Opening Bell: 2.6.17 - Dealbreaker

Opening Bell: 2.6.17

Goldman souring on Trump; Deutsche Bank still apologizing to Germany; Super Bowl commercials residing in the uncanny valley; and more.
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Goldman Sachs Economists Are Starting to Worry About President Trump (BBG)

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"Following the election, the positive shift in sentiment among investors, business, and consumers suggested that the probability of tax cuts and easier regulation was seen to be higher than the probability of meaningful restrictions to trade and immigration," Goldman Sachs Group Inc. economists led by Alec Phillips wrote in note published late last week. "One month into the year, the balance of risks is somewhat less positive in our view."

Tiger Hedge Funds Become Wall Street Prey (WSJ)

For the year, hedge-fund losses at Tiger Global Management LLC were roughly $900 million from a 15.3% loss. Lee Ainslie’s $11 billion Maverick Capital Ltd. was down more than 10% in its flagship fund. Andreas Halvorsen’s $30 billion Viking Global Investors LP and Stephen Mandel Jr.’s Lone Pine Capital LLC were down 4% and 2% respectively in their main funds, while Coatue Management LLC was up 2%.

‘Hamilton’ Ponzi Schemers’ Victims Said to Include Tudor Jones (BBG)

When U.S. authorities busted a Ponzi scheme that centered on marked-up tickets to the hit Broadway musical “Hamilton” last month, prosecutors described phone calls about a “big name” investor who’d demanded his money back. As it turns out, there were several big names -- including billionaires Paul Tudor Jones and Michael Dell, as well as an executive at Och-Ziff Capital Management Group -- among the more than 125 people who had unwittingly poured cash into the sprawling scam, according to people with knowledge of the matter.

The $100 Billion Reason Investors Loved Trump’s Bank Order (WSJ)

The six biggest U.S. banks could potentially return more than $100 billion in capital to investors over time through dividends and share buybacks if the Trump administration succeeds in a push to loosen bank regulation. The top six U.S. banks have $101.57 billion in capital in excess of what regulators require them to set aside, according to research from RBC Capital Markets. Analysts at Morgan Stanley estimate such capital at around $120 billion across 18 of the largest banks.

Switzerland’s own Trump risk (FT)

The Trump administration has spoken out against alleged currency manipulation from China, Japan and Germany. Yet the country most at risk of meeting the Treasury’s official criteria of currency manipulation is probably Switzerland. The risk of coming into US focus, perhaps as early as 2018, could add to the rationale for the SNB to gradually discontinue market intervention.

Deutsche Bank Buys Ads to Apologize for ‘Serious Errors’ (BBG)

Deutsche Bank AG bought full-page ads in all major German newspapers over the weekend to apologize for “serious errors” after misconduct costs helped tip the company into two years of losses. Legal cases that date back many years cost the Frankfurt-based company “reputation and trust” in addition to about 5 billion euros ($5.4 billion) since John Cryan took over as chief executive officer in July 2015, the CEO said in the ad, blaming the “misconduct of a few” employees.

The five worst Super Bowl commercials (WaPo)

Have you ever heard of the uncanny valley? It’s the concept that people like animated characters to have some humanlike characteristics, but if they look too realistic, they become physically repulsive. That’s the scientific explanation for the yucked-out feeling you got when Mr. Clean was grinding up on that mop.

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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.