Opening Bell: 3.17.17

Citigroup is literally trying to save its soul; Icahn is still doing Icahn; petting zoo raccoon "traumatized" by human breasts; and more.
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The Banker-Turned-Seminarian Trying to Save Citigroup’s Soul (WSJ)
The bank describes his role as providing “advice and input to senior management.” His conversations with top executives like Chief Executive Michael Corbat filter through the organization. At a meeting with managing directors, for example, Mr. Corbat raised an idea that came from Dr. Miller. In an uncertain situation, Mr. Corbat said, ask the four M’s: What would your mother, your mentor, the media and—if you’re inclined—your maker think?

Edge or Liability? White House Ties May Cut Two Ways for Goldman (NYT)
When Goldman employees run into their former colleagues now working at the White House, “everyone just needs to learn to talk weather and sports,” said a Goldman spokesman, Jake Siewert, who left a job at the aluminum company Alcoa for a Treasury post in 2009 and faced similar issues. “For better or worse” at Goldman Sachs, he added, “we have learned to run our business under intense public scrutiny.”

Being bullish on China is no longer an outlier view (FT)
“We’re not saying everything is right with China — there are certainly causes for concern,” said Timothy Moe, Goldman Sachs’ chief Asia-Pacific equity strategist. “What we are saying, pretty emphatically, is that growth prospects have improved.”

Bitcoin ‘mining’ is big business in Venezuela, but the government wants to shut it down (WaPo)
“Miners are getting jailed and accused of terrorism, money laundering, computer crimes and many other crimes,” read one comment from a user who claimed to be Venezuelan. “It's getting crazy here and I really don't want to waste my life for money.”

Icahn Bets Against Renewables Market He Wants Trump to Overhaul (BBG)
Icahn participates in the market through CVR Energy Inc., the oil refiner in which his company owns an 82 percent stake. CVR is required to buy credits known as renewable identification numbers when it makes gasoline. But Icahn said he's delaying those purchases in a wager that prices will fall. In effect, he’s shorting the market. “I’m not selling ’em, I’m not buying ’em,” the 81-year-old investor said in an interview at his New York office last week. “Hey, this is what I do in the market. I’m taking a chance.”

The Active Equity Renaissance: Rejecting a Broken 1970s Model (CFA Institute)
The top 20 relative-weight holdings generate fund alpha, while the low-ranked holdings destroy it. So any restriction imposed on a fund that mandates holding anything other than the best idea stocks negatively affects a fund’s alpha. If enough mandates are added, a potential positive alpha is transformed into an actual negative alpha. The fund distribution system is full of such restrictions: Fund managers are required to hold many stocks for diversification purposes, manage to low volatility and drawdown, avoid tracking error and style drift, grow large, and impose sector-weighting constraints. In essence, the distribution system is a closet indexer manufacturing juggernaut.

A blind spot masks the danger signs in finance (WSJ)
Before 2008, economists did not see the danger signs emerging in the weeds of financial markets, such as credit derivatives, because they were trained to watch only “real” economy signals (such as inflation). After that crisis hit, central bankers briefly seemed to change their ways. But Mr Shin fears that this blind spot is returning again: most notably, economists tend to blame low rates on the real economy, instead of also looking in the weeds of finance.

Lack of Oxford Comma Could Cost Maine Company Millions in Overtime Dispute (NYT)
The appeals court on Monday sided with the drivers, saying the absence of a comma produced enough uncertainty to rule in their favor. It reversed a lower court decision. In other words: Oxford comma defenders won this round. “That comma would have sunk our ship,” David G. Webbert, a lawyer who represented the drivers, said.

Zoo Sues Producers For 'Traumatizing' Raccoon With An 'Erotic Video' Shoot (Gizmodo) Animals Aren’t Toys characterizes itself as a “contact zoo” and its motto is “little animals are not toys.” Reportedly, the zoo made a deal with Russian video firm called Art-Msk back in August for Tomas to be featured in a “regular advertisement.” Spokesman Viktor Kiryukhin tells the BBC that when the raccoon returned from his filmmaking adventure he was traumatized and “was attracted to women’s breasts.”

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Opening Bell: 04.12.12

Buffett Feasts On Goldman Scraps (WSJ) Details of one trade in particular have recently caused a stir in the market. In November, Goldman sold about $85 million of loans in troubled newspaper publisher Lee Enterprises Goldman sold the debt at about 65 cents on the dollar, having bought it months before at around 80 cents, resulting in a loss of at least $13 million. The buyer: a unit of Warren Buffett's Berkshire Hathaway Inc., according to several people familiar with the matter. Mr. Buffett has since made a tidy paper profit on the loans, which are now worth about 82 cents on the dollar, the people said. Jim Chanos: Chinese Banks ‘Great Shorts,’ Won’t Be Broken Up (CNBC) Chanos, the head of Kynikos Associates, has been betting against China — despite its role as a global economic leader — primarily because he believes the country is overbuilt and does not have the internal demand to support its ambitious growth plans. Nowhere has that trend been more apparent than in the banking system. "If you looked at the performance of the banks over the last two years...they have been great shorts," Chanos said. "They have been going down — they're down 30 percent over the last two years." George Soros: Exceptional Measures Needed to Save EU (FT) "Other countries have gone through similar experiences. Latin American countries suffered a lost decade after 1982, and Japan has been stagnating for a quarter of a century; both have survived. But the European Union is not a country and it is unlikely to survive. The deflationary debt trap threatens to destroy a still-incomplete political union," he wrote. Blackstone President To Raise For Obama (Morning Money) "Tony James, the president of Blackstone Group LP, has agreed to hold a fundraiser for... Obama’s re-election campaign, according to two people familiar...By agreeing to raise money for Obama, James has diversified Blackstone’s political bets for the November election. Blackstone Chairman Stephen Schwarzman has been raising money for former Massachusetts governor Mitt Romney, the likely Republican nominee." SEC, Goldman to Settle Research Case (Reuters) U.S. securities regulators are preparing to announce that Goldman Sachs will pay $22 million to settle allegations the bank did not have adequate policies to prevent research from being passed inappropriately to preferred clients, people familiar with the matter said on Wednesday. BlackRock's Street Shortcut (WSJ) BlackRock is planning to launch a trading platform this year that would let the world's largest money manager and its peers bypass Wall Street and trade bonds directly with one another. The electronic trading hub has the potential to reduce a lucrative revenue stream for investment banks at a time when their businesses are being squeezed by lackluster markets and new regulations put in place to curb risk in the aftermath of the financial crisis. The trading platform would be run by the New York-based company's BlackRock Solutions arm and offer 46 clients—including sovereign-wealth funds, insurance companies and other money managers—the ability to trade in corporate bonds, mortgage securities and other assets, company executives say. Under the plan, the platform would seek to match buyers and sellers of the same securities, in a process known as "crossing trades." BlackRock Solutions would charge a small fee for the service that would be much lower than Wall Street's trading commissions. New Yorker breaks up subway scuffle, snacks in hand (NYDN) Sonder, 24, played the role of hungry hero “two or three Thursdays ago” after hopping on an uptown 6 train at Spring St. The calm inside the subway car was shattered a minute later when a tussle broke out between a man and a woman. “I turned around and I saw these two kicking each other pretty viciously,” said the sturdy Sonder, who stands six-feet tall and weighs 200 pounds. “I stepped over and tried to see if I could help.” Mid Pringle, Sonder thrust himself between the pugilists. More chips were eaten, but no other punches or kicks were thrown. “I just got caught up in the moment,” said Sonder, who was also holding a bag of gummy bears during the incident. Dimon Vows Fight Moynihan Lost Over Claims From Mortgages (Bloomberg) “We are going to fight repurchase claims that pretend the steep decline in home prices and unprecedented market conditions had no impact on loan performance,” Dimon, chief executive officer of the New York-based lender, wrote in the April 4 letter. He’ll also oppose “securities claims brought by sophisticated investors who understood and accepted the risks.” Jobless Claims Post Jump; PPI Up, Trade Deficit Down (Reuters) Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 380,000, the Labor Department said on Thursday. The prior week's figure was revised up to 367,000 from the previously reported 357,000. Fur Flies in High-Stakes Airlifts of Animals by Lufthansa (Bloomberg) An African white rhinoceros peers through the bars of its Frankfurt compound, while across the floor a Madagascan chameleon inches around its vivarium and an Andean alpaca plucks hay from a bale. It’s not a scene from the city’s zoo but from Deutsche Lufthansa AG’s Animal Lounge, a state-of-the-art complex that’s at the center of the German carrier’s plans to dominate the most specialized part of the $66 billion air-cargo industry. Lufthansa, Air France-KLM Group and Dubai-based Emirates, which transports thoroughbreds for Sheikh Mohammed bin Rashid Al Maktoum, horseracing’s leading owner, are competing in a high- stakes market. Premium profit margins come with the risk of an in-flight death involving a beloved family pet, top-ranked stallion or priceless panda. “It’s not like pharmaceuticals, where your main concern is the temperature,” said Animal Lounge Director Axel Heitmann. “If a bag of fish leaks it needs replacing with the right kind of water and the right oxygen. And if something goes wrong you can’t just hand a customer $1,000 and tell him to buy another pet. He wants the dog or cat he’s had for 10 years.” KKR Invests in China Cord Blood (WSJ) Kohlberg Kravis Roberts & Co. L.P. will invest $65 million into China Cord Blood Corp., the country's largest operator of services for umbilical cord blood that is rich in stem cells, to capitalize on China's fast growing healthcare services industry. Police: Dealer tied 89 bags to penis, peed at the station (Philly) Police Corporal Christopher Eiserman said another officer was on routine patrol Friday when he pulled Ray Woods over for a broken rear light and found marijuana in his car. When the officer searched Woods before placing him in the police cruiser, he discovered "a large bulge" in the front of his pants, Eiserman said. Police say Woods actually had the balls to deny that there was any contraband down there. “He stopped him for the traffic violation and one thing led to another," Eiserman said. Back at the station, Eiserman said, police discovered that Woods had tied a large plastic bag around his penis that contained a whopping 89 small bags of suspected heroin and cocaine. Then things got messy. “I tried to remove it. Unfortunately, and I don't know if it was nervousness or not, but he started urinating all over," Eiserman said. While it wasn't exactly what Eiserman had in mind when he started his shift Friday, he couldn't help but chuckle at the ingenuity, or lack thereof, of street-level drug dealers. “In 14 years, I’ve seen it down their pants, in their a--, but I've never seen it tied to their penis," he said.

Opening Bell: 05.29.12

Greece Pours $22.6 Billion Into Four Biggest Banks (Reuters) The long-awaited injection—via bonds from the European Financial Stability Facility rescue fund—will boost the nearly depleted capital base of National Bank, Alpha, Eurobank and Piraeus Bank. "The funds have been disbursed," an official at the Hellenic Financial Stability Facility, who declined to be named, told Reuters. The HFSF was set up to funnel funds from Greece's bailout programme to recapitalise its tottering banks. The HFSF allocated 6.9 billion euros to National Bank, 1.9 billion to Alpha, 4.2 billion to Eurobank and 5 billion to Piraeus. All four are scheduled to report first-quarter earnings this week. The news came as two government officials told Reuters that near-bankrupt Greece could access 3 billion euros, left from its first bailout programme, to cover basic state payments if efforts to revive falling tax revenue fail. U.S. Ready for Europe Fallout, Says Fed Official (WSJ) "There's absolutely no reason for people in the United States to get all in a dither," Federal Reserve Bank of Philadelphia President Charles Plosser said in an interview with The Wall Street Journal. Mr. Plosser said that in the short run, uncertainty in Europe might even work in the U.S. economy's favor, via lower U.S. interest rates and energy prices. Greece to Leave Euro Zone on June 18, Says Guy (CNBC) Greece will leave the euro zone on June 18 if the populist government wins the country’s elections on the 17 as the rest of the euro zone rounds on "cheaters," Nick Dewhirst, director at wealth management firm Integral Asset Management, told CNBC Monday. “The euro zone is a club but you get cheaters who get away with it until everyone finds out and at that point you need to remove them otherwise everyone will cheat. It’s better for Greece to leave,” Dewhirst said. He added that Greek society was built on cheating and scheming, saying “everyone does it” but that voters elsewhere in the euro zone were now calling Greece to account. “The basic question is that a German has to increase working from 65 to 67 and that is to pay for Greeks retiring at 50. The 17th of June is the perfect opportunity to say either 'we’ll behave' or 'we’ll carry on cheating,'" he said. Facebook Debacle Turns High Hopes Into Potentially Mood-Souring Skepticism (WSJ) It is impossible to measure the impact of Facebook's flubbed deal on overall investor confidence. But there is at least one sign of possible fallout: More than $3 billion was yanked from U.S. stock mutual funds by small investors in the week ended Wednesday, according to EPFR Global Inc. in Cambridge, Mass. That was the worst week for withdrawals since March. In the previous week, investors added $311 million to U.S. stock mutual funds. David Guthrie, a 30-year-old actor in Toronto, bought 15 shares of Facebook on its opening day. Before then, he had bought just one stock, yet saw the market as a place to make his savings rise in the long run. Now he feels burned. "If Facebook had made a lot of money, I'd try it again," Mr. Guthrie says. After the stock's disappointing slide, "I would never put big money into the stock market." Zoos' Bitter Choice: To Save Some Species, Letting Others Die (NYT) ...Ozzie, a lion-tailed macaque, will never father children. Lion-tails once flourished in the tops of rain forests in India, using their naturally dark coloring to disappear into the height of the jungle. Though there are only about 4,000 remaining in the wild, not one among Ozzie’s group here in St. Louis will be bred. American zoos are on the verge of giving up on trying to save them. As the number of species at risk of extinction soars, zoos are increasingly being called upon to rescue and sustain animals, and not just for marquee breeds like pandas and rhinos but also for all manner of mammals, frogs, birds and insects whose populations are suddenly crashing. To conserve animals effectively, however, zoo officials have concluded that they must winnow species in their care and devote more resources to a chosen few. The result is that zookeepers, usually animal lovers to the core, are increasingly being pressed into making cold calculations about which animals are the most crucial to save. Some days, the burden feels less like Noah building an ark and more like Schindler making a list. Icahn Takes Chesapeake Energy Stake (WSJ) Carl Icahn skewered Chesapeake Energy Corp.'s CHK board for corporate governance controversies and "irresponsible actions" while disclosing he acquired a sizeable new stake in the company. Euro Likely Worthless as Collector's Item (Bloomberg) FYI. JPMorgan Beefs Up China Unit With $400 Million Injection (Reuters) "The additional capital will better position the bank in the evolving regulatory environment and cement our commitment to clients in China," Zili Shao, Chairman and chief executive of J.P. Morgan China, said in a statement on Monday. "The capital will be used to expand the bank's branch network, develop products, increase corporate lending, and recruit employees," Shao added. Europe Turns To US For Loans (WSJ) In the latest symptom of Europe's financial turmoil, the region's riskier companies are bypassing banks and investors at home and turning to the U.S. for loans. European companies borrowed some €14.4 billion (about $18 billion at current rates) in the U.S. leveraged-loan market this year through Friday, more than double the €6.7 billion for all of 2011, according to data from S&P Capital IQ LCD. That is the highest amount since at least 2007, the height of the last boom in leveraged lending, when full-year loan volume was €12.2 billion, according to S&P. How Boaz Weinstein And Hedge Funds Outsmarted JPMorgan (NYT) By May, when fears over Europe’s debt crisis again came to the fore, the trade reversed. The London Whale was losing. And Mr. Weinstein began to make back all of his losses — and then some — in a matter of weeks. Other hedge funds were also big winners. Blue Mountain Capital and BlueCrest Capital, both created by former JPMorgan traders, were among those winners. Lucidus Capital Partners, CQS and a fund called III came out ahead, too. Inside the hedge fund world, some joked that Mr. Weinstein had been able to spot the London Whale because he himself had been a whale once, too. Drunk Brooklyn woman crashes car through Long Island home (NYDN) A drunken Brooklyn woman crashed her Mercedes into a Long Island home Monday, smashing through the house and landing in the backyard, cops said. Sophia Anderson, 21, failed to turn left or right when the road she was driving on in Huntington deadended at a T-intersection with another street, officials said. She left a train of wreckage as she smashed through the modest house on Southdown Rd., missing the 90-year-old homeowner and her caretaker. Anderson, treated and released at Huntington Hospital, was arrested and charged with driving while intoxicated, police said.

Opening Bell: 8.3.15

Greek financial markets reopen; Alexis Tsipras could use a hand here; Puerto Rico; Ichan; Batista; "Ohio man must spend two days in jail for petting zoo cougars"; and more.

Opening Bell: 01.14.13

Goldman May Delay UK Bonuses Until Top Tax Rate Falls (Reuters) Goldman Sachs is considering delaying bonus payments in the U.K. until after April 6, when the top rate of income tax in the country will drop to 45 percent, from 50 percent, a person familiar with the bank's operations said on Sunday. The strategy relates to bonuses that were deferred from 2009, 2010 and 2011, the person said. The Financial Times reported the news earlier today. JPMorgan Said to Weigh Disclosing Whale Report Faulting Dimon (Bloomberg) JPMorgan's board will consider releasing an internal report this week that faults Chief Executive Officer Jamie Dimon’s oversight of a division that lost more than $6.2 billion on botched trades, said two people with direct knowledge of the matter. The final report, which builds on a preliminary analysis released in July, is critical of senior managers including Dimon, 56, former Chief Financial Officer Doug Braunstein, 51, and ex-Chief Investment Officer Ina Drew, 56, for inadequately supervising traders in a U.K. unit that amassed an illiquid position in credit derivatives last year, the people said. The report, which isn’t complete, will be presented to the board when it meets tomorrow. The directors will then vote on whether to disclose it when the bank announces fourth-quarter results the following day, said the people, who asked not to be named because the report isn’t yet public. Morgan Stanley to trim Dubai staff amid global cuts (Reuters) "The Dubai cuts are part of the bank's global plan. Obviously, the bank is trying to focus on growth opportunities in the region and there has been little growth on the equities side barring Saudi," one of the sources said, speaking on condition of anonymity as the matter has not been made public. Morgan Stanley's equities business will now focus on Saudi Arabia, the source said, adding that planned cuts at other divisions in the Middle East were minimal. Hedge-Fund Leverage Rises to Most Since 2004 in New Year (Bloomberg) The rising use of borrowed money shows that everyone from the biggest firms to individuals is willing to take more risks after missing the rewards of the bull market that began in 2009. While leverage means bigger losses should stocks decline, investors are betting that record earnings and valuations 9.8 percent below the six-decade average will help push the Standard & Poor’s 500 Index toward the record it set in October 2007. “The first step of increasing risk is just going long, the second part of that is levering up in order to go longer,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a Jan. 8 telephone interview. “Leverage increasing in the hedge-fund area suggests they’re now getting on board.” Goldman: Insurer Knew Paulson Was 'Shorting' (WSJ) Goldman Sachs on Friday fired back at a bond insurer suing it over a soured mortgage-linked deal, arguing in a court filing that ACA Financial Guaranty Corp. "cherry-picked" evidence to bolster its case. ACA in 2011 filed suit against Goldman in New York State Court, alleging Goldman misled it about a 2007 mortgage deal. ACA alleges that Goldman told it that one of Goldman's hedge-fund clients, Paulson & Co., was betting on the deal, when in fact Paulson was betting against it, according to an amended complaint the insurer is seeking to file. Had ACA known Paulson's true position, it never would have insured the deal, according to the amended complaint. Goldman countered in the Friday filing that ACA insured the deal knowing Paulson was betting against residential mortgage-backed securities at the time. ACA analyzed and chose the investments in the deal and should have been alerted by various "red flags" that Paulson wasn't betting on the investment, according to the filing. Primate found to be addicted to porn (NYDN) Gina, a resident of the Seville Zoo in Spain, chose to solely watch adult entertainment channels when a television and remote control was placed in her enclosure. Primatologist Pablo Herreros, writing in Spanish newspaper El Mundo, claimed he made the discovery some years ago on a tour of the nation's chimpanzee enclosures. During his research trip he conducted surveys on the behavior of the animals. Herreros wrote, “What I could never imagine were the surprises prepared for me by a female of this species called Gina who inhabited Seville Zoo.” To enliven Gina's nights, officials apparently decided to install a television, protected behind glass, and gave her a remote control so she could change the channels herself. And enliven herself she did. “The surprise was when they found that within a few days, Gina was not only using the remote control perfectly well, but that she also used to choose the porn channel for entertainment, as many of us would have done, ” Herreros wrote. “Although a small study estimated that porn films are only watched for about 12 minutes on average, the truth is that human and non-human primates possess an intense sexual life.” AIG Sues New York Fed... To Secure Right To Sue Bank Of America (Reuters) American International Group Inc has filed a lawsuit against a vehicle created by the Federal Reserve Bank of New York to help bail out the insurer, in a bid to preserve its right to sue Bank of America Corp and other issuers of mortgage debt that went sour. The complaint filed in the New York State Supreme Court in Manhattan seeks a declaration that AIG has not transferred billions of dollars of "litigation claims" to Maiden Lane II, including many related to the insurer's $10 billion lawsuit against Bank of America. UK court approves ex-Credit Suisse trader's extradition to U.S. (Reuters) A British court on Monday approved the extradition of a former Credit Suisse trader to the United States, where he is wanted over a $540-million fraud dating back to the subprime mortgage crisis. The case of Kareem Serageldin will now be sent to Home Secretary Theresa May, the interior minister, who under British law has the final say over extraditions to the United States. She is expected to give the green light for the transfer to take place. Serageldin, 39, the Swiss bank's former global head of structured credit, is accused of artificially inflating the prices of mortgage-backed bonds between August 2007 and February 2008, when their real value was plummeting. Equities Bear Brunt of Wall Street Job Cuts on Volume (Bloomberg) Employees on stocks desks fell by 8.5 percent globally in the first nine months of last year, according to a survey by Coalition Ltd., an industry analytics firm. That compares with a 6.6 percent drop in fixed-income workers and a 5.8 percent decrease for origination and advisory functions, the data show. Banks Find Promise Unfulfilled in China Forays (WSJ) Global firms sold about US$44 billion worth of shares in Asian financial institutions in 2012 to institutional investors or other strategic buyers, up from US$32.7 billion in 2011, according to data provider Dealogic. The retreat is gathering pace as a host of new regulations, including the so-called Basel III capital rules, make holding minority stakes in financial institutions more expensive. Thousands Participate In Annual No Pants Subway Ride (CBS) Organizers arranged that starting at 3 p.m., people got on trains at six different stops across the city, took off their pants and put them into their backpack. Participants then acted as if everything was completely normal as they rode on to Union Square. Participants are asked to don typical winter wear such as coats, hats and gloves and act as if they don’t know other pantsless riders, according to organizers. The group said it was just all in good fun. “People are willing to give basically their Sunday afternoon to take off their pants; to do something silly and fun, and you know, a good time,” one participant said. “It makes you feel invincible; superior, because nobody else has any idea what’s going on,” another said. There were no-pants subway rides in dozens of cities in 17 countries Sunday. In New York City, participants were happy it was rather warm. In prior years, the cold has bummed them out.

Opening Bell: 03.12.13

Apple To Announce Plans For Cash Hoard (WSJ) Apple will outline what it plans to do with a growing pile of cash by next month, according to Howard Ward, chief investment officer at Gamco Investors Inc. Apple, which has been grappling with investor criticism over the handling of its $137.1 billion in cash and investments, will add $42 billion in earnings to that sum in 2013, Ward said. Greenlight Capital Inc.’s David Einhorn has been urging Cupertino, California-based Apple to issue high-yielding preferred shares to spread the funds among investors. Investors are also urging Apple to consider a higher dividend payout. “We’re going to get an announcement from the company as to how they intend to reallocate some of their cash,” Ward said in an interview today on Bloomberg Radio’s “Surveillance” with Tom Keene. “They will put a floor under their stock at a higher price than it is today.” AIG shareholders win class-action status in lawsuit versus U.S. (Reuters) Two groups of American International Group shareholders won class-action status from a federal judge on Monday in a $25 billion lawsuit by former Chief Executive Maurice "Hank" Greenberg over alleged losses caused by the U.S. government's bailout of the insurer. U.S. Court of Federal Claims Judge Thomas Wheeler also appointed Greenberg's lawyer, David Boies, of Boies, Schiller & Flexner LLP, as lead counsel for the classes. Greenberg's Starr International Co, once AIG's largest shareholder with a 12 percent stake, sued the United States in 2011 over what eventually became a $182.3 billion bailout for the New York-based insurer. It said that by taking a 79.9 percent AIG stake and then conducting a reverse stock split without letting existing shareholders vote, the government conducted an illegal taking that violated the 5th Amendment of the U.S. Constitution. Citing Boies' estimate that "tens of thousands" of shareholders might be affected, Wheeler said "class certification is by far the most efficient method of adjudicating these claims." Both Sides Of SEC Nominee Face Heat (WSJ) In one version, Ms. White is a no-holds-barred crime fighter known for stretching the law to jail mob bosses and international terrorists. In another, Ms. White is a friend of Wall Street who worked for the past decade for the law firm Debevoise & Plimpton LLP, where she represented giant banks such as J.P. Morgan Chase. Blackstone: We're Betting Big On Residential Real Estate (CNBC) "Blackstone is now the largest owner of individual houses in the United States," Schwarzman told CNBC's "Squawk on the Street" Monday, pointing to his company's $3 billion portfolio of residential real estate. But given the nascent recovery in the housing market, they're not buying and selling them quickly but rather renting them out. "It's a good business for us. It's a new thing, but it's also good for America," he said. Icahn Gets Confidential Look At Feds Books (Reuters) Dell Inc has agreed to give Carl Icahn a closer look at its books, less than a week after the activist investor joined a growing chorus of opposition to founder Michael Dell's plan to take the world's No. 3 personal computer maker private...A source with knowledge of the situation said Icahn's and Dell's confidentiality agreement does not have a contractual "standstill" obligation - meaning he is not obligated to stop trading stock in the company. But the activist investor would not be able to trade the stock while he is privy to non-public information in any case, the source added. Phoenix society gives gator happier life with prosthesis (AZC) The alligator is Mr. Stubbs, who is part science project, part human endeavor, and much more. He’s also half-gator, half-rubber. The 11-year-old crocodilian now sports a 3-foot-long prosthetic tail, attached firmly with nylon straps. It replaces the original, which was bitten off more than eight years ago. As far as anyone at the Phoenix Herpetological Society knows, Mr. Stubbs is the first alligator to tolerate, if not sport, a prosthesis. It will take months, however, before Mr. Stubbs learns how to properly use the tail. For now, handlers are happy with smaller milestones. “The fact he doesn’t try to bite it (the tail) is a good sign,” said Russ Johnson, president of the Phoenix Herpetological Society. “Learning how to use it is going to take a lot of training.” The months-long project was overseen by someone well-versed in anatomy. Marc Jacofsky is executive vice president of research and development at the CORE Institute in Phoenix, which specializes in orthopedic care — for humans. While visiting the Herpetological Society, Jacofsky was asked if it would be possible to make an artificial tail for Mr. Stubbs. “I looked and saw there was enough there that we could probably do something that wouldn’t involve surgery,” Jacofsky said. “I also liked the idea because it would improve his life. Our motto at the CORE Institute is ‘Keep life in motion,’ and this certainly fit in with that. I was on board.” Jacofsky estimated the project has cost the Core Institute about $6,000 in donated labor and materials. Mr. Stubbs had been a project since shortly after arriving at the center in May 2005. The then-3-year-old gator was one of 32 confiscated from the back of a truck pulled over near Casa Grande, Johnson said. Officers called in the Arizona Game and Fish Department as soon as the cargo made its presence known. “Scared the heck out of the officer,” Johnson said. “No one expects to find alligators when you look into the back of a truck.” Greece Faces 150,000 Job-Cut Hurdle to Aid Payment (Bloomberg) Greece is locked in talks with international creditors in Athens about shrinking the government workforce by enough to keep bailout payments flowing. Identifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a 2.8 billion-euro ($3.6 billion) aid instalment due this month. More than a week of talks on that has so far failed to clinch an agreement. Failed Sale Of Gleacher Is A Warning For Directors (WSJ) The Dell drama is still unfolding, but for a cautionary tale of how boards, even when they may be well-intentioned, can harm investors of a takeover target, take Gleacher. Shares in the small investment bank have lost more than 60% in the past year as the prospects for a deal evaporated, business dwindled and star traders left. Ironically for a firm that bears the name of Eric Gleacher, who made his name advising on big deals in the 1980s, the company failed to sell itself. At least as some critics see it, its independent directors are to blame. SEC Says Illinois Hid Pension Troubles (WSJ) For years, Illinois officials misled investors and shortchanged the state pension system, leaving future generations of taxpayers to foot the bill, U.S. securities regulators allege. The Securities and Exchange Commission on Monday charged Illinois with securities fraud, marking only the second time the agency has filed civil-fraud charges against a state. Bernanke Provokes Mystery Over Fed Stimulus Exit (Bloomberg) When Ben S. Bernanke asserted last month that the Federal Reserve doesn’t ever have to sell assets, he raised questions about how the central bank can withdraw its record monetary stimulus without stoking inflation. The Fed may decide to hold the bonds on its balance sheet to maturity as part of a review of the exit strategy Bernanke expects will be done “sometime soon,” he told lawmakers in Washington on Feb. 27. This would help address concerns that dumping assets on the market will lead to a rapid rise in borrowing costs. It also allows the Fed to avoid realizing losses on its bond holdings as interest rates climb. Man shot in buttocks at Calle Ocho Festival unaware he was wounded (Miami Herald) The shooting occurred around 4:30 p.m. as the man walked along Southwest Eighth Street and 11th Avenue, part of the throng of revelers who gather annually at the street festival in Little Havana. It’s unclear if something sparked the violence between the two men, or if the shooting was unprovoked. At first the victim did not realize he had been shot and kept strolling along the festival route. “He discovered later that he was bleeding and then passed out,” said Miami police spokesman Sgt. Freddie Cruz. The victim, who was hit in the left buttocks, was taken to Jackson Memorial Hospital, where he is in stable condition and expected to recover.

Opening Bell: 10.10.12

Banks Must Cut Deeper to Help Stock Prices, McKinsey Says (Bloomberg) Banks must make deeper and more sweeping cost reductions if they want to restore profitability levels that are acceptable to investors, McKinsey & Co. said in an annual review of the industry. “It has to go a lot further,” Toos Daruvala, a director in the consulting firm’s North American banking practice and a co-author of the report, said yesterday in a phone interview. “Banks have done quite a lot on cost-cutting but frankly the environment has deteriorated over the last year” because of economic weakness, he said. Argentina rejects Singer’s $20M in ransom for ship’s release (NYP) At a court hearing today in Ghana, where hedge fund manager Paul Singer’s lawyers are holding the ARA Libertad hostage, a lawyer for Argentina argued that Singer had no right to detain the ship because it’s a military vessel and immune from seizure. Lawyer Larry Otoo called the seizure — a move by Singer to force Argentina to repay a $1.6 billion debt he says he’s owed — an embarrassment to Ghana and demanded the ship’s immediate return. The court is expected to rule Thursday on whether to release the ship. Singer, the head of hedge fund giant Elliot Management, is seeking to recoup some of the $600 million in bonds he purchased as Argentina was headed for default in 2001. Elliot bought the bonds at steep discounts, paying as little as 15 cents on the dollar in some cases, but has since won judgments of as much as $1.6 billion. Elliot’s NML Capital unit is pursuing Argentina’s assets all over the world in an effort to collect on its debt. In Gupta Sentencing, A Judgment Call (WSJ) Former Goldman Sachs Group Inc. director Rajat Gupta is the highest-profile of more than 70 defendants convicted of insider trading in New York federal court in the past three years. But this month he will likely receive a more lenient sentence than the 11-year-prison term given to Raj Rajaratnam, to whom Mr. Gupta provided his illegal leaks, legal experts say. The sentence may have reverberations beyond the 63-year-old Mr. Gupta, a former chief of consulting giant McKinsey & Co. It will be widely watched in executive suites nationwide because it will be among the first handed down to a major corporate figure in the recent insider-trading crackdown. Previous sentences have largely involved traders, lawyers, lower-rung corporate employees and others. Mr. Gupta, who was convicted in June of three counts of securities fraud relating to tips about Goldman and one count of conspiracy, didn't trade or profit directly from his illegal tips. Before the conviction, he had a long and stellar career in corporate America and philanthropy. All this will be balanced against the nature of the crimes and the need to discourage others from similar offenses when U.S. District Judge Jed Rakoff hands down his sentence, scheduled for Oct. 24. Judge Rakoff often imposes sentences further below federal sentencing guidelines than some other judges do, according to a Wall Street Journal analysis...Since 2010, Judge Rakoff has imposed an average sentence of 21 months on insider-trading defendants who didn't cooperate with prosecutors—about 38% below the guideline minimum, according to the Journal analysis. By comparison, U.S. District Judge Richard Sullivan issued seven sentences in that period averaging 6.3% below the guideline minimum. U.S. District Judge Paul Crotty issued three sentences at 20.3% less than the minimum. Goldman Pushes On Limits In Volcker Rule (WSJ) Some executives at the New York company believe they have found a way to extricate the credit funds from proposed limits on how much can be invested in hedge funds and private-equity funds, according to people briefed on the efforts. The Volcker rule caps a bank's total investments in hedge funds and private-equity funds at 3% of its so-called Tier-1 capital. It also prevents any single bank from accounting for more than 3% of a fund's investments. Those limits are among the biggest components of the rule, named after former Federal Reserve Chairman Paul Volcker and designed to curtail risk-taking among financial firms. The rule is the most contentious part of the Dodd-Frank financial-overhaul law of 2010 but, like much of the rest of the legislation, the details of its implementation are still being worked out. Credit funds lend to companies that might not otherwise get financing, such as companies backed by private-equity firms, and tend to hold their investments to maturity while using a limited amount of leverage. Goldman has argued in meetings with regulators and in letters to them that these funds function like banks, just with a different structure, according to public records and the people familiar with the efforts. Report: 20% of US Firms Cook the Books During Earnings (CNBC) ...a new report by finance professors at Emory and Duke University raises questions about the quality of earnings in general. In an anonymous survey of CFOs last year, the study found that at least 20% of companies are "managing" earnings and using aggressive accounting methods to legally alter the outcome of their earnings reports. Of the 20% of companies that manipulated their earnings to hit a target, Graham says, a surprising 40% did so to the downside, not the upside, to pad and improve future quarters' earnings. Banks Chasing Asian Millionaires Create Singapore’s Canary Wharf (Bloomberg) Singapore’s Marina Bay area is emerging as the city’s new financial hub, with banks including Standard Chartered Plc and Barclays taking bigger offices as they pursue Asia’s expanding ranks of millionaires. Corrections & Amplifications (WSJ via Lauren Tara LaCapra) "Annie Hubbard, the woman appearing alongside Goldman Sachs's chief financial officer, Harvey Schwartz, in a photograph with a page-one article about Goldman on Tuesday, was incorrectly identified as his wife. Mr. Schwartz isn't married." Hulk Hogan ‘devastated’ by leak of sex tape filmed six years ago with friend’s wife Heather Clem (NYDN) The wrestling star tried to explain the kinky love triangle to Howard Stern Tuesday using a thinly veiled euphemism. “Let’s say I’ve been doing laundry, brother, for this person forever, and all of a sudden this person hates the way I do laundry. And that person says, ‘You suck. I hate you. F-you every single day. I hate the way you do laundry. I’m going to find somebody else to do laundry. Somebody younger, faster, stronger,’” he said, clearly taking a jab at his ex-wife, who he was still married to at the time of the taping. “But my buddy, you know, him and his girl say, ‘Hey, you can do our laundry any time you want!’ Both of them are saying that,” he told Stern. “Finally after the person I was doing laundry with for millions and millions of years left, and all of a sudden there was nobody there to do laundry, I was depressed… I go to my buddy’s house and he says, ‘Hey man you can do this other person’s laundry that I’m partners with.’ I said, 'Sure.’” Official Warmth And Public Rage For A German Leader In Athens (NYT) ...even as Ms. Merkel said that she had come as a “good friend and a real partner,” not a “taskmaster or teacher to give grades,” the approximately 40,000 Greeks who took to the streets in protest (a rather modest number, by Greek standards) treated the visit as a provocation by the arch-nemesis in the euro crisis whose austerity medicine is obliterating the Greek middle class. Some banners read “Don’t cry for us Mrs. Merkel” and “Merkel, you are not welcome here.” A small group of protesters burned a flag bearing the Nazi swastika, while a handful of protesters dressed in Nazi-style uniforms drew cheers of approval as they rode a small vehicle past a police cordon. Variety Being Sold To Penske, Third Point (Reuters) Variety, the century-old entertainment trade newspaper once considered the bible of the movie industry, is being sold to online publisher Jay Penske and Third Point LLC for about $25 million, two sources with knowledge of the deal told Reuters. Penske and Third Point have struck a deal to buy the money-losing, 107-year-old newspaper from medical and technical publisher Reed Elsevier, which put it up for sale in March, the sources said. IMF warns eurozone on capital flight (FT) In its global financial stability report, the IMF concluded that capital flight from the eurozone’s periphery to the bloc’s core, driven by fears of a break-up of the currency union, had sparked “extreme fragmentation” of the euro area’s funding markets. The fund said this was causing renewed pressure for banks to shrink their balance sheets, particularly those in countries with fiscal woes. A Fat, Mustachioed Orphan Finds a Home (NYT) How do you transport a 234-pound baby to New York City? If he’s a 15-week-old walrus rescued from the open ocean off Alaska, the answer is a jumbo-size crate aboard a FedEx cargo jet, accompanied by a veterinarian and a handler. “If he’s calm and comfortable, no worries,” said Jon Forrest Dohlin, director of the New York Aquarium, which will receive the walrus calf, named Mitik, on Thursday. “But his needs and comfort come first. So he may very well travel with his head in our keeper’s lap.” Since late July, Mitik and a second orphaned walrus, Pakak, have been nursed to health with bottle feedings and exercise at the Alaska SeaLife Center, an aquarium in Seward that conducts research and responds to strandings of marine mammals. (Pakak, nicknamed Pak, will arrive at the Indianapolis Zoo on Thursday.) Mitik — or Mit, for short — was weak from illness and considerably smaller than Pakak when he was found by a hunting vessel several miles offshore. Mit initially suffered from bladder problems and could not take a bottle, requiring both a catheter and feeding tube. But he is now sucking assertively from a bottle and putting on a pound a day...With his multiple chins and doleful expression, Mit is also exhibiting an undeniable pluck that should serve him well in his new surroundings. Martha Hiatt, the aquarium’s behavioral husbandry supervisor, traveled to Alaska in September to help care for him. At first, she said, Pakak totally dominated him, but no longer. “If Mit is resting with his head on my lap, sucking my fingers, looking sweetly into my eyes, and Pak comes anywhere near us, he pops up, yells at Pak and tries to head-butt him,” she said. “Then he’ll turn to me and be all cuddly again. We say he is small, but scrappy — the perfect New Yorker.”

Opening Bell: 03.06.13

EU Fines Microsoft $732 Million (WSJ) The European Commission said it was imposing the fine after the U.S. software giant became the first company to break a voluntary agreement with regulators, which would have allowed at least 15 million consumers to pick alternatives to its Internet Explorer browser. The penalty is the latest episode in over a decade of wranglings between the EU and Microsoft, which has already seen the commission fine Microsoft €1.6 billion for failing to provide rivals with information at fair prices and for tying its media player to its operating system. Fed Holds Ground On Stress Tests (WSJ) The first component of the release, data on how banks will fare in an economic downturn, is slated for after U.S. stock markets close on Thursday. The second part, the Fed's response to buyback-and-dividend requests, is scheduled for publication a week later. Some executives warn that the delay could boost volatility in bank shares, as traders speculate on what the first round of results might mean for bank capital plans. Others warn of shareholder lawsuits if banks fail to disclose any information they receive, even informally, from regulators on the capital plans. Stress Tests Seen Boosting U.S. Bank Shareholder Payouts (Bloomberg) The six largest U.S. banks may return almost $41 billion to investors in the next 12 months, the most since 2007, as regulators conclude firms have amassed enough capital to withstand another economic shock. Lenders including Citigroup and Bank of America will buy back $26.4 billion in shares, up from $23.8 billion, according to the average estimate of three Wall Street analysts. An additional $14.5 billion will be paid out in dividends, $3.4 billion more than 2012, separate estimates show. The payouts are contingent on approval by the Federal Reserve. Forbes Hits Back at Saudi Prince Over Rich List (CNBC) A spat between Saudi billionaire Alwaleed Bin Talal and Forbes over the exact fortune of the prince has taken another bizarre twist. After the prince announced a severing of ties due to what he argued were flawed valuation methods, Forbes has now responded with an in-depth investigation, hitting back by describing his estimates as an "alternate reality". Forbes went on to say that the valuation of Kingdom Holding, the publicly traded company of Prince Alwaleed, gyrated for reasons "that, coincidentally, seem more tied to the Forbes billionaires list than fundamentals". In the lengthy piece published on Wednesday, the magazine also details its relationship with Prince Alwaleed since it began in 1988, recounting what it classified as "intermittent lobbying, cajoling and threatening" to influence his net worth listing over the years. AIG to Start Loan Investment Unit as Housing Rebounds (Bloomberg) AIG plans to buy loans backed by its United Guaranty Corp. unit, the largest seller of traditional private mortgage insurance last year, according to Donna DeMaio, 54, the unit’s chief executive officer. The debt will be held as long-term investments by AIG insurance companies. “You’re cutting the middle man out of the securitization process,” DeMaio said, referring to bonds that package home loans. The yield on an individual mortgage “is better than if you just bought the paper backed by the whole loan.” Two Hedgies Top The Field (NYP) Stephen Mandel and David Tepper earned more money for clients than any other hedge-fund manager in 2012, LCH Investments said. Mandel’s Lone Pine Capital made about $4.6 billion; Tepper’s Appaloosa Management made $3.3 billion. Traders Flee Asia Hedge Funds as Job Haven Turns Dead End (Bloomberg) Asian hedge-fund assets are 28 percent below their 2007 peak, according to data provider Eurekahedge Pte. Globally, money overseen by the funds increased 21 percent since 2007 to a new high of $2.3 trillion as of December, data from Chicago- based Hedge Fund Research Inc. show. A total of 296 Asian hedge funds liquidated in the two years to December, 33 more than the number that started. On a global basis, 1,839 new funds outnumber those that shut by 371, according to Eurekahedge. Ikea recalls cakes in 23 countries after sewage bacteria found (Telegraph) The furniture giant admitted on Tuesday that coliform bacteria had been found in two batches of almond cake from a supplier in Sweden. It comes after Chinese customs officials announced that they had destroyed a batch of 1,800 cakes after finding it contained high levels of coliforms which failed to meet hygiene standards. Coliforms, common bacteria which are found in faeces as well as soil and water, do not normally cause serious illness but are a sign of contamination which can indicate the presence of more harmful bacteria such as E.coli. It comes after Ikea recalled meatballs and sausages from 24 countries due to fears they could have been contaminated with horse meat. Oil Trader Ex-Wife Shouldn't Get Offshore Assets: Lawyers (Bloomberg) An oil trader’s ex-wife shouldn’t have any claim to properties held by offshore companies in which he invested as part of a 17.5 million-pound ($26.4 million) divorce settlement, lawyers said at a hearing in the U.K.’s highest court. The three Isle of Man-based companies, including Petrodel Resources Ltd., are “not relevant as a party to the litigation,” Tim Amos, the lawyer representing the companies, said today. The firms have asked the seven-judge panel of Britain’s Supreme Court to dismiss the wife’s claim. Yasmin Prest appealed an earlier ruling that denied her access to properties held and controlled by her ex-husband to cover part of the 2011 divorce settlement, which Michael Prest hasn’t paid, according to court documents at the U.K. top court. Her ex-husband isn’t a party to the litigation. ADP Says Companies in U.S. Added 198,000 Workers in February (Bloomberg) The 198,000 increase in employment followed a revised 215,000 gain the prior month that was more than initially estimated, figures from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 170,000. Madoff Trustee ‘Unlikely’ to Win Merkin Suit, N.Y. Says (Bloomberg) The judge shouldn’t allow trustee Irving Picard to block the deal because “in the unlikely event” that Picard can win part of his suit, Merkin’s funds would be able to pay him, Schneiderman said in a filing with U.S. District Judge Jed Rakoff yesterday. The attorney general made his filing saying Picard’s “unusual” request for an injunction -- to give him time to proof his own $500 million case -- required an additional response. Zoo shuts in panic as male and female escape from cage because cleaner forgot to lock the door (DM) A zoo in China was forced to close after two lions escaped from their unlocked cages. Riot police, snipers and zoo workers armed with tranquiliser guns worked to capture the ferocious animals after theyescaped at the zoo in Chongqing, south west China. According to reports, the lion and lioness were given free run of the zoo when a keeper who was cleaning their enclosure forgot to lock the gate. The zoo was completely evacuated following the escape at 8am. While the lionness was caught within the hour, the male was at large for almost four hours before he was recaptured. A zoo spokesman said: 'We found the female first and subdued her with a tranquiliser gun but the male took longer to find and bring back. 'They both recovered quickly and are no worse off for their adventure.' Officials have issued an apology to visitors for the panic caused. One said: 'You can't blame the lions. It was human error and they naturally took advantage of it.'