Opening Bell: 8.24.17

Credit default swaps are coming back in style; Social Capital wants to end the IPO as we know it; Buddhist bitcoin; and more.
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By mattbuck [CC BY-SA 2.0, CC BY-SA 3.0 or CC BY-SA 4.0], via Wikimedia Commons

By mattbuck [CC BY-SA 2.0, CC BY-SA 3.0 or CC BY-SA 4.0], via Wikimedia Commons

Investors pour back into crisis-era credit product (FT)
Bespoke tranches remain largely the territory of credit hedge funds, since the products are not graded by the rating agencies and therefore have a limited investor base. But traders say pension funds in Canada and New Zealand are among the institutional investors who have entered the market. “In this environment, when spreads are tight and volatility is low, people are really looking for extra yield,” said Anindya Basu, an analyst at Citi.

Don’t Look Now, But Snap Shares Are Staging a Rebound (WSJ)
The stock’s trajectory matches the early period for other public tech companies like Facebook, LinkedIn Corp. and Twitter Inc., which all hit their lows within a week of their lock-up expirations, according to Jim Strugger, a derivatives strategist at MKM Partners. “The stock has conformed to internet stock biases including a 21% decline following its first quarter as a public company and a 24% decline ahead of its lock-up,” Mr. Strugger said in a Wednesday research note, where he recommended bullish options on the stock to play the bottoming out of its share price. BUT ALSO: Snap's lead IPO underwriter lowers its price target - again

How Wall Street Learned to Stop Worrying About the Debt and Love Tax Cuts (Businessweek)
The conversation on Wall Street changed after November’s election. Some of the same people who were anxious about the debt sounded delighted by Donald Trump’s plan to cut taxes for corporations and high earners, trumpeting it as a way to fuel growth. Never mind that estimates from the conservative-leaning Tax Foundation showed Trump’s campaign plan could reduce federal revenue by $3.9 trillion over 10 years. Case in point: Goldman CEO Lloyd Blankfein, a Fix the Debt supporter who in 2012 told CNBC he’d be for higher taxes if they helped mend the fiscal gap. After the election, Blankfein told colleagues in a companywide voicemail that Trump’s proposals, including tax reform, “will be good for growth and, therefore, will be good for our clients and for our firm.”

Is Social Capital trying to end-run banks by creating IPO 2.0? (Recode)
“The traditional technology company IPO process, which has been largely unchanged for decades, has also acted as a driving force to deter private company management teams and their pre-IPO stakeholders from pursuing IPOs. We believe management distraction, a sub-optimal price discovery mechanism and the resultant longer-term aftermarket impact have discouraged private technology companies from pursuing IPOs. This tends to be true even for businesses that are otherwise operationally ready and of appropriate size to access the public markets.” Translation: Going public is a pain in the neck. And other tech bros are the answer to those annoying banker bros!

Feline fortune: 2 cats inherit $300K from late owner (ABC13)
Troy and Tiger share a $300,000 bequest, just a small portion of author Ellen Frey-Wouter's $3-million estate that includes a large home in an exclusive section of the Bronx. Frey-Wouter was 88 and a widow with no children when she died. Two of her former home health aides now each take care of her precious pets. They submit the bills for expenses like food, grooming and vet care and are reimbursed from that trust fund.

How Fair Is Stock Trading? The SEC May Soon Decide (BBG)
There’s never been a comprehensive study on the desirability of the system in place at the three biggest U.S. stock exchanges, which pay some traders to use their platforms and charge others. That hasn’t stopped advocates on both sides of the issue from making arguments in favor or against the practice with similar near-religious zeal. Now the barroom debate may finally be decided. The SEC is considering a pilot program to determine the fairness of the “maker-taker” pricing used by NYSE, CBOE’s Bats division and Nasdaq.

The New Off-Court Play for NBA Stars Is Startup Equity (Businessweek)
Getting a piece of a tech startup is fast becoming standard in the NBA. Like wearing designer watches, being name-checked in a hip-hop lyric, and appearing on the cover of GQ, it’s a status symbol. “When I first came into the league,” says Iguodala, who’s played in the NBA since 2004, “you just had to have a certain car, or two or three or four or five, and you had certain clothes, certain shoes, to let everybody know you were a basketball player.” These days, guys also need a cut of the latest wearable gadget or media platform to show they’re not just basketball players.

Programmers say this Buddhist Bitcoin could “disrupt religion” (Lion's Roar)
At the core of the community would be its own economy, based on “Karma Coins,” which the creators say is the first real-world implementation of the concept of “Buddhist Economics.” That’s a term coined by philosopher E.F. Schumacher in the ’70s, and recently further developed by Berkeley professor Clair Brown. The currency would “reflect the true values of a Buddhist economy,” reads a post on the Lotos blog, meaning that the currency would be accumulated and spent “in ways helpful to the Noble Path.”

Related

Opening Bell: 06.21.12

SEC Said To Depose SAC’s Cohen In Insider-Trading Probe (Bloomberg) Cohen, 56, was recently deposed by Securities and Exchange Commission investigators in New York about trades made close to news such as mergers and earnings that generated profits at his hedge fund, said one of the people, who asked not to be identified because the investigation isn’t public. Neither Cohen nor SAC Capital, which oversees about $14 billion, has been accused of wrongdoing. Four-Week Jobless Claims Average Reaches 2012 High (Reuters) Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week's figure was revised up to 389,000 from the previously reported 386,000. Lawmakers Call For IPO Overhaul (WSJ) A bipartisan group of lawmakers called on regulators to overhaul the way initial public offerings are conducted, concerned that last month's flubbed stock sale by Facebook shows the current system unfairly punishes small investors. In a letter to Securities and Exchange Commission Chairman Mary Schapiro, Rep. Darrell Issa (R., Calif.) prodded the agency to revamp rules for pricing and disclosure in IPOs. Mr. Issa, who wrote the letter on behalf of the House Oversight and Government Reform Committee, said the social-networking company's steep share-price decline since its May 18 offering is a sign that investment banks are able to "dictate pricing while only indirectly considering market supply-and-demand." Separately, the Democratic chairman of a subcommittee of the Senate Banking Committee said regulatory changes are needed to bolster investor confidence sapped by Facebook's botched debut. Facebook’s 22% Rally Helps Stock Avoid Worst IPO Return In U.S. (Bloomberg) So that's something! Riskier Bets Pitched To Asia's Rising Rich (WSJ) In Japan, brokers are dangling what they claim is a tasty product in front of wealthy investors: a "triple-decker" that uses options to squeeze higher returns from stocks, "junk" bonds or other assets. If a triple-decker doesn't suit an investor's fancy, there is the increasingly popular—and slightly less complex—"double-decker." Elsewhere in Asia, so-called hybrid bonds and other high-yield varieties can be had. Investors in Singapore recently could buy so-called perpetual bonds through ATMs. Across Asia, brokers are pushing to sell increasingly complex products to the region's expanding ranks of investors, especially wealthy ones. These types of products appeal to those hungry for yield who normally focus on stocks and real estate but are worried about falling equity markets and the sudden shortage of initial public offerings. BlueMountain Said To Help Unwind JPMorgan’s Whale Trades (Bloomberg) A hedge fund run by a former JPMorgan Chase executive who helped create the credit- derivatives market is aiding the lender as it unwinds trades in an index at the heart of a loss of more than $2 billion. BlueMountain Capital Management LLC, co-founded by Andrew Feldstein, has been compiling trades in Series 9 of the Markit CDX North America Investment Grade Index in recent weeks, then selling the positions to the New York-based bank, according to three people outside the firms who are familiar with the strategy. JPMorgan tapped BlueMountain as a middleman after trades in its London chief investment office grew so large that the bank was creating price distortions that hedge funds sought to exploit, said the market participants, who asked not to be identified because they weren’t authorized to discuss the trades. BlueMountain was one of the funds that benefited from the price dislocations, the people said. US Olympic committee send cease and desist letter to knitting Olympics (TNT) The US Olympic committee has sent a cease and desist letter to the social networking group Ravelry, who had organised a Ravelympics in which contestants would compete in events such as ‘scarf hockey’ while watching the actual Games on TV...The US Olympic Committee has said that “the athletes of Team USA have spent the better part of the entire lives training for the opportunity to compete at the Olympic Games and represent their country in a sport that means everything to them” and that “using the name ‘Ravelympics’ for a competition that involves an afghan marathon and sweater triathlon tends to denigrate the true nature of the Olympic Games”. Romney Campaign Said To Ask Scott To Downplay Job Gains (Bloomberg) Mitt Romney’s presidential campaign asked Florida Governor Rick Scott to tone down his statements heralding improvements in the state’s economy because they clash with the presumptive Republican nominee’s message that the nation is suffering under President Barack Obama, according to two people familiar with the matter. Scott, a Republican, was asked to say that the state’s jobless rate could improve faster under a Romney presidency, according to the people, who asked not to be named. Lonely Hedge Fund Bullish On Greece Tries To Woo Investors (Bloomberg) In March, Elliott met with the investment chief of a family office in London who said within seconds of sitting down that the firm had no interest in giving money to a hedge fund wagering on Greece. The executive merely wanted to hear his story, Elliott, the founder of Naftilia Asset Management Ltd., said in a telephone interview from his office in Athens. Elliott, 39, responded by asking a few questions of his own, including whether the executive had invested in Russia after its 1998 currency crisis, in Argentina 10 years ago after the nation defaulted on its debt or in the Standard & Poor’s 500 Index (SPX) in March 2009, when the benchmark plunged to its lowest point in 13 years. Finally, Elliott questioned whether the family office’s investment chief had ever bought shares of Apple. In all cases, the answer was no. “Then you are not qualified to be discussing Greece with me because you have missed the best investment opportunities over the past 20 years,” Elliott retorted. National Bank Of Greece To Sell Luxury Resort As Slump Bites (Bloomberg) If you know anyone who's interested: The 3.3 million-square-foot (307,000 square-meter) Astir Palace complex has already drawn investors’ interest, according to Aristotelis Karytinos, general manager of real estate at the lender. The Athens-based bank and Greece’s privatization fund, which owns part of the property, will put out a public tender in coming months, he said. Fed Warns Of Risk To Economy (WSJ) Fed Chairman Ben Bernanke made clear in a news conference after the policy makers' meeting that he is prepared to take further action if he doesn't see progress on bringing down unemployment, which was 8.2% in May. "I wouldn't accept the proposition though that the Fed has no more ammunition," Mr. Bernanke said. He added, "if we don't see continued improvement in the labor market we'll be prepared to take additional steps." Australian mega-brothel gets go-ahead (AP) A Sydney brothel has received the green light for a multi-million-dollar expansion which will see it become Australia's largest sex premises, with rooms featuring multiple beds and pool tables. Plans to double the number of rooms at inner Sydney's "Stiletto" into a mega-brothel complex were knocked back late last year by the city council on the grounds that it was too big. But the owners won an appeal to the Land and Environment Court this week, with Commissioner Susan O'Neill ruling the Aus$12 million ($12.2 million) development, including a wing for group bookings, should go ahead...Stiletto promotes itself as "the world's finest short-stay boutique hotel and Sydney brothel". Its standard hourly rate of Aus$370 includes room, lady of choice and beverages.

Opening Bell: 06.15.12

Forthcoming Facebook Motion Said to Discuss Nasdaq’s Role in I.P.O. (NYT) Facebook is preparing for battle. One month after its botched initial public offering, the social network is set to file a motion to consolidate all the shareholder lawsuits against the company, according to a person with knowledge of the matter. The lead underwriters, Morgan Stanley, Goldman Sachs, and JPMorgan Chase, are expected to join the motion, which could be filed in the Federal District Court for the Southern District of New York as early as Friday. The motion will represent the first time Facebook has publicly addressed the lawsuits and the performance of its highly anticipated, but ultimately lackluster, IPO on May 18. Facebook Is Not The Worst IPO (Deal Journal) Thursday marked the 4-week anniversary of the pricing of the IPO at $38 and today marks the anniversary of the innocuous opening and subsequent turmoil. Through Thursday’s close the stock was down about 26%, losing some $27 billion in market capitalization. That is ugly, but not as bad as the Halloween 2007 debut of Giant Interactive Group. The Chinese online-gaming company raised just over $1 billion in an IPO that started out well, rising about 18% on day one, but then promptly tumbled 30% through its first month, according to Dealogic. Draghi Hints ECB Is Ready To Act (WSJ) Providing liquidity "is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term, and this is what we will continue to do," Mr. Draghi said. The Eurosystem, the ECB and the 17 national central banks that use the single currency "will continue to supply liquidity to solvent banks where needed," he added. Greeks Return To Ballot Box As Crisis Nears Decisive Moment (Bloomberg) The June 17 vote will turn on whether Greeks, in a fifth year of recession, accept open-ended austerity to stay in the euro or reject the conditions of a bailout and risk the turmoil of becoming the first to exit the 17-member currency. World leaders have said they’d prefer a pro-euro result, underscoring concern over global repercussions. Moody's Downgrades Dutch Banks (WSJ) In a statement, Moody's said it had cut the ratings by two notches each of ABN Amro Bank NV and ING Bank NV to A2, LeasePlan Corp. NV to Baa2 and Rabobank Nederland to Aa2. It also cut the rating of SNS Bank NV by one notch to Baa2. Giselle Is World's Highest Paid Model (Forbes) Just like last year, the Brazilian bombshell Bündchen leads the pack with a stunning $45 million in earnings (all estimates from May 1st, 2011 to May 1st, 2012). Even in her early thirties, Bündchen remains an unparalleled force within the fashion world. As the world’s most powerful supermodel, she racks up modeling gigs, spokesperson deals, and independent licensing ventures at every turn...Bündchen’s success combining business with modeling is influencing young, ascendant models. “The ones that are coming up, their model for excellence is Gisele. They’re looking at her and saying ‘that’s what I want to shoot for,’” Razek said. Fed Loans Backing AIG, Bear Repaid (WSJ) On Thursday, the regional Federal Reserve bank said it has been repaid, with interest, on $53.1 billion in loans it made to two crisis-era vehicles that held complex subprime mortgage bonds, home loans, commercial-property loans and other unwanted assets from Bear and AIG. The New York Fed earlier recouped a separate $19.5 billion loan that financed the purchase of mortgage-backed securities from AIG. Warren Buffett fired Benjamin Moore CEO after Bermuda cruise (NYP) “[Abrams] kept asking what he’d done wrong,” according to an insider briefed on the ouster. “[Berkshire officials] told him to clear his stuff out while they stood and watched every move he made.” Gupta Hopes Family Guy Image Will Help (NYP) The 63-year-old former Goldman Sachs director — facing 25 years in prison on charges of leaking inside information to his hedge fund pal Raj Rajaratnam — has surrounded himself with family and friends throughout the four-week trial. Gupta’s four Ivy League-educated daughters, his wife, Anita, and sister, Kumkum, in-laws and colleagues — roughly a dozen daily attendees — were in the courtroom each day, taking up the first two rows of the gallery. As the jury today starts its second day of deliberations, the fallen Wall Street star hopes the family vibe helps push the panel toward an acquittal. In the Facebook Era, Reminders of Loss if Families Fracture (NYT) The Times just found out that one of the weird things about Facebook is that you can find out things about people you haven't spoken to in years: Not long ago, estrangements between family members, for all the anguish they can cause, could mean a fairly clean break. People would cut off contact, never to be heard from again unless they reconciled. But in a social network world, estrangement is being redefined, with new complications. Relatives can get vivid glimpses of one another’s lives through Facebook updates, Twitter feeds and Instagram pictures of a grandchild or a wedding rehearsal dinner. And those glimpses are often painful reminders of what they have lost.

munch-scream-bitcoin2

Opening Bell: 11.30.17

Grandma wants bitcoin; hedge funds are betting on cheese; get ready for the end of the credit rally; even rats don't like to go to midtown, says science; and more.

Opening Bell: 09.11.12

Before Scandal, Class Over Control Of Libor (WSJ) At an April 25, 2008, meeting with officials at the Bank of England, Angela Knight, head of the British Bankers' Association, argued that the London interbank offered rate had become too big for her organization to manage, according to minutes of the meeting and a person who was there. Her suggestion went nowhere. Even as Libor's deep flaws became apparent, regulators resisted a greater oversight role, the BBA's member banks clung to control of Libor, and BBA executives bickered with one another over whether to hang onto the lucrative business, according to people who were involved and a Wall Street Journal review of hundreds of pages of emails, meeting minutes and other documents. Treasury Sells Big Chunk Of AIG Stock (WSJ) The Treasury sold about 554 million shares to the public at $32.50 apiece for a total of $18 billion in one of the biggest global follow-on stock offerings since the financial crisis. The offering was the Treasury's fifth sale of AIG stock since early last year and reduced the government's stake in the company to about 22% from 92% in early 2011. The price set Monday was above the government's cost basis of $28.73 a share, meaning taxpayers will earn a profit on the sale. New iPhone could boost U.S. GDP by up to 0.5 percent, JP Morgan says (Reuters) "Calculated using the so-called retail control method, sales of iPhone 5 could boost annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate," Feroli wrote. That 0.33 percentage-point boost, he added, "would limit the downside risk to our Q4 GDP growth protection, which remains 2.0 percent." Feroli laid out his math. J.P. Morgan's analysts expect Apple to sell around 8 million iPhone 5s in the fourth quarter. They expect the sales price to be about $600. With about $200 in discounted import component costs, the government can factor in $400 per phone into its measure of gross domestic product for the fourth quarter. Feroli said the estimate of between a quarter to a half point of annualized GDP "seems fairly large, and for that reason should be treated skeptically." But, he added, "we think the recent evidence is consistent with this projection." Geithner Holds His Own on Triathlon Front (Dealbook) Geithner participated in the 7th annual Nation’s Triathlon to Benefit the Leukemia & Lymphoma Society on Sunday, swimming, biking and running his way through the nation’s capital. The race involved a 1.5-kilometer swim in the Potomac River, a 40-kilometer bike ride through the city and a 10-kilometer run. And Mr. Geithner, 51, can boast of a pretty good finish to his race, completing the course in 2:33:07. He placed ninth in his division, men aged 50 to 54, according to the race’s Web site. Individually, he completed the swim in 29:10, the bike ride in 1:13:52 and the run in 45:51. New Yorker Cartoon Dept Temporarily Banned From Facebook For Violating ‘Nudity And Sex’ Standards (Mediaite) In a post entitled “Nipplegate,” the New Yorker‘s cartoon editor, Robert Mankoff, detailed how the magazine’s cartoon department became temporarily banned on Facebook: a particular Mick Stevens cartoon violated the social networking site’s community standards on “Nudity and Sex.” Stevens redrew the cartoon, he said, “but the gain in clothes caused too great a loss in humor.” He then noted that Facebook has different standards when it comes to males and females. As “the guidelines say, ‘male nipples are ok.’ It’s the ‘female nipple bulges’ that are the problem.” Big Banks Hide Risk Transforming Collateral for Traders (Bloomberg) JPMorgan and Bank of America are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erode efforts to safeguard the financial system. Starting next year, new rules designed to prevent another meltdown will force traders to post U.S. Treasury bonds or other top-rated holdings to guarantee more of their bets. The change takes effect as the $10.8 trillion market for Treasuries is already stretched thin by banks rebuilding balance sheets and investors seeking safety, leaving fewer bonds available to backstop the $648 trillion derivatives market. The solution: At least seven banks plan to let customers swap lower-rated securities that don’t meet standards in return for a loan of Treasuries or similar holdings that do qualify, a process dubbed “collateral transformation.” That’s raising concerns among investors, bank executives and academics that measures intended to avert risk are hiding it instead. Soros: Germany going into depression in 6 months (MarketWatch) The recession in Europe will spread to Germany, the euro-zone's largest economy, within six months, said George Soros, chairman of Soros Fund Management. "The policy of fiscal retrenchment in the midst of rising unemployment is pro-cyclical and pushing Europe into a deeper and longer depression," Soros said in prepared remarks for a speech in Berlin Monday. "That is no longer a forecast; it is an observation. The German public doesn't yet feel it and doesn't quite believe it. But it is all too real in the periphery and it will reach Germany in the next six months or so." Lindsay Lohan encourages President Obama to slash taxes for 'Forbes millionaires' (DM) In a tweet fired off on Friday, the 26-year-old actress encouraged President Barack Obama to consider lowering taxes for the one-percenters listed on the Forbes Magazine’ millionaires’ list. Lohan, who has been very active on Twitter recently, was responding to a message posted by the Obama campaign following his Thursday speech at the Democratic National Convention. ‘I’ve cut taxes for those who need it: middle-class families, small businesses,’ the tweet read. About 10 minutes later, the star of the upcoming Elizabeth Taylor biopic ‘Liz and Dick’ put in her two cents on the issue of tax cuts: ‘We also need to cut them for those that are listed on Forbes as "millionaires" if they are not, you must consider that as well,’ her late-night message read. Gross Says Age of Credit Expansion Led Fund Returns Over (Bloomberg) Gross’s outlook follows his commentary last month, which sparked debate among investors and analysts after he declared that the “cult of equity” was dying. In his August comments, he compared long-term returns from equities to a “Ponzi scheme” and said returns of 6.6 percent above inflation, known as the Siegel Constant, won’t be seen again. “Our credit-based financial system is burdened by excessive fat and interest rates that are too low,” Gross wrote. “Central banks are agog in disbelief that the endless stream of” liquidity pumped into the banking sector has not stimulated lending, Gross wrote. Queen's Corgi Buried At Balmor (TDB) The dog, Monty was involved in a fight recently when he was one of a number of dogs which attacked Princess Beatrice's terrier Max over the summer, but it appears the fight - Max came off worst and nearly lost an ear in the fracas - was not a contributory cause of death. Buckingham Palace is not officially revealing how or when the corgi, named Monty (after the American horse whisperer Monty Roberts who has advised the queen on dogs and horses) met his end, but palace sources told the Royalist the animal passed away of old age over the summer. The animal died at the Royal Scottish residence of Balmoral, where, in accordance with tradition, he has been buried in the Royal pet cemetery opened by Queen Victoria when her beloved Collie, Noble, died there in 1887...the Queen is known to take the deaths of her pets hard: Lady Pamela Hicks, the mother of India Hicks once wrote a note when one of the Queen’s corgis died and received a six-page letter back.

Opening Bell: 03.30.12

Three Major Banks Prepare for Possible Credit Downgrades (NYT) Moody’s Investors Service has said it will decide in mid-May whether to lower its ratings for 17 global financial companies. Morgan Stanley, which was hit hard in the financial crisis, appears to be the most vulnerable. Moody’s is threatening to cut the bank’s ratings by three notches, to a level that would be well below the rating of a rival like JPMorgan Chase. Eurozone Lifts Firewall (WSJ) Euro-zone finance ministers on Friday agreed on a temporary boost of the bloc's bailout lending limit to €700 billion ($931 billion), opting for a less ambitious plan that some fear won't be enough to prevent a re-awakening of euro zone financial turmoil. Dalio Earns $3.9bn to Top Hedge Fund Pay List (FT) Ray Dalio, head of Bridgewater, the world’s largest hedge fund, personally made $3.9 billion in a year that his $70 billion Pure Alpha fund produced $13.8 billion of investment profits for its investors, according to industry rankings. He tops a list published Friday by Absolute Return magazine of the richest 25 hedge fund managers. The select group took home $14.4 billion in pay and paper profits on their own investments last year, down from $22 billion in 2010 in a sign of the industry’s struggle to deliver returns for its clients in 2011. Goldman Bets on Property Rebound With New Fund: Mortgages (Bloomberg) The U.S. Housing Recovery Fund is expected to finish its first round of capital raising and open April 1, according to a marketing document obtained by Bloomberg News. It will focus on senior-ranked securities without government backing, many of which now carry junk credit grades. BATS Weighs Cooling Its Listing Push (WSJ) BATS Global Markets Inc. is considering suspending its efforts to recruit corporate listings after a software glitch last Friday derailed the exchange operator's IPO, people familiar with the matter said. Concerns about BATS's bungled initial public offering could disrupt its efforts to draw other companies to list their stocks on its electronic exchange, forestalling ambitions by the electronic-markets operator to become a full-service exchange company. Such a move could entail notifying the Securities and Exchange Commission, which last year approved BATS's plan to list shares and exchange-traded products. Canada Eliminates Penny Costing Penny-and-a-Half to Make (Bloomberg) Canada will withdraw the penny from circulation this year, saving taxpayers about C$11 million ($11 million) annually and forcing retailers to round prices to the nearest nickel, the government announced in its budget today. Grand Central nabs tell-all by ex-Goldman exec Smith (NYP) Greg Smith, the former Goldman Sachs executive who became an instant sensation when he ripped the Wall Street investment bank with a resignation letter published as an Op-Ed piece in the New York Times, has scored a $1.5 million advance to write a memoir of his experiences. Oil Rally Fails to Lift Commodity Hedge Funds' Returns (FT) Many multibillion managers have been wary of potential political shocks in the Middle East and a repeat of last year’s May oil sell-off. They have shunned risk over the past three months or lost out by betting that oil markets would become more choppy. Many of the sector’s leading names have underperformed broader hedge fund peers, which have enjoyed one of their best quarters on the back of rising global equity markets. Billions Lost In Tax Refund Scam (WSJ) The perpetrators of the scheme, authorities say, swipe the Social Security numbers of Puerto Rican citizens, who don't have to pay federal income tax—and are less likely to be on the IRS radar—and use their information to file fake returns. In some cases, they enlist U.S. mail carriers to intercept the refund checks that are disbursed. The plot, which includes participants from around the U.S. and Latin America, has been around for at least five years. Prosecutors have obtained multiple convictions but none involving those believed to be among the top players in the operation, according to several people briefed on investigations into the fraud. BlackBerry Maker In Turmoil (WSJ) The overhaul comes just two months after Thorsten Heins took the reins at RIM and confidently proclaimed there was no need for "seismic" change. But with the company's sales tumbling 25% in the latest quarter, new BlackBerrys piling up unsold and a crucial lineup of new devices still not expected to arrive until later this year, Mr. Heins is taking more drastic actions. RIM will back out of its high-profile attempt to win business among consumers to focus on its core corporate customers. Queen Creek couple accused in dog-sex plan plead not guilty (AZC) A Queen Creek couple have pleaded not guilty to charges of planning to have sex with a dog. The case prompted Sheriff Joe Arpaio to ask the website Craigslist to better monitor its personal ads. Shane Walker, 33, and his wife Sarah Walker, 39, posted a Craigslist ad on Feb. 7 titled, "Wife looking for K9," according to Maricopa County Superior Court records.

Opening Bell: 03.15.12

Goldman Roiled by Op-Ed Loses $2.2 Billion for Shareholders (Bloomberg) Goldman Sachs slid $4.17 to $120.37 yesterday, leaving the shares still up 33 percent this year...Smith, who also wrote that he was quitting after 12 years at the company, blamed Blankfein, 57, and President Gary D. Cohn, 51, for a “decline in the firm’s moral fiber.” They responded in a memo to current and former employees, saying that Smith’s assertions don’t reflect the firm’s values, culture or “how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.” You Have Less Than Two Hours To Sign Up For The Dealbreaker NCAA Tournament Challenge (DB) Do it here, do it now, or lose us forever (the password is: animalliar). SEC Cracks Down On Pre-IPO Trading (WSJ) Federal regulators are cracking down on an obscure but booming market for trading shares in companies before they go public. The Securities and Exchange Commission brought charges against two money managers, alleging they misled and overcharged investors on funds formed to buy shares of Facebook Inc., Twitter Inc. and other social-media companies. A so-called secondary market in these companies' private shares has grown rapidly as more investors seek to buy into the companies before their initial public offerings, hoping to profit later from a "pop" in the stock price after the IPO. The allegations by the SEC mark the first major regulatory blow to the market, which the agency says emerged in 2009 and which industry participants say has been fueled lately on the anticipation of a Facebook IPO in the coming months. Citi Rejection Stings Pandit (WSJ) The board of directors held a meeting by telephone shortly after the Federal Reserve said Tuesday it had turned down the capital plan the New York company submitted as part of its latest "stress test," according to people familiar with the situation. Neither Citigroup nor the Fed disclosed what the bank had been seeking, but in recent months the bank's executives had repeatedly said they wanted to return capital to shareholders through dividends or share buybacks in 2012. "Everyone was taken by surprise," said a person with knowledge of the reaction among Citigroup executives and board members. Jobless Claims in U.S. Decrease, Matching Four-Year Low (Bloomberg) Claims for jobless benefits dropped last week in the U.S., matching the lowest level in four years, more evidence the labor market is improving. Applications for unemployment insurance payments fell by 14,000 to 351,000 in the week ended March 10, Labor Department figures showed today. Economists forecast 357,000, according to the median estimate in a Bloomberg News survey. Claims reached the same level a month ago, the lowest since March 2008. UBS Cuts Bonus Pool (WSJ, DB) That would be putting it mildly. JPMorgan's Dimon Responds to Goldman Column (Reuters) J.P. Morgan CEO Jamie Dimon told employees to resist taking advantage of competitors and to focus instead on strengthening the bank's own standards, in an internal memo sent in response to the firestorm engulfing Goldman Sachs after a former banker published his resignation letter in the New York Times. Meredith Whitney: Banks Oversold, Muni Defaults Still Coming (CNBC) "The banks should trade at tangible (book value) or a little better," she said. "But that doesn't mean they're off to the races and that there's tremendous momentum behind the fundamentals of these banks." Goldman fights back after employee's scathing public exit (NYP) After the memo was distributed, Goldman brass went into damage-control mode, fielding calls from investors and clients searching for reaction from the 143-year-old firm. Blankfein was light-hearted about the surprise attack but tried to be extremely responsive to client inquiries about it, sources said. Privately, some Goldman officials played down Smith’s significance within the firm, describing him as a “disgruntled mid-level employee.” Two Billionaires Side With Greg Smith Against Goldman (Forbes) Jim Clark said Smith’s criticism of Goldman’s treatment of its customers is “what I experienced over the four to five years” he entrusted some of his funds with the firm’s private wealth management division...Billionaire Stephen Jarislowsky, CEO of Canadian investment firm Jarislowsky, Fraser, says he also supports Smith’s op-ed. “It’s about ethics and fiduciary responsibility, and the lack thereof,” explains Jarislowsky. “If you’re a fiduciary you should work for your client and not for anyone else. If you’re a doctor, you’re not supposed to work for your pocketbook, but for your client’s health.” Chinese Economy Already in ‘Hard Landing,’ JPMorgan’s Mowat Says (Bloomberg) China’s economy is already in a so- called “hard landing,” according to Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging-market strategist. “If you look at the Chinese data, you should stop debating about a hard landing,” Mowat, who is based in Hong Kong, said at a conference in Singapore yesterday. “China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.” Arrest warrant issued for Russell Brand over iPhone rage (NYP) Brand was named in a police report on Monday night after allegedly grabbing a photographer's cell phone out of his hand and hurling it through the window of a law firm. The paparazzo, Timothy Jackson, filed a police report immediately after the incident, citing "criminal damages." According to Jackson, he had been out with several fellow photographers when he started taking pictures of the 36-year-old British comedian and actor with his iPhone. Brand allegedly "flipped out," snatched the cell phone and threw it at a building, breaking a window in the process. His reps have contacted the law firm and offered to pay for the broken window.

Opening Bell: 03.02.11

Financial Crisis Amnesia (WSJ) Tim Geithner: "My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system. We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises. These reforms are worth fighting to preserve." IMF Says Threat Of Sharp Global Slowdown Has Eased (Reuters) So that's nice. Life as Libor Traders Knew It Seen as Abusive by Investigators (Bloomberg) Regulators probing the alleged manipulation of global interest rates are focusing on what traders involved in setting the benchmark say were routine discussions condoned by their superiors...“A few hundred people, mostly based in one city and sitting in close proximity to each other, set an index rate for trillions of dollars of securities with little or no oversight,” said Mark Sunshine, chief executive officer and chairman of Veritas Financial Partners, a Florida-based firm that provides loans to businesses and real estate companies. “That cannot continue. The mechanism itself, the oversight and the penalties if violated, are woefully inadequate.” Twitter's Slow Road To IPO (WSJ) In just six years Twitter Inc. has become the world's digital soapbox, amassing more than 100 million monthly users—from everyday people to Lady Gaga to Middle East protesters—who use the service to spread pithy updates and breaking news. Yet despite the service's growing influence on society and culture, the business behind it still has a ways to go until it's ready for an initial public offering. To understand why, travel to Cincinnati, where last June Twitter planted a staffer blocks from Procter & Gamble Co.'s headquarters and assigned him a critical task: Teach the country's biggest advertiser to use Twitter and buy its ads. But when P&G spent $150 million to promote the launch last month of a Tide laundry detergent, the company bought magazine pages, billboard spots and television commercials during the Academy Awards—and no Twitter ads. "All [P&G] brands are asking questions about what to do with Twitter and how to leverage it; nobody really had a clear, lean answer," said the staffer, J.B. Kropp. US Seeks Dismissal Of Lawsuit On AIG Takeover (Reuters) In November, Hank Greenberg's company, Starr International Co, sued the U.S. government for $25 billion, calling the 2008 federal takeover of the insurer unconstitutional. Starr sued the government in the U.S. Court of Federal Claims in Washington, D.C., which handles lawsuits seeking money from the government. It brought that lawsuit on behalf of itself and other AIG shareholders...In a filing with the U.S. Court of Federal Claims in Washington, D.C., on Thursday, the government said although Starr may disagree with the terms to which AIG agreed, any loss resulting from that agreement should be borne by AIG and its shareholders, and not the public. Obama Back On Wall Street (Politico Morning Money) Obama raised just north of $5 million for his re-election campaign and the DNC at four events in NYC last night including a swank dinner ($35,800 per person, $71,600 per couple) at Jean-Georges Vongerichten’s ABC Kitchen on East 18th Street. The dinner, the first Wall Street-heavy event since Obama doubled down on his proposed bank tax, was hosted by a handful of the President’s stalwart industry supporters including Robert Wolf, Blair Effron, Mark Gallogly, Marc Lasry and Orin Kramer. Sex Work Among Medical Students On the Rise? (ABC) Sex work among medical students is on the rise, claims a new editorial, published in the journal Student BMJ. The UK-based publication noted that students are likely seeking extreme measures to deal with their financial hardship. One in 10 students knows of another who participated in prostitution to pay their medical student loans, according to the editorial. "Mounting evidence suggests that more university students are engaging in prostitution as a means to pay increasing tuition fees, growing debts, and high living costs," Jodi Dixon, the author of the editorial, wrote. "With escalating debts, students in the United Kingdom may view prostitution as an easy way to get rich quick." Greek Swaps Headed Back to ISDA Committee (Bloomberg) Holders of credit-default swaps on Greek bonds shouldn’t tear up their contracts after yesterday’s ruling against a payout. The International Swaps & Derivatives Association said the swaps hadn’t been triggered by the European Central Bank’s exchange of Greek bonds for new securities exempt from losses taken by private investors. The group will now probably be asked to determine whether collective action clauses, or CACS, being used by Greece to impel investors to participate in a wider exchange of bonds that would trigger the swaps. Madoff moneyman Merkin near $400M AG deal (NYP) After a bitter three-year legal battle, Ezra Merkin, the Manhattan moneyman who funneled more than $2 billion to convicted Ponzi king Bernie Madoff, is nearing a settlement with the New York attorney general that could have him shell out as much as $400 million. Sources said the settlement with AG Eric Schneiderman would recover the bulk of the $470 million in fees the notorious middleman pocketed from investing his clients’ cash with Madoff. Game Changer For Zynga: No Facebook (WSJ) The San Francisco-based company, whose offerings have long been associated with Facebook as well as apps for mobile devices such as Apple Inc.'s iPhone, said a "beta," or prerelease version of what it calls the Zynga Platform, will initially allow customers to play five of its popular titles—"CityVille," "Hidden Chronicles," "Zynga Poker," "CastleVille" and "Words With Friends"—from its website. Zynga said more of its games will become available on the website over time. Cops Ticket Woman For Resting Injured Leg On Seat In Deserted Subway Train (Gothamist) Brooklyn resident Kate Wilson was riding the D train home to Sunset Park around 1 a.m. one morning in February when several police officers entered her subway car at 36th street. The subway car was mostly empty, with plenty of empty seats, and Wilson was resting her right leg—which she had injured in a race that day—on a corner of one seat. What followed was an absurd yet all too familiar encounter with overzealous, quota-filling transit cops and ended with a $50 summons.

Opening Bell: 01.07.13

Regulators Give Ground To Banks (WSJ) Global banking regulators watered down a key element of their plan for creating a safer financial system, giving ground to banks that argued the rules were unworkable and financially risky. The Basel Committee on Banking Supervision, a group of the world's top regulators and central bankers, said Sunday that it agreed to relax a rule designed to ensure that big banks are able to weather financial crises without running short of cash. Bowing to two years of intense pressure from the banking industry, the regulators made it easier for banks to meet the rule, known as the "liquidity coverage ratio," and delayed its full implementation until 2019. It is the latest instance of regulators chipping away at their landmark 2010 response to the global financial crisis. The regulators argue that the changes make banking rules much stronger than they were before the crisis. Herbalifers Stay Resolute (WSJ) When hedge-fund manager William Ackman unveiled his 334-slide presentation alleging that Herbalife is a pyramid scheme, it did nothing to shake Joanne Clare. The 38-year-old Staten Island mother of three has been selling the company's weight-loss products and supplements since 2004, when she says they helped her drop from 210 to 160 pounds in four months. She now sells as much as $3,500 a month of Herbalife products to her 30 clients and the two distributors in her "down line." "People have always said it's a pyramid scheme, but it's not," Ms. Clare said, adding that the bulk of her earnings come from sales to clients, not her cut of her recruits' take. Mr. Ackman's declaration that he had bet more than $1 billion against Herbalife caused many investors to flee, sending the stock down 38% in four days in late December. But some of the company's 3.1-million-strong army of distributors were unmoved. Eliot Spitzer Ends His Show On Current TV (NYT) The announcement comes a few days after Al Jazeera said it was acquiring Current TV. Later this year, the Qatar-owned broadcaster plans to turn the channel into an Americanized version of the international news channel Al Jazeera English. Mr. Spitzer said he had a “wonderful time” at Current, but emphasized that his relationship was with Al Gore and Joel Hyatt, Current’s co-founders, not with Al Jazeera. “Moving forward, their mission will be different,” he said — more international newscasts, less liberal talk about the news. Citi's Corbat builds bridges (Reuters) Citigroup Inc's Michael Corbat has been meeting with bank regulators in his first months as CEO, as he looks to bolster relationships and finalize the bank's plan to return capital to shareholders, sources familiar with the matter said. Corbat also expects to name his team of top managers within the next week or so, one of the sources said on Sunday. Corbat is expected to play it safe when Citigroup asks the U.S. Federal Reserve for permission for moves such as buying back shares or increasing dividends, analysts and investors said. His predecessor, Vikram Pandit, lost his job in October in part because the bank's request for returning capital was denied in March. The bank, which is due to submit its plan to the Fed on Monday, has not yet done so, the source said. The third-largest U.S. bank will only seek approval to buy back shares and not raise dividends, the Wall Street Journal reported on Friday. Last year, the bank wanted permission to return more than $8 billion to shareholders over two years, the paper said. For Newly Minted MBAs, A Small Paycheck (WSJ) For graduates with minimal experience—three years or less—median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined. Even for more seasoned grads the trend is similar, says Katie Bardaro, lead economist for PayScale.com. "In general, it seems that M.B.A. pay is either stagnant or falling," she says...It is all a far cry from the late 1980s and early 1990s heyday for M.B.A.s, when some companies would hire 100 or more M.B.A.s. It wasn't uncommon to recruit first, and fill actual jobs later. DOJ pledges to respect Swiss law in tax probe (Reuters) Swiss chief finance diplomat Michael Ambuehl was given a verbal pledge from the U.S. Department of Justice to respect Swiss law when asking for bank client data of potential tax dodgers, a newspaper reported on Sunday. Switzerland is in negotiations with U.S. authorities to find a deal that would end tax probes into at least ten Swiss banks suspected of helping clients dodge taxes, including Credit Suisse and Julius Baer. The Alpine country is trying to preserve what is left of its cherished banking secrecy that suffered a severe blow in 2009 when UBS, the first Swiss bank that came under scrutiny in the U.S., was required to disclose client data. Brazilian prison gaurds catch cat that slipped through the gate with escape tools taped to its body (NYDN) Guards at a Brazilian prison nabbed a white cat that slipped through the gate with a cell phone, drills, small saws and other contraband taped to its body. Alagoas prison spokeswoman Cinthya Moreno says the cat was caught New Year’s Eve at the medium-security prison in the city of Arapiraca. The O Estado de S. Paulo newspaper reported Saturday that all of the prison’s 263 inmates are suspects in the smuggling attempt, though a spokesperson said, “It will be hard to discover who is responsible since the cat does not speak.” Loeb, Cooperman Stand Out in Horrid Year for Hedge Funds (CNBC) Third Point was the clear hedge fund standout in a horrible year for the industry as almost nine out of 10 managers underperformed the S&P 500. Omega Advisors' Leon Cooperman also scored big. Loeb — once better known for his acerbic letters to CEOs — used an activist position in Yahoo and the contrarian buying of Greek bonds to drive the firm's flagship fund to a 21 percent gain in 2012. The firm's more-leveraged Ultra fund posted an even bigger 34 percent return...Cooperman's fund had a net return of 26 percent in 2012. Banks Zero In On Foreclosure Pact (WSJ) Banks were closing in on a $10 billion foreclosure-abuse settlement with regulators that could be announced as soon as Monday, according to people familiar with the talks. The settlement was nearly complete Sunday afternoon, the people said, after the Federal Reserve backed down on a demand for more compensation for consumers and other changes to the pact. Bankers threatened to walk away from the deal if the Fed's demand for an additional $300 million was included, a person briefed on the talks said. Junk Bonds' Fire Is Poised to Fade (WSJ) Junk bonds started 2013 much like they finished 2012—on fire. In just three trading days this year, bonds of low-rated companies delivered returns of almost three-quarters of a percent, even as most other types of bonds lost value. And junk bonds continued to clock new milestones: Average prices soared to their highest since 2004 and average yields, which decline as prices rise, dropped below 6% for the first time ever, according to Barclays. But the rapid march is making fund managers and analysts wary. Prices are now so high—averaging more than 105 cents on the dollar—that there is little room for them to climb much further, some investors say. These are lofty prices for bonds that usually trade below 100 cents, reflecting the higher default risk for such companies. At the very least, returns will pale in comparison with the 15% achieved in 2012, analysts and investors say. NHL, Players Settle Labor Dispute (AP) On the 113th day of a management lockout and five days before the league's deadline for a deal, the bleary-eyed sides held a 6 a.m. news conference to announce there will be a season, after all. NHL Commissioner Gary Bettman and union head Donald Fehr both appeared drained, wearing sweaters and not neckties, when they stood side by side at the hotel and announced labor peace. "We have reached an agreement on the framework of a new collective bargaining agreement, the details of which need to be put to paper," Bettman said. "We've got to dot a lot of Is, cross a lot of Ts. There's still a lot of work to be done, but the basic framework of the deal has been agreed upon." Hostess in Talks to Sell Off Bread Brands (WSJ) Hostess could disclose Flowers, Grupo Bimbo or others as opening bidders in a looming bankruptcy-court auction for the assets as soon as this week, said people familiar with the matter. Hostess, whose bread brands include Wonder Bread, Nature's Pride, Home Pride, Merita and Butternut, is still determining how to split up assets and package them for buyers, one of the people said. Gérard Depardieu gives up French citizenship after bitter tax fight (GM) In a fit of pique, French movie star Gérard Depardieu announced during the weekend that he would give up his citizenship after politicians and the media took him to task for moving to Belgium and avoiding an impending tax hike for the rich. Mr. Depardieu is not France’s first fiscal refugee but his high-profile door-slamming so monopolized public debate that Prime Minister Jean-Marc Ayrault had on Monday to parse whether or not he had insulted the actor. “I did not call Mr. Depardieu a loser, I said that it was loser-like [to move to Belgium to avoid taxes],” Mr. Ayrault told reporters...The “loser” comment seemed to have been the jab that stung Mr. Depardieu the most. “Loser, did you say loser?” the 63-year–old actor began an open letter to Mr. Ayrault that appeared Sunday in Le Journal du dimanche. Mr. Depardieu wrote that he had paid a total of €145-million in income tax in the last four decades and kept 80 people employed. He added that he had been taxed at a marginal rate of 85 per cent this year. “I am giving you back my passport and my social insurance, which I had never used. We no longer have the same fatherland. I am a true European, a citizen of the world.”