Opening Bell: 12.9.14

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PwC sold ‘tax avoidance on industrial scale’ (FT)
MPs accused a firm of accountants of “selling tax avoidance on an industrial scale” on Monday after a tense parliamentary hearing sparked by the leak of hundreds of Luxembourg tax rulings. In the course of a two-hour grilling, MPs on the public accounts committee angrily denounced professional services firm PwC for devising financing structures that allowed companies to secure very low tax rates in Luxembourg. The MPs also attacked Shire, a FTSE 100 pharmaceutical company that was one of the companies that saw its tax affairs come under scrutiny after the leak of documents from Luxembourg. Margaret Hodge, chair of the committee, said: “The way in which you conduct your business is outrageous.” Both PwC and Shire denied the MPs’ accusations. The inquiry is the latest in a series of high-profile hearings into the tax affairs of multinationals, such as Google, Amazon and Starbucks, by the committee. Ms Hodge said the committee’s work had played a role in catalysing an overhaul of the international tax rules that she said was “making real progress”.

New York’s $500,000-a-Month Apartment Nabs a Tenant (WSJ)
A full-floor rental of New York’s Pierre Hotel that was listed for $500,000 a month has found a tenant, according to the listing agents. To boot, the same renter has also reserved a separate $150,000-a-month suite for guests. Jonathan Miller, president of appraisal firm Miller Samuel, said the $500,000-a-month listing sets a record for New York City residential leasing. The pricier rental, which came on the market at the end of October, leased for full asking price to an international renter, while the less expensive suite rented for close to asking price, according to listing agents Therese Bateman and Andres Perea-Garzon of Town Fifth Avenue. The tenant has reserved both spaces through the end of December, Ms. Bateman said...Located on the 39th floor of the luxury hotel, the full-floor listing has 4,786 square feet of living space, six bedrooms and 6½ bathrooms, including the Presidential Suite. The unit overlooks Central Park, the Jacqueline Kennedy Onassis Reservoir and the George Washington Bridge, among other sights. The less expensive unit is the Getty Suite, a 1,015-square-foot apartment on the 10th floor with a 920-square-foot terrace “for an extended family-entourage situation,” Ms. Bateman said. Amenities include a language-specific butler and concierge service and a chauffeur-driven Jaguar.

Bill Gross’s New Janus Fund Rises to $1.2 Billion in Assets in November (WSJ)
Janus Capital Group Inc. has rallied its sales force around Bill Gross, helping to push the assets in his new mutual fund past the $1 billion mark in November. Mr. Gross’s strong performance also contributed to the fund’s increased assets as bets on derivatives linked to China and Mexico appear to have paid off, analysts say. The Janus Global Unconstrained Bond fund returned 0.36% during the month, beating out 82% of similar mutual funds, according to fund research firm Morningstar Inc.

Fed Aims to Signal Shift on Low Rates (WSJ)
Federal Reserve officials are seriously considering an important shift in tone at their policy meeting next week: dropping an assurance that short-term interest rates will stay near zero for a “considerable time” as they look more confidently toward rate increases around the middle of next year. Senior officials have hinted lately that they’re looking at dropping this closely watched interest-rate signal, which many market participants take as a sign rates won’t go up for at least six months. “It’s clearer that we’re closer to getting rid of that than we were a few months ago,” Fed Vice Chairman Stanley Fischer said in an interview with The Wall Street Journal last week. New York Fed President William Dudley has avoided using the “considerable time” phrase in recent speeches and instead said the Fed should be “patient” before raising rates.

TGI Fridays drone delivers bloody 'mistletoe mischief' (CNBC)
TGI Fridays' "mobile mistletoe drone" left a woman bloody and missing a piece of her nose last week. Photographer Georgine Benvenuto was at a Fridays in Sheepshead Bay, N.Y., when one of the operators tried to land the 10-inch aircraft on her head, but clipped off a part of her nose instead. "It literally chipped off a tip of my nose," Benvenuto told the Brooklyn Daily. "It took off part of my nose and cut me here, right under my chin." The drone's operator said the mistake wouldn't have happened if the woman hadn't flinched, according to the website. TGI Fridays never officially acknowledged the injury. The drones were intended to hover over couples and inspire a little "mobile mistletoe mischief," according to promotional material for the event. "If guests show a little love under the mistletoe, Fridays might just show them a little love with some nice holiday gifts," Fridays said in a press release last week.

Big Banks Face U.S. Capital Rule Tougher Than Global Agreement (Bloomberg)
Global regulators have already agreed that the world’s biggest banks, including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), need to have extra capital to absorb losses in a crisis. Fed Governor Daniel Tarullo has said the U.S. requirement should be more stringent than the international standard and take into account how banks borrow money to determine how much more capital they need. The Fed proposal, to be announced today, may lower returns for shareholders of U.S. banks compared with firms in other parts of the world, according to analysts. The extra capital requirement could be heavier for firms such as Goldman Sachs Group Inc. and Morgan Stanley that rely more on markets for short-term funding, instead of looking to depositors.

Sony Hackers Demand Studio Stop Showing ‘The Interview’ (Bloomberg)
The hackers who broke into Sony Pictures’ computers released new files and warned the studio not to show “The Interview,” the Seth Rogen comedy about a plot to kill North Korean leader Kim Jong Un. “Stop immediately showing the movie of terrorism which can break the regional peace and cause the war,” the group calling itself GOP, or Guardians of Peace, said in a statement posted yesterday on the website Github, along with links to a fourth set of files. “You, Sony & FBI, cannot find us.” The hackers didn’t name the film directly. The latest post marks the first time they have demanded the studio halt the release of “The Interview,” which has drawn scorn from North Korean officials. The picture is scheduled to open on Dec. 25. The studio has been holding screenings, including in San Francisco on Nov. 18.

Senate to Hold Hearing on Cyberattacks Against Finance (Dealbook)
The hearing set for Wednesday will feature testimony from top officials of the Federal Bureau of Investigation, the Secret Service, the Treasury Department, the Department of Homeland Security and the Office of the Comptroller of the Currency. The banking committee is holding the hearing in the aftermath of this summer’s big cyberattack at JPMorgan Chase that compromised some account information of 83 million households and small businesses. Law enforcement officials have said the same hackers that breached JPMorgan’s systems also tried to gain access to the systems of at least a dozen other financial institutions.

The Greatest Night Of 2014 Is Happening December 17th (DB)
Be there or get your nose clipped by a mistletoe drone.

Church Moving Services To Restaurant (UPI)
An Alabama church announced it will start holding services at a Buffalo Wild Wings to reach potential parishioners who "wouldn't go to a church." The Rev. Wesley Savage, minister of young adults for Riverchase United Methodist Church in Birmingham, said the church is planning to begin holding Sunday morning services at a local Buffalo Wild Wings in the hopes of attracting worshipers who might be intimidated by the church setting. "We believe there's a population that would attend a service there that wouldn't go to a church," Savage told AL.com. "We hope it's going to be a more inviting atmosphere." The services have been dubbed "The Stream" and they are being billed in signs posted by the church as "Wings. Prayer. Sports."

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Germany's Credit Rating Slashed By Egan-Jones (Reuters) The credit ratings agency on Tuesday downgraded its credit rating for Germany to "A+" with a negative outlook from "AA-," noting the need to watch for fallout should Greece exit the euro zone. Whether or not Greece or other euro-zone members exit the monetary union, Germany will be left with "massive" additional, uncollectible receivables, Egan-Jones said in a statement. Spain Considers Sweeping Tax Hikes to Please EU (Reuters) Spain's current VAT rate is 18 percent, one of the lowest in Europe, but many products are charged at a reduced 8 percent or a "super-reduced" 4 percent. "The ministry is studying reclassifying certain products and services that have reduced or super-reduced VAT," a spokesman for the ministry said. Madrid is also considering eliminating tax breaks on housing after reintroducing the measure as one of the first decrees the center-right government announced after being sworn in December. It is also considering introducing a so-called "green tax" on gasoline, following recommendations by the European Union, Treasury Secretary Marta Fernandez Curras said. New Plan Sees Closer Euro-Zone Ties (WSJ) Several of the proposals—such as joint bond issuance and the effective veto powers on national budgets—raise red flags for many governments. If all 27 EU leaders, or at least those from the euro zone, accept the report's basic principles at their summit scheduled for Thursday and Friday, the decision will set the currency union off on what is likely to be a long period of wrangling. Accused Manhattan 'madam' posts bail (NYP) Pattis and Gristina faced the microphones briefly before the family sped off to her 200-acre pig rescue farm in upstate Monroe. Singapore Pastor Charged For Funds For Wife’s Pop Career (Bloomberg) The founder and senior pastor of Singapore’s City Harvest Church was charged with three counts of dishonestly using the charity’s funds to finance his wife’s singing career. Kong Hee, whose wife Ho Yeow Sun has performed with artists like Wyclef Jean, conspired with others to conceal the diversion of the funds, prosecutor Christopher Ong told a Singapore Subordinate Court today. Financial irregularities of at least S$23 million ($18 million) from the charity’s funds were discovered, Singapore’s Commissioner of Charities said in a statement on its website yesterday. Wedding Party Soaked After Dock Breaks (WTV) A bride, groom and their entire wedding party fell into Gun Lake after the dock on which they were having photos taken gave way. It happened Saturday at Bay Pointe Inn at the wedding reception of Eric Walber and Maegan McKee (now Walber) of Bryon Center..."We were out there for probably 30 seconds, standing on the dock, and it started to lean and tilt," groom Eric told 24 Hour News 8. "We went right under." Eric said he knew just a split second before the dock collapsed what was about to happen. "I saw the thing starting to tilt, and I'm like, 'Oh, yup, this is going to happen,'" he said. Wall Street Analysts Give Facebook A Cautious Nod (Reuters) Barclays Capital, Stifel Nicolaus and Citi Investment Research & Analysis set a "hold" or equivalent rating on the stock, while Morgan Stanley and RBC Capital Markets began coverage of Facebook with their top ratings. Barclays in Libor settlement (Reuters) The bank is poised to secure a $200 million deal with U.S. regulators to settle a probe into allegations staff manipulated a key interbank lending rate known as Libor, one source familiar with the matter said. SEC And Falcone Set For Showdown (WSJ) Mr. Falcone's pledge sets the stage for a legal battle that may decide the fate of an investor who seemed poised to become a Wall Street star as recently as four years ago, when a series of winning bets propelled his fund to $26 billion in assets. The New York-based fund managed $3 billion in March, after several years of client withdrawals and steep losses, including those tied to a troubled venture to set up a nationwide wireless network. Mayor Cools SUV (NYP) Mayor Bloomberg wants to maintain his politically correct credentials on global warming — but hates to get into a hot car when he leaves an air conditioned building. The solution his aides came up with? In full view of bemused tourists and other passers-by yesterday, workers hoisted a standard room air conditioner to a side window of one of the mayor’s SUVs parked in the City Hall lot to see if it would fit. “This is an experiment to be used on extremely hot days like the types we saw last week,” said mayoral spokesman Stu Loeser.

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Cyprus Finance Minister Sarris Resigns After Brokering Rescue (Bloomberg) Cyprus Finance Minister Michael Sarris quit the government today after helping clinch the final terms of an international aid agreement to stave off a financial collapse of the island. Sarris told reporters in Nicosia that he resigned due to a committee set up today to investigate the reasons that led to Cyprus’s economic crisis. Sarris has served as chairman of Cyprus Popular Bank Pcl, the second-largest lender, which has been shut as part of the financial rescue. Fannie Logs Record Profit (WSJ) Fannie Mae reported an annual profit of $17.2 billion on Tuesday, its first annual profit since 2006 and its largest annual profit ever, boosted by the housing market's turnaround and sustained declines in the number of soured home loans. Fannie's profit compares with a year-earlier loss of $16.9 billion. Fannie and its smaller sibling, Freddie Mac, posted banner earnings for 2012 because rising home prices have allowed them to set aside much less to cover the cost of defaulting home loans. Bank of America Finds Profit in Foreign Tax Credit Moves (Bloomberg) Bank of America Corp. more than doubled its profits in 2012 -- with some help from the tax code. What the bank calls “restructuring” of its non-U.S. operations yielded $1.7 billion in foreign tax credits, or 41 percent of the $4.2 billion the company reported in 2012 earnings, according to securities documents including the form 10-K it filed Feb. 28. While the maneuvers didn’t provide an immediate cash tax benefit for Bank of America, the foreign tax credits count toward net income under accounting rules. Goldman Unit To Seek Risk (WSJ) Goldman Sachs is launching a specialty finance company to invest in high-risk debt primarily of midsize U.S. companies with no credit ratings. The New York firm said in a filing with the Securities and Exchange Commission late Friday that it plans to offer shares in the new unit, Goldman Sachs Liberty Harbor Capital LLC, "as soon as practicable after the effective date of this registration statement." SEC Ex-Chief Lands at Consultant (WSJ) Promontory Financial Group LLC is expected to announce Tuesday that it has hired Ms. Schapiro, who was chairman of the Securities and Exchange Commission for nearly four years. "In my case, there's no revolving door…I won't ever be going back to government," the 57-year-old Ms. Schapiro said in an interview. She decided that after spending "28 of the last 32 years as a regulator," now was the "right time…to do something different." Mothers brawl during Seattle zoo Easter egg hunt (SPI) A fight between two women during an Easter egg hunt at Woodland Park Zoo led to a bloody nose and several crying children Sunday, according to police and a witness. The incident began about 1 p.m. when a woman allegedly pushed a child aside as her own child was scrambling toward some brightly colored eggs, police spokesman Jonah Spagenthal-Lee said. “The shoving sparked a confrontation between the first woman (the supposed shover) and the second child’s mother, who began fighting and had to be separated three or four times,” Spagenthal-Lee said in a statement. “The brawl left the first woman with a bloody nose.” The children, mostly 4- to 6-year-olds, were subjected to foul language. The bloody scene left several children crying. Judge Questions Fairness of Citigroup $590 Million Settlement (Reuters) A Manhattan federal judge on Monday signaled he will not rubber-stamp Citigroup's proposed $590 million settlement of a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets. U.S. District Judge Sidney Stein asked lawyers for the bank and its shareholders to address several issues at an April 8 fairness hearing, including requested legal fees and expenses of roughly $100 million, and the absence of payments by former Citigroup executives. Argentine-bond tango heats up (NYP) The yearly cost to insure the debt in the credit default swaps market for five years jumped by nearly 10 percent yesterday after President Cristina Kirchner and her government refused to come up with a better offer for bondholders led by hedge fund billionaire Paul Singer’s Elliott Management. A New York appeals court is expected to rule that Argentina must pay the Elliott group $1.44 billion, and its latest proposal indicated that it will not, which could push its bonds into default. Nasdaq Accepts Credit Rating Risk in Quest to Expand (Bloomberg) For Nasdaq OMX Group Inc., the benefits of expanding into electronic bond trading justify the risk of a lower credit rating. The second-biggest operator of American equity exchanges agreed yesterday to acquire eSpeed, a platform for U.S. Treasuries, from BGC Partners Inc. (BGCP) for $750 million cash, or $1.2 billion should sales goals be met. Moody’s Investors Service said Nasdaq’s Baa3 senior rating may be cut following the deal. Hampton Waffle House employee charged for April Fool’s joke (WTKR) A Hampton Waffle House employee is now charged after officers say she played an April Fool’s joke on them. Susan Tinker is charged for lying about a robbery. Police say around 6 a.m. Monday morning, Tinker called to report the robbery at the restaurant on West Mercury Boulevard. Police say they got to the scene and spent more than an hour investigating. While waiting for the manger to get there to review surveillance tape, they figured out there was no robbery. Tinker told police it was all an April Fool’s joke. But officers say this was no laughing matter. A spokesperson for the Waffle House says they do not tolerate this kind of behavior and Tinker is no longer employed there.

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