Opening Bell: 3.17.16

Goldman losses; Adult dorms in Silicon Valley; Legendary Muppets song is actually from a 1960s porno; and more.

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Wall Street's Awful Quarter Is Hitting Goldman Sachs, Too (Bloomberg)
Goldman Sachs’s income from investment banking -- advising takeovers and underwriting securities -- is projected to tumble 32 percent this quarter from a year earlier, Credit Suisse Group AG analysts wrote in a note on Tuesday. Internally, some senior executives are anticipating a drop of roughly 25 percent in that business, according to two people with knowledge of the matter, though the estimate may not be formal. Revenue from the bank’s larger trading business will probably fall 17 percent, the Credit Suisse analysts said.

Ex-Federal Reserve worker gets off easy for leaking documents (NYP)
Jason Gross, the former New York Fed employee who pleaded guilty in November to leaking highly confidential government documents to his friend at Goldman Sachs, was sentenced to a year of probation, 200 hours of community service and a $2,000 fine.

Ex-Goldman employee settles SEC insider case, to give up profits (Reuters)
A former Goldman Sachs Group Inc employee hired to help the bank root out illegal conduct settled Securities and Exchange Commission insider trading charges by agreeing to give up $468,132 in profit he made by stealing from the Wall Street bank's email system, the SEC said. The SEC on Wednesday said Yue Han, who had worked in Goldman's compliance division, consented to a final judgment under which he will relinquish various brokerage accounts that had been frozen after the regulator sued him in November. Han also consented to a ban from associating with brokers, dealers, investment advisers and others in the financial services industry. He did not admit wrongdoing.

Legendary Muppets song is actually from a 1960s porno (NYP)
“Mah Nà Mah Nà,” as it is called, was written by Piero Umilani and made its first appearance in the 1968 film “Svezia, inferno e paradiso” (“Sweden: Heaven and Hell”). The film is a “softcore mondo,” a Swedish term for “exploitation documentary,” a movie genre in which softcore pornography is dressed up as a documentary to give it a faint air of respectability.

Bill Ackman Sheds Assets as Pershing Portfolio Sinks (WSJ)
William Ackman’s hedge fund is selling down his biggest investment, as a disastrous bet on Valeant Pharmaceuticals International Inc. tears a hole in its portfolio. The activist investor said his Pershing Square Capital Management LP sold 20 million shares in Mondelez International Inc. after the market closed, which would yield $834 million at current prices.

Yellen steers Fed with cautious hand, despite hints of inflation (Reuters)
Federal Reserve policymakers urging caution over interest rate hikes have gained the upper hand in the central bank's internal debate, but the risk for the U.S. economy is that they are wrong to downplay a recent rise in inflation. In words that echo those of colleagues on the Fed's dovish wing, Fed Chair Janet Yellen told a news conference on Wednesday that "caution is appropriate" when it comes to raising interest rates. She said she was not convinced underlying inflation had accelerated.

Adult Dorms Could be the Future of City Living (Fortune)
For venture capitalists, the opportunity is doubly exciting since the housing practice would theoretically grow exponentially, showing start-up like profit, unlike investing in real estate which generally reaps in moderate returns...Coliving companies target urban areas with high rent prices such as San Francisco, where rent is the highest in the U.S., at a median of $3,346 per month according to Zillow’s January survey.

Rugby Player's Penis Partially Torn Off During Gruesome Tackle (HP)
"The pain was all right and then at halftime I was like, I’ve got to have a look," he told the French Footy blog in an item posted March 11. "I checked on it and the skin is half ripped off and I was like, ‘Shit, where’s the doctor? Where’s the doctor?’ " The doctor sent him to a clinic that night to be treated. Peacock showed his teammates the damage to laughs all around and said he had to "strap it up" for the next game. "#rugbyleague is definitely not a sport I recommend," he wrote in an Instagram post featuring the photo. "11 stitches later for the little fella but she'll be right." Despite the close call, Peacock still refuses to play with a protective cup, telling French Footy it impedes his ability to run.

Opening Bell

Power shifts to bankers at Goldman; Doubleline taking market share from Pimco; Scouts in Silicon Valley; "Official Who Oversaw Public Toilet Closures Caught Peeing In Street"; and more.

Opening Bell

Stress tests; The next Silicon Valley; Why you should lease a Rolls-Royce ; Emu on the loose; AND MORE.

News

Silicon Valley edges out hedge funds in talent war; initial coin offerings are here, they're weird, get used to it; how not to win a House election (hint: it involves body-slamming a reporter); and more.

By Paul Elledge Photography [CC BY-SA 3.0], via Wikimedia Commons

News

Goldman Sachs tops estimates; GOP wants to reinstate Glass-Steagall; Husband fails to notice bride's fall from back of electric scooter; and more.

Opening Bell

Nasdaq CEO Lost Touch Amid Facebook Chaos (WSJ) At the end of Facebook's disastrous first day of trading May 18, the phone in Robert Greifeld's New York office rang. It was Mary Schapiro, head of the Securities and Exchange Commission, wanting an explanation from the chief executive of Nasdaq OMX Group for the epidemic of glitches and delays in one of the most anticipated initial public offerings ever. Mr. Greifeld couldn't talk. Having monitored the rocky process from Silicon Valley, where he had gone to join Facebook executives in remotely ringing the market's opening bell, he concluded the worst problems were fixed and caught a noon flight back to the East Coast. So, marooned for almost five hours in business class with a phone he says didn't work, he didn't realize that continuing breakdowns at his exchange had left countless investors not knowing how many Facebook shares they had bought or sold and at what price, nor did he know the SEC chief wanted to reach him. Three weeks later, Mr. Greifeld still isn't sure why technology systems failed during the crucial IPO. Nasdaq's failure to see the problem coming is something its engineers are still dissecting. "You wake up, you turn around, and there's a black or dull spot," Mr. Greifeld said in an interview, sucking on Life Savers candy at a conference table in his office. "You can't get away from it." Spain’s Bailout Gives Rajoy Best Chance To Fix Banks (Bloomberg) Spain’s request for as much as 100 billion euros ($125 billion) of European bailout funds may provide the country with enough money to shore up its banking system after three failed attempts in as many years. “Now that they have this money, it will hopefully finally be possible to recognize all the hidden losses and clean up the system,” Luis Garicano, a professor at the London School of Economics, said in a phone interview. The amount sought is about 2.7 times the funds deemed necessary for Spanish banks by the International Monetary Fund in a report released June 8 and five times the total requested by the Bankia group, the country’s third-biggest lender, to cleanse its balance sheet. Spain's economic misery will get worse this year despite bailout request, prime minister says (NYP) A day after the country conceded it needed outside help following months of denying it would seek assistance, Rajoy said more Spaniards will lose their jobs in a country where one out of every four are already unemployed. "This year is going to be a bad one," Rajoy said Sunday in his first comments about the rescue since it was announced the previous evening by his economy minister. IPOs Dry Up Post Facebook (WSJ) In the aftermath of Facebook's botched trading debut, the IPO market has gone three weeks without an offering, the longest drought in five months. It is the slowest stretch in initial public offerings since a four-week span at the end of 2011 and the beginning of this year, according to data from Ipreo. Greece Threatens Wall Street Jobs In Third Trading Plunge (Bloomberg) For a third consecutive year, revenue from investment banking and trading at U.S. firms may fall at least 30 percent from the first quarter, Richard Ramsden, a Goldman Sachs analyst, said in a note last week. Greece, which gave English the word “cycle,” has been the main reason each year that the second quarter soured after a promising first three months. Nickelback Review Goes Viral (Poynter) Music critic Josh Gross has written hundreds of stories about bands, but none has brought him as much attention as the brief he wrote this week about Nickelback’s upcoming appearance in Idaho, where Gross writes for the Boise Weekly. He summarizes the response: "In the past day, I have been told that I am a genius, a king amongst men and a hack that could be easily outdone by a one-armed cat. I should alternately win the Pulitzer and forcibly insert 45 pickles into my bum. There has been little middle ground. Why? Because I had the audacity to point out that seeing Canadian “rock” band Nickelback at the Idaho Center may not be the best use of one’s $45." Gross wrote of the Nickelback: "You can spend $5 to go see Nickelback this week. Or you could buy 45 hammers from the dollar store, hang them from the ceiling at eye level and spend an evening banging the demons out of your dome...$45 is also enough to see Men In Black III five times, buy a dozen Big Macs, do 10 loads of laundry or so many other experiences as banal and meaningless as seeing Nickelback but come without actually having to hear Nickelback. But if you must, the band is playing The Idaho Center on Wednesday, June 13, at 6PM tickets start at $45." Dimon Faces Washington Grilling Over Trading Debacle (Reuters) The Senate Banking Committee has asked Dimon to come prepared Wednesday to provide "a thorough accounting of the trading losses," a committee aide said. Senators will also ask what he knew about the risks involved in the trading strategy. Fed Colleague Backs Dimon (WSJ) "I do not think he should step down," Lee Bollinger said in an interview with The Wall Street Journal. He said Mr. Dimon appears to have done nothing wrong, that critics attacking the Fed have a "false understanding" of how it works, and that it is "foolish" to say Mr. Dimon's presence on the New York Fed board creates an appearance of a conflict when the law requires bankers to serve on such boards. Private lunch with investor Warren Buffett sells for $3.5 million (WaPo) The previous four winning bids have all exceeded $2 million with records set every year. Last year’s winner, hedge fund manager Ted Weschler, paid $2,626,411. India Could Be First BRIC to Lose Investment Grade: S&P (Reuters) Standard & Poor's said on Monday that India could become the first of the so-called BRIC economies to lose its investment grade status, sending the rupee and stocks lower, less than two months after cutting its rating outlook for the country. "Slowing GDP growth and political roadblocks to economic policymaking are just some of the factors pushing up the risk that India could lose its investment-grade rating," the ratings agency said in a statement issued Monday on a report dated June 8. Town Considers Fines For Cursing (WSJ) Mimi Duphily was hanging baskets of pink geraniums on antique street lamps downtown for the Middleborough Beautification and Activities Group when she noticed something else that needed cleaning up—citizens' mouths. "The cursing has gotten very, very bad. I find it appalling and I won't tolerate it," said Ms. Duphily, a civic leader in the otherwise quiet New England community, which calls itself the Cranberry Capital of the World. "No person should be allowed to talk in that manner." Soon, Middleborough residents who do could risk a $20 fine. Ms. Duphily, 63 years old, tried scolding the cursers—whom she describes as young people shouting the "F word" back and forth—with a stern, "Hey kids, that's enough!" Then she conferred with the Beautification and Activities Group, which informed the Middleborough Business Coalition, which then called a summit with Middleborough Police Chief Bruce Gates, who now, in his sworn role, is trying to stomp out swears.

News

BofA Sees $5 Billion Collateral Need in Credit Downgrade (Bloomberg) A two-level downgrade of long-term senior debt ratings would have prompted the bank to post about $5.1 billion of collateral tied to derivatives contracts and other trading agreements as of March 31, the Charlotte, North Carolina-based firm said yesterday in a regulatory filing. It would have had to post an additional $1.1 billion of collateral if trading partners opted to tear up contracts in a two-level cut. RBS claims 'pleasing progress' though loss triples (AP) RBS, 82-percent owned by the British government after a massive bailout in the global the financial crisis, posted a 2011 first quarter net loss of £528 million. The lender said losses soared owing to an increase in the value of its outstanding debt to £2.46 billion. "As RBS's credit spreads tightened during the quarter, a charge of £2,456 million was booked for (our) own credit adjustments," RBS said in a statement. But the bank's underlying performance was brighter, with RBS posting a first quarter operating profit of £1.18 billion. RBS also confirmed that it would repay the last of emergency state loans totalling £163 billion but the British government will still own almost all of the bank after a £45.5 billion bailout following the 2008 financial crisis. "The start of 2012 has shown pleasing progress at RBS within the context of a flat economic environment," chief executive Stephen Hester said in the statement. Employers in U.S. Added Fewer Jobs Than Forecast in April (Bloomberg) Payrolls climbed 115,000, the smallest gain in six months, after a revised 154,000 gain in March that was larger than initially estimated, Labor Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent, and earnings stagnated. Facebook Targets $96 Billion Value (WSJ) With the pricing, Facebook is anticipated to raise as much as $13.6 billion, above earlier expectations of $10 billion. In a regulatory filing, Facebook said the company would seek to sell 337.4 million shares, with about half of those being sold by founders, employees and investors. The only U.S. issuers that have raised more money in an IPO were Visa Inc. at $19.7 billion in 2008 and General Motors Co. at $18.1 billion in 2010. Zuckerberg Facebook IPO to Make Him Richer Than Ballmer (Bloomberg) So that's exciting. Warren Buffett Has 'No Plans To Invest In Facebook IPO' (CNBC) When asked whether the current attention surrounding Internet IPOs reminded him of the tech stock bubble of the late 1990s, the Oracle of Omaha said, “It is not a bubble ... this is not what we were seeing in late 1999 all the way into 2001. We aren’t in any bubble phase of anything.” Inmates Dance, Deputy Fired (OBJ) Some inmates did the worm, others chose the old school robot. Each dance was performed to the beat of hip-hop artist Usher on command from a now-fired Summit County deputy. The inmate prize: use of a jail microwave. The charges are revealed in an internal affairs report released Wednesday. Deputy Dominic Martucci, 35, was fired for violating the department’s policies, including a mandate that inmates be treated humanely. Martucci is accused of ordering five inmates dance to Usher’s Yeah! song and then inviting other deputies to watch during an early evening shift on April 11. The inmates danced their way to regaining use of a microwave that they had lost earlier that day. Fitch CEO: US Downgrade Not Likely Before Election (CNBC) "We currently have the U.S. on a negative outlook, which actually suggests we think there is the potential for a downgrade," Taylor said in an interview. "It's too early to tell whether that will turn into an actual downgrade or not,” he said. “We think we still need to see what's going to happen through the elections and what actions are put in place subsequent to the elections. I think it's very clear that the U.S. does need to do something to deal with the debt problems built up since the financial crisis," he added. New Ripples For Gupta Case (WSJ) Mr. Gupta's criminal trial for securities fraud and conspiracy is scheduled to begin May 21 and expected to last about three weeks. Mr. Gupta has pleaded not guilty. His lawyer, Gary Naftalis, declined to comment for this article but previously has called the accusations "totally baseless." The Manhattan U.S. attorney's office also declined to comment. Federal prosecutors in Manhattan have taken note of the spike in trading in Goldman, which began as the firm's board concluded a special meeting to approve the deal that afternoon, according to people familiar with the matter. Galleon traders also noticed the climbing stock, conversations recorded on government wiretaps show. "Someone had this before us, someone, whatever went on, something happened," Galleon trader Ian Horowitz told Mr. Rajaratnam in a phone call the next morning, caught on tape by the Federal Bureau of Investigation. Goldman Readies Low-Cost Bond PLatform (WSJ) Goldman is preparing to roll out a bond-trading platform on which it will charge lower fees than on typical bond trades, according to people familiar with the matter, a move that could help retain customers tempted by rival trading venues being set up by BlackRock Inc. and others. AIG Invests $7.4 Billion at 5.3% to Boost Returns, Adds RMBS (Bloomberg) “We continue to be opportunistic with our investments in structured securities in order to improve yields, increase net investment income and offset the impact of a lower interest rate environment,” Wintrob said. BofA Talks Deal On Ex-Broker Pay (WSJ) The former Merrill brokers left the firm after the 2009 takeover by Bank of America and claim they are owed deferred compensation as a result of the deal. They were emboldened last month by an arbitration ruling ordering the Charlotte, N.C., company to pay more than $11 million to two former brokers with related complaints.