Opening Bell: 10.5.16

Julian Robertson sees 'a lot of sharks in the water looking to eat us right up'; Bill Gross says markets are 'a casino'; Twitter investor Chris Sacca suggests Twitter sucks; British man solves 'world's smallest Rubik's cube' with tweezers; and more.
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Photo: Bob Riha Jr/Getty Images

Photo: Bob Riha Jr/Getty Images

Bill Gross: Markets are a casino and 'this cannot end well' (CNBC)
The Janus Capital fund manager stepped up his criticism of institutions like the Federal Reserve, the European Central Bank and Bank of Japan, charging that the trillions in negative-yielding debt are presenting investors with unpleasant choices. Recalling his days many years ago as a blackjack counter in Las Vegas, Gross reasons that "central bankers cannot continue to double down bets without risking a 'black' or perhaps 'grey' swan moment in global financial markets." "At some point investors — leery and indeed weary of receiving negative or near zero returns on their money, may at the margin desert the standard financial complex, for higher returning or better yet, less risky alternatives," he added.

Yahoo secretly scanned customer emails for US intelligence (Reuters)
Yahoo last year secretly built a custom software program to search all of its customers' incoming emails for specific information provided by U.S. intelligence officials, according to people familiar with the matter. The company complied with a classified U.S. government directive, scanning hundreds of millions of Yahoo Mail accounts at the behest of the National Security Agency or FBI, said two former employees and a third person apprised of the events.

Early Twitter Investor Sacca Says He's Been Selling Shares (Bloomberg)
Chris Sacca, the investor who was once one of Twitter's largest shareholders, said he has been selling his stock in the social network, and is now hoping for an acquisition. ``I've definitely sold some Twitter shares,'' Sacca said in an interview Tuesday on Bloomberg Television. ``I don't own as many as I used to because I'm not an idiot, but I own more than I should because I'm an idiot.'' Sacca said the San Francisco-based company has fallen short of its potential by failing to showcase its most interesting content, despite tweaking the product to make it more accessible. Under Chief Executive Officer Jack Dorsey, not enough has changed, Sacca said -- he had believed that another co-founder, Ev Williams, would be given more influence over the product direction.

Julian Robertson Sees Opportunity Betting Against Fixed Income (Bloomberg)
Tiger Management’s Julian Robertson is betting against fixed income amid expectations of rising interest rates.
“I see it as a long-term sure thing to go short the bond market,” Robertson, 84, said Tuesday at Grant’s 2016 Fall Investment Conference in New York, adding that he has some exposure to this position. “In the meantime there are a lot of sharks in the water looking to eat us right up as we swim to shore,” he said, explaining that caution has held him back from taking larger positions. Robertson, who founded Tiger in 1980 and built it into one of the world’s largest hedge funds, said that for now he’s wagered against Italian sovereign debt, which yields less than U.S. government bonds. He said he’s watching German sovereign debt, whose negative yields seem “absurd.”

British man solves 'world's smallest Rubik's cube' with tweezers (UPI)
A British puzzle enthusiast shared video of his successful attempt to solve what he bills as the "world's smallest Rubik's cube." Tony Fisher, who holds the Guinness World Record for largest Rubik's cube after building a puzzle measuring more than 5 feet tall, created a Rubik's cube measuring only .22 inches on each side. Fisher said he couldn't get a 3D printer to make the puzzle small enough, so he filed down a cube that started at .24 inches on each side.

Bill Gates, Jeff Bezos top Forbes list of richest Americans (NYP)
The Microsoft billionaire on Tuesday was crowned the wealthiest American for the 23rd year in a row even as a new generation of tech wizards closes in on him. Gates is worth $81 billion after increasing his net worth by $5 billion in the last 12 months, according to the Forbes 400 list of the richest Americans. Amazon founder Jeff Bezos rose to the No. 2 position, thanks to a 56 percent jump in the e-commerce giant’s share price. Bezos is now worth $67 billion. Warren Buffet, despite adding $3.5 billion, giving him a net worth of $65.5 billion, fell to third place.

Hedge Fund Targets Companies’ Weakness: The Gender Gap (Dealbook)
...activist hedge funds are also often guilty of nominating only men as candidates for a board. Since the beginning of 2011, five of the largest activist funds nominated 174 directors, just seven of them women, according to a March report by Bloomberg. However, a number of studies have shown the benefit of having at least one woman on a corporate board, including better director attendance, fewer rash acquisitions and a lower rate of earnings restatements and fraud. Ms. McKeever, 38, and her partner and co-founder of Ides Capital in Manhattan, Robert Longnecker, 42, saw diversification as a missing part of the typical activist strategy.

About 10K small business accounts affected by Wells Fargo scandal (CNBC)
Thousands of small business owners were also impacted by Wells Fargo's practices, wrote Vitter, a Republican from Louisiana, in a letter dated Sept. 29 to Wells Fargo chief executive John Stumpf and seen by Reuters. Vitter demanded a "full accounting" of small business owners affected by "fraudulent activity." Around 10,000 small business accounts were affected by improper Wells practices, people familiar with the matter said.

Karl Lagerfeld has no sympathy for Kim over jewelry heist (NYP)
Chanel creative director Karl Lagerfeld thinks Kim Kardashian is contemptible for flashing her $4.5 million ring on Instagram. The fashion icon doesn’t seem to have a shred of sympathy for Kim after she was held at gunpoint and robbed of nearly $10 million in jewels at her French hotel, saying instead, “It’s a very bad thing for Paris.” Lagerfeld told Reuters, “I don’t understand why she was in a hotel with no security … If you are that famous and you put all your jewelry on [social media], you go to hotels where nobody can come near to the room.” ... Lagerfeld — himself a lover of luxury whose cat Choupette has two maids and nearly 90,000 followers on Instagram — added of Kim’s garishly naïve nature, “You cannot display your wealth and then be surprised that some people want to share it with you.”

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US To Slash Stake In AIG (WSJ) The U.S. Treasury Department said it will sell $18 billion of American International Group Inc., slashing its stake in the New York company by more than half and making the government a minority shareholder for the first time since the financial crisis was roaring in September 2008. Banks Rethinking Executive Compensation (WSJ) At J.P. Morgan, the biggest U.S. bank by assets, directors are considering lower 2012 bonuses for Chief Executive James Dimon and other top executives in the wake of a multibillion-dollar trading disaster, said people close to the discussions. But they also are grappling with the question of how to do that without drastically reducing the executives' take-home pay, the people said. More than 93% of Mr. Dimon's $23 million in compensation last year came from either stock- or cash-based bonuses. Citigroup's board, meanwhile, is expected to decide this fall how to fine-tune next year's compensation plan to win broader support among investors, people familiar with the situation said. Former UBS trader faces trial over $2.3 billion losses (Reuters) Investment banker Kweku Adoboli, who was arrested a year ago when the huge losses came to light, has pleaded not guilty to two charges of fraud and two of false accounting related to disastrous trades that UBS says were unauthorized. "Given how serious the consequences of the incident were, we must assume that UBS's culture and practices will be examined during the course of the trial," UBS chief executive Sergio Ermotti told the bank's staff last week. "As uncomfortable as the entire trial will be for UBS, it will show us what the consequences are when misconduct occurs or when individuals do not take their responsibilities seriously," he wrote in an internal message published on its website. Alligators, Bearded Dragons Among Wild Animals Seized in Brooklyn Raid (DNAI) Police seized 13 exotic animals, including alligators, bearded dragons, and a tarantula in the raid of a public housing unit Friday, police said. On Friday afternoon at 1:30 p.m., Animal Care and Control officers removed five pythons and a boa constrictor, as well as two alligators, two bearded dragons, a gecko, a scorpion, and a tarantula, from the fifth-floor apartment of a Crown Heights public housing complex called the Weeksville Houses, police said, as part of an ongoing investigation. ‘Lead or Leave Euro’, Soros Tells Germany (FT) “Lead or leave: this is a legitimate decision for Germany to make,” the billionaire financier and philanthropist said in an interview with the Financial Times. “Either throw in your fate with the rest of Europe, take the risk of sinking or swimming together, or leave the euro, because if you have left, the problems of the eurozone would get better.” Few Hedgies Kicking Butt (NYP) There are some bright spots in hedge fund land, however, thanks in large part to Apple, which has long been a favored holding of the funds seeded by or spun out of Julian Robertson’s Tiger Management. Chase Coleman’s Tiger Global, which he co-manages with Feroz Dewan, gained 21 percent through August, and the flagship of Lee Ainslee’s Maverick Capital, one of the original Tiger cubs, rose 20 percent. Deutsche Bank Chiefs To Unveil Plans (WSJ) A major question is whether Deutsche Bank will need to raise capital. Tougher regulatory capital requirements are being phased in starting next year, and the bank will need as much as €10 billion to meet the new targets, analysts say. Nomura CEO Sees Overseas Units Posting Profit by June 2014 (Bloomberg) Nomura Holdings’s Koji Nagai, who took over as chief executive officer last month, said he plans to make overseas operations profitable by June 2014 at Japan’s largest brokerage. “We are not going to lower the flag as a global bank,” Nagai, 53, said in an interview in Tokyo on Sept. 7. “We want be an Asia-based global investment bank.” Schumer: Newfangled detergent 'pods' look too much like candy (NYDN) The Consumer Product Safety Commission should crack down on detergent companies whose superconcentrated cleanser “pods” look so much like candy that even a sitting senator wanted to gobble one. Since April, 40 local children in the city have mistakenly downed the colorful laundry packs such as Tide Pods, leading to numerous hospitalizations, some emergency intestinal surgery, and pangs of hunger of Sen. Charles Schumer. “The incidents are skyrocketing,” Schumer said Sunday joined by several medical professionals. “These pods were supposed to make household chores easier, not tempt our children to swallow harmful chemicals. I saw one on my staffer's desk and I wanted to eat it.”

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