Deutsche Profits Big On Libor Bets (WSJ) Deutsche Bank made at least €500 million ($654 million) in profit in 2008 from trades pegged to the interest rates under investigation by regulators world-wide, internal bank documents show. The German bank's trading profits resulted from billions of euros in bets related to the London interbank offered rate, or Libor, and other global benchmark rates. ECB Stands Pat On Rates (WSJ) The ECB's Governing Council decided to keep Europe's most important interest rates at their lowest levels since the single currency was introduced in 1999, encouraged by a clear improvement in financial-market sentiment over the past month and by tentative signs of growing confidence in the euro-zone economy. Rivals Clash As Inquiry Into Herbalife Opens (WSJ) Daniel Loeb's hedge fund disclosed Wednesday it owns an 8.2% stake now valued at $350 million in nutrition-supplements company Herbalife Ltd. Mr. Ackman's Pershing Square Capital Management LP has bet more than $1 billion against the company by shorting its stock…The face-off between two high-profile, media-savvy hedge-fund managers highlights the arrival of a new wave of postcrisis financial stars. They tout their positions during television interviews and at conferences, in letters or securities filings and on customized Web pages, often convincing other investors to follow their lead. Their pronouncements move stocks, at times dramatically, and leave companies scrambling to respond. And when they take the opposite sides of the same trade the ensuing battle can captivate the financial world. "One of them is going to be very wrong," said Gregg Hymowitz, founder of the $8.2 billion EnTrust Capital, a longtime investor with both Mr. Ackman and Mr. Loeb's firms. "Ackman thinks it's a complete and utter fraud, and Dan thinks it's a completely legitimate business." Hedgie's Herbalife Bet Counters Ackman (NYP) [In addition to Loeb], Carl Icahn is also believed to have taken a long position in Herbalife, sources said. The possibility of Loeb and Icahn going up against Ackman’s Herbalife short sent investors into a tizzy. “It’s going to be an Ackman sandwich,” one hedge fund manager wailed. Lew Taking Over at Treasury Puts Perennial Aide at Head (Bloomberg) With his penchant for thinking several steps ahead, his organizational drive and his budget expertise, Lew, 57, has been Obama’s consummate aide. Now, he’s Obama’s choice for Treasury secretary, according to a person familiar with the process. Lew faces the prospect of becoming a leader at a critical juncture for the nation’s economic and fiscal future. “As chief of staff you are staff and as Treasury secretary, you are principal -- Jack has to make that transition,” said Ken Duberstein, a chief of staff to former President Ronald Reagan who first met Lew in the 1980s. “It’s not the invisible hand, it is the visible hand.” If confirmed, Lew may need to play that hand as soon as next month, when the administration squares off with Congress over the U.S. debt ceiling. Lew’s job will be all the more difficult because his relations with House Republicans soured during the 2011 battle over the government’s borrowing limit. Government's worst signature will be on America's dollar bills (NYP) Lew’s signature — which looks like a strand of hair gone though a curler treatment — might even be too peculiar to grace our greenbacks, political insiders said. “Whoa! That’s completely unintelligible,” said a Senate finance aide. “This doesn’t look like anyone’s name at all.” She concluded, “Oh my gosh — I’ve never seen a signature like that.” ome social-media users were also quick to poke fun, saying Lew should clean up his squiggle. “HE GOT A CRIZZAZY SIGNATURE!!!!” one Twitter user wrote. Another tweeter quipped, “Looooooo!” But just because his autograph looks it’s penned by a drunken 3-year-old doesn’t mean it isn’t lovable, others said. Some fans created a petition on the White House’s Web site called “Save the Lewpty-Lew!” “We demand Lew’s doodle on every dollar bill in circulation,” the petition read. It had garnered 10 signatures by late yesterday…Asked yesterday if Lew had been practicing to improve his signature, presidential press secretary Jay Carney, said, “Not that I’m aware of.” Cantor Growth Plan Sputters as 41% of Touted Hires Exit (Bloomberg) Chief Executive Officer Howard Lutnick’s drive to turn one of the largest independent U.S. brokerages into a rival to Wall Street’s investment banks has been pocked with dismissals and defections. Forty-one percent of the 158 traders and bankers whose hirings Cantor announced in news releases since 2009 have left, industry records show. In interviews, 19 current and former employees blamed Cantor’s reluctance to commit money to deals and pressure to turn immediate profits. Norfolk 911 calls for 'baby lion' turn up a coiffed dog (HR) The first caller was fairly calm. “I’d like to report a lion sighting,” he said. “Say that again?” a dispatcher responded. And thus began the drama over baby lion sightings in Norfolk on Tuesday. Police said Wednesday that they actually got three 911 calls about the “lion.” The first came at 10:19 a.m. The animal was running on Granby Street, a male voice said. Then a woman took the phone. She sounded anxious as she described the proximity to the zoo. “There was a lion that ran across the street. A baby lion. It was about the size of a Labrador retriever.” It was near Granby and 38th, she said. “It’s roaming loose in the neighborhood.” A second call came five minutes later. “I just saw an animal that looked like a small lion.” It had “the mange and everything,” a man said. He had seen it on Delaware Avenue near Llewellyn Avenue. “I don’t know if it got away from the zoo, or what,” he said. The dispatcher said they already had received a report. “I’m not sure if it actually is a lion or not, but I’ll update the information.” A third call came at 1:19 p.m. “I just saw a baby lion at Colley Avenue and 50th Street,” a man reported. “What kind of animal?” the dispatcher later asked him. “A lion. A baby lion, maybe.” The lion was going to nearby houses. “I don’t think it has caused any problem so far,” said the caller. “OK. You think it’s looking for food?” the dispatcher asked. “I don’t know.” By now, most folks know that the “baby lion” was actually Charles the Monarch, a Labrador-poodle mix owned by Daniel Painter, who lives in Riveriew and has a garden center on Colley Avenue. He has the dog groomed to look like the Old Dominion University mascot. Many people say they see Charles out a lot, especially on Colley. But to someone who hasn’t seen him, he sure doesn’t look like a dog at first. PE King Black Is Hungry For Hostess (NYP) Black’s Apollo Global Management has teamed with veteran food executive C. Dean Metropoulos on a potential bid for bankrupt Hostess Brands’ snacks business, which includes Twinkies, Ding Dongs and Ho Hos…Hostess is in the process of selling off its iconic brands and liquidating the company after a crippling strike by its bakers union forced it to shut down in November. The Irving, Texas-based company plans to hold separate auctions for its bread and snack businesses. Hostess is just a few days away from choosing a so-called stalking horse bidder for its bread brands, including Wonder Bread, Nature’s Pride and Butternut. The snack business will follow suit later. Mortgage Deals Came Just In Time (WSJ) Major banks pushed to complete an $8.5 billion legal settlement with federal regulators this past weekend so they could book the deal's costs in their fourth-quarter results and present a cleaner slate to investors in 2013, according to people familiar with the talks. The timing of the settlement of alleged foreclosure abuses, announced Monday, allowed banks including Bank of America, JPMorgan, Citigroup, and Wells Fargo to take advantage of so-called subsequent-events accounting. The same rules apply to Bank of America's $11.6 billion pact with Fannie Mae over buybacks of questionable mortgage loans. Monday's settlements are "almost the textbook example" of when subsequent-events accounting comes into play, said Robert Willens, an accounting and tax expert. Obama’s 81% New York City Support is Best in 114 Years (Bloomberg) President Barack Obama won more support from New York City in November’s election than any White House candidate in more than 100 years, according to a final tally of votes. Obama beat Republican challenger Mitt Romney by 81 percent to 18 percent in the nation’s largest city, according to a certified vote count released Dec. 31 by the state board of elections. Some New York ballots were counted late in part because of complications caused by Hurricane Sandy. Yum Brands Apologizes For Chicken Probe (WSJ) Yum Brands's China chief executive apologized to consumers after negative publicity surrounding an official probe into chicken purchased from local suppliers caused sales to tumble at the company's KFC chain. Yum failed to address problems quickly and had poor internal communications, Sam Su said in a statement posted on the company's official account on Sina Corp.'s Twitter-like Weibo microblog service. He said the company would strengthen its management and oversight of suppliers. "We feel regretful for all the problems," Mr. Su said in the statement. "I sincerely apologize to the public on behalf of the company." Swiss Banks Welcome Rejection of Germany Tax Accord, Study Shows (Bloomberg) Swiss banks welcome the collapse of an accord with Germany that would have imposed new taxes on German clients in a bid to end a dispute over tax evasion, Ernst & Young said. About 72 percent of 120 Swiss banks surveyed see the demise of the agreement as positive, Ernst & Young said in a report today. How Jawboning Works (WSJ) The clearest example comes from Europe. In July, Mario Draghi, president of the European Central Bank, defused an intensifying crisis of confidence in the euro with two sentences scribbled in the margins of an otherwise routine speech. "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro," he said. "And believe me, it will be enough." That may prove to be the most successful central-bank verbal intervention in history. A few weeks later, the ECB pledged to buy bonds of governments shunned by markets if those governments made belt-tightening commitments accepted by fellow euro-zone countries. No government has sought that help so the ECB hasn't spent a single euro. Yet global anxiety about an imminent euro crisis has abated. Beautiful Existence, Seattle Woman, Plans To Eat Only Starbucks For One Year (HP) A Seattle woman, legally named Beautiful Existence, will eat only food from Starbucks this year. She'll also be only drinking beverages from Starbucks as well, but will include drinks from Tazo Tea and Evolution Fresh since both fall under the Starbucks brand. Beautiful Existence cites several reasons for this endeavor. She explains them on her blog: "So how can eating only one company’s products impact me, anybody? Well Mr. McDonald’s already proved that question years ago with his documentary and Mr. Subway did his take on the loosing weight portion of the food challenges too. But when I watched those guys doing their thing I asked myself “where are the WOMEN challenging themselves in the world?” “Where are the effects being shown on a woman’s culture? A woman’s family & children? A woman’s diet, weight, fashion, checkbook, community and world through challenges?” “Where is HER VOICE on how an international company is directly or indirectly impacting everything from her waistline to her bottom line and every other woman’s, man’s, child’s, societies and planets world with their presence?” So far, Existence has really liked the Turkey Rustico Panini and is trying hard not to eat any of the baked items.

Ex-Goldman Worker Said to Seek Book Deal (NYT) Greg Smith has met with publishers this week, including imprints at several prominent houses. According to several people who were present, Mr. Smith described his book as a coming-of-age story, the tale of someone who came into the business with good intentions and sky-high ideals that were ultimately pierced by Goldman’s obsessive focus on making money. It would also be a story of the history of Goldman Sachs and the perceived change in the culture of the firm that left Mr. Smith, a native of South Africa who lived in London, disillusioned and eager to leave after spending nearly 12 years there. JPMorgan Wins Case Against Trader Over Decimal Point Dispute (Bloomberg) JPMorgan doesn’t have to pay a trader 580,000 pounds ($921,000) after a missing decimal point in an employment contract led him to believe his salary would be 10 times what was offered, a London court ruled. Kai Herbert, a Switzerland-based currency trader, sued JPMorgan for lost earnings claiming he signed a contract to relocate to Johannesburg for a salary of 24 million rand ($3.1 million). JPMorgan said there was a typographical error and the figure should have been 2.4 million rand. “Herbert took the commercial risk of accepting the offer, knowing full well that the figure was an error,” Judge Henry Globe said in today’s judgment. E-Mail to Corzine Said Transfer Was Not Customer Money (Dealbook) But the e-mail, a copy of which was reviewed by The New York Times, did not capture the full story behind the wire, which turned out to contain customer money. MF Global employees in Chicago had first transferred $200 million from a customer account to the firm’s house account, people briefed on the matter said. Once it was in the firm’s coffers, the people said, Chicago employees then promptly transferred $175 million of the money to the MF Global account at JPMorgan in London — the account that was overdrawn...The e-mail suggests that Mr. Corzine, a former governor of New Jersey, was unaware that the money had been transferred from a customer account. Germany Backs Boost To Bailout Fund (WSJ) Germany has been staunchly opposed to raising the planned €500 billion ($664 billion) ceiling on the ESM, but has left the question of the EFSF open until now. It was widely believed that the EFSF would be retired as soon as the ESM is launched and that the EFSF loans already awarded would be assumed by the ESM, reducing its future lending capacity. But now Berlin is suggesting allowing the EFSF to run longer and by doing so ensure that the ESM can use its full lending capacity, effectively boosting the firewall to about €700 billion. "We are saying that the ESM should permanently have €500 billion," Ms. Merkel told a news conference in Berlin on Monday. BATS Faced Revolt Over IPO (WSJ) "The fact that our own stock was out there to be traded for the first time, and we showed systems problems, eroded customer confidence," Joe Ratterman, BATS's chief executive, said Sunday in an interview. "Of course investors are going to say, 'Hey, wait a second.'" Some traders and investors considered the offering pricey. At $16 a share, BATS would have traded at about 10 times analysts' 2013 earnings estimates. That is roughly on par with New York Stock Exchange owner NYSE Euronext and a premium to the Nasdaq OMX Group Inc., which trades at 8.6 times 2013 estimates. Even before the glitches appeared, the offering was off to a rocky start. When trading in BATS shares opened at 10:45 a.m., they were down 75 cents, to $15.25. From there, things only got worse. Hedge Funds Capitulating Buy Most Stocks Since 2010 (Bloomberg) A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 48.6 last week from 42 at the end of November 2011, the biggest increase since April 2010, according to data compiled by the International Strategy & Investment Group. The Bloomberg aggregate hedge fund index gained 1.4 percent last month, lagging behind the Standard & Poor’s 500 Index by 2.65 percentage points. Banks Set to Cut $1 Trillion From Balance Sheets (FT) Investment banks are to shrink their balance sheets by another $1 trillion or up to 7 percent globally within the next two years, says a report that foresees a shake-up of market share in the industry. Higher funding costs and increased regulatory pressure to bolster capital will force wholesale banks also to cut 15 percent, or up to $0.9 trillion, of assets that are weighted by risk, a joint report by Morgan Stanley and consultants Oliver Wyman predicts. In addition, banks are expected take out $10 billion to $12 billion in costs by reducing pay, firing employees and paring back investments in areas that are no longer considered core. Larry Summers: Strong Recovery A "Substantial Possibility" (FT) According to Summers, the biggest risk to the recovery in the next few years is that policy will move away too quickly from its emphasis on boosting demand. "A lurch back this year towards the kind of policies that are appropriate in normal times would be quite premature," he added. Bernanke Notes Labor Market Concerns (WSJ) "Further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Mr. Bernanke said in prepared remarks to the annual conference of the National Association for Business Economics. Bad fliers get boot – & bill (NYP) Fed up with disruptive fliers, the Port Authority plans to go after them for the money they cost their airline and the PA. “We’re going to use every lever at our disposal,” said PA chief Pat Foye. “These delays cost thousands of dollars — maybe tens of thousands — each. One Alec Baldwin incident can delay a whole airport for a day with cascading delays.” (Baldwin, the “30 Rock” star, made international headlines in December when he got booted by American Airlines at LAX after refusing to turn off his phone.) The PA is going to “aggressively’’ remind passengers to keep cool and listen to instructions from airline crews — even if they think they’re stupid, Foye said.