Opening Bell: 12.15.14

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Bigger Is Better for Retaining Junior Analysts, Report Says (WSJ)
The study found that one-third of investment-banking analysts who started working at the biggest U.S. banks in 2012 remained with the same firm this year. At smaller boutique banks, only about half that percentage—17%—stayed on after two years. Many top boutiques have a disproportionate presence in mergers and acquisitions, promising analysts more exposure to deal making. That often appeals to the buy-side firms. After two years, 63% of bankers who worked in the M&A group, at both big and small banks, left to join buy-side firms, predominantly private equity and hedge funds. “The deal-making skill set is highly valued by buy-side recruiters,” said Alex Orn, director of analytics at Vettery.

Meet the SEC’s Brainy New Crime Fighters (WSJ)
While SEC investigators have been using computer models for several years to detect fraud, the approach has gained added steam under Ms. White, agency officials say. The regulator, known for its platoons of lawyers with little experience in math or coding, is hiring more employees versed in computer programing and mathematics and pressing the old guard to get up to speed with the new methods, these officials say.

A Stuyvesant Senior Made $72 Million Trading Stocks on His Lunch Break (NYM)
Over late nights out and dinners at Morimoto, the three hatched a plan to start a hedge fund. “There are a lot of steps we have to follow through,” said Patrick, calling to mind a more serious Chuck Bass. “But we’re on the right track.” They plan to launch in June, after Mo turns 18 and can get his broker-dealer license. “Mo’s our maestro,” Patrick said. “He’s going to be earning the big bucks. We’re just going to try to fill his needs.” All three plan to attend college next year, but they’re not concerned about classes getting in the way of their goal: “A billion dollars!” Damir said. “By next year!” Mo affirmed the number with a nod. “But it’s not just about money,” he added. “We want to create a brotherhood. Like, all of us who are connected, who are in something together, who have influence, like the Koch brothers …”

Fed considers time to end free money pledge (Reuters)
The U.S. Federal Reserve would give the clearest signal next week that its easy money stance is ending if, as some expect, it drops its two-year long pledge to keep interest rates close to zero for a "considerable time". The Fed, which meets on Tuesday and Wednesday, first inserted that wording in its post-meeting statements in December 2012, promising then to maintain its highly accommodative monetary stance for a considerable time after its asset purchase program ends and the economic recovery strengthens. Both have occurred.

Amid Crisis, Pimco Steadies Itself (WSJ)
In November, three of Mr. Gross’s former lieutenants delivered by one measurement the best monthly performance in more than a decade by the Total Return bond fund, where he became one of the world’s most famous investors. Prices for some of the investments held by Pimco fell right after Mr. Gross, the firm’s co-founder and chief investment officer, walked out the door of Pimco’s headquarters here for the last time. As investors left, rival traders expected Pimco to be forced to sell some bonds to raise cash. Instead, Pimco executives decided to buy more of certain hard-hit investments, including Mexican, Italian and Spanish debt, according to people at the company. Prices on those securities soon began to rebound—and have grown into a profit of more than $200 million so far. That isn’t much money for Pimco, which manages $1.9 trillion, but it boosted the confidence of executives as they continue a sprawling strategy to end the outflow of cash.

Bungled Marriage Proposal Forces Evacuation (AP)
A Dutchman's attempt at a romantic wedding proposal was simply smashing. The unidentified lover in the central town of Ijsselstein rented a crane, planning to descend in front of his girlfriend's bedroom window first thing Saturday morning, play her a song and then pop the question. Instead the crane toppled over, smashing a large hole in the neighbors' roof...According to the Algemeen Dagblad newspaper, the girlfriend said "yes" anyway. After speaking with police, the pair traveled to Paris to celebrate. Then the crane fell again during attempts to right it with a larger crane, bashing in the rest of the neighbors' roof. The town's mayor is on the spot after the building was declared unsafe. Six apartments were evacuated.

Sony Demands News Outlets Stop Using Hacked Documents (Bloomberg)
Sony Pictures Entertainment (SNE)’s lawyers sent letters asking news organizations to stop writing articles based on stolen documents released by hackers seeking to interrupt the release of the comedy “The Interview.” The letter, dated Dec. 14, was sent by attorney David Boies to news organizations including Bloomberg News and the New York Times. Media outlets should destroy the stolen data and will be held responsible for damages from publication of the information, which includes salaries, intellectual property and communications protected by attorney-client privilege, he wrote. “If you do not comply with this request, and the stolen material is used or disseminated by you in any manner, SPE will have no choice but to hold you responsible for any damage or loss,” Boies wrote, using the acronym for Sony Pictures Entertainment, a division of Sony Corp. (6758) Sony is trying to stem the damage from an unprecedented cyberattack that its investigators have linked to “The Interview,” a film that depicts the assassination of North Korean leader Kim Jong Un and is set for release on Christmas Day. Thousands of studio documents have spilled onto the Internet, including the fees of the picture’s stars, Seth Rogen and James Franco, employee health records and e-mails showing studio chief Amy Pascal and producer Scott Rudin making racial jokes about President Barack Obama’s taste in films.

PetSmart Agrees to Be Bought by BC Partners for $8.3 Billion (Bloomberg)
PetSmart Inc. (PETM) agreed to be bought by a group led by BC Partners for about $8.3 billion in the largest leveraged deal for a U.S. company this year. The group will pay $83 a share, or about 39 percent more than the company’s price on July 2, before activist investor Jana Partners began pushing for the sale, according to a statement today. Including debt, the total value of the deal is about $8.7 billion, the statement shows.

Hurdles Appear Higher for Next Stock Market Bounce (WSJ)
“Overall, the performance of the markets is very worrisome,” said Krishna Memani, chief investment officer at OppenheimerFunds Inc., which oversees $245 billion in New York. He is particularly concerned about heavy selling of junk bonds, also called high-yield bonds, which has spread beyond energy companies. He and many other money managers, however, think that the economy is strong enough and the Federal Reserve is supportive enough to keep financial markets out of serious trouble. So despite his concerns, Mr. Memani isn’t selling. He is buying. Last week’s selloff “may end up being a Christmas gift for investors,” he said, meaning people can buy beaten-down stocks and junk bonds at low prices. He said he is buying junk bonds and corporate loans that he believes have been wrongly caught up in the rush to sell.

Short sellers are making a beary big comeback on Wall Street (NYP)
Short sellers are back with a vengeance. The five-year bull market has inflicted nothing but pain on short sellers as many of the stocks they bet against just kept soaring. But with investors much more skeptical of the markets testing all-time highs this year, short sellers are bouncing back as their most heavily shorted stocks suffer steep losses. The 112 companies publicly targeted by those who make money when the stocks fall are down an average of 17 percent this year, compared with a gain of 8 percent for the 102 targeted in 2013, according to Activist Shorts Research, a new database of short seller activity. The analysis looked at companies with a market cap greater than $300 million.

Dealbreaker Dramatic Reading Night Part IV Is December 17th (DB)
Buy your ticket here now.

South Dakota pulls ‘Don’t Jerk and Drive’ public safety campaign (NYDN)
South Dakota officials shuttered a "Don't Jerk and Drive" campaign after complaints that the public safety push was too inappropriate. Officials created the risqué campaign in early December to raise awareness about the dangers of jerking the steering wheel on icy roads. "The message is that we'd prefer drivers keep their cars out of the ditch and their minds out of the gutter," Lee Axdahl, director of the Office of Highway Safety, told the Argus Leader. But the double entendre, referring to a euphemism for masturbat!on, took attention away from the real issue, public officials complained. "This is an important safety message and I don't want this innuendo to distract from our goal to save lives on the road," said Trevor Jones, the secretary of the state Department of Public Safety in a statement.

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Cryan.CalmDown

Opening Bell: 7.25.17

John Cryan opens up (kind of); Goldman bids adieu to ETF market making; Wisconsin company literally getting under employees' skin; and more.

Opening Bell: 10.04.12

France’s LBO Firms See ‘Death’ From Hollande’s 75% Carry Tax (Bloomberg) Hollande, who released his first annual budget on Sept. 28, plans to tax fund managers’ share of the profit from their investments, known as carried interest, at a rate of as much as 75 percent, part of a wider effort to increase taxes on the wealthy and narrow the country’s deficit. France also plans to as much as double taxes on capital gains and restrict the amount of debt interest payments a company can deduct from its taxable income, a measure that will reduce returns on leveraged buyouts. Facebook Test Turns Users Into Advertisers (FT) Facebook is testing a new product in the US that allows ordinary users to pay to promote their own status updates, marking a shift in the social network’s willingness to charge its users for a core service. The product has potential to generate revenues, analysts said, but could also threaten the organic feel of the site as people pay to market their own social lives. Mark Zuckerberg Confirms: 'I wear the same thing everyday' (DL) "I mean, I wear the same thing every day, right? I mean, it's literally, if you could see my closet," Zuckerberg starts to explain, as Lauer asks if he owns 12 of the same gray t-shirt. "Maybe about 20," Zuckerberg admits, somewhere between discussing the future of Facebook, his daily routine, the iPhone 5, and his wedding to college sweetheart Priscilla Chan last May. The Facebook CEO says that he doesn't really have much in his closet — it's mainly used by his wife, who graduated from medical school at the University of California at San Francisco shortly before their marriage. Instead, Zuckerberg's identical t-shirt collection lives in the one drawer he's allotted. Tiger Global Up 22.4 Percent (Reuters) Tiger Global, one of the world's best-performing hedge funds, ended the third quarter with strong gains, leaving the fund up 22.4 percent for the year, two people familiar with the numbers said on Wednesday. The roughly $6 billion fund, run by Chase Coleman and Feroz Dewan, has been the darling of the investment community for its string of strong returns at a time when the average hedge fund is delivering only low single-digit returns. In 2011, when most funds nursed losses, Tiger Global captured headlines with a 45 percent gain for the year after having made a good chunk of money on the short side, people familiar with the portfolio said. 'Dark Pool' And SEC Settle (WSJ) The Securities and Exchange Commission alleged in its order that Boston-based broker-dealer eBX LLC allowed the third-party operator of its trading platform, called LeveL ATS, to use details on client orders, including the stocks involved and whether they were buy or sell orders, to its own advantage. That operator is Lava Trading, an electronic-trading unit of Citigroup, according to eBX. eBX agreed to pay $800,000 to settle the SEC's allegations. It did so without admitting or denying wrongdoing. Mohamed El-Erian: No corner offices at PIMCO (Fortune) "It doesn't matter whether you're CEO or whether you're an associate, you have the same size office. No corner offices. Just a conference room. And then I knew that I had made the right decision when my very first outing with PIMCO, I had come from the IMF, 15 years working on emerging markets. I had a swagger, I thought I knew what I was talking about. I put forward my view, and this summer intern felt safe enough to get up and say, "You know what? Mohamed is wrong and this is why he's wrong." The fact that PIMCO had created this safe zone where a summer intern could get up and question someone who was supposed to be an expert confirmed to me that I was in the right place." Bank-Friendly U.S. Regulator Shifts Focus to Revamp Reputation (Bloomberg) In a stately hearing room stuffed with senators and bankers, Thomas Curry began his apologies. His agency should have stopped a major bank from helping drug cartels launder cash. The violations went on for years while his agency was overly passive. “I deeply regret we did not act sooner,” he said. Curry had been on the job for just over three months on that day in July, so the mistakes hadn’t been made on his watch. His apologies were less a confession than a signal the new Comptroller of the Currency -- long seen as the most bank- friendly of U.S. regulators -- was changing course. “I’m not interested in what people thought about in the past,” Curry said in an interview. “My focus is going forward.” Since he took over in March, at least two key staff members closely associated with the agency’s pro-industry stance have departed, notably chief counsel Julie Williams. Williams, a 19- year OCC veteran, was known for helping nationally chartered banks resist state regulation by arguing they were preempted by often less-stringent federal rules. Curry has also raised the profile of consumer protection and shifted focus toward “operational risk” -- the idea that bank practices and management can pose as much of a threat to safety and soundness as external forces. Argentine Navy Ship Seized In Asset Fight (FT) An Argentine naval vessel crewed by more than 200 sailors has been seized in Ghana as part of an attempt by the US hedge fund Elliott Capital Management to collect on bonds on which Buenos Aires defaulted in 2001. A Ghanaian court ordered an injunction and interim preservation order against the ARA Libertad, a 100-metre long tall ship, following an application by Elliott subsidiary NML Capital on Tuesday. The hedge fund, run by the US billionaire Paul Singer, has been closely monitoring the course of the Libertad, according to sources familiar with the firm. Elliott had been waiting for the ship to stop in a port where it would have a chance to enforce legal judgments previously awarded by UK and US courts. The hedge fund declined to comment. Argentina slammed the interception of the Libertad as a “trick which these unscrupulous financiers” had pulled, adding that it “violates the Vienna Convention on diplomatic immunity”. Morgan Stanley commodities talks with Qatar hit snag (Reuters) Morgan Stanley's talks with Qatar's sovereign wealth fund over the sale of its commodities business have run into difficulty, and the deal may need to be reworked if it is to go ahead, banking sources said. One of the top banks in commodity trading over the past 30 years, Morgan Stanley has been in discussion for more than a year with Qatar over the sale of at least a majority stake in the energy-focused trading business, the bankers said. "There have been some differences, and Qatar is a bit lukewarm about it," one said. "It's not dead yet but definitely not imminent." Maple syrup stolen in Quebec seized by police in New Brunswick (The Star) Quebec police have seized between 700 and 800 barrels of maple syrup from a New Brunswick exporter, linking the drums to August’s massive heist of the sweet stuff. Étienne St-Pierre, owner of S.K. Exports in Kedgwick, N.B., told the Star that police executed a search warrant Sept. 26 and hauled away the barrels. “They said they were searching to find some stolen drums from Quebec,” he said. “It was a surprise. That was the first news I received.” St-Pierre said each barrel weighs about 270 kilograms and holds 170 litres of syrup, meaning police seized at least 119,000 litres of gooey Quebec gold. A spokesperson for the Sûreté du Québec, Sgt. Bruno Beaulieu, confirmed a search warrant had been executed in Kedgwick but said he could not comment on the investigation. The Federation of Quebec Maple Syrup Producers has never revealed the amount of syrup stolen from its secure St-Louis-de-Blandford, Que. warehouse in August. The facility held about 3.75 million litres of syrup, enough to fill one and a half Olympic swimming pools. St-Pierre said he obtained the barrels from a regular Quebec supplier, who he refused to identify.