Opening Bell: 1.20.15

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Fed Officials on Track to Raise Short-Term Rates Later in the Year (WSJ)
Federal Reserve officials are staying on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation. The Fed’s stance, as it prepares for a policy meeting later this month, is striking because European Central Bank officials are poised to take the opposite approach later this week.

Jefferies Reprises Role of Market White Knight (WSJ)
When foreign-exchange broker FXCM Inc. FXCM -15.06% was forced to seek a rescue last week following a surprise surge in the Swiss franc, a number of potential white knights surfaced, including private-equity firms and Leucadia National Corp. It soon became apparent, however, that the best-suited among them to pull off the lightning-fast cash infusion FXCM needed was Leucadia and its Jefferies Group LLC unit, which in recent years has honed its skills as a rescuer of firms succumbing to bouts of market turmoil. Jefferies bankers in about 36 hours put together a $300 million financing from its parent company that will keep FXCM in business. In addition to the 10% initial annual interest the loan commands, Leucadia stands to reap an outsize share of any dividends FXCM generates and of proceeds from any sale of the company or its parts. Jefferies’s role in bailing out FXCM is reminiscent of one it played in 2012, when Knight Capital Group Inc. needed an emergency infusion to stay afloat after a slew of accidental stock orders put the trading firm on the verge of collapse.

Wall Street titan’s son thrown out of NYC steakhouse (NYP)
The son of Wall Street titan Mario Gabelli caused a scene at hot new restaurant Hunt & Fish Club, bellowing “Do you know who my father is?” as Fox Business’ Charlie Gasparino tried to calm him down. Michael Gabelli was thrown out of the Midtown steakhouse after he started yelling when the bill arrived. A witness said, “He forcefully argued with the servers and managers. Gasparino tried to help. Charlie kept saying things like, ‘You’re embarrassing your father.’” After Gabelli calmed down, he tried to get a drink, but when the bartender refused to serve him, he flipped out. So he was thrown out, but not before dropping, “Don’t you know who my father is?…He runs this city.”

Swiss Franc Trade Is Said to Wipe Out Everest’s Main Fund (Bloomberg)
Marko Dimitrijevic made a smart bet in December. The hedge fund manager, wagering the Swiss franc would fall, profited after voters there rejected a plan to have the central bank hold a fifth of its assets in gold. For the $830 million Everest Capital Global, his Miami-based firm’s oldest and biggest fund, investments from Switzerland contributed 0.6 percentage points to gains that month. Last week, the wager had a far bigger impact. In less than a day, it wiped out the 24-year-old fund, according to a person familiar with Everest Capital, leaving the firm with about $2.2 billion in seven other funds. Dimitrijevic, an emerging market specialist who’s navigated at least five debt crises in those markets, was undone by the central bank of the country where he was raised. Last week, the Swiss National Bank unexpectedly let the franc trade freely against the euro, ending its three-year policy of capping the franc at 1.20 a euro.

Gleeful German Firms Target Switzerland on Franc’s Gains (Bloomberg)
“The first thought to cross my mind was that this would be great for me and my company’s deliveries in Switzerland,” Hartmut Neidlein said as he recalled hearing about the Jan. 15 decision. “It’s now cheaper for them to buy our products and that could increase demand.” Wurotec is one of the thousands of small and medium-sized companies that make up the German Mittelstand, which account for more than half of the country’s gross domestic product. Neidlein has now set up a meeting with his Swiss distributor to try to boost sales of his machines, which start at 2,000 euros ($2,320), beyond the current 10 percent of the total.

Woman steals flat screen between her legs (WTSP)
Captured on video, a woman shocked workers by stealing a flat screen TV by stuffing it up her dress, between her legs. The woman simply walked into the store, picked up the packaged TV, placed it between her legs and walked out along with an accomplice. According to reports, it all happened in 13 seconds. "She did it so quickly no one had time to notice or react," said the shop assistant.

Federer on Swiss Franc Shock: "Does It Mean I've Got to Win Now?"
Last week’s decision by the Swiss National Bank (SNBN) to scrap its currency cap with the euro not only roiled global markets, it’s also being felt in the pockets of Roger Federer. The Swiss franc jumped as much as 41 percent against the euro, while climbing more than 15 percent against all of the more than 150 currencies tracked by Bloomberg after the SNB’s surprise announcement last week to scrap its three-year-old policy. Switzerland’s Federer, the holder of a men’s record 17 tennis majors, joked with reporters at the Australian Open that the change increases the pressure on him to add victories. “Does it mean I’ve got to win now?” Federer said in a news conference yesterday in Melbourne when asked about the move in the currency.

Stress mounting on ‘do-or-die’ Citigroup (NYP)
Citigroup faces “do-or-die time” as the Federal Reserve administers an annual stress test to the struggling bank, an analyst said. “Either Citi gets it done or it’s time to more aggressively break up the company,” Mike Mayo, a banking-industry analyst at brokerage firm CLSA, told Crain’s New York Business. Citi has flunked the test twice in the past three years, and insiders say Chief Executive Michael Corbat probably can’t survive another failure. The bank submitted its paperwork earlier this month and should get results in mid-March. Stress tests are annual exams in which 31 large banks forecast how much money they could lose in a serious economic downturn.

Richest Russians Repatriate Assets After Putin Turns Tax Screw (Bloomberg)
President Vladimir Putin is pushing harder on Russia’s richest citizens to repatriate offshore assets amid a slump in the ruble and the imposition of sanctions by the U.S. and the European Union. Under new tax rules signed into law by a presidential decree in November, Russian residents will from this year pay a tax of 13 percent on earnings reported by foreign companies and trusts they control. Should authorities prove those entities are managed from Russia and don’t have significant assets or employees abroad, the tax rate increases to 20 percent.

World’s Largest Traders Use Offshore Supertankers to Store Oil (WSJ)
According to shipbrokers and analysts, major traders including Vitol SA, Gunvor SA, Trafigura Beheer BV and Koch Supply & Trading Co. Ltd have chartered supertankers capable of storing a combined total of more than 30 million barrels of oil—many of them in the past few weeks. Vitol, Gunvor and Trafigura declined to comment.

Inside Goldman Sachs’s Loan to Banco Espírito Santo (WSJ)
When Goldman Sachs Group Inc. arranged an $835 million loan to Banco Espírito Santo SA last summer, it was the result of a concerted, monthslong effort by senior Goldman officials to win business with the large Portuguese company, according to people familiar with the matter. Today, Goldman’s embrace of Espírito Santo has come back to haunt the Wall Street giant. Weeks after Goldman arranged the loan, Banco Espírito Santo collapsed amid allegations of fraud. Goldman now is in an unusual public fight with Portugal’s central bank, which bailed out Espírito Santo, over whether the loan should be fully repaid. Anticipated losses linked to the loan took a bite out of Goldman’s already weak fourth-quarter results, the firm’s executives said last week.

Georgia Cop Tickets Motorist For Eating McDonald's Double Quarter Pounder While Driving (TSG)
A motorist was cited for “eating while driving” after a cop spotted him noshing on a McDonald’s Double Quarter Pounder with Cheese as he drove along a Georgia roadway. Madison Turner, 36, was ticketed by a Cobb County policeman shortly after he left a McDonald’s drive-thru in Marietta on January 10. The ticket issued to Turner, a web developer from Alabama, alleges that the driver failed to exercise due care while behind the wheel. In the ticket’s “remarks” section, Officer Delaney wrote, “Eating While Driving.” Turner, who was pulled over around 3:40 PM, told TSG that the cop specifically told him that his 2009 BMW was not swerving in the roadway, nor was he driving above the speed limit. Turner contends that he was not distracted while enjoying his McDonald’s grub.

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Opening Bell: 11.26.12

UBS Stung By Adoboli Case (WSJ) Swiss financial market regulator Finma said it will keep a close eye on UBS's investment bank for the foreseeable future and may ask it to raise fresh capital, following an investigation into failures that allowed London-based trader Kweku Adoboli to make unauthorized trades. At the same time, the U.K. Financial Services Authority fined UBS £29.7 million ($47.6 million). Mr. Adoboli was convicted of fraud last week and sentenced to a seven-year prison term. "The measures ordered by Finma include capital restrictions and an acquisition ban on the investment bank, and any new business initiative it plans must be approved by Finma," the regulator said. Finma will also consider "whether UBS must increase capital backing for its operational risks," will appoint a third party to ensure corrective measures are introduced, and will organize an audit to review the steps taken by UBS. Finma declined to say when the auditing review would be completed or when a decision on a capital increase would be made, though a spokesman said this is likely to be within months rather than years. SAC Fund Manager Faces Choice of Trial or Deal (Bloomberg) Martoma, 38, used illegal tips to help SAC make $276 million on shares of pharmaceutical companies Elan Corp. and Wyeth LLC, according to the Justice Department and the Securities and Exchange Commission. Arrested last week, he is to appear today in Manhattan federal court for masterminding what the U.S. calls the most lucrative insider-trading case ever. Flowers Foods Sizes Up Hostess (WSJ) The Thomasville, Ga., company is considered a likely bidder for some of the assets owned by Hostess, which last week was granted permission by a federal bankruptcy-court judge to begin liquidating. The end came after a contentious bankruptcy that began in January and culminated this month in a strike. Goldman Turns Down Southern Europe Banks as Crisis Lingers (Bloomberg) Goldman Sachs, the No. 1 stock underwriter in Europe, turned down roles in offerings by banks in Spain and Italy this year, the only top U.S. securities firm not to take part in the fundraisings by southern European lenders as the region’s debt crisis stretches to a fourth year. The firm declined a role in Banco Popular Espanol SA’s 2.5 billion-euro ($3.2 billion) rights offering this month because it wanted greater protection to avoid potential losses on the sale, two people familiar with the talks said. JPMorgan and Morgan Stanley are helping to guarantee the deal. Goldman also didn’t underwrite this year’s share sales by Italy’s UniCredit SpA and Portugal’s Banco Espirito Santo SA, which drew Bank of America Corp. and Citigroup. Knight Seen Getting Acquisition Bids This Week (Bloomberg) The company with a market value of about $430 million was bailed out by six financial firms in August after losing $457 million in a trading error. Chicago-based Getco LLC, one of the rescuers, and Virtu Financial LLC in New York are among the likely bidders, said the person, who requested anonymity because the negotiations are private. The Wall Street Journal reported Nov. 23 that Knight expected offers for its market-making unit. Woman who rode manatee charged with violating protection act (Sentinel) A 53-year-old Pinellas County woman was arrested Saturday for violating the Florida Manatee Sanctuary Act by riding a sea cow in the waters near St. Petersburg in September. Ana Gloria Garcia Gutierrez of St. Petersburg was arrested at her place of employment — Sears at Tyrone Square Mall in St. Petersburg — on a warrant issued by the State Attorney's Office. The charge is a second-degree misdemeanor. The punishment could be a $500 fine or up to 60 days in jail, the Tampa Bay Times said. Gutierrez stepped forward after the Pinellas County Sheriff's Office released photos of a then-unknown woman riding a manatee near Fort DeSoto Park in Pinellas County on Sept. 30. "Gutierrez admitted to the offense claiming she is new to the area and did not realize it was against the law to touch or harass manatees,'' the Pinellas County Sheriff's Office said in a statement. Escrowyou too, judge! (NYP) Argentina, bruised and battered after a 10-year battle to sidestep billions of dollars in bond payments, is lashing out at US courts and a Manhattan federal court judge. A high-ranking member of Argentina President Cristina Kirchner’s administration terms “judicial imperialism” the Thanksgiving eve ruling by Judge Thomas Griesa that ordered the South American country to place a $1.3 billion bond payment in escrow pending the end of the legal tussle. Kirchner has repeatedly said she would not pay up. Griesa, frustrated with Argentina’s repeated attempts to stall the legal proceedings, sided with New York hedge fund billionaire Paul Singer, whose Elliott Management owns Argentine bonds that were defaulted on back in 2002. 'Cliff' Threatens Holiday Spending (WSJ) The White House warned in a new report that going off the so-called "fiscal cliff" could slow the growth of real gross domestic product by 1.4% and limit consumer spending during the holiday season. The report comes as lawmakers are returning to Washington with just weeks left to find an agreement to prevent taxes from going up on millions and spending cuts from kicking in. It will likely provide fodder for both political parties as they seek to find a compromise. At Some Firms, Cutting Corporate Rates May Cost Billions (WSJ) President Barack Obama has said, most recently during last month's presidential debates, that the 35% U.S. corporate tax rate should be cut. That would mean lower tax bills for many companies. But it also could prompt large write-downs by Citigroup, AIG, Ford and other companies that hold piles of "deferred tax assets," or DTAs...Citigroup, for instance, acknowledged during its recent third-quarter earnings conference call that a cut in the tax rate could lead to a DTA-related charge of $4 billion to $5 billion against earnings. Cohen's General Counsel Gives SAC Boss Cover (NYP) The sharks of the US Attorney’s office have SAC Capital Advisors surrounded — and owner Steven Cohen is looking a lot like chum. Good thing the billionaire hedgie has a large supply of shark repellent. That would be Peter Nussbaum, SAC’s longtime general counsel who, over his 12 years at the Stamford, Conn., firm, has built up an impressive 30-person compliance department — not including an additional tech compliance team. “Nussbaum is the most respected person at SAC,” said a hedge fund executive not at SAC. “He is going to do what he thinks is best for the firm and not be cowed by anyone.” Nussbaum’s huge compliance department, observers said, was built, in large part, because of the perception that the government was determined to bust Cohen. Confidential Police Docs Found in Macy's Parade Confetti (WPIX) Confidential personal information is what some paradegoers found among confetti tossed during the world's most famous parade. That information included social security numbers and banking information for police employees, some of whom are undercover officers. Ethan Finkelstein, who was home from college on Thanksgiving break, was watching the parade at 65th Street and Central Park West, when he and a friend noticed a strip of confetti stuck onto her coat. "It landed on her shoulder," Finkelstein told PIX11 News, "and it says 'SSN' and it's written like a social security number, and we're like, 'That's really bizarre.' It made the Tufts University freshman concerned, so he and his friends picked up more of the confetti that had fallen around them. "There are phone numbers, addresses, more social security numbers, license plate numbers and then we find all these incident reports from police." One confetti strip indicates that it's from an arrest record, and other strips offer more detail. "This is really shocking," Finkelstein said. "It says, 'At 4:30 A.M. a pipe bomb was thrown at a house in the Kings Grant' area." A closer look shows that the documents are from the Nassau County Police Department. The papers were shredded, but clearly not well enough.