Opening Bell: 1.7.15

Author:
Dealbreaker
Updated:
Jan 14, 2019
Original:
Jan 7, 2015

American Apparel updates code of ethics document (Reuters)
American Apparel Inc updated its code of ethics on the company's website, after firing founder Dov Charney as its chief executive last month for alleged misconduct. "No management-level employee may make sexual advances, welcome or unwelcome, toward any subordinate," the ethics document of the retailer read. The retailer, known for its provocative clothing ads, fired Dov Charney last month, ending a tenure racked with sexual assault allegations and scandal. He was fired as chairman and suspended as chief executive in June last year, with alleged misuse of corporate funds and role in disseminating nude photos of an ex-employee who had sued him being cited as reasons. "No employee who has a personal relationship or romantic relationship with another employee may be in a position with any perceived or actual influence over the other's terms of employment," the new ethics code on the company's website said. The new code specified that 'romantic relationship' could refer to both casual dating and committed relationships.

Hamm Divorce Judge Won’t Change $1 Billion Award to Ex-Wife (Bloomberg)
The judge who awarded almost $1 billion to the ex-wife of Continental Resources Inc. (CLR) founder Harold Hamm after a divorce trial won’t revisit his ruling despite requests by both sides to change it, saying “It is what it is.” Hamm, the Oklahoma fracking billionaire, argued in court papers that plunging oil prices should entitle him to a break on the assets awarded to his ex-wife, who countered that the award is too small. Judge Howard Haralson in state court in Oklahoma City today gave short shrift to their claims, telling them at a hearing that he wouldn’t retry the matter. “We knew at the time of trial that oil prices were plummeting,” Haralson said. “I see the relationship between the price of oil and the price of stock.”

Deep Debt Keeps Oil Firms Pumping (WSJ)
American oil and gas companies have gone heavily into debt during the energy boom, increasing their borrowings by 55% since 2010, to almost $200 billion. Their need to service that debt helps explain why U.S. producers plan to continue pumping oil even as crude trades for less than $50 a barrel, down 55% since last June. But signs of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million.

Son Who Allegedly Killed Father Over Allowance Also Suspected in Arson (Gawker)
The man suspected of murdering his hedge fund manager father over an allowance cut is also the prime suspect in a suspicious fire at a romantic rival's Hamptons home, police say. Thomas Gilbert Jr., a 30-year-old yoga enthusiast, was apparently under investigation in connection with a suspected arson in Sagaponack, NY. The late-night fire destroyed the home of one Philip Smith, the New York Post reports.

Investment Firm 3G Capital Eyes Next Targets (WSJ)
In the past several weeks, investors have pledged about $5 billion to a new takeover fund being formed by 3G, according to people familiar with the matter. 3G hasn’t publicly disclosed the amount raised or what it plans to do with the money, but 3G usually seeks only what it needs in equity for individual deals, using borrowed money to at least quadruple the firm’s buying power. In a sign of the investment firm’s aspirations, executives are discussing the possibility of trying to buy a food or beverage company such as Campbell Soup Co. , worth about $14 billion, or even PepsiCo Inc., which has a stock-market value of $140 billion, say people familiar with the situation.

NYTimes Feels Sorry for Its Knicks Beat Writer, Asks Readers If He Should Cover Their Rec League Teams Instead (DI)
"...we feel it’s only merciful to give our Knicks beat writer, Scott Cacciola, a break from such woeful basketball. He deserves to see the game played at a higher level. For the next month or so, we would like to point him to some good, quality basketball, wherever it might exist. Any suggestions? Maybe there’s another N.B.A. team that warrants his attention, or perhaps a high school or a college squad. For that matter, maybe you know of a strong coed team at your local Y that Scott should write about."

Finra to investigate US bond trading (FT)
A top regulator for the US brokerage industry said it would begin examining the bond market, including the operations of electronic debt trading platforms that were proliferating as investors seek new ways of trading fixed-income securities.
The review, announced as part of the Financial Industry Regulatory Authority’s annual letter of regulatory and exam priorities, comes as the fixed-income market undergoes a change in the way investors buy and sell a wide variety of debt. Large trades of many fixed-income securities, but especially corporate bonds, have historically been struck over the phone between investors and dealers at big banks, but more of the transactions are migrating to new electronic trading venues as many financial institutions retreat from the bond trading business. The lack of liquidity in parts of the bond market has worried regulators, who are trying to gauge how retail investors may be affected by the evolution of the fixed-income asset class.

Single malt from Taiwan shakes up whiskey industry (CNBC)
While still relatively undiscovered by the masses, Kavalan, Taiwan's first distillery owned by domestic conglomerate King Car Group, has been racking up awards, most recently winning top honors at the 2014 Malt Maniacs Awards, which is followed by industry experts..."Between 2013 and 2014, we've seen a roughly 50 percent growth in exports, and are optimistic we'll see a similar level of growth in 2015," Ian Chang, master blender and global export director at Kavalan, told CNBC in a phone interview.

Janus’ Gross Sees No Rate Increase Until Late 2015 ‘If at All’ (Bloomberg)
While the Fed has concluded its three rounds of asset purchases, known as quantitative easing, interest rates in almost all developed economies will remain near zero as central banks in Europe and Japan embark on similar projects, Gross said in an outlook published on the website of Janus Capital Group Inc., where he runs the $1.2 billion Janus Global Unconstrained Bond Fund.

'I Have Drugs' T-Shirt Worn By Marijuana And Methamphetamine Suspect (HP)
The words written across John Balmer's chest really fit him to a tee. The 50-year-old was wearing a shirt that read, "Who Needs Drugs?" in big letters, with "Seriously, I Have Drugs" in smaller letters underneath when cops allegedly found him with a bag containing — guess what? — drugs in a Kmart in Hudson, Florida, according to TampaBay.com. The ironic arrest occurred after a Pasco County Sheriff's deputy allegedly saw Balmer attempt to pass a plastic bag containing pot and meth to another customer on the checkout line. When that person didn't take the bag, police said Balmer walked to another register where he allegedly placed the drug-filled baggie on the ground. Balmer returned to pay for his items, but store employees informed officers about the bag. The officers picked up the bag and discovered the drugs...There's a long line of suspects busted while dressed in Incriminating t-shirts. In November, Deborah Delane Asher, 37, was busted in Kentucky for possessing meth while wearing an "I love crystal meth" T-shirt.

Opening Bell

Buffett Feasts On Goldman Scraps (WSJ) Details of one trade in particular have recently caused a stir in the market. In November, Goldman sold about $85 million of loans in troubled newspaper publisher Lee Enterprises Goldman sold the debt at about 65 cents on the dollar, having bought it months before at around 80 cents, resulting in a loss of at least $13 million. The buyer: a unit of Warren Buffett's Berkshire Hathaway Inc., according to several people familiar with the matter. Mr. Buffett has since made a tidy paper profit on the loans, which are now worth about 82 cents on the dollar, the people said. Jim Chanos: Chinese Banks ‘Great Shorts,’ Won’t Be Broken Up (CNBC) Chanos, the head of Kynikos Associates, has been betting against China — despite its role as a global economic leader — primarily because he believes the country is overbuilt and does not have the internal demand to support its ambitious growth plans. Nowhere has that trend been more apparent than in the banking system. "If you looked at the performance of the banks over the last two years...they have been great shorts," Chanos said. "They have been going down — they're down 30 percent over the last two years." George Soros: Exceptional Measures Needed to Save EU (FT) "Other countries have gone through similar experiences. Latin American countries suffered a lost decade after 1982, and Japan has been stagnating for a quarter of a century; both have survived. But the European Union is not a country and it is unlikely to survive. The deflationary debt trap threatens to destroy a still-incomplete political union," he wrote. Blackstone President To Raise For Obama (Morning Money) "Tony James, the president of Blackstone Group LP, has agreed to hold a fundraiser for... Obama’s re-election campaign, according to two people familiar...By agreeing to raise money for Obama, James has diversified Blackstone’s political bets for the November election. Blackstone Chairman Stephen Schwarzman has been raising money for former Massachusetts governor Mitt Romney, the likely Republican nominee." SEC, Goldman to Settle Research Case (Reuters) U.S. securities regulators are preparing to announce that Goldman Sachs will pay $22 million to settle allegations the bank did not have adequate policies to prevent research from being passed inappropriately to preferred clients, people familiar with the matter said on Wednesday. BlackRock's Street Shortcut (WSJ) BlackRock is planning to launch a trading platform this year that would let the world's largest money manager and its peers bypass Wall Street and trade bonds directly with one another. The electronic trading hub has the potential to reduce a lucrative revenue stream for investment banks at a time when their businesses are being squeezed by lackluster markets and new regulations put in place to curb risk in the aftermath of the financial crisis. The trading platform would be run by the New York-based company's BlackRock Solutions arm and offer 46 clients—including sovereign-wealth funds, insurance companies and other money managers—the ability to trade in corporate bonds, mortgage securities and other assets, company executives say. Under the plan, the platform would seek to match buyers and sellers of the same securities, in a process known as "crossing trades." BlackRock Solutions would charge a small fee for the service that would be much lower than Wall Street's trading commissions. New Yorker breaks up subway scuffle, snacks in hand (NYDN) Sonder, 24, played the role of hungry hero “two or three Thursdays ago” after hopping on an uptown 6 train at Spring St. The calm inside the subway car was shattered a minute later when a tussle broke out between a man and a woman. “I turned around and I saw these two kicking each other pretty viciously,” said the sturdy Sonder, who stands six-feet tall and weighs 200 pounds. “I stepped over and tried to see if I could help.” Mid Pringle, Sonder thrust himself between the pugilists. More chips were eaten, but no other punches or kicks were thrown. “I just got caught up in the moment,” said Sonder, who was also holding a bag of gummy bears during the incident. Dimon Vows Fight Moynihan Lost Over Claims From Mortgages (Bloomberg) “We are going to fight repurchase claims that pretend the steep decline in home prices and unprecedented market conditions had no impact on loan performance,” Dimon, chief executive officer of the New York-based lender, wrote in the April 4 letter. He’ll also oppose “securities claims brought by sophisticated investors who understood and accepted the risks.” Jobless Claims Post Jump; PPI Up, Trade Deficit Down (Reuters) Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 380,000, the Labor Department said on Thursday. The prior week's figure was revised up to 367,000 from the previously reported 357,000. Fur Flies in High-Stakes Airlifts of Animals by Lufthansa (Bloomberg) An African white rhinoceros peers through the bars of its Frankfurt compound, while across the floor a Madagascan chameleon inches around its vivarium and an Andean alpaca plucks hay from a bale. It’s not a scene from the city’s zoo but from Deutsche Lufthansa AG’s Animal Lounge, a state-of-the-art complex that’s at the center of the German carrier’s plans to dominate the most specialized part of the $66 billion air-cargo industry. Lufthansa, Air France-KLM Group and Dubai-based Emirates, which transports thoroughbreds for Sheikh Mohammed bin Rashid Al Maktoum, horseracing’s leading owner, are competing in a high- stakes market. Premium profit margins come with the risk of an in-flight death involving a beloved family pet, top-ranked stallion or priceless panda. “It’s not like pharmaceuticals, where your main concern is the temperature,” said Animal Lounge Director Axel Heitmann. “If a bag of fish leaks it needs replacing with the right kind of water and the right oxygen. And if something goes wrong you can’t just hand a customer $1,000 and tell him to buy another pet. He wants the dog or cat he’s had for 10 years.” KKR Invests in China Cord Blood (WSJ) Kohlberg Kravis Roberts & Co. L.P. will invest $65 million into China Cord Blood Corp., the country's largest operator of services for umbilical cord blood that is rich in stem cells, to capitalize on China's fast growing healthcare services industry. Police: Dealer tied 89 bags to penis, peed at the station (Philly) Police Corporal Christopher Eiserman said another officer was on routine patrol Friday when he pulled Ray Woods over for a broken rear light and found marijuana in his car. When the officer searched Woods before placing him in the police cruiser, he discovered "a large bulge" in the front of his pants, Eiserman said. Police say Woods actually had the balls to deny that there was any contraband down there. “He stopped him for the traffic violation and one thing led to another," Eiserman said. Back at the station, Eiserman said, police discovered that Woods had tied a large plastic bag around his penis that contained a whopping 89 small bags of suspected heroin and cocaine. Then things got messy. “I tried to remove it. Unfortunately, and I don't know if it was nervousness or not, but he started urinating all over," Eiserman said. While it wasn't exactly what Eiserman had in mind when he started his shift Friday, he couldn't help but chuckle at the ingenuity, or lack thereof, of street-level drug dealers. “In 14 years, I’ve seen it down their pants, in their a--, but I've never seen it tied to their penis," he said.