Opening Bell: 12.8.14

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UBS Turns to Artificial Intelligence to Advise Clients (Bloomberg)
UBS, facing the threat of competition from Google Inc. (GOOGL) and Amazon.com Inc., has turned to a Singapore-based technology company that uses artificial intelligence for help delivering personalized advice to the bank’s wealthy clients. Sqreem Technologies Pte. Ltd. beat some 80 teams competing in the Innovation Challenge, a contest organized by Switzerland’s biggest bank that offered S$40,000 ($30,000) and a potential contract to the winner. Their task: Extract the information most relevant to an individual client from an explosion of data and deliver this tailored content to clients’ mobile phones, iPads and other digital devices. “Banking is one of the most rudimentary industries when it comes to digitalization,” Dirk Klee, chief operating officer for UBS wealth management and responsible for digital initiatives, said in an interview. “EBay, Amazon - everything is getting more and more digital. The question is how we translate this into a similar experience for our clients.”

Banks Urge Big Customers to Take Cash Elsewhere or Be Slapped With Fees (WSJ)
Banks are urging some of their largest customers in the U.S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits. The banks, including J.P. Morgan Chase & Co., Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and Bank of America Corp. , have spoken privately with clients in recent months to tell them that the new regulations are making some deposits less profitable, according to people familiar with the conversations.

Bafin exonerates Deutsche Bank's Jain in Libor probe: Handelsblatt (Reuters)
German financial watchdog Bafin has found that Deutsche Bank co-Chief Executive Anshu Jain was neither aware nor part of possible attempts at the German lender to manipulate interest rates, German newspaper Handelsblatt reported. After a two-year investigation, Bafin concluded there was no evidence the bank's board members participated in or knew about any possible interest rate manipulation efforts, the German business daily said, citing unnamed financial sources.

Merkel Takes Tougher Line on Neighbors’ Plans in Deficit Fight (Bloomberg)
German Chancellor Angela Merkel increased pressure on France and Italy to deliver extra economic reforms in exchange for more time to meet budget targets. The European Commission “has made clear that that, which until now has been on the table, isn’t enough,” Merkel said in an interview with Die Welt am Sonntag. “I would subscribe to that view.”

Credit Suisse evaluates prime brokerage business as part of October cuts: source (Reuters)
Credit Suisse AG is considering scaling down its prime brokerage business as part of already announced efforts to reduce risk in its investment banking division, a person familiar with the matter told Reuters. Credit Suisse like many investment banks is reconciling its ambitions with increased regulation.

Nebraska Player Jack Gangwish Takes Selfie With Raccoon, Kills It After He's Bitten (AP)
A Nebraska football player on Wednesday took a roadside selfie with a raccoon, but says he unintentionally killed the animal after it bit him on the calf, according to reports. Jack Gangwish, a defensive end, told local paper The Lincoln Journal Star he knew the raccoon would have to be tested for rabies, so he attempted to subdue it with a wrench from his truck. The animal died, however. "It was a raccoon selfie gone completely wrong," Gangwish told the paper. He said the animal is being tested.

Putin's Stash of Oil Money Is Shrinking (BusinessWeek)
While oil prices were soaring, Russia amassed a pile of hard currency that most countries could only dream of. Just a year ago, foreign reserves held by its central bank stood at more than $515 billion, including tens of billions in energy export revenue pumped into two big sovereign wealth funds that invested the money in foreign government bonds and other overseas assets. Now the hoard is starting to dwindle. Over the past year, total foreign reserves have fallen almost 20 percent, to less than $419 billion. The Bank of Russia has spent billions in an effort to prop up the ruble, while the Kremlin has begun raiding the sovereign wealth funds to aid banks and companies hit by Western sanctions. The finance ministry says it will probably take $10 billion out of one of the funds to plug a hole in the government’s 2015 budget. And in his annual address to lawmakers on Dec. 4, President Vladimir Putin said that the other fund, which is intended to support Russia’s pension system, should be tapped for an unspecified amount “to implement a program for recapitalization of leading domestic banks,” which in turn would be expected to invest in infrastructure projects.

Hedge Funds Betting That OPEC-Led Oil Rout Is Near End (Bloomberg)
Speculators boosted their net-long position in West Texas Intermediate crude by 14 percent in the week ended Dec. 2, the most in 20 months, U.S. Commodity Futures Trading Commission data show. Short bets contracted by 15 percent as long wagers expanded 4 percent.

Sentencing Looms for Ex-Madoff Staffers (WSJ)
On Monday, U.S. District Judge Laura Taylor Swain will sentence Daniel Bonventre, 67 years old, a former operations director for Mr. Madoff convicted of helping gin up false books and records. In the following days, sentences will be levied on computer programmers Jerome O’Hara, 51, and George Perez, 48, both of whom were convicted of creating phony customer accounts, and portfolio managers Annette Bongiorno, 67, and JoAnn Crupi, 54, convicted of concocting phony trading records. All five were convicted in March of aiding and hiding the fraud.

Blackstone to Sell California Buildings for $3.5 Billion (WSJ)
Blackstone Group LP has agreed to sell its northern California portfolio of 26 office buildings for $3.5 billion to a Los Angeles-based real-estate investment trust, its largest office sale in seven years. The properties were part of Equity Office Properties Trust, which Blackstone acquired for $39 billion in a 2007 leveraged buyout.

Wall Street’s dark pools being drained by regulations, losses (NYP)
The Street’s high-speed stock traders are being dumped overboard as more layoffs and closures rock the thinning ranks of demoralized equity desks. Slammed by stricter regulatory enforcement and mediocre volume, the US electronic stock-trading business continues to retrench — and it’s taking down some high-profile stars. Citigroup is one of the latest victims. Last week, the bank confirmed its plan to shut down its private electronic stock-trading network, LavaFlow ECN, early next year.

Spend The Holidays With Dealbreaker (DB)
Dealbreaker Dramatic Reading Night Part IV is happening December 17th. Make it your business to be there.

Florida man leads police on 90-minute chase in stolen front-end loader (UPI)
A Florida man was arrested Saturday after he stole a front-end loader and led authorities on a chase for up to an hour-and-a-half, police say. Donald John Clark, 32, is being held at the Pinellas County jail in St. Petersburg, Fla., on $32,000 bail for stealing a Volvo L110G -- a 20-ton, $250,000 front-end loader -- from a construction site before leading police on a chase that lasted over an hour. After receiving a tip about a front-end loader being driven erratically, police attempted to pull over Clark, who ignored sirens and emergency lights. The Tampa Bay Times reports Clark hit curbs and ran stop signs as he cut through side streets and neighborhoods. Police traced the movements of the front-end loader, which traveled at a top speed of 25 mph, but officers had few ways to actually stop the vehicle. When establishing police-car road blocks, officers were forced to make openings at the last minute as Clark charged toward them. The vehicle eventually ran out of gas 90 minutes later and police arrested Clark, who has a history of driving with a suspended license, disorderly conduct and driving under the influence.

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Fed Weighs More Stimulus (WSJ) A few Fed officials were ready to move aggressively when the Fed met in June and several others said they might want to take new measures if the recovery loses momentum or their growth and employment forecasts are cut once again. That is according to minutes of the central bank's June 19-20 meeting, which were released Wednesday with their usual three-week lag. Gold to Hit $2,000 by Year-End on More Fed Easing: Merrill (CNBC) "We think that $2,000 an ounce is sort of the right number,” Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at the investment bank, said Thursday. Regulators’ Shake-Up Seen as Missed Bid to Police JPMorgan (NYT) After the financial crisis, regulators vowed to overhaul supervision of the nation’s largest banks. As part of that effort, the Federal Reserve Bank of New York in mid-2011 replaced virtually all of its roughly 40 examiners at JPMorgan Chase to bolster the team’s expertise and prevent regulators from forming cozy ties with executives, according to several current and former government officials who spoke on the condition of anonymity. But those changes left the New York Fed’s front-line examiners without deep knowledge of JPMorgan’s operations for a brief yet critical time, said those people, who spoke on the condition of anonymity because there is a federal investigation of the bank. Forced to play catch-up, the examiners struggled to understand the inner workings of a powerful investment unit, those officials said. At first, the examiners sought basic information about the group, including the name of the unit’s core trading portfolio. Neb. Man Jailed for Bomb Threat on Job Application (AP) the Legacy 272 Lounge employee who reviewed 38-year-old Jason Dornhoff's application last Thursday called police when he read the threat that closed with: "If you be quiet and help me, you won't die." Police arrested Dornhoff, of Heartwell, Neb., at gunpoint and searched his truck, but didn't find any bomb. Court documents say Dornhoff told police he uses methamphetamines and went to the restaurant hoping to find a way to fulfill his sexual fantasies. Clock Is Ticking On Crisis Charges (WSJ) Federal laws under which the Securities and Exchange Commission usually goes after alleged fraud and other misdeeds have a five-year statute of limitations. The five-year limit is causing SEC officials to race to file lawsuits in some cases and ask lawyers representing the targets of certain investigations to give the agency more time, according to people close to the investigation. The SEC intends to file charges against firms and people involved in the creation of a $1.6 billion mortgage-bond deal called Delphinus CDO 2007-1, people close to the investigation said. Credit Suisse Clients Targets Of Tax Probe (WSJ) German tax inspectors in recent weeks have been raiding the homes of Credit Suisse Group AG clients suspected of evading taxes, according to bank and German government officials. The investigation is centering on about 5,000 clients who between 2005 and 2009 allegedly bought insurance policies at a Bermuda-based subsidiary of the Swiss bank. In These Knife Fights, Only Pride Gets Wounded (WSJ) Donavon Phillips windmilled his arms. He hopped a few times to get the blood flowing in his legs. A light sweat formed under his black-and-red jersey—just the right dew. "You can't go into this cold, because it's an all-out sport," said Mr. Phillips, pulling his right arm across his chest. He was warming up for a cutthroat event: the 10th annual World Championship Cutting Competition. It takes razor-sharp focus to be a cutting champ, along with a blade that resembles a bulkier, sharper version of a kitchen meat cleaver. Mr. Phillips is one of a few who have helped make a sport out of demonstrating they can swiftly, flawlessly slice through a dozen water bottles or chop a rolling tennis ball in half. Having won the national title in May, he is a favorite on the cutting circuit. SEC Votes To Require Consolidated Audit Trail For Markets (Bloomberg) “A consolidated audit trail that accurately tracks orders throughout their lifecycle and identifies the broker-dealers handling them will provide us with an unprecedented ability to effectively oversee the markets we regulate,” said SEC Chairman Mary Schapiro. The rule is a “great leap forward,” she said. BofA Execs Dodge A Bullet (NYP) Bank of America won a federal court ruling dismissing claims against former Chief Executive Officer Ken Lewis and others in a securities-fraud lawsuit over the bank’s use of an electronic mortgage registry. Buffett: US Economic Growth Slowing, US Slipping "Pretty Fast" (CNBC) Despite the slowdown, Buffett says the U.S. economy is still doing better than "virtually any other big economy" around the world. New York Fed to Release Libor Documents Friday, Official Says (Reuters) The Federal Reserve Bank of New York will release on Friday documents showing it took "prompt action" four years ago to highlight problems with the benchmark interest rate known as Libor and to press for reform, an official at the regional U.S. central bank said on Wednesday. 'Con artists' scammed Hamptons homeowners by turning rentals into teen party pads: officials (NYP) Two real-estate con artists made hundreds of thousands of dollars by renting homes in the Hamptons and using them as post-prom and graduation-party crash pads for raucous teens, authorities said. Officials and outraged homeowners said the front man, 25-year-old Lee Hnetinka, of Jericho, would rent the mansions saying he intended to use them for his own family reunions. “He said it was his aunt having a party at his house,” said Lucy Sachs, 64, who rented her family’s East Hampton home to Hnetinka for $30,000 a month. When a neighbor called on June 8 to tell her that a “party bus with a disco ball had arrived” at Sachs’ place in the middle of the night, she rushed over, confused. What Sachs found was a houseful of nearly 100 teens smoking and drinking in the century-old building. Hnetinka allegedly teamed up with Leslie Jennemann (both inset), a Hamptons real-estate agent who in 2002 was convicted of running over and killing a migrant potato picker on her way home from a party, Southampton officials said...The suspects charged students $355 each for three days at the house, homeowners said. Scarlato estimated that the pair brought in $60,000 to $80,000 a weekend and had as many as 10 rentals. Another East Hampton homeowner, Eli Braha, rented to Hnetinka and became suspicious after a landscaper called to ask about all the trash and as many as 30 inflatable beds in the home.

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