Opening Bell: 1.12.15

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Wall Street workers shouldn’t be too excited for bonus season (NYP)
After a year of record fines, sluggish trading and low interest rates, bankers hoping for richer payouts should prepare to be disappointed when bonus season gets underway next week. By most estimates, the pool of money set aside for Wall Street workers is expected to be flat with the previous year, when the industry took home $16.7 billion, or an average of $164,530 per person. Last year, big banks were slammed by billions in fines and penalties — Bank of America paid the largest fine ever for a single company, $16.7 billion — for offenses ranging from toxic mortgage securities to money laundering to tax evasion. “The fines have come to roost,” said Michael Karp, CEO and co-founder of headhunting firm Options Group. “The bonus pool and compensation are the most vulnerable for banks to make up the shortfall.”

Banking bonuses set to disappoint in City and on Wall Street (FT)
Bankers on both sides of the Atlantic are fighting over a diminished bonus pool this year, according to executives. In the UK, most investment banks expect to see bonuses fall after a tough year, but are still braced for political sensitivities over the topic given the looming general election. At US banks, several of which report results this week, payouts are also set to fall. Traders can expect the worst declines after a weak fourth quarter. Citigroup decided last week that the bonus pool for traders would fall about 5-10 per cent, according to people familiar with the matter, after earlier pledging to hold it flat. Citi’s advisory bankers can expect a modest increase. One finance officer at a large Wall Street bank said it had been difficult to satisfy the warring parties: mergers and acquisitions and equity underwriting enjoyed a good year but these advisory bankers never suffered the same bonus cuts as traders so they should not expect a big rebound in payouts.

Paulson Event-Driven Fund Said to End Last Year Down 36% (Bloomberg)
Billionaire John Paulson posted the second-worst trading year of his career in 2014 as a wrong-way energy bet added to declines tied to a failed merger and investments in Fannie Mae and Freddie Mac. The worst performance was in the Advantage Plus fund, which plummeted 36 percent last year, two people with knowledge of the returns said. The event-driven strategy, which uses leverage to make bets on companies undergoing transformations such as spinoffs and bankruptcies, lost 3.1 percent in December, said the people, who asked not to be identified because the information is private. The 59-year-old manager also lost money in a credit pool and barely broke even in a fund that bets on company mergers.

Lax Morgan Stanley security has some blame in data leak, too (NYP)
Former Morgan Stanley adviser Galen Marsh — who was fired by the investment bank, accused of brazenly stealing an encyclopedia full of client data and then selling it online — still professes his innocence, but pros say the bank should not get off so easy. Dumbfounded cyber-security experts and financial execs contend that Morgan will need a good defense. Early “evidence” that Marsh stole and posted 900 pieces of client data for sale late last month for 78,000 electronic speedcoins on controversial Web site Pastebin is laughable, they say.

Former MIT professor ‘robs bank,’ films ‘heist’ (NYP)
Joseph Gibbons, 61, a filmmaker and “visual artist’’ who taught for a decade at one of the world’s most prestigious universities, has gone rogue, robbing banks as part of his latest “art’’ project. Gibbons was charged on Friday with robbery after allegedly making off with $1,000 from a Capital One branch at Bowery and Grand Street in Chinatown. While waiting for his arraignment, the eccentric academic boasted to fellow inmates that his crime was for art’s sake. “He was doing research for a film,” said his dazzled cell-mate Kaylan Sherrard, 27. “It’s not a crime; it’s artwork… He’s an intellectual,” Sherrard gushed. In former interviews, Gibbons has admitted to using illegal drugs to inspire his short, semi-autobiographical films.

Oil Falls to 5 1/2-Year Low as Goldman Sees Need for $40 Crude (Bloomberg)
Oil fell to the lowest level in more than 5 1/2 years in New York and London as Goldman Sachs Group Inc. reduced its price forecasts while Venezuela called on OPEC producers to spur a recovery. Futures slid as much as 3.8 percent in London after a seventh weekly drop. Crude has to “stay lower for longer” if investment in shale is to be curtailed to re-balance the global market, according to Goldman analysts.

As Oil Prices Fall, Banks Serving the Energy Industry Brace for a Jolt (NYT)
Tumbling oil prices are dimming one of the few big bright spots that banks have enjoyed since the financial crisis. Banks have been lending hand over fist to companies in the nation's energy industry, underwriting bonds, advising on mergers, even financing the building of homes for oil workers. All of this has provided a boon to banks that have been struggling to find more companies and consumers wanting to borrow. Yet with the price of crude oil falling below levels sufficient for some energy companies to service their huge debts, strains are being felt and defaults are likely. While it may take some time for the crunch in the oil industry to translate into losses, one thing already seems clear: The energy banking boom is over.

Venezuela, Iran plea for oil cut hits Gulf OPEC brick wall (Reuters)
...the Gulf members of the Organization of the Petroleum Exporting Countries, who account for more than half of the 12-member group's output, are holding to their stance from OPEC's November meeting in Vienna. "There's a push from Venezuela for a cut, this is what they argued in Vienna and this is what they are lobbying for now. But from what I see there is no sign of cutting production from the Gulf states," a Gulf OPEC delegate said. "The only solution is to have the market absorb this surplus and the extent of that will be assessed by OPEC by ministers during their meeting in June."

Banks Prepare For Potential Greek Exit (WSJ)
Banks and other financial institutions in Europe are stress-testing their internal systems and dusting off two-year-old contingency plans for the possibility that Greece could leave the region’s monetary union after a key election later this month. Among the firms running through drills are Citigroup Inc., Goldman Sachs Group Inc. and brokerage ICAP PLC, according to people familiar with the matter. The firms’ plans include detailed checks on counterparties that could be significantly affected by a Greek exit, looking at credit exposures and testing how they would provide cross-border funding to local operations.

Bondholders Attempt to Push Caesars Unit Into Bankruptcy (WSJ)
In a statement released through a spokesman, Caesars labeled “meritless” the claims of “certain junior creditors,” who are hoping to improve their standing in restructuring negotiations. While it prepares a formal response to the attempt to force it into bankruptcy, Caesars said “all business operations will continue normally and without interruption.”

Ex-Credit Suisse Trader Banned for Life by Hong Kong SFC (Bloomberg)
A former trader for Credit Suisse Group AG (CSGN) was banned from Hong Kong’s financial industry for life after he made fictitious trades and covered up losses in 2012. Jagjit Singh Dhillon, who traded equity derivatives, hid losses and his true exposure to risk in trading books, booked fake trades and entered incorrect market data, the city’s Securities and Futures Commission said on its website today. The trader’s actions led to overstated profits and understated risk exposure, resulting in Zurich-based Credit Suisse having to make $5.4 million of adjustments to the cumulative monthly profit and loss figure for its trading book on May 18, 2012, the regulator said. Dhillon made no personal gain from his conduct, it said.

NYPD Takes Down ‘Feisty’ Upper West Side Coyote (Daily Intel)
A female coyote spent her Saturday night trotting around Riverside Drive in between 72nd and 79th streets, forcing some Upper West Side cops out into the freezing air. It took more than three hours for the authorities to capture the creature on a Riverside Park basketball court, partially because, as the 24th Precinct tweeted, it was "so cold out, the tranquilizer in the darts kept freezing!" Coyotes aren't exactly common in New York, but they're not unheard of: At least six have been spotted around the city over the last five years..."We knew it had to be a girl," one cop observed, "because she was so feisty."

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Opening Bell: 11.27.12

Greece's Creditors Reach Aid Deal (WSJ) struck a deal in Brussels to cut Greece's debt to a level below 124% of gross domestic product by 2020, officials said. To satisfy IMF concerns that Greece's debt must fall even more to be considered "sustainable," euro-zone ministers agreed to bring the government's debt to under 110% of GDP in 2022. The deal will allow Greece to receive loan payments of about €44 billion ($57 billion) to be paid in three installments early 2013, tied to Greece's implementation of the continuing measures, said Eurogroup president Jean-Claude Juncker. The deal will lower Greece's debt through a mix of interest-rate cuts on loans to Athens, a buyback of Greek debt at sharply discounted prices and the European Central Bank returning profits linked to its holdings of Greek bonds to the Greek government. London Bankers Bracing for Leaner Bonuses Than New York (Bloomberg) nvestment bankers and traders at European banks should expect at least a 15 percent cut in pay this year, while U.S. lenders may leave compensation unchanged, three consultants surveyed by Bloomberg said. That’s because bonus pools at European banks may be reduced by as much as half, while those at U.S. firms, which can cushion the impact of falling fees in the region with earnings from home, may fall 20 percent, they said. “The real split is coming, and we will see the quantum divide this year,” said Tom Gosling, a partner at PricewaterhouseCoopers LLP in London, referring to the difference in pay between the two financial centers. “U.S. regulators don’t have the same obsession with pay structures that European regulators have.” Dimon Would Be Best to Lead Treasury in Crisis, Buffett Says (Bloomberg) “If we did run into problems in markets, I think he would actually be the best person you could have in the job,” Buffett said in response to a question about Dimon from Charlie Rose, according to the transcript of an interview that was scheduled to air yesterday on PBS. “World leaders would have confidence in him.” [...] Dimon, once dubbed Obama’s “favorite banker” by the New York Times, said in a 2011 CNBC interview that he could never work as Treasury secretary and was “not suited to politics.” Carney Abondons A Haven, Leaping Into British Storm (WSJ) Philipp Hildebrand, the former head of the Swiss National Bank, described Mr. Carney as one who "speaks bluntly and politely." The son of a professor and a teacher, Mr. Carney grew up in Edmonton, the capital of Canada's western province, Alberta. He played hockey as an undergraduate at Harvard. Mr. Carney has close links to Britain, having studied in Oxford University in the early 1990s. He worked for a time in Goldman Sachs' London office...Known as a diplomat, Mr. Carney, who supports the Edmonton Oilers NHL team, in his Ottawa office displays a mock street sign alluding to one of Canada's other pro teams, the Ottawa Senators. He cultivates an everyman image, recently discussing his musical tastes—from AC/DC to the hip-hop group Down with Webster—in local media interviews. Fiscal Cliff Compromise Elusive as Congress Returns (Bloomberg) “There’s still a great deal of ground that has to be covered before they get anywhere near a budget deal, and time is running” short, said Phil English, a former Republican congressman from Pennsylvania and now a lobbyist at Arent Fox LLP in Washington. The Secret Powers Of The Son-In-Law (WSJ) In couples where the husband initially reported being close to his wife's parents, the risk of divorce over the next 16 years was 20% lower than for the group overall. Yet when the wife reported being close to her in-laws, that seemed to have the opposite effect: The risk of divorce with these couples was 20% higher. Dr. Orbuch has a possible explanation: The wife who feels close with her husband's parents may find it difficult to set boundaries and over time may come to see their close relationship with her as meddling. "Because relationships are so important to women, their identity as a wife and mother is central to their being," says Dr. Orbuch, author of the 2012 book "Finding Love Again: 6 Simple Steps to a New and Happy Relationship." "They interpret what their in-laws say and do as interference into their identity as a spouse and parent." Men, for the most part, don't have this problem. Their identity as a father and a husband is often secondary to their identity as a provider, Dr. Orbuch says. As a result, they don't tend to take what their in-laws do so personally. Chicago, Illinois charges woman $105,761 for parking infractions she did not commit (TN) Jennifer Fitzgerald is fighting back against the city, her ex-boyfriend and United Airlines with a lawsuit filed November 2 in Cook County Circuit Court. According to the complaint, the somewhat confusing story starts when her former boyfriend Brandon Preveau, bought a 1999 Chevy Monte Carlo from Fitzgerald's uncle for $600 in 2008. Despite paying all the fees associated with owning a vehicle (registration, title and insurance) he put the vehicle's registration in Fitzgerald's name -- something the West Side Chicago resident claims was done without her knowledge...the couple broke up at the start of 2009 and Preveau took the car with him after their split. He used the Monte Carlo to drive to work at O'Hare Airport where he was employed by United Airlines. Preveau would leave the vehicle in O'Hare parking lot E, a secured outdoor lot surrounded by high chain link fencing, that is open to the flying public but also utilized by airport employees. The parking lot is owned by the city of Chicago and operated by Standard Parking Corporation, but according to the complaint, United Airlines leases spaces in the lot for use by airline employees. Unbeknownst to Fitzgerald, Preveau abandoned the vehicle. According to the complaints, "On or before November 17, 2009, Brandon drove the automobile into the parking lot and never drove it out again." While the car Preveau drove began receiving parking tickets at the O'Hare lot as early as May 23, 2009, the key date for this story is November 17, 2009. On that day the vehicle was issued seven different parking tickets including being in a hazardous and dilapidated condition, no city sticker, broken headlights, missing or cracked windows, expired plates, being an abandoned vehicle and most importantly a violation for parking a vehicle for more than 30 days in a city-owned lot. Intrade, Facing Charges, Won't Take U.S. Bets (WSJ) The online-predictions exchange Intrade—known for offbeat markets on presidential politics and the Academy Awards—said it would no longer accept bets from U.S. residents. The move came just hours after U.S. regulators filed a civil complaint against the firm over its commodities-focused markets. "We are sorry to announce that due to legal and regulatory pressures, Intrade can no longer allow U.S. residents to participate in our real-money prediction markets," the Dublin-based company said in a statement on its website. Intrade said that existing customers must exit their trades and close their accounts. In China, Hidden Risk of 'Shadow Finance' (WSJ) Shadow finance in China totals about 20 trillion yuan, according to Sanford C. Bernstein & Co., or about a third the current size of the country's bank-lending market. In 2008, such informal lending represented only 5% of total bank lending. The sector is lightly regulated and opaque, raising concerns about massive loan defaults amid a softening economy, with ancillary effects on the country's banks. Harvard Doctor Turns Felon After Lure of Insider Trading (Bloomberg) Today, Joseph F. "Chip" Skowron III, 43, is serving a five-year term for insider trading at the federal prison at Minersville, Pennsylvania. At FrontPoint, Skowron lied to his bosses and law enforcement authorities, cost more than 35 people their jobs and stooped to slipping envelopes of cash to an accomplice. FrontPoint is gone. Morgan Stanley, which once owned FrontPoint, is seeking more than $65 million from Skowron, whose net worth a year ago was $22 million. Until he’s a free man, his wife of 16 years will have to care for their four children and Rocky, their golden retriever, on her own...Health care has become America’s sweet spot for insider traders like Skowron. Among researchers, physicians, government officials and corporate executives, the lure of easy money in health-care insider trading has become epidemic. Since 2008, about 400 people were sued by regulators or charged with insider trading; of those, at least 94 passed or received tips involving pharmaceutical, biotechnology or other health-care stocks. Man Arrested For Saying He Had Dynamite in His Luggage at Miami International Airport (NBC) A man was arrested for telling a TACA ticket agent that he had dynamite in his luggage, which prompted the partial evacuation of Concourse J at Miami International Airport on Monday, Miami-Dade Police said. Alejandro Leon Hurtado, 63, a doctor from Guatemala, faces a charge of false report bomb/explosives at airport, the arrest affidavit said. It wasn't immediately known if Hurtado had an attorney. The ticket agent had just accepted Hurtado luggage, when he asked him about whether it contained hazardous materials. Hurtado answered that he had dynamite in the baggage, and the ticket agent asked him again if he had dynamite in his bag, and he replied that he did and started laughing, the affidavit said. "Once the Defendant was told that police were going to be called the Defendant stated that he was joking," the affidavit said. Hurtado admitted he did say he had dynamite in his bag, but that it was a joke. Hurtado was in custody on an immigration hold Monday night, according to online Miami-Dade Corrections records.