tight and you can’t afford to contribute to the bachelorette party or won’t be able to afford a dress, then [I] don’t have time to deal with that, I’m sorry,” the woman wrote. Of course, she’ll aim for what’s affordable, but, “If you think it’s going to be a $25 Forever 21 dress then you’re going to the wrong wedding.” The lucky bridesmaids must also be available — at any moment — between February and August. “If you don’t think you’ll be able to attend one party but can make the rest of them, I’m sorry, but I’ll have to take you out as a bridesmaid and put you as a guest,” the woman wrote. And please, don’t ignore phone calls. “I don’t have time to wait around for responses, everyone has their phone on them,” she wrote. “It shouldn’t take you more than a day to get back to me. Really think about everything I've said. This is really going to be the most epic wedding ever so I hope you girls can share this special day with us!"

By Evan-Amos (Own work) [CC0], via Wikimedia Commons

Opening Bell: 8.31.16

El-Erian sees September rate hike; The CIA has a venture capital firm; Paris targeting Brexit jobs; Police hunt for armed, naked candy bandit; and more.