Opening Bell: 6.30.16

Google Capital makes first public company investment; Airbnb plans stock sales; Puerto Rico says it will default; Roomba beer pong; and more.
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Fed Clears 31 of 33 Big Banks to Boost Returns to Investors (WSJ)
Big firms such as Bank of America Corp. and Citigroup Inc., which struggled on the tests in recent years, passed this time. Morgan Stanley also passed but received a bit of a rebuke. The Fed said it found “weaknesses” in internal risk- management processes and required the bank to submit a revised capital plan by the end of the year, though it will still be able to return capital in the meantime...The U.S. banking units of two foreign firms, Deutsche Bank AG and Banco Santander SA, were flunked, due to Fed concerns about their ability to measure risks. It was the second year in a row the German bank failed and the third consecutive failure for the Spanish firm.

puerto rico flag

Carlyle CEO Rubenstein Says Brexit Won’t Cause ‘Calamity’ (Bloomberg)
David Rubenstein, co-founder of Carlyle Group LP, said Britain’s vote to exit from the European Union will depress U.K. economic growth and mergers and acquisitions activity, but won’t have disastrous effects. “The U.K. economy will slow, but it won’t be a calamity,” Rubenstein, who’s also the co-chief executive officer of Carlyle, said Wednesday in an interview with Bloomberg Television’s Erik Schatzker.

Airbnb Plans Dual Stock Sales to Push Off IPO (WSJ)
Airbnb Inc. lined up investors for a new funding round and an employee stock sale that will value the room-rental website at up to $30 billion and help defer an initial public offering, said people familiar with the matter. The San Francisco company plans to raise between $500 million and $1 billion from more than a half dozen large, investors in the coming weeks, the people said. The deal is expected to value Airbnb at about $30 billion, up from $25.5 billion a year ago.

Google Capital Makes First Public Company Investment in Care.com (Bloomberg)
Shares in Care.com Inc soared 18 percent in extended trading, after the home care provider announced a $46.35 million investment from Google Capital, the growth equity arm of Alphabet Inc. Google Capital’s investment makes it the largest shareholder in Care.com, and Laela Sturdy, a partner at the fund, will join the company’s board, Care.com said Wednesday in a statement.

Voodoo Client Made Threats, Man Tells Cops (TSG)
German Padilla-Balderas, 33, contacted investigators earlier this month to report that he was receiving threats from a former co-worker (whose name was redacted from an incident report). Padilla-Balderas, a Bradenton construction worker, said that the suspect “has been having relationship issues which resulted in his wife leaving.” Padilla-Balderas said that the man “came to him to put ‘voodoo’ on his wife in hopes of her returning.” But when a marital reconciliation did not materialize, Padilla-Balderas (seen above) reported, the customer “became upset with his services, claiming that they didn’t work.” The man warned that if his wife did not return by the end of June, “he will kidnap Padilla,” according to the Manatee County Sheriff’s Office report. Fearful for his safety, Padilla-Balderas told cops that he believed the man would carry through on his threat, adding that his former co-worker has “ties.”

Puerto Rico Says It Will Default Even With Congressional Aid (Bloomberg)
“On July 1, 2016, Puerto Rico will default on more than $1 billion in general obligation bonds, the island’s senior credits protected by a constitutional lien on revenues,” Garcia Padilla wrote in a editorial posted on a CNBC website. The lapse will mark the first time the U.S. territory has failed to pay what it owes on general-obligation debt, a $13 billion swath that its constitution says has the top claim to the government’s funds.

A Real Rock of a Diamond Fails to Sell at Auction (NYT)
A 1,109-carat uncut diamond offered in an unusual public auction is still waiting for a buyer. Offered for sale at a public auction on Wednesday evening at Sotheby’s in London, the stone — believed to be the largest still-uncut diamond in the world — failed to sell when it did not meet the minimum reserve, a price that was not specified. The bidding stopped at $61 million. A fee of about 12 percent, known as the buyer’s premium, would have been added to that price, which would have brought the total cost to about $68 million. “If you divide it by 1,109 carats, it is about $62,000 a carat,” said Henri Barguirdjian, president and chief executive of Graff Diamonds. “That is a very high price for a rough diamond, so obviously the reserve was too high.”

US banks in much better shape than years ago, says EY CEO (CNBC)
U.S. banks are in much better shape than they were years ago, EY Global Chairman and CEO Mark Weinberger said Wednesday. "Bottom line is they've got to get back into the business of lending, the business of going ahead and creating capital, and hopefully this will be turning the corner," he said in an interview with CNBC's "Closing Bell" from the Aspen Ideas Festival.

Roomba Beer Pong Is Your Game Of The Summer (HP)
A version of beer pong played with cups on moving Roombas has hit the Internet. In a video posted Tuesday to YouTube by Megan Noll, one gentleman tosses a ping pong ball into a cup despite the added degree of difficulty. That’s right, bros, you can play your favorite drinking game on pricy cleaning robots. But you might want to be well-heeled bros. Wrote one Redditor: “All you need is 12 cups, some beer, and $800 worth of vacuum cleaners.”

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Opening Bell: 9.3.15

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Opening Bell: 6.29.15

Greece, Greece, Greece; Puerto Rico; "CNN mistakes sex toy sign for Islamic State flag" and more.

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Opening Bell: 6.10.16

Puerto Rico debt crisis bill passes house; Whistleblower aided SEC in Deutsche probe; Man reaches day 322 of eating Chipotle every day; and more.

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Opening Bell: 08.02.12

Knight Says Glitch Cost It $440 Million (WSJ) Knight, in a press statement Thursday, said the problematic software had been removed from its systems and that the firm would conduct business making markets and trading on behalf of its clients Thursday. Knight's broker-dealer subsidiaries are in compliance with requirements to hold capital, the company said. The estimated $440 million loss disclosed Thursday by Knight follows a $35.4 million hit taken by the company in the problematic stock-market debut of Facebook. Goldman Leads Foreign Banks Accelerating Job Cuts In Japan (Bloomberg) Goldman Sachs led foreign banks in accelerating job cuts at their Japanese brokerages last fiscal year as employees relocated to other Asian financial centers and firms trimmed costs amid a global industry slump. The number of staff at nine global securities firms in Japan fell by 537, or 7.3 percent, to a combined 6,796 as of March 31, more than double the previous year’s 3.2 percent reduction, according to company regulatory filings. Wall Street and European banks have been eliminating jobs and transferring staff from Japan to Hong Kong and Singapore to reduce expenses as the euro region’s debt woes dent global investor confidence. The worst may be over as Japan recovers from last year’s nuclear crisis and some U.S. firms start hiring junior bankers for mergers advice and asset management, said Katsunobu Komizo, a Tokyo-based recruiting consultant. BNP Paribas Second Quarter Net Falls, Hits Capital Goal Early (Reuters) Second-quarter net income fell to 1.85 billion euros ($2.27 billion), beating the average of analyst estimates of 1.74 billion in a Reuters poll. Revenue dropped 8 percent to 10.10 billion, broadly in line with the poll average of 10.13 billion. The bank hit an 8.9 percent core Tier 1 ratio under stricter new Basel III methodology due to come into force from 2013. It is six months ahead of its target to hit 9 percent by end-2013. AIG Pushing Plan For Independence (WSJ) Several analysts who follow the company say the government's stake could be cut below 30% before the November elections, if asset sales expected by AIG in the coming months help the company raise a total of $10 billion to $15 billion in excess capital. The buybacks are likely to accompany one or more public share offerings of AIG stock by the Treasury, which over the past 16 months has reduced its stake from a peak of 92% through a series of at-market sales. Boulder police: Longmont man urinated on woman at bar after she rejected his advances (CD) Boulder police arrested a Longmont man who witnesses said urinated on a woman at a local bar after she rejected his advances Saturday night, according to a report. The woman told police she was standing next to the bar at Shooters Grill and Bar, 1801 13th St., about 11:45 p.m. Saturday when a man -- later identified as Timothy Paez, 22 -- came up behind her and put his arm around her. The woman turned around and said, "Um, really?," and Paez took his arm off her, according to the report. According to police, a few seconds later, the woman said she felt some sort of liquid hitting her leg. She initially thought Paez was spilling his beer on her, but when she turned around she told police she saw Paez with his penis exposed urinating on her leg and the front of the bar. Berkshire Benefits As Buffett Wagers On U.S. Housing (Bloomberg) “I don’t know if he’s lucky, smart or patriotic, but it’s worked out for him,” Cliff Gallant, an analyst at KBW Inc., said in a phone interview. He estimates that Berkshire will post an operating profit of $1,750 a share for the second quarter, a 6.7 percent increase from a year earlier. Bacon To Return $2 Billion (NYP) Louis Moore Bacon plans to give back $2 billion, or 25 percent of his main hedge fund, to investors, saying it may be too big for him to achieve past returns as “liquidity and opportunities have become more constrained.” Bacon, who seeks to exploit macroeconomic trends such as changes in interest rates and currencies, returned a “disappointing” 0.35 percent in the first half and a “tolerable” 6 percent in the past year, according to a letter sent yesterday to clients. He has gained on average more than 18 percent a year since starting the Moore Global Investments fund in 1989. Jobless Claims Increase (WSJ) Initial jobless claims, an indication of layoffs, increased by 8,000 to a seasonally adjusted 365,000 in the week ended July 28, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires had forecast 370,000 new applications for jobless benefits last week. Your 119 Billion Google Searches Now A Central Bank Tool (Bloomberg) Margo Sugarman spent months last year searching on Google for the appliances to complete her dream kitchen, scouring the Internet for information on the latest double ovens and low-noise mixers. Not only did those queries guide the Tel Mond, Israel, resident to the best deals for her 70,000-shekel ($17,680) renovation, they also helped the Bank of Israel, which looks to searches like Sugarman’s to assess the state of the nation’s $243 billion economy. The central bank stands at the forefront of the world’s hunt for new economic indicators, analyzing keyword counts for everything from aerobics classes to refrigerators -- reported by Google almost as soon as the queries take place -- to gauge consumer demand before official statistics are released. The Federal Reserve and the central banks of England, Italy, Spain and Chile have followed up with their own studies to see if search volumes track trends in the economies they oversee. For Retiring GE Executive, $89,000/Month Not to Work (WSJ) John Krenicki is giving up his General Electric paycheck. But he's going to be collecting an allowance. As part of a deal to keep the veteran executive from joining a competitor for an usually long three years, the conglomerate has agreed to pay Mr. Krenicki $89,000 a month until 2022. The payment to Mr. Krenicki, who is 50 years old, was dubbed a retirement allowance by GE and is worth $1 million a year.

Opening Bell

Opening Bell: 12.21.12

Critics Say UBS Let Off Too Easy (WSJ) Our goal here is not to destroy a major financial institution," Lanny Breuer, assistant attorney general for the Justice Department's criminal division, said Wednesday after the $1.5 billion fine against UBS was announced. Prosecutors have to at least "evaluate whether or not innocent people might lose jobs" and other types of potential collateral damage. Sen. Charles Grassley (R., Iowa), a Senate Finance Committee member, said he is unsatisfied that prosecutors didn't go higher up the corporate ladder at UBS than its Japanese subsidiary..."The reluctance of U.S. prosecutors to file criminal charges over big-time bank fraud is frustrating and hard to understand," Mr. Grassley said. The $1.5 billion fine is a "spit in the ocean compared to the money lost by borrowers at every level, including taxpayers." Regulatory 'Whale' Hunt Advances (WSJ) The first regulatory ripples from the "London Whale" trading fiasco are about to hit J.P. Morgan Chase. The Office of the Comptroller of the Currency, led by Comptroller Thomas Curry, is preparing to take a formal action demanding that J.P. Morgan remedy the lapses in risk controls that allowed a small group of London-based traders to rack up losses of more than $6 billion this year, according to people familiar with the company's discussions with regulators. Khuzami To Leave SEC Enforcement Post (WSJ) Robert Khuzami, head of the Securities and Exchange Commission's enforcement unit, plans to leave the agency as soon as next month, a person familiar with the expected move said Thursday. Boehner Drops ‘Plan B’ as Budget Effort Turns to Disarray (Bloomberg) House Speaker John Boehner scrapped a plan to allow higher tax rates on annual income above $1 million, yielding to anti-tax resistance within his own party and throwing already-stalled budget talks deeper into turmoil. He will hold a news conference today at 10 a.m. Washington time to discuss the next steps in the budget dispute, a Republican leadership aide said. House members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach agreement to avert tax increases and spending cuts set to take effect in January. The partisan divide hardened yesterday, making the path to a deal more uncertain. BlackRock Sees Distortions in Country Ratings Seeking S&P Change (Bloomberg) Credit rating companies are distorting capital markets by assigning the same debt ranking to countries from Italy to Thailand and Kazakhstan, according to BlackRock, the world’s biggest money manager. While 23 countries share the BBB+ to BBB- levels assessed by Standard & Poor’s, the lowest investment grades, up from 15 in 2008 at the beginning of the financial crisis, their debt to gross domestic product ratios range from 12 percent for Kazakhstan to 44 percent for Thailand and 126 percent for Italy, International Monetary Fund estimates show. The cost of insuring against a default by Italy, ranked BBB+, over the next five years is almost triple that for Thailand, which has the same rating. For BlackRock, which oversees $3.7 trillion in assets, the measures are so untrustworthy that the firm is setting up its own system to gauge the risk of investing in government bonds. This year, the market moved in the opposite direction suggested by changes to levels and outlooks 53 percent of the time, data compiled by Bloomberg show. “The rating agencies were very, very slow to the game,” Benjamin Brodsky, a managing director at BlackRock International Ltd., said in a Nov. 23 interview from London. “They all came after the fact. For us, this is not good enough.” If You Bought Greek Bonds in January You Earned 80% (Bloomberg) Greek government bonds returned 80 percent this year, compared with 3.7 percent for German bunds and 6.1 percent for Spanish securities, Bank of America Merrill Lynch indexes show. It’s the first year since 2009 that investors made money on Greek securities, with 2012 providing the biggest advance since Merrill began compiling the data in 1998, according to figures that don’t reflect this month’s debt buyback by the government. Texas lawmaker: ‘Ping-pongs’ deadlier than guns (The Ticket) Incoming Texas State Rep. Kyle Kacal says guns don’t kill people—ping-pong kills people. "I've heard of people being killed playing ping-pong—ping-pongs are more dangerous than guns," he says. "Flat-screen TVs are injuring more kids today than anything." The lifetime rancher, who will take his seat in 2013 as a freshman, says that new gun restrictions are unnecessary. Kacal, who reportedly operates a hunting business, notably came out against a bill instructing Texans how to secure their assault weapons. "People know what they need to do to be safe. We don't need to legislate that—it's common sense," he said. "Once everyone's gun is locked up, then the bad guys know everyone's gun is locked up." Flare-up in war of words between Ackman, Herbalife (NYP) “This is the highest conviction I’ve ever had about any investment I’ve ever made,” Ackman said yesterday in a series of interviews. The investor told CNBC that he expects the Federal Trade Commission will take a “hard look” at the company. The heavyweight battle picked up steam over the last two days and has become, in the typically slow days leading up to Christmas, one of the most-watched events on Wall Street. As the financial world watched, Herbalife CEO Michael Johnson returned fire — calling Ackman’s statements “bogus” and asking the Securities and Exchange Commission to probe the motives of Ackman and his Pershing Square Capital hedge fund. A spokeswoman said if Johnson were allowed the chance to face-off against the investor at the Downtown conference, the CEO “would have been able to tear Mr. Ackman’s premises and interpretation of our business model apart.” Citigroup Said to Give CCA Managers 75% Stake in Funds for Free (Bloomberg) Among Vikram Pandit’s last jobs as Citigroup’s chief executive officer was to decide the fate of the bank’s hedge-fund unit, which employs some of his oldest colleagues. He agreed to give them most of it for free. While Citigroup is keeping a 25 percent stake, managers at the Citi Capital Advisors unit will pay nothing for the remaining 75 percent of that business as it becomes a new firm managing as much as $2.5 billion of the bank’s money, according to people with knowledge of the plan. The lender will pay the executives fees while gradually pulling out assets to comply with impending U.S. rules, said the people, who requested anonymity because the terms aren’t public. The deal was Citigroup’s response to the Volcker rule. Peter Madoff Is Sentenced to 10 Years for His Role in Fraud (Dealbook) A lawyer by training, Peter Madoff is the second figure in the scandal to be sentenced. His older brother, Bernard, pleaded guilty in March 2009 and is serving a prison term of 150 years. UK Boom in Pound Shops: An Austerity-Proof Business Model? (CNBC) Pound shops in the U.K. are reporting massive increases in profits across the board showing that the formula "pile 'em high and sell 'em cheap" has particular resonance in Britain's current age of austerity. Names like "Poundstretcher," "Poundland" and "99p Stores" in the U.K. have become high street stalwarts as other brands go bust. The chains, immediately recognizable on price point, are opening new stores and reporting record results reflecting the increasing public demand for cheaper goods. U.K. based "Poundland" is one such chain reporting steep sales growth as its range of 3,000 items -- from umbrellas and pregnancy tests (it sells 14,000 a week) to bird feeders and bags of crisps all priced at one pound – resonates with cash-strapped Britons. In the year to April 2012, the Warburg Pincus owned company said its turnover increased 22 percent to 780 million pounds ($1.25 billion) and profits increased by 50 percent to 18.3 million pounds from last year's figure of 12.2 million. Former Olympian Suzy Favor Hamilton admits to life as a $600-an-hour hooker (NYP) Steamy, lingerie-clad images of the champion runner helped tout her services on the Web site of a Vegas escort agency called Haley Heston’s Private Collection, where Favor Hamilton operated under the name “Kelly Lundy,” according to The Smoking Gun. Customers could hire her lithe Olympic-class runner’s body for $600 an hour, $1,000 for two hours and $6,000 for 24 hours. The site described her build as “athletic,” her bosom as “perky,” and her belly button as “pierced.” She was willing to provide horny customers the full “girlfriend experience,” and would also engage in a certain undisclosed sex act for an extra $300. “I enjoy men of all shapes, sizes and colors, and I have an affinity for women (I am bisexual),” “Kelly” wrote on her page on the escort service’s Web site. “I consider dates with couples an experience to cherish.” Her sexual skills reportedly earned her a high rating on The Erotic Review, a Web site frequented by prostitution fans. Favor Hamilton’s lusty secret life might have stayed secret if she had not made the mistake of revealing her true identity to some of her wealthy johns, who went to the media.

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Opening Bell: 8.5.15

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Opening Bell

Opening Bell: 01.22.13

Glencore, Xstrata Move Closer to Deal (WSJ) The two companies, who want to combine to form the world's fourth-largest diversified miner with a market capitalization of about $80 billion, said they still need to secure regulatory approval from China. They will also have to abide by conditions set out by the South African regulator limiting the timing and scope of any layoffs stemming from the merger. SAC Misses Out On Big Investment (WSJ) Mizuho Financial Group had discussed last year making a major investment that could have brought as much as $500 million to SAC, said people briefed on discussions with SAC executives and advisers. But the bank ultimately notified SAC that it wasn't proceeding. By December, with scrutiny of SAC's trading practices mounting, the firm's executives told advisers and others inside and outside the firm that Mizuho's decision appeared final, the people said. Global A-List Descends On Davos (WSJ) Of all the sectors it is probably the bankers who are fielding the highest concentration of big names. Anshu Jainof Deutsche Bank AG,  Brian T. Moynihan of Bank of America Corp., Lloyd C. Blankfein of Goldman Sachs and HSBC Holdings CEO Stuart T. Gulliver are just a sample. Trust in Business Leaders at Low as Davos Begins (CNBC) Less than one in five people believe business and government leaders can be trusted to make ethical and moral decisions, the survey of some 30,000 people showed, with confidence particularly low in France and Germany. Calpers Buy-Hold Rule Recoups $95 Billion Recession Loss (WSJ) The California Public Employees’ Retirement System is poised to top a record $260 billion in assets, the market value it held before the global financial crisis wiped out more than a third of its wealth, by sticking with a strategy of buy-and-hold. The largest U.S. public pension, with half of its money in publicly traded equities, was worth $253.2 billion on Jan. 17, or about 97 percent of the pre-recession high set in October 2007. The fund returned 13 percent in 2012, about the same gain as the Standard & Poor’s 500-stock index achieved. Armstrong Becomes ‘Madoff on a Bike’ as Cheating Shatters Lives (Bloomberg) “He’s Bernie Madoff on a bike,” said John Llewellyn, an associate professor of communication at Wake Forest University in Winston-Salem, North Carolina. “The level of self-absorption and mean-spiritedness with which he has defended himself and castigated others over a decade makes an impression that’s pretty bleak for the human spirit.” Irish lawmakers back plan to allow drink-driving ‘in moderation’ (The Journal) KERRY count councillors have voted in favour of a motion which would allow people in rural Ireland to have ‘two or three’ drinks and still drive. The motion put forward by councillor Danny Healy-Rae calls on the Minister for Justice to allow Gardaí to issue permits to people in the most isolated parts of the country to allow them to drive after drinking some alcohol. Speaking to The Journal, Danny Healy-Rae said the idea was to help “those people in every parish who are isolated and who can’t get out of their place at night." Barclays Loses Anonymity (Bloomberg) A group of Barclays employees had a request to prevent their names from being published ahead of the UK’s first trial related to manipulation of the London interbank offered rate rejected by a judge yesterday. “I simply do not see that there is any sufficient case of prejudice” to the trial, Judge Julian Flaux said in dismissing the request. The names weren’t immediately released. Affiliates of Guardian Care Homes sued Barclays over an interest-rate swap tied to Libor and argued the benchmark was manipulated. The swap resulted in a loss for the Wolverhampton, England-based Guardian and Barclays was ordered to give the company’s lawyers the identities and e-mails of bank staff that were included in disclosures to regulators. Atari’s U.S. Operations File for Chapter 11 Bankruptcy (Bloomberg) Atari SA’s U.S.-based video-game- making businesses filed for bankruptcy protection inManhattan with the intention of separating from the unprofitable French parent and seeking independent funding. New York-based Atari Inc., maker of video games “Pong” and “Asteroids,” as well as affiliates Atari Interactive Inc., Humongous Inc. and California U.S. Holdings Inc., asked to be jointly administered in filings yesterday in U.S. Bankruptcy Court, according to a statement. “Within the next 90 to 120 days, the companies expect to effectuate a sale of all, or substantially all, of their assets,” in a free and clear sale under the U.S. bankruptcy laws, or confirm reorganization plans that “accomplish substantially the same result,” according to the statement. EU Approves Financial Transactions Tax (Reuters) A majority of European Union finance ministers voted on Tuesday to allow Germany, France and nine other euro zone countries to prepare to introduce a tax on financial transactions, said two officials who attended the meeting. The vote clears the way for Germany,France, Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia to press ahead with their own tax on trading. Man paddles for love of Florida waters (NWFDN) Justin Riney turned his back on his degree in finance and last year followed his heart and founded his own non-profit organization: Mother Ocean...Riney needed a project to kick off his newly-founded organization and bring attention to it and when he read that 500 years had passed since Ponce de Leon discovered Florida, he decided that was a cause for celebration. On Jan. 1 he began a 365-day journey around Florida on a stand-up paddle board from Pensacola. He plans to spend six months paddling the peninsula, ending In Jacksonville on July 4. Then, he will spend six months on the inner waterways, ending Dec. 31 in Tallahassee. He has named this adventure Expedition Florida 500. Briton wrestles shark away from children in Australia (Telegraph) The incident happened on Friday in the Sunshine Coast region of the state of Queensland, and was captured by a local news team. According to Australia's Channel Nine, the shark came into very shallow waters and two men rushed to move it away before it reached children who were playing in the water nearby. Paul Marshallsea, a grandfather from Wales, and Terry Dale, a wildlife carer, pushed the shark towards open waters. The shark was also spotted in shallow waters of a creek by frightened parents, children and tourists.