Opening Bell: 6.20.17

Crisis-era Qatar deal comes back to bite Barclays; Whole Foods' John Mackey says Amazon deal was sex; this tick might make you allergic to meat; and more.

Author:
Dealbreaker
Updated:
Jan 14, 2019
Original:
Jun 20, 2017

Barclays and former executives charged with crisis-era fraud (FT)
Barclays, its former chief executive and three of its other ex-senior executives have been charged with fraud by UK authorities over side-deals struck with Qatar during emergency cash calls to stave off a government bailout at the height of the financial crisis. The Serious Fraud Office case marks the first criminal charges in the UK to be filed against a bank and ‎its former top team related to activities during the financial crisis.

Blankfein Says He Tweets to Protect Goldman Sachs's Standing (BBG)
In an interview with CNBC’s Jim Cramer on Monday, Blankfein said there are limited reasons for him to weigh in publicly on current events. “Either it’s something in our wheelhouse of expertise,” such as warning U.S. policy makers against defaulting on the nation’s debt, the Goldman chief executive officer said. Or, it’s “when things really affect the ability of our people to be who they are and do their job.”

'Love at first sight': The bizarre story of how Amazon's deal for Whole Foods went down (BI)
It’s been a whirlwind courtship. Because— little over six weeks after we met on this blind date, we’re— we’re f— officially engaged, (LAUGHTER) as of today. But like an old traditional marriage, where there are all kinds of rules and chaperones, we can’t consummate the marriage, (LAUGHTER) until we’re actually officially hooked up. This is not— this is not a Tinder relationship. (LAUGHTER) I got a feeling I’m off script.

Sluggish US growth has led companies to take the short view (FT)
A virtuous cycle reveals itself whereby accelerating growth leads to more investment now, which leads to faster expected future growth, and so on. Short-termism is a complicated issue and not all the criticisms are misplaced. But the single best thing critics can do is to spur policymakers to stimulate the economy using the available macroeconomic tools. Corporate long-termism is likely to follow.

Amazon's New Customer (Stratechery)
To the outside it may seem that Amazon is buying a retailer. The truth, though, is that Amazon is buying a customer — the first-and-best customer that will instantly bring its grocery efforts to scale.

A Tour of the Ethereum Token Bubble (Lyle Cantor)
People on both sides of these transactions smell easy money. The result is a potent combination of half-brained investment schemes and brainless investors trapped in a Keynesian beauty contest. Undoubtedly, this is a bubble. Undoubtedly, it will pop. But as with all bubbles, the trick is timing exactly when. And with that I am not able to help.

Has the meteoric rise of passive investing generated the “greatest bubble ever”? (13D Research)
At the heart of passive “dysfunction” are two key algorithmic biases: the marginalization of price discovery and the herd effect. Because shares are not bought individually, ETFs neglect company-by-company due diligence. This is not a problem when active managers can serve as a counterbalance. However, the more capital that floods into ETFs, the less power active managers possess to force algorithmic realignments. In fact, active managers are incentivized to join the herd—they underperform if they challenge ETF movements based on price discovery. This allows the herd to crowd assets and escalate their power without accountability to fundamentals.

The lost Goldman Sachs 1985 fixed income recruiting video (EFC)
Highlights of 1985 Goldman Sachs included smoking at the desk, endless coffee in paper cups, pagers in belts, big hair, big computers, a lot of telephones, a lot of paper and a lot of human beings. The video supplements this with an encouraging ’80s musical accompaniment.

Oh, Lovely: The Tick That Gives People Meat Allergies Is Spreading (Wired)
Yep, one bite from the lone star tick—which gets its name from the Texas-shaped splash of white on its back—is enough to reprogram your immune system to forever reject even the smallest nibble of perfectly crisped bacon. For years, physicians and researchers only reported the allergy in places the lone star tick calls home, namely the southeastern United States. But recently it’s started to spread. The newest hot spots? Duluth, Minnesota, Hanover, New Hampshire, and the eastern tip of Long Island, where at least 100 cases have been reported in the last year. Scientists are racing to trace its spread, to understand if the lone star tick is expanding into new territories, or if other species of ticks are now causing the allergy.

Opening Bell

Barclays doesn't want to burden everyone with bonuses this time around; Goldman thinks stocks too high; have you heard of this bitcoin thing?; Tufts ditches Mooch; and more.

Opening Bell

Apple gears up for Europe tax war; Barclays dumps another 7,000 clients; meat pies in space; and more.

Opening Bell

JPMorgan borrows a page from Amazon; John Taylor returns; French hamsters are taking up cannibalism; and more.

Opening Bell

Lloyd has 140 characters or so for Donald Trump; Jana looking to pull a Whole Foods with Blue Apron; Malcolm Gladwell takes contrarian stance on inane topic; and more.

Opening Bell

Schapiro SEC Reign Nears End With Rescue Mission Not Done (Bloomberg) Admirers and critics agree Schapiro rescued the agency from the threat of extinction when she was appointed by President Barack Obama four years ago. Still, she hasn’t fulfilled her mission -- to overcome the SEC’s image as a failed watchdog by punishing those who steered the financial system toward disaster and by proving regulators can head off future breakdowns. “It was harder than I thought it was going to be,” Schapiro, 57, said during an interview in her office that looks out on the Capitol dome. “You have this nice little box of things you want to do all tied up with a bow, and you walk in the door and it’s very hard to keep at least one eye on that agenda while you’re dealing with the flash crashes and the new legislation and the whole range of things that happened,” she said. Morgan Stanley CEO Hints Of Commodity Arm Sale (Reuters) Morgan Stanley has an obligation to explore "different structures" for its commodities trading business because new regulations are limiting the unit's activities, Chief Executive James Gorman said on Thursday. The CEO's comments were the first time Morgan Stanley has publicly hinted at a possible sale of its multibillion-dollar oil and metals trading arm, which has been reported in the media for months. Morgan Stanley has been in discussions with OPEC member Qatar for more than a year over the sale of at least a majority stake in its energy-focused trading business, according to bankers. Speaking on a conference call with analysts after the firm reported better-than-expected quarterly results on Thursday, Gorman said changes under the U.S.' Dodd-Frank financial reform law restrict the kind of trading the firm can do in commodities. Europe Agrees On Banking Supervisor (WSJ) European leaders early Friday agreed to have a new supervisor for euro-zone banks up and running next year, a step that will pave the way for the bloc's bailout fund to pump capital directly into banks throughout the single-currency area. John Paulson Doubles Down On Housing (WSJ) Hedge-fund manager John Paulson famously made nearly $4 billion in 2007 correctly betting that the housing bubble, fueled by the subprime mortgage market, would pop. Then the billionaire investor somewhat reversed course, arguing that the housing cycle had hit a low point. "If you don't own a home, buy one," he said in a 2010 speech at the University Club in New York. "If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home." So far, that bet has been a loser: The Wall Street tycoon lost about $3 billion personally in 2011, according to people close to the hedge-fund manager, speculating that the economy would recover faster than it did. But through the downturn Mr. Paulson—whose net worth is estimated to be around $11 billion, according to people familiar with his situation—continued his real estate spending spree. Over the last eight years, he has spent more than $145 million on six properties, including two estates in Southampton, N.Y., two properties near Aspen, Colo., and two residences in Manhattan, where he is based, according to public records. (He later sold one of the Southampton properties, for $10 million in 2009, a year after buying a larger estate nearby). In June, Mr. Paulson snapped up a 90-acre Aspen ranch and an adjoining property from Prince Bandar bin Sultan for a total of $49 million, according to public records, one of the highest prices ever paid for property in the area. Ben Stein: Taxes Are Too Low (Mediaite) Author and economist Ben Stein joined Fox & Friends on Thursday where he stunned the hosts after he called for raising the tax rates on people making more than $2 million per year. He said that he did not think that the United States simply had a spending problem, and cited the early post-war period as an example of a time when you could have high tax rates and high growth. “I hate to say this on Fox – I hope I’ll be allowed to leave here alive – but I don’t think there is any way we can cut spending enough to make a meaningful difference,” said Stein. “We’re going to have to raise taxes on very, very rich people. People with incomes of, say, $2, $3, $4 million a year and up. And then slowly, slowly, slowly move it down. $250,000 a year, that’s not a rich person.” Stein said that the government has a spending problem, but they also have a “too low taxes problem.” “With all due respect to Fox, who I love like brothers and sisters, taxes are too low,” said Stein. “That sounds like Bowles-Simpson,” said Gretchen Carlson. “It is Bowles-Simpson,” Stein replied. Should've Left That At Home, Teacher Is Told On Jury Duty (NYT) Damian Esteban was qualified to teach students at a specialized New York City high school, and had just been deemed reasonable enough to judge a man’s fate in a murder trial. But passing through the metal detectors at a Manhattan courthouse may have been too tough a test. Mr. Esteban, 33, was arrested on Wednesday as he returned from a break in a trial in State Supreme Court in Manhattan, David Bookstaver, a spokesman for the state Office of Court Administration, said. As Mr. Esteban, a teacher at the Williamsburg School of Architecture and Design in Brooklyn, passed through a metal detector at the courthouse, it beeped. A court officer, Laura Cannon, found the culprit to be a cigarette box in Mr. Esteban’s pocket. Upon opening the cigarette box, Ms. Cannon reported that she found a much bigger problem: 18 small bags of heroin. A Daunting To-Do List For Citigroup's New CEO (BusinessWeek) Citigroup’s largest problem may be internal. The company, analyst Richard Bove says, “is a political swamp. It’s a snake pit.” Cleansing the culture must be a priority, says Mike Mayo, an analyst at Crédit Agricole Securities. “So whether it’s the inappropriate pay for subpar performance; the lack of adequate disclosure, such as returns by business line; the failure to properly oversee the many different businesses; or the poor tone set at the top of the firm for corporate governance, they all add up to the need to improve the culture,” Mayo says. Cooling The Pits: ICE Yelling Ends (WSJ) Augustine Lauria knew his 37-year career as a floor trader was over when he got a memo from IntercontinentalExchange in late July announcing the closing of the exchange operator's last trading pits. Friday will be the last chance the 61-year-old trader will get to put on his navy-blue and yellow trading jacket and badge. It will be the final day of rough-and-tumble "open-outcry" commodities trading on the ICE-owned pits in lower Manhattan where options on cotton, coffee, cocoa, sugar and orange juice are bought and sold. "What can I do? I can count fast and yell loud," says Mr. Lauria, who boards the Staten Island Ferry before sunrise to get to work in time for the 8:10 a.m. bell. Amanda Larrivee Speaks Out about Incident at Samuel’s (ABC) Amanda Larrivee and her brother Robert Larrivee were arrested at Samuels Sports Bar Sunday for allegedly stealing TV’s from the bathroom. Now, the woman involved is speaking out about what happened that night and the “immature” remark made by her brother. The legal case against Amanda has been dropped, but a comment made by her brother is getting all the attention. He told police that the two were in the bathroom having sex. Amanda says that was not the case. “The comment was taken out of context and it’s not what it looks like,” said Larrivee...“I just want to come out and really let people know that it’s not what it looked like. It’s humiliating and the comment having sexual relations with my brother was an impulse, immature comment made by him that is not the truth,” said Larrivee. Amanda says Robert wasn’t trying to steal the TV’s, but was upset over seeing his ex-girlfriend. “He had an outburst at the time you know it turned into you know touching the TV on the wall, turned into an ugly scene,” said Larrivee. “He took the televisions down. He had no intention of stealing. He’s not walking out with two televisions,” said Attorney Jack St. Clair.