Opening Bell: 8.25.17

Gary Cohn talks tax reform, Nazis; millennial quants want to drink your milkshake; Estonia wants to launch a sovereign bitcoin; the world champion in Excel; and more.
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Transcript: Gary Cohn on tax reform and Charlottesville (FT)
“I have come under enormous pressure both to resign and to remain in my current position. As a patriotic American, I am reluctant to leave my post as director of the National Economic Council because I feel a duty to fulfil my commitment to work on behalf of the American people. But I also feel compelled to voice my distress over the events of the last two weeks. Citizens standing up for equality and freedom can never be equated with white supremacists, neo-Nazis, and the KKK. I believe this administration can and must do better in consistently and unequivocally condemning these groups and do everything we can to heal the deep divisions that exist in our communities. As a Jewish American, I will not allow neo-Nazis ranting “Jews will not replace us” to cause this Jew to leave his job.”

GaryCohnHamlet

SoftBank’s $100bn Vision Fund needs Wall St trader to come good (FT)
Rajeev Misra liked to puff cigars at Deutsche Bank. Subordinates would have to remove smoke detectors from the ceilings. In these heady days before the financial crisis, Mr Misra, as head of fixed income, recruited traders such as Greg Lippmann, later played by Ryan Gosling in The Big Short. They made gigantic bets. Losses of $100m piled up in one book in 2006, enough for those responsible to be fired at any other institution, but they were kept around and made much bigger profits. Today Mr Misra, 55, is leading a very different enterprise with a similar disregard for norms.

Younger, Cheaper, Smaller, Smarter: Meet the New Breed of Quants (II)
A growing number of entrepreneurs schooled in AI see a model ripe for disruption. After all, they have no legacy business to protect. Experts anticipate that these entrepreneurs, armed with computers taught to do the work of expensive and moody humans, will first make inroads with a lower-cost product covering the most efficient parts of the market. Large-cap equities managers, watch out.

Jackson Hole Dark Side Stab (Macro Tourist)
If there was to be a surprise at today’s Jackson Hole symposium, I doubt it would be that either Draghi or Yellen tries to get out ahead of this dovishness by signaling even easier policy. No, a surprise will most likely look like a Central Bank chief that attempts to put policy back on the previous tighter path. Most likely they will both duck and try to not disrupt the markets. But there is a better chance than the market is anticipating that one of them (or maybe both of them) surprises with a hawkish statement. SEE ALSO: Jackson Hole Bingo

Rapper Cancels Shows After Saying He Didn’t Need Eclipse Glasses (HuffPo)
“Am I crazy for watching the eclipse today [with] no glasses?” Joey Bada$$ tweeted on Monday. “I’ve sungazed before and afterwards saw colors for a whole day. I didn’t die tho (sic).” He went on to argue, “This ain’t the first solar eclipse and I’m pretty sure our ancestors ain’t have no fancy eyewear. Also pretty sure they ain’t all go blind.” Fast forward to Tuesday, and the hip-hop artist announced the cancellations of shows in Cleveland, Chicago and Toronto “due to unforeseen circumstances.”

The Bitcoin Sovereign Wealth Fund (Gadfly)
A proposal by Estonia's agency in charge of "e-residency" applications (more on this later) has suggested raising money by selling "estcoins" to the public.The wealth could then be managed via a public-private partnership; a chunk might be poured into venture capital to support domestic start-ups. Holders of estcoins would have a stake in the fund and a say in how it is run. The tokens might then become a viable currency, so the thinking goes, paying for goods and services in a euro-zone country.

Valeant’s Latest Litigation Threat Could Be Especially Costly (BBG)
By invoking the RICO law in New Jersey, the location of Valeant’s U.S. headquarters, Lord Abbett could seek a penalty three times as large as the losses it allegedly sustained from the decline in Valeant’s share price. Federal securities laws don’t allow investors to invoke national RICO laws in comparable shareholder suits.

Two Bankers Indicted in Libor-Manipulation Case (WSJ)
The U.S. Justice Department accused Danielle Sindzingre and Muriel Bescond of instructing their subordinates to submit inaccurately low figures that were then used to calculate Libor, according to Thursday’s indictment in U.S. District Court in Brooklyn. The actions, which are alleged to have happened between May 2010 and October 2011, caused more than $170 million in harm to global financial markets because the false information affected transactions tied to Libor, according to the indictment.

Vanguard Group is America's new landlord (Philly.com)
Securities and Exchange Commission reports compiled by Bloomberg show that the company’s mutual funds and exchange-traded funds are now the leading owners of real estate investment trusts (REITs), the tax-protected investor funds that own many of the nation’s offices, shopping centers, apartments, hotels, warehouses, and data and storage centers.

There’s a world championship for Excel spreadsheets (AP)
Dumoulin was a bit taken aback when he saw how seriously the international competitors approached the tournament. No American has won the Excel competition in 16 years, though they have won on other Microsoft Office products including Word and PowerPoint. “Some of the foreign countries, they’ve been training for hours and hours and hours on end,” he said. “When you first meet the international students, everyone’s friendly, but when they find out you’re competing against them in the same category, they get this fire in their eyes.”

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Credit Suisse Returns To Profit (WSJ) In the fourth quarter, Credit Suisse's net profit was 397 million francs, compared with a net loss of 637 million francs a year earlier when restructuring charges weighed on earnings. Revenue, which includes interest income, fees and trading proceeds, rose 29% to 5.8 billion francs. Analysts had expected a profit of 563 million francs and revenue of 6.14 billion francs. State Lawsuits Could Add To S&P Exposure (WSJ) On Tuesday, the Justice Department sued S&P for allegedly causing some banks and credit unions to lose $5 billion after relying on the company's ratings of mortgage-linked securities. However, the $5 billion claim, which S&P has dismissed as "meritless," is only part of the legal battle being fought by the world's largest credit-ratings firm by number of deals rated. Thirteen states and the District of Columbia have followed in the Justice Department's footsteps, filing separate lawsuits against S&P on Tuesday. The California attorney general alone is suing S&P for about $4 billion to recover funds for two of the country's largest public pension funds, according to its lawsuit. Other states, such as Colorado and Arkansas, are demanding S&P give back the revenue it earned on precrisis ratings of hundreds of securities. State prosecutors allege S&P presented its ratings as based on objective and independent analysis but actually were inflated to cater to the banks that helped arrange and sell the securities. S&P Hires Top Defense Attorney for $5 Billion Lawsuit (Reuters) Standard and Poor's has hired John Keker, one of the country's top white-collar defense attorneys, to help fight the $5 billion lawsuit brought by the U.S. government this week. Keker, who is based in San Francisco and has represented everyone from cyclist Lance Armstrong to Enron's Andrew Fastow, was hired at the recommendation of Floyd Abrams, a prominent New York attorney who also represents the ratings firm. RBS Settles Rate Charges (WSJ) CFTC enforcement chief David Meister said Wednesday that the trading floor was "laden with conflicts of interest," where RBS traders "seized the opportunity to ask colleagues sitting in the next chair for false rate submissions." From mid-2006 to the end of 2010, traders at RBS tried hundreds of times to rig the London interbank offered rate, or Libor, sometimes succeeding, said U.S. and U.K. regulators as they announced a $612 million settlement with the British bank. ‘Historic Winter Storm’ Moving Toward U.S. Northeast (Bloomberg) A “potential historic winter storm” and blizzard may dump 2 feet of snow on Boston and eastern Massachusetts, potentially causing power outages and leaving 10 inches in New York City. Eighteen to 24 inches (46 to 61 centimeters) of snow may fall in Boston, and the city has an 85 percent chance of receiving at least 12 inches from the storm that is expected to arrive in two days, according to the latest forecast from National Weather Service in Taunton, Massachusetts, published at at 4:25 a.m. Eastern Standard Time. “Heavy snow and gusty winds will bring the potential for blizzard conditions. The worst of the storm will be Friday night into the morning,” the weather service said. The storm arrives on almost the 35th anniversary of the Blizzard of 1978, which killed 99 people, destroyed 2,000 homes, drove 10,000 residents into shelters and paralyzed eastern Massachusetts and northern Rhode Island for a week, according to the weather service. Ireland Moves Toward Debt Deal (WSJ) Under Ireland's new proposal, the government will provide a long-term bond to the Irish central bank that replaces the note, the Irish finance ministry said. IBRC will be liquidated and its remaining commercial property assets will be dispatched to Ireland's so-called bad bank, the National Asset Management Agency. Mr. Noonan told lawmakers early Thursday that there was still "no deal," but he needed to announce new powers to liquidate IBRC—the first step toward potentially striking such a debt agreement—to protect the country from unspecified legal challenges. Man Claims IRS Agent Coerced Him Into Sex (CBS) An Oregon man is suing the U.S. Government and a female IRS agent he alleges pressured him into sex, by threatening a tax penalty. Vincent Burroughs, of Fall Creek, Ore., says the harassing relationship began in August of 2011 when Dora Abrahamson, an agent with the Internal Revenue Service, called him and said he would be audited, CBS affiliate KVAL reports. Burroughs says he didn't know Abrahamson, and that he hadn't met her before those calls - nor had he heard that he was being audited by the IRS. "She was sending me texts that she wanted to come out, give me massages because she needed to help me relax," Burroughs said in a phone interview with KVAL News. Over the next two months, Burroughs alleges that Abrahamson sent him several flirtatious text messages - offering to give massages, asking to meet him, and sending racy photos of herself to his cell phone. "She said she knew more than my mother knew about me," said Burroughs. In the lawsuit, Burroughs says in September 2011 Abrahamson came to his home wearing provocative attire. "Next thing I know, she's at my gate, honking...so I opened my gate, she came into my property dressed exactly like [when] she texted me," Burroughs said. The lawsuit states: "She said that she could impose no penalty, or a 40% penalty, and that if he would give her what she wanted, she would give him what she needed." E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad (NYT) When an outside analysis uncovered serious flaws with thousands of home loans, JPMorgan Chase executives found an easy fix. Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the bank adjusted the critical reviews,according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors. The trove of internal e-mails and employee interviews, filed as part of a lawsuit by one of the investors in the securities, offers a fresh glimpse into Wall Street's mortgage machine, which churned out billions of dollars of securities that later imploded. 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Agents from the FBI’s New York office have been knocking on doors of people associated with the firm, asking questions about JTF’s business practices, including cold calling by brokers and Belesis’ overseas accounts, sources told The Post. Fewer Workers Filed Claims for U.S. Jobless Benefits Last Week (Bloomberg) Applications for jobless benefits dropped 5,000 to 366,000 in the week ended Feb. 2, Labor Department figures showed today. Economists forecast 360,000 claims, according to the median of 53 estimates in a Bloomberg survey. Big Mac Prices Show Which Euro Zone States Best at Belt-Tightening (Reuter) Economist Guntram Wolff took the data and found that the price rise in Greece, Portugal and Spain has been less than the euro zone average, while in Ireland the price actually fell. These are the main countries undergoing deep economic reform due to the debt crisis. This contrasts with price rises above the euro zone burger average in Germany. Wolff concludes from this that economic adjustment is working. For example, In Ireland, which has made spending cuts after receiving international aid, the burger price has fallen from 3.80 euros to less than 3.50 euros. There is one notable exception, however. Heavily-indebted Italy is the most expensive country in the euro area to buy a Big Mac - 3.85 euros - while it costs just 3.64 euros in Germany. PETA: Naked chicken corpses aren't sexy (CM) The American founder of People for the Ethical Treatment of Animals, president Ingrid Newkirk, criticised a newspaper for running a picture of a raw chicken. "We don't want to see any chickens on display, but instead want them to live natural, happy lives with their families. Sexily displaying the corpse of a chicken who has been bred to grow so big, so quickly, that many collapse under their own weight, is just additionally offensive."

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Opening Bell: 11.9.17

The sad, strange story of Deutsche Bank; banks are ditching the Fed; Cohn on taxes; millennials are (you guessed it!_ killing the very foundation of financial capitalism; sheep like Obama; and more.