Opening Bell: 12.9.15

Yahoo shelves Alibaba plan; Citi sued over '08 crisis trades; Dow Chemical/DuPont in talks; "Florida burglary suspect eaten by alligator after fleeing police"; and more.
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Yahoo to Suspend Work on Its Alibaba Spinoff Plan (Bloomberg)
The Web portal will instead explore a reverse spin, in which the assets and liabilities excluding the Alibaba stake would be transferred to a newly formed company, the Sunnyvale, California-based company said in a statement Wednesday. The stock of the new entity would be distributed pro rata to Yahoo shareholders, resulting in two separate publicly-traded companies.

Citigroup Sued by Failed Hedge Fund Over 2008 Crisis Trades (Bloomberg)
Liquidators of Millennium Global Emerging Credit Fund Ltd., which had almost $1 billion in losses, said Citigroup terminated positions too quickly and at rates that didn’t reflect the market, according to court papers filed in October and made available last week. The liquidators are seeking about $53 million in damages.

Dow Chemical and DuPont Are Said to Be in Merger Talks (Dealbook)
Dow Chemical and DuPont, two of the biggest and oldest companies in the American chemical industry, are in talks to merge in what would be one of the largest transactions in a year full of huge deals, people briefed on the matter said on Tuesday. Under the terms being discussed, a merger of the two companies — each with a market value of roughly $60 billion — could eventually be followed by a breakup of the company, two of these people said.

Lawmakers worry AB InBev beer deal will hurt craft brewers (Reuters)
...in a hearing of the Senate Judiciary Committee's antitrust subcommittee, lawmakers worried about the merger's effect on craft beer, defined as brewing in volume of fewer than 6 million barrels annually. Craft was 11 percent of the U.S. market last year. Despite the panel's concerns, it will have no say on whether it goes ahead. That decision lies with the U.S. Justice Department.

Man named Bud Weisser accused of trespassing at Budweiser plant (Reuters)
Police apprehended the 19-year-old St. Louis man on Thursday when he entered a secure area at the brewery and refused to leave, the St. Louis Police Department said in a statement. Weisser was issued summonses for trespassing and resisting arrest and authorities continue to investigate the incident, police said.

Conviction of Former Jefferies Trader Is Overturned (Dealbook)
A federal appeals court has overturned the 2014 conviction of a former Jefferies Group trader, Jesse C. Litvak, striking a blow to the government’s efforts to crack down on abuses in bond trading. The United States Court of Appeals for the Second Circuit said in an 84-page decision on Tuesday that there was a lack of evidence that misstatements made by Mr. Litvak were material to the government and that the lower court erred in excluding expert witness testimony. Mr. Litvak was accused of lying about mortgage bond prices to bolster profits. The case was returned to the Federal District Court in New Haven for a new trial on securities fraud charges.

China Sets Yuan at Four-Year Low in ‘Stress Test’ (WSJ)
China guided the yuan to its weakest level in more than four years as the country deals with currency outflows and a slowing economy while trying to loosen its grip on the exchange rate. The central bank is testing how far it can let market forces go in determining the yuan’s value without setting off a sharp selloff and incurring wrath from trading partners, according to people familiar with the matter.

Banks Will Struggle With Profitability in 2020, Survey Shows (Bloomberg)
The firms on average will earn a 9 percent return on equity in 2020, still short of their cost of equity, according to the survey of 147 analysts and portfolio managers conducted by Institutional Investor and Broadridge Financial Solutions Inc., which handles trade processing and investor communications for banks and other companies. Sixty-one percent of the respondents expect regulatory pressure to increase over the next five years and 9 percent predict a decline.

Florida burglary suspect eaten by alligator after fleeing police (Reuters)
A 22-year-old man suspected of burglarizing homes in Florida was killed and partially eaten by an 11-foot (3.4 meters) alligator after he waded into a lake, apparently to avoid detection by law enforcement officers pursuing him, police said on Tuesday. An autopsy on the man, Matthew Riggins of Palm Bay, determined that he drowned in November after an apparent alligator attack. A necropsy on the alligator revealed parts of the man's body in the reptile's stomach, according to a report released this week by the Brevard County Sheriff's Office. Sheriff's deputies chased Riggins and another suspect with dogs and a helicopter on Nov. 13 after residents in the Barefoot Bay community reported two men walking behind houses, authorities said.

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SEC Warns Netflix CEO Over Facebook Post (WSJ) Mr. Hastings boasted on his Facebook page in July that Netflix exceeded 1 billion hours of video streaming in a month for the first time. The post may have violated rules of fair disclosure, the SEC said. The SEC said it may also issue a cease-and-desist proceeding against Netflix and Mr. Hastings. Mr. Hastings responded in another Facebook post Thursday. He said further disclosure at the time wasn't necessary because he has more than 200,000 subscribers to his Facebook page, which makes it a "very public" forum. Netflix had also disclosed on its blog in June that it was nearing the 1 billion streaming hours milestone, he said. Mr. Hastings, who is also on the board of Facebook, added that, at any rate, such information isn't a "material" event to investors. Germany's Central Bank Cuts Forecasts (WSJ) "The cyclical outlook for the German economy has dimmed [and] there are even indications that economic activity may fall in the final quarter of 2012 and the first quarter of 2013," the Bundesbank said in its monthly report. In its semiannual economic projections, the central bank slashed its forecast for German growth next year to 0.4% from its previous estimate of 1.6% in June. It also lowered its forecast for 2012 growth to 0.7% from 1.0%. Moody's: It's Deal Or Die (NYP) The American economy will fall into “severe recession by the spring” unless Congress lessens the tax increases and spending cuts that are set to begin in January, said Mark Zandi, chief economist at Moody’s Analytics. “We’ve got to nail this down; uncertainty is killing us,” Zandi told lawmakers yesterday at a Joint Economic Committee hearing in Washington...If Congress were to “kick the can down the road” by extending the current tax-and-spend policies, Zandi predicted the US would lose its Aaa rating because “it would signal that the political will is lacking to put the nation on a sustainable fiscal path.” Fiscal Cliff? France Has ‘Fiscal Mountain’: PPR CEO (CNBC) The head of one of France's biggest companies has warned that France's problems dwarf those of the U.S. in an interview with CNBC. Francois-Henri Pinault, chief executive of luxury goods company PPR, said: "When we talk about the fiscal cliff in France it's a mountain, it's much higher than a cliff. And when it comes to France the only solution that has been put on the table is tax raises, nothing about cutting expenses. So it's a completely different situation." Greece sticks to buyback plan, says will shield banks (Reuters) Greece says it is sticking to plans to close its offer to buy back its own bonds from investors on Friday in a deal that should meet a debt writedown target set by its international lenders. The government said it would shield the country's banks from any lawsuits over losses booked if they take part in the buyback. The buyback, part of a broader debt relief package worth 40 billion euros ($52 billion) agreed by Greece's euro zone and International Monetary Fund lenders last month, is central to efforts to bring its debt to manageable levels. Judge: Ganek, Steinberg conspirators (NYP) Manhattan federal judge Richard Sullivan yesterday ruled that SAC Capital money manager Michael Steinberg and Level Global co-founder David Ganek can be named co-conspirators in the current insider trading case unfolding downtown. Neither Steinberg nor Ganek has been charged in the case, but the ruling lets prosecutors submit their e-mails and instant messages as evidence in their case against Todd Newman, a former portfolio manager at Diamondback, and Anthony Chiasson, Ganek’s former Level Global partner. The feds have accused Chiasson and Newman of improperly profiting off insider tips on Dell and Nvidia. Chiasson lawyer Greg Morvillo objected, saying that Chiasson’s former analyst Sam Adondakis, who pleaded guilty, testified that he never told Ganek he had an inside source at Dell. Judge Sullivan said the evidence is “certainly circumstantial” but sufficient enough for the government’s request to be granted. Sullivan cited the “precise information” Ganek had received leading up to Dell’s earnings as well as the “large trading positions” he authorized on the computer maker. The judge relied on three e-mail communications to implicate Steinberg, one of which he said made “clear references to keeping things on the down-low and being extra sensitive.” Burglary suspect calls 911 after Springtown homeowner holds him at gunpoint (DN) In a strange flip of events, a burglary suspect called 911 early Tuesday to report that he was being held at gunpoint by a Springtown homeowner and his son. The homeowner called 911, too, but by then he was in control, holding him at gunpoint and demanding to know what he was doing in his home. “Just unlucky, I guess,” the man responded, according to a release from the Parker County Sheriff’s Department. The incident happened around 12:30 a.m. when the homeowner and his wife woke up to find an intruder in the bedroom of their home in the 100 block of Lelon Lane. The suspect, identified as 41-year-old Christopher Lance Moore of Bedford, left the home and sat in his GMC pickup, parked in the family’s driveway. The homeowner followed him with a pistol, took the suspect’s keys and blocked his getaway with his own vehicle, while his stepson trained a shotgun on Moore, Fox 4 News reports. “If he gets out of the truck, shoot him in the legs,” James Gerow told his son. “You ain’t gotta kill him; just shoot him in the legs. … If he’d got out, I’d have expected him to shoot him.” When deputies arrived, both men were on the phone with 911. Deputies asked Moore why he had broken into the home, to which he merely said he had “bad intentions.” Morgan Stanley Alters Broker Pay Plan as Revenue Bonus Takes Hit (Bloomberg) Morgan Stanley, the brokerage with the biggest corps of financial advisers, changed its wealth- management compensation plan to encourage brokers to increase revenue and allow them to buy discounted stock. The 2013 program pays a bonus of 2 to 5 percentage points of revenue for advisers who bring in new assets and are in the top 40 percent in revenue growth, according to terms outlined in a summary obtained yesterday by Bloomberg News. That comes at the expense of a 2 percentage-point reduction in the revenue bonus paid to all brokers who generate at least $750,000. JPM Bonus Bummer (Bloomberg) JPMorgan Chase’s bonus pool for the corporate and investment bank may shrink as much as 2 percent this year as the firm completes performance reviews, three executives with direct knowledge of the process said. Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion (Bloomberg) A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record monetary stimulus. Under the exit strategy, the Fed would start selling bonds in mid-2015 in a bid to return its holdings to pre-crisis proportions in two to three years. An accelerated buildup of assets would also mean a faster pace of sales when the time comes to exit -- increasing the risk that a jump in interest rates would crush the economic recovery. Danger Lurks Inside The Bond Boom (WSJ) Amid the rush of bond deals, which already have topped $1 trillion in value, these managers—from BlackRock to Federated Investment Management Co.—are pointing to unusual wrinkles suggesting that now could be one of the most dangerous times in decades to lend to investment-grade companies. Interest rates are so low and bond prices so high, they warn, that there is little room left for gains. Some worry that even a small increase in interest rates—a traditional enemy of bond returns—could eat away at bond prices. College Student Poisons Roommate's Iced Tea With Bleach Following Argument (DM) A college student faces 15 years in jail after she allegedly sprayed bleach into her roommate's iced tea. Kayla Ashlyn Bonkowski, 19, was charged with felony poisoning and appeared in court on Wednesday. She reportedly told police that she had put chemicals in the drink following an argument about cleaning the dishes with her 20-year-old roommate Emily Joseph. The poisoning occurred on November 7 at the students' apartment in Union Township, located near the Mount Pleasant school of Central Michigan University, authorities said. Miss Joseph was taken to hospital for treatment but later released. After she filed a complaint, Bonkowski was arrested. The 19-year-old 'verbally admitted' to police that she put bleach in the drink because 'Joseph is mean', according to ABC. She was arraigned on Wednesday at 2pm before posting $2,000 bond. She entered a plea of not guilty to the charge of poisoning a food, drink, medicine or water supply. The college student faces up to 15 years in prison. Reached by e-mail, Bonkowski said on Wednesday morning that she needed to consult with a lawyer before commenting.

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