Opening Bell: 11.13.14 - Dealbreaker

Opening Bell: 11.13.14

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Citigroup, J.P. Morgan Take Brunt of Currencies Settlement (WSJ)
Citigroup Inc. and J.P. Morgan Chase & Co. agreed to pay more than $1 billion each to resolve allegations that they tried for years to manipulate the foreign-currency market, the biggest fines wrung from a group of six banks by regulators in the U.S., U.K. and Switzerland.

Barclays Pressed by New York’s Bank Regulator in FX Probe (Bloomberg)
Benjamin Lawsky, the head of New York’s Department of Financial Services, refused to join a group settlement announced yesterday by U.S. and European regulators, causing Barclays Plc (BARC) to pull out at the last minute, according to a person familiar with the matter. Lawsky decided the settlement over rigging foreign-exchange rates wouldn’t be severe enough and instead is continuing his own probe, said another person briefed on the matter who asked not to be named because the investigation isn’t public. He has also appointed a monitor, Devon Capital LLP, to review Barclays’s continuing conduct, confirmed John Padrnos, a partner at the advisory firm, which specializes in derivatives.

Bank of England Officials Cleared of Wrongdoing in Currency Manipulation (Dealbook)
An independent inquiry released on Wednesday found that no one at the Bank of England was involved in unlawful or improper behavior related to the foreign exchange market, but a top official was fired this week after the central bank said he failed to follow internal policies. In October 2013, the Bank of England’s governors began an internal review after accusations arose that officials condoned or knew about manipulation in the foreign exchange market. In March of this year, the bank’s oversight committee took over the investigation, and Lord Grabiner, Queen’s Counsel, was appointed to lead the external review.

Goldman Names Fewer Traders to Newest Class of Partners (Bloomberg, earlier)
Employees in the trading and research divisions comprise 36 percent of the class, down from 44 percent two years ago, according to the New York-based company. An industrywide slump has driven down Goldman Sachs’s trading revenue to $12 billion in the first nine months of the year, from $27.5 billion in the same period of 2009 and $18.2 billion in 2010.

Martoma In Prison Posture (NYP)
Martoma’s bid to stay out of prison pending his appeal was quickly denied Wednesday by a federal appeals panel that ruled he had “failed to show that the appeal ‘raises a substantial question of law or fact.’"

Alleged coke-dealing priest headed for trial (UPI)
An Italian priest arrested at a cocaine party on suspicion of dealing the drug has been scheduled for a fast-track trial in January. Don Stefano Maria Cavalletti, 45, was arrested in July when police were called to a Milan address on a report of a loud party and they found a large amount of cocaine along with the priest's shredded passport in the bathroom of the home. Cavalletti told police he had been using cocaine as "self-treatment" for depression he suffered after being convicted in September 2013 of fraud against an elderly woman. The priest is now scheduled for a fast-track trial January 29.

Obama Aims to Reawaken G-20 Economies (NYT)
“We’re not about to have a meltdown that will spill over into the United States and bring us into recession,” Treasury Secretary Jacob J. Lew said on Wednesday in a telephone interview on his way to the summit meeting of the Group of 20 largest economic powers. “On the other hand, the global economy is highly interconnected, and if things are really bad in Europe and Japan, if there’s a real slowdown in China, that’s a headwind in the United States that we don’t need.”

Mr. Lew and Mr. Obama will arrive at the G-20 meeting in Brisbane in a familiar position: pressing nations to raise their spending and monetary levers while struggling to secure their own economic policies. The president’s first G-20 summit — in London in 2009 — was dominated by a push for fiscal stimulus and monetary easing. This weekend, he will be back at it. “The world is counting on the U.S. economy to drive the global recovery,” Mr. Lew said in an address on Wednesday in Seattle to the World Affairs Council. “But the global economy cannot prosper broadly relying on the United States to be the importer of first and last resort, nor can it rely on the United States to grow fast enough to make up for weak growth in major world economies.”

Buffett Right, Einhorn Wrong as Moody’s Tops $100 a Share (Bloomberg)
In the aftermath of the financial crisis, Einhorn bet against Moody’s Corp. (MCO), whose largest shareholder is Buffett’s Berkshire Hathaway Inc., and rival McGraw Hill Financial Inc. He called their brands “ruined” for their roles in precipitating the worst recession since the 1930s with faulty credit ratings. Moody’s, founded by John Moody in 1909, surpassed $100 for the first time today, climbing 0.8 percent to $100.08. The New York-based company has advanced more than fivefold since 2008 on five straight years of increasing revenue as low borrowing costs spurred debt issuance across the globe. “We believe the recent case against S&P is a negative for the rating agencies and Moody’s is not immune,” Einhorn said on an earnings call for his reinsurer Greenlight Capital Re Ltd. in February 2013, the last time he discussed the position in relation to that company’s earnings. “We are short both Moody’s and S&P’s parent, McGraw Hill.”

Obama to Nominate Lazard Banker for a top Treasury Post (WSJ)
President Barack Obama said he intends to nominate investment banker Antonio Weiss as the next U.S. Treasury undersecretary for domestic finance. Mr. Weiss, 48 years old, is head of global investment banking at Lazard Ltd. , a mergers-and-acquisitions and restructuring shop on Wall Street. If confirmed by the Senate, Mr. Weiss would succeed Mary Miller, who stepped down from the senior Treasury post in September.

Twitter answers sceptics with 2024 targets (FT)
Anthony Noto, new chief financial officer and a former Goldman Sachs banker, said Twitter wanted to become one of the “top revenue generating internet companies in the world”. He said Twitter could reach $14bn in annual sales in the next ten years, ten times the $1.4bn it is forecast to record this year according to the average analyst estimate. In five to eight years, it could generate $11bn, he added. Using long range forecasts in an attempt to inspire sceptical investors, Twitter said it could generate long term margins of 40 to 45 per cent – higher than the forecast for margins of 35 to 40 per cent it made during its initial public offering last year – partly because of a greater use of targeted advertising than it had predicted.

The bigger the age gap, the shorter the marriage (MarketWatch)
There are many early indications of what might cause a marriage to crumble before a couple walks down the aisle — and the age gap between partners is one of them. And according to data in a recent study of 3,000 people by Andrew Francis and Hugo Mialon, professors in the Department of Economics at Emory University in Atlanta, it could be a considerable factor. Randal Olson, a fourth-year computer science graduate research assistant at Michigan State University, crunched the raw data from Emory and found that a larger age gap is related to a higher divorce rate. A five-year age gap statistically means you’re 18 percent more likely to divorce (versus just 3 percent with a 1-year age difference), and that rate rises to 39 percent for a 10-year age difference and 95 percent for a 20-year age gap. Partners from different generations may have different cultural reference points and values, and polar opposite tastes in music and film, and even friends, and also have different approaches to their sex life, says Fran Walfish, Beverly Hills psychotherapist and panelist on “Sex Box,” a forthcoming We TV relationship therapy show. “Sex drive goes up for women in middle age, but sexual function decreases for men.”

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